Customer loyalty in marketing: how to use data to evolve your reward schemes

  • Posted: 15th March 2019

Theoretically, customer loyalty in marketing is a simple proposition: do things your audience likes, offer things they like, and communicate with them in a way they like, and you’re all set. In practice, it’s a lot more complicated – especially with the introduction of the EU General Data Protection Regulation.

Now, more than ever, it depends on the consumer’s enthusiastic sign-off. In the new digital environment, they must actively opt-in to tailored communications and rewards, brought to them via their chosen marketing channels.

This has changed the marketing game – and many would agree for the better. But how do you run an effective, personalized customer loyalty scheme in today’s world?

Getting started 

In the early stages, loyalty programs can be fairly generic experiences. Customers get the same rewards, earn the same points, and redeem them in the same way.

It’s true that customers would rather have this kind of experience than nothing at all. But it’s neither very memorable nor very personal – and it’s ill-suited to a modern age of customer loyalty in marketing, where customers are interacting with brands across a number of digital and physical touchpoints, and in a number of distinct ways. They need something beyond identikit discounts and referral rewards: when they promote you, when they share your message, when they retweet you on Twitter, they should be recognized as individuals and get something in return.

Customer loyalty programs must therefore move past ‘earn and burn’ – and towards ‘earn and return’. Consumer advocacy must take center stage if you’re to access the full benefits of loyalty programs. Brands running more sophisticated loyalty programs understand this and recognize the value of getting their best customers to shout about their offering. They give these customers tailored rewards based on their behavior, their preferences and their rank in the overall loyalty system.

And as they come to understand customers and begin to build up a history, they’ll also come to understand the kinds of communication that they tend to respond to. The overall aim is to issue personalized rewards. Take Christmas presents as an example, rather than confetti: they should appear to have been selected specifically, they should be something the recipient likes and will use, and they should arrive at the right time – not on Boxing Day! Treat them accordingly, and your customers will keep coming back.

Crossing the channels

Of course, to hit this new gold standard of loyalty, brands must understand the particular preferences of their target audience and develop a single customer view (SCV). Consumers must feel like they’re getting something back when they interact with you, when they promote you, and when they repeatedly buy from you.

Brands that understand customer loyalty in marketing understand that the initial purchase isn’t just a single, open-and-shut transaction – but potentially the beginning of a long conversation that spans products, channels, and years. If you can reflect the offline experience in an online format such as an app, for example, you’ll make life easier for customers. Rewards and loyalty points can turn a customer complaint on social into a neutral or even positive experience that encourages repeat business.

A SCV will help you develop these capabilities by joining the online and offline data buckets. You should be looking at implementing some sort of customer data platforms (CDP), which eases the process of collecting and analyzing this information with minimal latency. The most up-to-date insights will help you deliver an up-to-date experience – and appropriate rewards – to customers, and they’ll make sure your marketing efforts can keep up when buyer behavior changes.

It can occasionally be difficult to make the case for interaction-based rewards: it’s a non-transactional kind of loyalty and the immediate benefits aren’t always clear. But look at brands like Abercrombie & Fitch, which are using interaction programs to show that they value customer time and money. Look at cosmetic companies, which reward customers for using their preference center to identify their preferred dyes, styles, and colors. You get better information, and more of it; the customers get personalized offers and rewards – and the loyalty program is given the scope and the space to get better over time.

It’s not personal – it’s individual 

Post-GDPR, it’s more important than ever to ensure that customers are given a distinct reason to interact with your brand. When they offer you their personal data, your obligations go beyond ensuring that it’s not misused – it must be used in a way that creates value and encourages repeat custom.

In other words, customer loyalty in marketing is now about individualization, rather than personalization through an SCV that’s comprised of hundreds of different data points: all offered willingly, and with a clear expectation of a meaningful reward.

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