In 2023, Loyalty360 asked supplier-member experts to weigh in on the impact of data and privacy regulations in the U.S. and abroad—e.g., the California Consumer Privacy Act (CCPA) and the European Union’s General Data Protection Regulation (GDPR)—and how these regulations could affect how brands gather and leverage customer data in support of loyalty program strategies and efforts.
Seeking an update on how brands have adapted, Loyalty360 reached out to experts partnering with brands and brand marketers to learn their perspectives on the current state of customer data and privacy and how brands are approaching challenges brought about by proposed/enacted laws and new regulations.
Article contributors:
· Don Smith, Global Consulting Officer and Chief Marketing Officer (CMO), Brierley – Capillary
· Peter Vogel, Chief Revenue Officer (CRO), vPromos
· Tim Glomb, VP Digital, Content & AI, Wunderkind
New Observations
In the past nine months, successful brands have adapted and made changes to how they collect customer data and how they leverage it to shape customer loyalty strategies. Wunderkind has observed a notable increase in clients who are more interested in collecting first-party data and, in particular, how to collect it at scale.
“We’ve also seen a massive increase from brands—from all revenue brackets—researching identity resolution solutions so they can increase their marketable databases by recognizing and converting more anonymous traffic into opted-in consumers along with their zero- and first-party data,” says Wunderkind’s Glomb.
Many brands have proven adept at responding to changes in privacy laws and pivoting to develop more customer-centric approaches to data collection. Brierley – Capillary’s Smith notes that loyalty programs are proving to be tremendous enablers of zero-party solutioning.
“Many of our brand clients have placed increased emphasis on member profiles and preference centers, incentivizing completion and mapping these declared data attributes to personalized communications and recommendations,” shares Smith.
Smith goes on to explain that the brands his company works alongside are also deploying more voice of customer research, rewarding program members for sharing opinions and recommendations, and tying survey responses back to larger data repositories, with an emphasis on proportionate sampling methodologies that aim to wean brands from third-party and appended data sources while relying instead on data points shared directly and openly by their consumers.
“There is also renewed interest in creating clubs and lifestyle platforms within loyalty/engagement programs, with members opting-in to groups based on need state and interest, enabling communication vehicles that are more relevant and tailored,” adds Smith.
For example, one of Brierley – Capillary’s international clients is implementing a grocery program, and members can join thematic groups, including “Mom and Baby,” “Chill Club,” “Wine and Spirits Enthusiast,” “Vegan Collective,” and more. Offers, perks, and communications are club-specific, enabling an authenticity that appeals to both consumers and consumer packaged goods (CPG) partners willing to invest in the new lifestyle enclaves.
vPromos’ Vogel believes text messages are the new email, and text messages often have a 98% open rate versus common email open rates of 20%. He emphasizes that compliance with federal guidelines is key.
“Marketers need to understand the Telephone Consumer Protection Act (TCPA) or face potential class-action lawsuits. In essence, the TCPA is to SMS Marketing what the CAN-SPAM Act was for email,” says Vogel.
Brand Innovation and Customer Empowerment
Savvy brands are collecting zero-party data, as well as first-party data, to better understand their customers and truly personalize owned channels such as email and SMS. Glomb notes that brands, such as global fashion brand Kurt Geiger, have doubled their email and mobile collection rates by using identity resolution partners. This allows them to smash their top-of-the-funnel marketing KPIs while filling the bottom of the funnel and driving an increase in direct-to-consumer revenue through triggered and personalized email and SMS.
Smith believes zero-party data collection is increasingly overt, incentivized, and, ultimately, serves consumers’ interests. Innovation in consumer research, member profiles, preference centers, and lifestyle groups is advancing the “Age of the Consumer” and empowering customers to have more say in how brands engage with them.
“The results are compelling, leading to increased emotional loyalty and lifetime value among consumers who avail themselves of these new solutions,” adds Smith.
Some Brands Are Vocal, Most Are Not
One of Maine’s most recognized brands, outdoor retailer L.L. Bean, went to the state capital to voice its opposition to a data privacy bill introduced in May 2023. L.L. Bean claimed the bill would create “unnecessary burdens” for companies.
Still, many brands have not openly shared their concerns regarding how privacy laws or regulations might markedly—or adversely—affect how they leverage data to remain competitive. Moreover, the experts tapped for this article have not witnessed many brands criticizing proposed laws or regulations publicly.
“Our clients have not been terribly vocal in opposing new privacy laws, placing their emphasis instead on compliance and empowering consumers and program members through more authentic and personalized mechanisms that enable lifetime loyalty,” says Smith.
A “Cookieless Future”
Brands have come to terms with the fact that they must operate in a “cookieless future” (i.e., loss of third-party cookies), which means they will lose some insight into customer behaviors, such as online searches, devices used, or even clicks. Many brands have pivoted their focus to zero- and first-party data collection, which is a viable solution.
“Our clients understand their customers are receptive to marketing messages and want relationships with brands—customers simply want more control and more relevance,” explains Smith. “Zero-party data paves the way for true personalization, enabling clienteling tactics, tailored perks, and authentic dialogue.”
There are certainly challenges in getting customers to complete profiles and preference centers as well as take surveys, and not all customers are going to be willing to do so—a reality to which brands are adapting. Smith reports that zero-party penetration rates are increasing as a function of incentivization (e.g., rewards for profile completion) and from shifts in consumer reaction as they see brands honoring the social contract of declared data assets through more relevant communications and benefits.
Glomb believes most brands struggle with collecting zero- and first-party data because they lack with how to approach customers.
“The tools to collect this data have existed for some time, but many are new to the idea,” he adds.
Brands offering a value exchange with the end goal of opting in consumers and learning more about them are successful when they market that value exchange everywhere—in their advertisements, in their normal newsletter or owned channel communications, on their websites, via influencers and social media, and during post-purchase surveys.
From Vogel’s perspective, credit cards are the new ‘cookie’ that provides automated and seamless tracking.
“Marketers and loyalty program managers are now often directly tracking members’ credit card purchases in order to provide rewards or discounts,” says Vogel. “Customers can opt-in to allow tracking in online programs or even at the point of sale during an in-store transaction.”
What the Future Might Bring
Looking ahead, Loyalty360 asked the experts if they believed other data collection restrictions would have an impact on how a brand gathers, maintains, and leverages customer data. Brands need to learn what they can do to prepare and stay ahead of potential limitations while seeking a better understanding of future potentialities.
Smith encourages brands to keep empowering their customers with data collection tactics that are open, honest, and voluntary.
“There will certainly be additional restrictions imposed, ranging from expanding Children’s Online Privacy Protection Act (COPPA) provisions and social media linkages to truncated timelines on data warehousing and further limits on affiliate marketing practices,” shares Smith.
He believes these expanded changes should be welcomed and embraced by loyalty marketers and consumers alike, as each clearly benefits from data practices that are open, authentic, and empowering.
Glomb sees the death of Google’s third-party cookie as shaking many marketers and brands to the core.
“Even ones that believe they are prepared will find disruption headed their way,” asserts Glomb.
To minimize any disturbance, he advises brands to invest in partners who have both the technology and expertise to help collect, manage, and activate first-party data.
“Identity resolution is also an area brands should explore to harness and convert their anonymous traffic to opted-in, known consumers that they can reach through owned channels, such as email and SMS, at a fraction of the cost of paid remarketing,” finishes Glomb.
See also New Data and Privacy Regulations in the U.S. Will Impact Brands—Are They Ready?