Customer Loyalty: The Gift That Keeps on Giving

Posted on by Brian Quinton

Loyalty efforts traditionally provide rich amounts of data on a member’s transactions. Transaction data, however, only reveals what a loyalty program member is currently buying. Transaction data rarely provides insight on what else the member could be buying, the reasons behind the purchase or what differentiates this customer from others.

Trying to learn from transactions alone is like receiving a gift without knowing why or who gave it to us. We want to thank the person for the gift and let them know how much it’s appreciated. We want to know more about the giver so we can give them something in return. The more we know about them, the more value we can provide in future interactions with them.

Seeking and applying data in loyalty enables marketers to understand who gave the gift, which in this case is a purchase. Identifying and gaining information on the customer allows marketers to learn more about them in order to make each interaction more relevant and valuable.

Good loyalty marketers engage members to gain information about their interests, hobbies, lifestyle and lifestage, as well as when and how they prefer to be contacted. Marketers often refer to this type of information as self-reported profile and preference information.

Customers respond well when asked to complete a profile and indicate their preferences, especially if they perceive value from the effort. To demonstrate value, smart marketers begin the process with a few key questions, which should trigger a predefined plan for an immediate response. For instance, a question about interests should lead to a reply with information on specific products or services that align with each interest identified by the customer.

Response speed is important. The faster the response, the stronger the linkage made between providing the information and the value gained by the customer. Too often, surveys are conducted or preferences are captured and nothing happens. The same undifferentiated marketing campaigns and message cadence continues. Customers become wary. If this happens, an incentive may be required to get the sharing started.

The key is to demonstrate how the information customers provide and will improve their experience with a brand. If customers indicate their interests are sports or cooking, they will expect to be provided offers, benefits or award options aligned with these interests. The more marketers can demonstrate the use of the information they’re asking for, the more willing the customer will be to share.

Third Party Information Helps

When people give us gifts, we want to be able to give them a gift in return, so we set out to learn more about the giver. We talk to their friends or others that know them. For loyalty marketers, the "friends" are other brands or organizations that also interact with the member.

There are numerous sources for this third-party data, such as data firms that can provide demographic, psychographic and socioeconomic information. Typically these companies need a name and physical address, or sometimes just an email address, to match to customer records in their system. Once a match is made, these firms provide information based on the needs of the marketer to help fill gaps in the customer’s file.

Marketers can also gain information by suggesting promotion or co-marketing opportunities to their partners or other companies that serve loyalty members. Such efforts are commonly done in cooperative marketing campaigns between companies that have the same target customers but offer different products or services.

For instance, a hotel chain might partner with an airline to target international travelers. Such partnerships allow the hotel chain to offer more appropriate rewards and marketing collateral that reflects its loyalty members’ interests while enriching both its own and the airline's data repositories.

Marketers should take care when sharing information because of privacy concerns and privacy policies. Does your organization’s privacy policy cover sharing customer information with third parties? If it doesn’t, your cooperative marketing efforts may be limited to making offers to your customers on behalf of a partner. In this case, you identify who might be interested in the partner’s products and make the offer in a communication you send to your customers.

Even if your company has a privacy policy that allows data sharing, it should only share the information needed to accomplish the marketing program. You might provide a name and address list of customers that match a given profile to a partner with a clear understanding of how the list will be used, the number of times the list can be used and for what purpose. To monitor the practice of your partner, include some ‘seed’ names in the file so you can monitor the list usage.

Join Your Customer's Social Circle

Lastly, when a marketer knows its customers, it wants to become part of the customers' social circles and be in touch with them on a regular basis, such as by connecting with them on social networks. Social networks are rapidly becoming an information source for today’s customers. Across their networks, they share what they like and don’t like, how they use a product or even how a product or service has failed them. Customers learn through their networks. If you can add to the learning, you simultaneously provide and gain value.

Marketers can also use social media to invite feedback. Gaining feedback from loyalty members allows a marketer to capture new data while engaging them. Marketers can ask program participants for reviews of recent purchases, opinions of the locations they visited or suggestions for future promotions. Feedback also helps marketers shape the conversations taking place about their brands.

Many interactions with marketers' brands occur online. These interactions reveal data points and preferences that can help the marketer enrich the customer experience. Data collected through social media can help identify key topics or keywords that can be used in marketing communications. Monitoring online conversations can also improve customer service.

Loyalty is about building relationships. Information, or data, is at the center of the personal relationships we form every day. As marketers we need to focus not just on collecting data. We need to constantly use data to inform and improve the relationship between our brand and customers.

That said, marketers must be respectful of the information they collect, how they collect it and most importantly, how they use it. Use information that doesn’t come directly from the customer or interaction between a brand and the customer to enhance marketing messages, but be careful about building a message solely on third-party information. If a stranger were to begin a conversation with you with a piece of personal information, would you be skeptical or uneasy?

Conversely, if the conversation begins with an introduction and conversation, that same person could bring the same personal information up and you probably wouldn’t be as concerned.

An even better tactic would be if the person posed a question around the personal information, thus giving you the opportunity to provide the information yourself. This is good because it accomplishes two goals: First, it poses the third party information in a non-threatening way. Second, it allows you to confirm the accuracy of the information.

By using the information collected to create mutual value for a loyalty marketer and its members, loyalty programs become the gift that keeps on giving.

John Bartold is VP of Loyalty Solutions at Epsilon

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