Delivering a 1:1 Experience with Personalized Offers at Scale: Q&A with Formation CEO Christian Selchau-Hansen

In a rapidly changing digital world, it can be a significant challenge for marketers to get their message across when every brand is trying to capture consumers’ limited attention. This challenge is only made more difficult by the need for personalization, and the realization that blanket discounts, offers, and communications will not work for brands looking to drive positive customer experiences and customer loyalty. 
 
Founded in 2015, Formation partners with brands to automate the deployment of individualized offers across digital and physical channels at scale. With dynamic offers, brands can continually build deeper relationships with customers and program members over time, instead of pushing out mass communications and offers, hoping that one may stick. 
 
To learn more, Loyalty360 interviewed Formation’s Christian Selchau-Hansen to better understand how brands can make a transition for mass offers and discounts, to personalized experiences that can build long-term customer loyalty. 

Can you tell us a little bit about yourself? Your role with the company now and your background?  

I’m a co-founder and CEO of Formation, a proud dad, an analytics junkie and a passionate advocate for creating sustainable, local, journalism. 
 
The founding of Formation was a culmination of more than ten years of my career as well as a love of engineering and economics. While at Zynga, I focused on data insights and product, including a stint where I worked to measure fun for online games. The result was a great appreciation for what makes a great game. For a game to be fun - human beings need to see progress, and the effort should be challenging, but not frustrating. It seems simple at first, but it’s a powerful principle that I believe holds true for many parts of life.
 
It was this principle that got me really thinking about how to improve a customer’s experience. I joined BCG Digital Ventures in the winter of 2015 as an entrepreneur in residence, with the aspiration of finding a problem and solution worthy of a new company. That same year Starbucks set the goal to become the world's most personalized brand and sought a partnership with BCG to make it happen. It was kismet.
 
Now that we’ve established who we are as a company, I'm focused on growth. Growth of our market and category, our platform capabilities and our customer base.

Can you give us a brief overview of Formation? What problems do you solve, how you do it, industries you work with? 

For years, brands have been reliant on mass discounts to acquire and retain customers. It creates two problems: 1) existing customers are trained to wait for large discounts, making it almost impossible to drive new behaviors and 2) new customers demand deeper, richer, more personalized experiences so mass discounts don't help to drive any brand equity or loyalty. 
 
Formation helps brands make the transition from mass discounts to personalized offers with data-driven personalization and optimization. Our patented technology has driven over $2B of incremental revenue and powers dynamic offers for some of the world’s largest brands such as United Airlines, Giant Eagle, and Smiles. 
 
Our mission is to help every brand create evolving, lifelong relationships with their customers, so brands can achieve long term business success.  

What are the key features of Formation’s platform, and what sets you apart from competitors? 

Formation’s Dynamic Offer Platform automates the execution, fulfillment and measurement of personalized offers at scale. Marketers build campaigns focused on a specific business objective from a wide range of single-action or multi-action offer types. The platform then automatically generates a unique offer for each customer within the guardrails determined by the marketer and continuously optimizes each campaign automatically, enabling the marketer to focus on gaining new consumer insights and designing campaigns to new business objectives. 
 
Formation’s platform integrates with your existing marketing stack to ingest and process data from your customer data platform, deploy campaigns through your existing distribution channels and fulfill rewards through your loyalty systems.
 
There are three capabilities that set us apart from the competition. 

  1. Flexibility: Our Offer Engine enables marketers to create highly-engaging, gamified experiences throughout the customer journey - including steps that span across multiple transactions and include just about any digital event. 
  2. Scale: The platform automates personalizing each offer and can create millions of unique offers in minutes. 
  3. Optimization: Our patented platform is able to continuously optimize campaigns to improve their effectiveness over time without manual effort. 
Many offer engines can create one-off segmented offers, but only Formation creates dynamic, gamified offers that automatically get better over time. 

Recently, Formation announced enhanced platform capabilities for dynamic offers. Can you tell us a little bit more about the “Three-Step Offer” and how brands can leverage this capability to engage customers? 

The addition of the Three-Step Offer to Formation’s offer catalog enables marketers to create personal gamified offers out of any three actions, selecting from both transactional and non-transactional actions. The launch of this offer type provides marketers with a range of benefits:
  • Deepen relationships with customers because they build fun multi-step journeys that result in larger rewards to the customers and benefit to the business
  • Increased flexibility - marketers can now combine digital non-purchase & purchase actions into a single cohesive experience
  • Immediate feedback/improved customer experience - as soon as a qualifying action has taken place, the customer can see they’ve progressed and relevant rewards can be distributed. No need for manual work to create those updates.

What types of actions (steps) could – or should – brands ask customers to complete as part of the “Three-Step Offer”?

