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Catherine Malone, content manager of CrowdTwist, sat down with Loyalty360 to discuss the results of a survey of customers’ perceptions about brands and loyalty programs. CrowdTwist is a provider of a loyalty and engagement solution that drives incremental spend, leading to better customer data, stronger insights, and more personalized experiences. It helps brands, including Pepsi, 24 Hour Fitness, and Zumiez, develop a deeper understanding of their customers.
What is your research about?
I can give you an overview of some of the questions that we asked. We did a consumer study, an extended survey of just over 1,000 people. We tried to do an even mix of male and female. We didn’t put any restrictions on age. We wanted to gauge what makes consumers loyal, to gauge their interest in emerging technology, like facial recognition technology. We also wanted to get a sense of how they feel about sharing their data, because obviously there are a lot of concerns about sharing data these days. We also wanted to understand what makes for a better shopping experience.
So, this is actually the first report that we’re releasing on the research and we’re going to do another report in September, which will seek information about different generations. This one, however, is mainly focused on the fact that, compared to our research from last year, fewer people are willing to share their data with brands in exchange for personalized experience. Also, we’ve learned that, for a lot of brands, their personalization techniques aren’t working effectively. That’s something that we wanted to bring into focus. We also wanted to argue that loyalty program participation is really high and that can provide a good opportunity for brands to get consumer info and share really rich data and start to offer better personalized experiences based on that data.
Are consumers less willing to share data with everyone? Or are they only willing to share it with a finite set of brands?
So, we did a research report last year that focused on Gen Z and Millennials, and we asked them the same question then that we did now, which was, “Are you willing to share data with brands in order to gain a personalized experience?” Last year we found that the overwhelming majority said, “Yes,” which was 98 percent. This year it’s closer to 50 percent. This demonstrates that there was an erosion of trust between brands and consumers.
Do you think that has to do with the Cambridge Analytica and the Facebook issues?
All of them. At the start of the report we touch on that. We give a list of ideas about why we think this erosion has occurred, about why consumers are a little bit more skeptical. What’s interesting though is that loyalty program participation is really high.
How are you measuring that?
We asked about participation in the survey. We found that around 78 percent of respondents are active in at least one loyalty program. Also, reward redemption is really high. So, if you’re redeeming rewards, then you’re obviously very active in a program.
How many questions did you ask?
We had around 38 questions, I think. Definitely between 35 and 40.
Do people who participate in a loyalty program realize that there’s an implicit understanding that they’re going to be sharing data with brands?
On the survey, we did outline what a loyalty program is and what is considered active participation. We also asked respondents what their favorite loyalty programs are, what they’re active in, and why they like those programs.
What were some of the favorite programs?
Kroger, Kohl’s, Amazon Prime, obviously. Dunkin’ Donuts, Starbucks.
Did respondents give reasons as to why those were their favorite programs?
Yes. Respondents chose Amazon Prime for the product selection and pricing, free shipping, free returns, access to streaming services, the new pantry, and wardrobe offerings. Consumers chose Kohl’s for its prices and product selection, discounts and cash back, and how easy it is to earn rewards. For Kroger, they cited personalized coupons and discounts on food and gas as the main drivers of their participation.
Why did you conduct the report?
We were trying to find out what consumers want from a loyalty program. We sought to determine which means of engagement are more effective, for example. We also wanted to learn how people are shopping. We believe that loyalty programs should be omnichannel and that brands should reach out across all channels. We weren’t expecting the percentage of people who are willing to share data to be so low, however. That was something we thought would be most interesting to highlight in this report.
But if customers are participating in loyalty programs, and if those loyalty programs are well constructed, they understand that they are, in fact, sharing data to get more personalized offers?
Yes. So, we even asked questions like, “Which engagement activities are you willing to complete as part of a loyalty program?” About 89 percent are willing to complete a survey, people are willing to visit a website, and people are willing to play a game. So, I think that brands have been collecting data in unethical ways and that’s been an issue. Consumers are still finding a lot of value in loyalty programs, and these programs are providing brands the opportunity to collect the data that consumers want to share. Its permission based.
What do you mean by “brands are collecting data in unethical ways?”
Well, what’s been happening in the news in the past year? All the breaches are coming to light and Cambridge Analytica and whatnot. I feel that consumer data is being shared and they’re not knowing about it. Loyalty programs are offering a way for consumers to have control over the data they’re sharing.
With Cambridge Analytica, though, that was more of a Facebook issue, correct? Are there specific examples where you think brands themselves are being disingenuous?
I think it is very telling that the personalization that brands have been doing doesn’t seem to be working. Only 34 percent of the consumers we surveyed said that they purchased something that was recommended to them in the past six months. I think that’s very telling and I think, just generally, there’s big news which you don’t know if you should believe, and we’re being targeted with ads that aren’t relevant. So, there’s this sentiment that brands are putting out so much content that a lot of it isn’t relevant.
The benefit of a loyalty program is to get customers in direct communication with the brand. That way a brand doesn’t need to go through a third-party to collect data. Is this something you think that all brands should be doing to try to find a highly engaged audience?
Yes, absolutely, and that’s why we wanted to ask respondents about their experiences with loyalty programs. That way we can get a better idea of how brands create that unique, one-to-one relationship.
If you were to suggest one thing that brands can do to improve personalization, what would it be?
One thing we’ve learned is that customers are willing to share information, they are willing to complete surveys, but they have to be in control of what they share. I also think it’s interesting that personalization is obviously happening, but that it’s not as effective as you would hope at this level. It’s not at the point where it’s sophisticated and customers are seeing relevant offers promoted to them. So, I think that brands should be aware of that as well.
And do you think that there are certain brands that do personalization well?
I think it’s telling that Amazon Prime is a well-oiled machine, that it is the top-rated loyalty program with our survey respondents. There’s a lot of other reasons that consumers choose Amazon Prime. It has a lot of great perks like free shipping and two-day shipping and free returns and things like that. I think they’re one of the best at personalizing for consumers, at making relevant recommendations.
The full report can be accessed at http://resource-center.crowdtwist.com/blog/earning-consumer-trust-with-omnichannel-loyalty.
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