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Leveraging digital channels to meaningfully engage customers has become critical for brands to thrive. Interacting in “the digital space” allows brands to deepen relationships with customers by demonstrating through personalization that customer expectations and preferences are heard. Personalization is no longer a “nice touch” — it’s a vital component in a brand’s customer loyalty strategy. Elevating individual customer experiences or failing to do so can be the dealmaker or dealbreaker. Customers can choose a brand’s competitor with a click.
Engagement through personalization and unique customer experiences can be cultivated using powerful emerging technologies like artificial intelligence (AI), machine learning (ML), digital collectibles/non-fungible tokens (NFTs), and marketing automation. However, integrating new technologies into a customer loyalty strategy to meet or exceed organizational goals can only achieve success by effectively tapping into consumer-generated data to reveal what is important to customers. Within the data lies the key to building long-lasting emotional loyalty.
Loyalty360 spoke with supplier members and loyalty strategy experts about the new technologies impacting customer loyalty, creating emotional connections with customers in the digital space, and measuring the ROI of digital engagement initiatives.
Eric Dean, Head of Platform Partnerships, Banyan
Mike Nolan, VP, Marketing, Banyan
Parker Noren, CPO, Banyan
Kristen Schrenkeisen, Sr. Strategist Loyalty & CRM, Bounteous
Chris Barnett, VP of Strategic Consulting, Kobie
Sam Panzer, Director Industry Strategy, Talon.One
The Rise of Digital
The rise of digital engagement has transformed the traditional notions of customer loyalty. In response, brands are launching or redesigning their strategies to build and maintain customer loyalty in the digital age. While opportunities allow brands to increase personalization, thereby generating a deeper level of engagement with customers, only those leveraging data to build strategies will find success.
Kobie’s Barnett sees digital engagement as redefining customer loyalty by shifting the focus from only offering great products and in-store experiences to delivering personalized and unified touchpoints across all digital channels.
“Digital allows brands to leverage data-driven insights in real-time to power smart apps, creating seamless and timely interactions to keep members engaged wherever they are, online or off,” says Barnett. “Some are even moving into the next phase of digital engagement with Generative AI and NFTs.”
Digital channels hold immense potential for brand engagement and loyalty when businesses combine relevance and value in their offerings. Banyan’s Nolan points out how one-sided approaches fall short of capturing today’s consumers.
Nolan cites card-linked offers as an example and notes how retailers leverage banks’ digital platforms to entice cardholders with shopping deals. Using detailed item-level purchase data, leading retailers can craft personalized shopper incentives, such as discounts on complementary products based on past buying behavior.
“These tailored offers not only expand retailer sales but can also protect margins in contrast to whole-store shopping offers,” Nolan adds. “The outcome is a fusion of value and relevance that resonates with shoppers’ preferences and habits, conveyed through shopper-preferred digital channels to forge a deeper connection to and stronger loyalty for brands.”
The shift to digital has increased engagement in traditional loyalty and allowed for more meaningful connections. Bounteous’ Schrenkeisen observes that within the traditional model, brands were limited to broad transactional benefits that rewarded customers with loyalty currency for shopping. Now, brands can personalize experiences to engage and interact with customers in ways outside of discounting that can resonate deeply with loyalty members. Schrenkeisen shares some examples: digital badges, social bragging rights, personalized offers, and personal messages or kudos.
Successful brands continue to realign loyalty strategies to infuse more personalized offers and experiences into their core structures. Engaging employees to help build emotional loyalty can be part of the process. Tapping into the power of brand enthusiasts is another.
“Many are finding new ways to create community within their programs by empowering employees to celebrate customers, in-person and across digital properties, while some of the most advanced brands, like Peloton, are deepening emotional loyalty by allowing customers to engage and compete with each other,” Schrenkeisen finishes.
The Competition — Only a Click Away
To combat attrition, effective marketing and loyalty teams leverage digital channels to engage customers, create emotional connections, and foster a sense of brand loyalty. They also use customer-generated data to create seamless personalization throughout the customer experience.
“Customer data is the game-changer here,” says Barnett. “When brands use digital channels to deliver those personalized, spot-on experiences, they don’t just grab attention; they create an emotional connection. The brands that are nailing it are using data analytics to fine-tune these interactions, making it tough for competitors to lure their best customers away.”