Dynamic multi-action offers can be powerful because they enable marketers to engage customers not only across the traditional transactional use cases (buy now, or buy this week) but are now able to target non-transactional behaviors such as: registering for a loyalty program, downloading a mobile app, completing account profilts, referring a friend, writing a product review, etc.

What are the key benefits of Formation’s dynamic offer capabilities? How do these capabilities compare to how some brands are currently trying to connect with program members? 

Some of the key benefits of our platform include:
  • A Comprehensive Offer Catalog - A rich catalog of offer types that enables brands and their marketers to engage their customers in new ways and meet specific business objectives such as increasing frequency, driving second purchase, category exploration, and digital onboarding.
  • Automated Generation of Personalized Offers at Scale - Formation automates the creation, fulfillment, and measurement of dynamic offers taking your Time-To-Offer (TTO) from months to minutes. Our platform creates millions of offer variations using automated machine learning so loyalty marketers have more time to focus on the strategic elements of their program.
  • Multi-Step Offers - The industry’s only patented and personalized multi-step offer. Multi-step offers gamify both transactional and non-transactional experiences to drive a variety of business objectives like increasing frequency and spend.
  • Drive Incremental Behavior - Loyalty marketers can explicitly define and target incremental behaviors such as spend, visits, and engagement at the individual level in order to maximize revenue from each customer.
  • Continuous Offer Optimization -  Our platform’s machine learning powered offer optimization functionality automates your campaigns to get continually smarter over time adjusting offers to maximize Customer Lifetime Value (CLV).
  • Metrics & Insights - Our comprehensive dashboard provides key metrics for the offer funnel, engagement, consumer spend and overall campaign KPIs over time. Loyalty marketers gain key insights and can put them into action quickly.
  • Tech Stack Agnostic - Our platform easily integrates into your existing tech stack allowing organizations to leverage marketing, loyalty and other customer data sources through open API surfaces.  This ease of integration jump starts the journey to highly enrich personalized and dynamic offers with every insight available.
Formation’s capabilities are complementary to the other ways brands are connecting with their loyalty members. Rather than replacing an existing solution, Formation improves your offer strategy by removing manual work from loyalty marketers and other parts of the organization, creating continuously relevant offers for customers, and improving the efficiency of the brand’s rewards. Our focus is on helping brands innovate on the processes and technologies already in place. 

Personalization and emotional loyalty are popular topics within our brand community. How can dynamic offers provide a more personalized experience, leading to building emotional connections with loyalty members? 

Forrester’s Customer Experience Index shows three emotions bind customers to brands: appreciation; happiness; and feeling valued. Since emotions drive behavior, brands that create an emotional connection with customers will be better positioned to engage modern consumers.  
 
Dynamic offer platforms ingest all available customer data, use machine learning to analyze that data and provide a balance of highly-personalized rewards and non-transactional actions the consumer can use or take, which then builds that emotional relationship. When customers do receive a reward, it’s commensurate with both the action they were asked to take, their previous purchase history, and the information they’ve provided the brand in the past. These types of offers give customers the relevance and value they’re craving from their favorite brands, and brands can stretch customers into new categories or more frequent purchases, preserving brand value and still giving marketers a tool to enable customers to discover new and valuable elements of the brand. 
 
This means customers get more of what they want, while a brand increases their revenue. Everyone wins. 

Could you give an example or two of how brands leverage dynamic offer capabilities? 

One great example is a multi-billion dollar grocery chain, that included grocery, gas station and convenience store brands, who wanted to differentiate themselves from larger national competitors. They focused on turbo-charging their loyalty program by: 
  • Creating personalized journeys for their customers, featuring individualized offers with different actions and rewards based on previous purchases; and
  • Creating a unified digital journey that provided a seamless loyalty experience between gas stations, convenience stores and grocery stores. 
The chain’s business objectives included fostering engagement and loyalty to increase overall and frequency of spend across all three brands. By shifting from a product-centric marketing model to a customer-centric model, the chain decreased focus on a coupon program that is much more common across the industry. But the results included the following:
  • Increased average revenue per customer per visit by $5 
  • Customer visits to stores increased by up to 10%, including cross-visits from grocery to gas station to convenience store 
 
In addition, the chain was also able to increase their offer creation speed by 90%. Prior to installing Formation, it took an average of 14 weeks for the company to create one static offer. 

How do these recent enhancements to the Formation platform help your clients drive long-term loyalty with their best customers? 

A dynamic offer capability helps clients drive long-term loyalty because of our platform’s unique ability to personalize each game experience. As soon as our customers send through their transaction data, our Dynamic Offer Platform automatically creates millions of personalized multi-step offers - ensuring high relevance and value to each customer. 

This relevance and value deepens the ongoing relationship with customers, increasing the emotional connection between the brand and it’s customers, ultimately leading to long-term loyalty.
 
 

Recent Content

Membership and Pricing

Videos and podcasts

Membership and Pricing