Making Customer Loyalty Work for You

DataCandy president and CEO Lorne Schwartz knows a little bit about customer loyalty data and how it can be leveraged to help marketers achieve greater success and create holistic relationships.

Schwartz talked to Loyalty360 about this vitally important topic among loyalty marketers.

What are some of the myths about customer loyalty data that marketers might fear?

Schwartz: A very common misconception revolves around size: My store is too small to manage loyalty program data or the size of the reward my store can offer is insignificant to customers. Rewards that come from loyalty programs are a sincere “thank you” to your customers. They are giving you the privilege of collecting data via a loyalty card. The information collected based on spending will reveal customer shopping habits and favorite brands. Gifting a relevant reward to loyal customers, such as a coupon, is far from insignificant. Rather, it says we know your likes and needs and want to help you save money on the specific items you regularly purchase. The value of tailor-made coupons to an individual shopper will build over time as retailers gain more insight surrounding dollars spent in the store and the contents of the shopping basket. It’s a win-win.

Another common myth is that loyalty cards are ineffective because shoppers belong to multiple rewards programs from competing retailers. Consumers regularly shop at more than one competing store due to out of stocks, price, and location, to name a few. However, the dominant spend occurs in the consumer’s favorite store. In fact, more than two-thirds of total spend typically occurs at the ‘favorite store’. More spending means more data is collected. As a result, the customer’s favorite store can offer far more appealing and targeted offers to reinforce customers’ spending. One hundred percent loyalty to one store is rare, so retailers should be realistic in their approach to customer loyalty.

We talk to brands on a regular basis and one of their biggest challenges is they have too much customer loyalty data. What advice would you offer them?

Schwartz: I don’t think you can have too much customer data. Personalization is critical for retailers right now. The more you know, the more you will be empowered. Capturing, recording, and analyzing each customer’s transaction history paints a clear picture of who your target customer is and how to keep them loyal for the long term. Organizing data into tailored dashboards and segmented reports will streamline data points. A best-in-class loyalty program will offer ways to organize your customer data and highlight KPIs that suit your business and needs.

How can brands make customer loyalty data work for them?

Schwartz: Customer data will begin to reveal patterns. For example, what brands are regularly purchased, as well as when and how often. Retailers can put that data to work by creating personalized offers to increase visits, frequency, and spending. Analyzing and segmenting customer data also helps you predict future offers to not only entice them, but it demonstrates you’re listening and value them. Leveraging loyalty data also helps retailers communicate, advertise, and market to customers in a more meaningful and effective way. I think it’s important to remind retailers that they don’t need to gather every element of demographic data from every single loyalty member. You only need to capture the data that’s relevant and relative to your business and your sales objectives. 

What are brands doing well in this regard and where do the challenges lie?

Schwartz: There are some brands getting creative to add more value to the traditional structure of loyalty programs. Offering extra points for social media activity, giving members first access to sales and extending behind-the-scenes tour are some that stand out in my mind. If I had to call out one brand doing loyalty well, it’s Amazon, which teamed up with a few partners to offer Amazon Prime members free eBooks, music, and TV shows. The road ahead will challenge retailers to continuously provide loyalty members with added value. Each household in America holds 29 loyalty memberships. With that kind of competition, your loyalty program needs to stand out.

What trend(s) do you see regarding customer loyalty data this year and beyond?

Schwartz: There has been a major shift from transactional-based loyalty to developing emotional loyalty and engagement. There are obviously several trends in social and mobile, but mobile-friendly loyalty programs are now a requirement. And it’s not just mobile-friendliness that attracts and maintains customers; it’s an overall technologically advanced program.

Loyalty programs should have an easy-to-use app for customers to check their points balance, identify rewards, and contact your company. If your loyalty program doesn’t offer this option, it’s time to think about a change. But ease of use is key. If customers find the app irrelevant, unresponsive, or difficult to use, they will simply delete your app.

In recent years, focusing on omnichannel was the key to loyalty program success. Serving customer needs online, in-store, and on mobile is still critical and the time has come to unite all the collected data into a single, real-time database. The push for unified commerce will let marketers examine a 360-degree customer behavior profile. 

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