Forming Customer Bonds Through Hyper-Personalization – Loyalty360 Exclusive Q&A with Christian Selchau-Hansen, CEO at Formation | Part II

Engaging and creating the best hyper-personalized customer experiences is top of mind for most brands.

Loyalty360 recently spoke with Christian Selchau-Hansen, CEO of Formation, a global leader in developing scalable solutions for individualized offers. If you missed the first part of our interview, read Part I of the Q&A here.

In the second part of the interview, learn more on how to form a successful loyalty program, some of the challenges brands have, and how Formation uses AI and machine learning to bridge the gap between customer data and actionable insights. From years of industry experience, Formation gives brands the knowledge they need to know to be able to personalize their offers to a customer’s individual needs.  

What makes a successful loyalty program?

If you can act in a way that is coherent and personal to a consumer, throughout all the stages of their customer journey, that’s a way to build true loyalty. To understand what their needs are and to make it possible for them to achieve their need and to do it with less friction than they ever could before. That will keep people coming back. What it requires is a very high bar for relevance, and that’s where I think today’s loyalty programs have generally put in place one of the foundational building blocks for that, which is understanding your customer and that starts with your data infrastructure. Can you match up, for example, your transactions by customer? Understand what are they doing, how are they engaging, what products are they purchasing? Having that granularity of understanding, that’s really important.  


Where do you see the biggest challenges and opportunities for brands today? 

For brands that have that granularity of understanding, the next thing is, what do you do with it? That’s where we see some of the biggest challenges, and most opportunity for companies today. Because, I’m sure when you’ve talked to various leaders, once you have your data then you start developing insights, and you say, “Wow, I understand this about consumer base, or this about a potential segment, or maybe I’m moving from macro-segmentation more into micro-segmentation, but I wish I could get even more granular.” 
The challenge that we often see is not that you lack insight, it’s that you have no path to act on it in a scalable way and that disconnect between that insight and that action, that’s where there’s a huge amount of potential for loyalty programs but also a huge amount of change needed. Because today’s consumer, they’re engaging with the products, that are effectively personal products, every single day, whether it’s Amazon or Netflix or Instagram. Any one of those three, my interaction with Amazon or Netflix or Instagram is just for me. It makes sense to me, and your Instagram page is going to look completely different than mine and that’s what consumers are getting used to.

We’re getting used to things being personal, and when you can’t connect the insights you have about a customer to how you treat them, kind of across not only your digital channels but your physical ones as well, you’re starting to create friction, and it’s friction that consumers are going to increasingly choose not to have. That means if you can eliminate that friction, they’re going to choose you, and if you can’t, they’re going to choose a competitor. What we see is a lot of companies, they have established a loyalty program often as the first chance to just start to collect data, understand their customer base better. The next stage is engaging, leveraging that data and generally just macro segmentation kind of ways. The goal needs to be personal. It’s all about addressing the individual’s needs in the most effective way. 


One of the Top 4 Trends/Topics Brand Members have asked Loyalty360 to focus on in 2020 is personalization, segmentation, and cadence management. How are you looking at personalization, segmentation, and cadence management? How can your offering/expertise help brands in this area? 

Often, when we start working with a company, they’re operating, if we think of these stages of stage 1 as segmentation at a macro-level, five to 10 segments, and stage 2 is more, let’s say 20 to 30 segments, and then stage 3 is one-to-one, we often see people operating at stage one-and-a-half. They’re starting to get more specific, and the challenge they have is scaling. 
Often what we see is, and this was true working with customers across all these different verticals, segmentation is intensely manual, and what I mean by that isn’t necessarily, let’s say, developing the segment, determining what differentiates one from another. A lot of that is manual work, but then the next stage is where it really gets complex, and that’s, well what now do I want to provide or communicate to that segment to show them that I understand their need as a marketer and that I have a product or service that could help address that need, could help them achieve their goal and developing the messaging, developing that strategy, developing then the experiment to test whether my hypothesis is right, to then analyze my results of that experiment and determine a winner and what I do next. 

That whole chain of events is manual and if you have five segments, you have five different groups of people developing, potentially, all of those different things, or maybe it’s one, but then you have your through-put problem. They can only do so much. If you move from, let’s say five to 50, you’re increasing the level of work by 10x, and if you go from 50 to 100, you’re doubling it again, and you reach this point of dramatically increasing complexity without necessarily seeing that because of the cost, the ROI tradeoff, for your team. 
As a point of comparison, when we start working with people, last year we sent over 2 billion individualized offer, across 50 million consumers in the US, and that level of scale, being able to operate at the individual person level, you can’t get there through the challenges of today. As you said, the systems just aren’t built for it, and that’s the thing about that insight to action gap, is you have to close it. You have to build a pipeline to take those insights and put them into action, and the pipeline, kind of the way we think about it is, we’ve invested in a system to help automate that pipeline and be able to take those insights and operate at scale. 

How can Formation help brands improve the efficacy of their loyalty programs? 

At the highest level, it’s making it more personal. It’s being able to address the individual needs of each of the people in your loyalty program and at the various stages of customer journey. And then, more pragmatically, what we do is we allow you to individualize offers or experiences. We allow those offers and experiences to improve over time automatically, using AI and machine learning. We synchronize those experiences across channels, so you can have the same kind of offers available wherever your customers are, which is, again, an important part of how consumers want to engage with brands today. They want the experience to be relevant and have the same information across e-mail and web and mobile and call center and all the other places, because otherwise it’s disconnected. 
At Formation, we dramatically increase the execution speed. A brand’s segmentation process is often anywhere between three and five months, from the time a campaign is developed as an idea to when it goes into market to when it’s measured. That can be easily 16, or more, weeks. We bring that down to less than 10 days, and what that means is dramatically increasing the through-put of your learning. 
And the last thing we do is measure the impact, and I think this gets to some points just raised. The kind of impact that being personal can really drive, it increases engagement, it increases completion, it increases your net-incremental revenue from your loyalty efforts and it dramatically increases marketing efficiency, meaning the amount of marketing dollars or loyalty currency that you’re deploying can be far better applied and drive much higher levels of results. 

Click here to learn more about Formation.

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