Schrenkeisen highlights how creating premier customer experiences across every customer engagement can build brand loyalty. Companies that place customers at the center of their digital strategy and design experiences to delight them foster brand and emotional loyalty.
“Make the digital experience EASY to use,” says Schrenkeisen. “Customers crave convenience and experiences that provide solutions to their needs. Digital engagements need to be fast, frictionless, and fun to win brand loyalty.”
When it comes to recognition, even a little can go a long way toward building a sense of brand loyalty. Schrenkeisen encourages brands to actively recognize customers by acknowledging their preferences or tailoring offers/experiences to their previous behaviors. Loyalty members want to know they’re seen and valued — sometimes, a sincere “thank you” is enough.
Mobile devices have become central to digital engagement. With many consumers choosing to use their smartphones as their primary device, brands optimizing mobile experiences to create value, convenience, and lasting loyalty among on-the-go customers will build a deeper brand-customer connection.
Barnett believes brands have seriously upped their game in mobile apps, going beyond the usual points-for-purchases to offer real, tangible benefits that stand out, citing one-click ordering, personalized gamification, life-altering convenience, and exclusive access to content or experiences as examples.
“It’s this kind of app experience that keeps customers not just engaged but genuinely loyal, even when they’re on the move,” he adds.
Schrenkeisen advises that brands keep mobile experiences simple and easy for all users to use, infusing fun where possible, and giving members a reason to engage daily with the brand’s app to help generate customer loyalty.
“Mobile experiences give brands an opportunity they’ve long coveted: meeting customers everywhere they are,” says Schrenkeisen. “The key to maximizing mobile engagement is understanding where and how customers are using your mobile properties to provide the most relevant experiences.”
Engaging Gen Z and Millennials
Gen Z and Millennial generations have grown up in a digital world, and their expectations and behaviors have indeed influenced businesses’ digital engagement strategies. Brands must determine how to keep this younger audience engaged and secure long-term loyalty.
“Gen Z and Millennials, as digital natives, aren’t just hoping for easy, instant, and personalized online interactions with brands — they expect it,” affirms Barnett.
With a mobile-first approach, brands can leverage digital engagement strategies like personalization, community building, user-generated content, convenience features, and gamification to create real-time engagement between and during purchases. Barnett reminds brands that while digital, they should inject a human feel by being authentic, transparent, inclusive, and purposeful in their online interactions.
Schrenkeisen sees what seems to be a bit of digital burnout across both generations and notes that Gen Z explores ways to set boundaries when it comes to digital experiences. This can be seen in the resurrection of the flip phone and the newest trend, “silent walking” — or walking without a device to clear their heads. Millennials, who grew up alongside brands and experienced the technological awakening, seek new ways to balance legacy technology while exploring new digital experiences that better serve their changing needs as professionals and parents.
“Winning the loyalty of these generations must go beyond frictionless experiences. It needs to respect their boundaries and resolve their needs,” Schrenkeisen asserts. “We saw this with TikTok, which largely took off during the pandemic and only continues to gain momentum. During pandemic lockdowns, Gen Z primarily had a need to connect. TikTok resolved this by providing a frictionless video-based social media experience connecting them to their peers without leaving their homes.”
Furthermore, Schrenkeisen believes companies can prepare for this generational shift by building data structures that support listening to their customers and actioning on that information to address their needs. First- and zero-party data collection is critical to understanding customers’ desires in order to provide highly relevant experiences, respect boundaries, and break through burnout. Brands must take action on data in a meaningful and recognizable way for the customer.
Digital Engagement ROI
Measuring the ROI of digital engagement initiatives can be complex as brands determine what metrics and KPIs should be used to assess the impacts and effectiveness of their digital engagement efforts on customer loyalty. Traditional KPIs — conversion rates, customer acquisition, revenue, etc. — remain important, but there are others for brands to consider now.
Talon.One’s Panzer believes that, where possible, loyalty operators should be equipped with comparable cohorts to note any change in behavior after a new engagement strategy is rolled out. Continually building benchmarks on the impact of specific engagement initiatives (like a push on SMS engagement) is also important for operators to build assumptions of the financial impact of given campaigns or projects. This also helps the organization learn what’s working and what’s not so that it can continually improve its digital marketing work.
