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While 91% of respondents in a survey conducted by Experian Data Quality indicated they have a loyalty program or customer engagement program in place, a staggering 81% faces challenges related to those programs.
Erin Haselkorn, Analyst and Public Relations Manager for Experian Data Quality, examined this dilemma and many other customer loyalty-related issues during Thursday’s Loyalty360 webinar, “Loyalty Matters: How Better Insight Can Drive More Loyal Customers and More Revenue.”
The two biggest challenges related to loyalty programs are not enough customers signing up and poor contact data, Haselkorn told attendees.
“Both of these can clearly be detrimental to a program,” she said. “Without enough customers signing up, it is hard to engage customers with messages and coupons that will drive additional revenue. However, inaccurate contact data means that a customer has signed up, but the marketer is unable to communicate with them in the desired channels.”
Haselkorn noted that this clear drop in communication and a potentially bad customer experience could by why improved data collection is the top strategic priority of loyalty programs this fiscal year.
What’s more, 64% of respondents say this is a needed improvement. The next priority relates to customer sign up (56%); while 53% are focused on personalization.
“While many of these priorities overlap, they represent the varied areas companies are working on the make their loyalty programs more effective,” Haselkorn said. “These programs are also designed to generate revenue, increase the lifetime value of each customer, and promote the brand. These are all big gaps companies are trying to fill when we think about that more empowered, multichannel consumer. “
But, not all loyalty programs are created the same.
“These programs take many different shapes depending on the organization,” Haselkorn said. “Loyalty programs serve up a wide variety of offers, marketing messages and interaction points. Some may focus mainly on rewards, while others many talk about special events or free samples. However, there are common benefits that customers can expect to receive. The most popular benefit for companies to provide is points. This would mean assigning points based on given actions that ultimately lead to a reward. This is followed by free shipping and coupons. However, we did notice differences between industries. Coupons, for instance, are far more popular for retailers with 61% offering them, compared to 57% of all types of companies.”
There is also a difference between small and large businesses.
“Those in small businesses are more likely to offer free shipping as a benefit to their loyalty program,” Haselkorn said. “Those in enterprise businesses are far more likely to offer points and coupons. What this means for the consumer is that they can gain a ton of impressive benefits for staying true to one company. For the business providing the loyalty program, it means they can help influence customers coming back and also learn something about them.”
Given the explosion in the number of loyalty programs to drive more revenue, Haselkorn said that many of them struggle with the data associated with loyalty programs.
“But, this data represents an opportunity to better understand their customers and drive actionable insights, if that data is accurate and consolidated,” she said.
Jamie Carlin, Product Manager, Experian Data Quality, outlined three ways to improve loyalty insight.
“Start with an accurate, consolidated, and accessible database to ensure insight and analytics can be achieved,” Carlin said.
He offered the following key points for loyalty marketers to focus on:
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Today, 69% of companies are tracking the lifetime value of each customer. For those tracking the lifetime customer value, the average value of a customer is $1,803.
But, how are companies tracking the benefit of these programs because setting them up and providing benefits like free shipping and coupons are certainly not free to the company. As with most dollars companies spend today, tracking is of utmost importance when it comes to loyalty or customer engagement programs.
“The good news is that most companies--75%--are seeing a return on investment,” Haselkorn said. “Only 17% say flat-out that they are not seeing a return. This is great to show that these programs are providing value and can help support continued investment.”
The most popular method for tracking success is though customer retention, which is monitored by 63% of companies. Other popular techniques include revenue attributed to the program and the number of new sign-ups. While these are great and should certainly be monitored, there are also ways to look at ROI in terms of engagement.
But why collect all this data in the first place?
“For the customer, providing data can help their account be identified and allows them to receive marketing offers and coupons,” Haselkorn said. “For the business or retailer, they get to understand a bit more about their customer base, create relevant offers based on purchases, and track purchases to determine what you buy and when. Whatever the benefit, the bottom line is that companies are taking in a lot of data associated with these programs. This data represents not only an enrolled customer and an ability to remain in contact with a consumer, but also an opportunity to better understand their customers and drive actionable insights. That data is a great asset, but also can be a challenge.”
Knowing your customer is the first step, Haselkorn said.
“Companies should analyze data to get a deep understanding of your customer, what they do, and what they want to receive from you,” she said. “If you can’t tell who your best customers are because you are dealing with a poor loyalty database, then you will be stabbing at the dark with any messaging or campaign optimization. Once you get that baseline of understanding, then you can start to action on it.”
Here are some key questions to ask about your company culture:
Here are some key takeaways:
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