“When it comes to measuring the ROI of your loyalty program in particular, it’s crucial to compare metrics between members and non-members, such as Average Order Value, Site Conversion or Messaging Conversion of your customer outreach,” Panzer explains. “This is key to understanding how engaged your loyalty program users are compared to non-members.”
For Banyan’s Dean, a key metric and KPI that merchants should focus on is the cost of acquiring a customer or sale and driving an increased efficiency in acquisition.
“To meet or exceed these KPIs, aligning with the right partner will make the difference in being able to change crude data into a more qualitative selling point that can enable targeted sales with new products and seasonal products if that is what your business focuses on,” Dean says.
Merchants who usually have exclusion or product segments like gift card or pharmacy can drive increased profitability and no longer just pass-through costs or have products that are drags on margin.
Dean offers examples. “When you use this metric as a KPI to enable targeted sales, a pharmacy merchant can promote flu, cold, and cough products, a breakfast QSR can promote new breakfast items, and an online flower merchant can provide more bouquets for holidays in their channels to all new and existing customers and thus better understand efficiency in acquisition.”
Measuring the ROI of digital engagement isn’t easy, but Barnett sees it as essential for making savvy investment decisions.
“Brands can’t just look at the usual suspects like response and conversion rates, ROI, or session duration; they need to watch ‘big picture’ metrics like benefit utilization, NPS, CLTV, and retention rates,” says Barnett. “That way, they get the full 360 on how well they’re doing at building enduring customer relationships.”
To this, Schrenkeisen adds, “Time spent in app is an often under-utilized primary indicator of brand loyalty and the likelihood of a digital user to convert.”
What’s Next? How Should Brands Prepare?
Loyalty360 asked its expert panel to offer their perspectives on emerging technologies or trends likely to significantly impact the relationship between digital engagement and customer loyalty and how marketers should prepare.
For Banyan’s Noren, a connection with the customer will have the most significant impact on digital engagement and customer loyalty — creating more meaningful intersections between partners, merchants, and customers.
Retail media networks (RMN) are important, and although they aren’t emerging, Noren believes they should be a bigger focus than ever for companies of all sizes.
“It’s a misconception that you need millions of customers or thousands of brick-and-mortar stores to have an RMN,” he explains. “A great example of what makes an RMN valuable is the retailer Dollar General. They have created deep relationships with consumers who are difficult to reach through other channels, and 75% of the markets they serve have 20,000 or fewer customers. Because of this, they can provide brands with hard-to-get first-person consumer data.”
Noren proposes using banks as a channel as another option. To date, the use of “banks-as-a-channel” for brands to cultivate customer loyalty has been sporadic, superficial, and disjointed from most core marketing objectives. By connecting the merchant’s understanding of the consumer for activation in the bank environment, merchants can foster closer ongoing relationships with their bank partners by collaborating on their shared customers — not only for the merchant itself but also for the brand manufacturers that sell through its stores. This is how banks can become a truly viable and meaningful channel to engage, habituate, and expand loyalty.
Looking ahead, Barnett sees Generative AI and NFTs as game-changers for loyalty programs.
“Imagine members getting rewards or content that are not just personalized but uniquely theirs, thanks to AI,” says Barnett. “With NFTs, it could include exclusive digital assets members can own, trade, or sell, adding a whole new level of exclusivity, monetization, and ownership to loyalty programs — think special tiers, unique benefits or rewards, and even one-of-a-kind partnerships.”
Personalized experiences have cemented their place in customer loyalty marketing and digital business strategy to drive relationship building with permanence. Schrenkeisen sees mass media and broad-net offers as no longer suiting the needs of loyalty members.
“If you’re not personalizing at some level, you’re late,” says Schrenkeisen. “But there’s an opportunity to catch up! Marketers can start making strides toward personalization by advancing their segmentation from transactional behaviors toward attitudinal shifts, solidifying their data foundations and breaking down data silos, and rounding out their martech stacks to prepare for machine learning, marketing automation, and AI messaging development.”
As new technologies continue to shape the landscape of customer loyalty, brand marketers and loyalty professionals will need to recognize the trends that impact their strategies and be prepared to adapt as customer expectations evolve. By leveraging the right technologies at the right time, brands can become better positioned to build stronger customer relationships and deepen lasting emotional loyalty.
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