As privacy and data collection regulations change, there is a growing space for leveraging zero-party data in personalization efforts within customer loyalty programs. As brands seek to collect and use this data effectively, there are best practices they can implement to better target their loyalty program strategies and increase personalization when engaging customers.
But the shift to elevate customer loyalty through personalization and enhance engagement is not without significant challenges. Many brands have traditionally relied on tracking cookies to tell their customers’ stories. Forced to pivot, some brands struggle to implement the right strategies to collect zero-party data and build robust profiles which allow them to develop deeper relationships with their customers. Initiatives to entice customers to share their preferences and what’s most important to them across multiple channels might not be seamless. Engagement strategies may lack cohesion when drawing data from multiple sources.
Loyalty360 spoke with supplier members and loyalty strategy experts about opportunities in leveraging zero-party data, understanding timing and simplicity, and ideas for encouraging customers and loyalty program members to share their information.
Article contributors:
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Pamela Erlichman, Chief Evangelist, Jebbit
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Ellen Green, VP, Loyalty Strategy, Bounteous
The Impact of Zero-Party Data on Personalization
Whether zero-party data is collected through sign-up forms, contests, preference forms/call centers, surveys/polls/quizzes, or gamification in an app, there are multiple opportunities for learning about customer behaviors and preferences. A unique identifier, such as a customer email address, allows brands to track all the disparate touchpoints with a customer and funnel that data into one profile.
Talon.One’s Panzer suggests that in many cases, loyalty programs are the best antidote to the deprecation of tracking “cookies” — offering a huge amount of insights into customer preferences, behaviors, and purchasing patterns.
“The wild west days of third-party cookies are over, and brands without a coherent engine to collect and use customer data are going to struggle to drive meaningful behavior,” continues Panzer. “Loyalty programs are a core part of that engine, helping brands collect and use customer data in a trusted, transparent way. By leveraging them, brands can effectively replace third-party cookies with a more ethical, transparent, and customer-centric approach to data collection.”
This sentiment is echoed by Bounteous’ Green. “In a time where privacy is such a big concern, you instantly gain permission because customers are intentionally and proactively giving you [zero-party] data. By abiding by these principles, brands build trust and a stronger emotional connection with customers.”
Cheetah Digital’s Watson sees gathering zero-party data as a fun initiative. When companies engage customers through brand-led interactive experiences, they learn more about their customers — ultimately allowing brands to understand passions, preferences, and interests. Then, through subsequent communications, more can be made of zero-party data, and less emphasis would be placed on purchase-related personalization. According to Watson, the process becomes more about personalizing offers based on what appeals directly to the individual and their personal interests or tastes. This is what zero-party data offers a brand.
“You can think of zero-party data as the secret sauce that allows a brand to be genuinely personal in their personalization,” says Watson. “If a customer has already signed up for a loyalty program, they will be willing to give their psychographic data without needing such a strong value exchange.”
Two important factors for using zero-party data in personalization efforts are cited by Jebbit’s Erlichman. First, brands eliminate all risks of getting personalization strategies wrong if they are letting consumers choose their own personalization journeys as they demonstrate what they care about through interactive experiences. The second is that brands can capture consumers’ rational and emotional needs.
“This is the data you can’t buy or observe — it only comes from asking a consumer directly what they want, how they feel, and what they want to do in the future,” asserts Erlichman. “This ensures that future personalization efforts are based on what is truly relevant and important to your consumer.”
Successful Brands Understand Timing, Tastes, and Simplicity
Loyalty360 asked supplier members to share successful examples of brands utilizing zero-party data to deliver personalized experiences and rewards within their loyalty programs. While soft touchpoints and more targeted data collection (e.g., surveys, contests) should be part of a brand’s strategy, so should timing.
Green noted that one of the most effective places to leverage zero-party data capture is when kicking off a new relationship between a brand and a customer by incorporating it into the onboarding series.
“Noodles & Company does an exceptional job of this by asking customers, ‘Who do you typically visit Noodles with?’ This immediately delivers a personalized offer based on their response,” says Green. “This real-time value exchange builds trust and excitement from the beginning of the relationship.”
For Watson, it’s sports shoes and clothing retailer, Vans®. He believes the brand has done a great job of tapping into zero-party data, ensuring that it truly understands the tastes and style preferences of its customers before reaching out to them. The brand learns about customers through product finder tools but also collects information about the interests and passions of its audience — skating, BMX, surfing, and snowboarding.
“From there, Vans personalizes the experience online and offers limited edition products and access to exclusive events or content — all part of creating a sense of community and family with their customers,” explains Watson. In fact, the brand even refers to its program as Vans Family.
“I love HungryrootTM’s data collection journey,” says Panzer. “They don’t have a loyalty program per se, but you could argue their entire business is basically a grocery program loyalty program.”
Panzer goes on to describe Hungryroot’s clean onboarding survey about the consumer’s household, meal preferences, kitchen habits, and food goals. Right after the survey, Hungryroot serves up a personalized grocery list and meal plan. It’s a short setup, and every member must complete the survey to use Hungryroot — which typically would be seen as a lot of friction. However, the brand has kept it simple and varied, with different survey mechanics and a clear progress indicator.
“The personalized results are really impressive, with a whopping 70% of all items now suggested by Hungryroot’s AI,” Panzer enthuses. “They’ve grown 50% YoY (to $237M) with a $125 average order value (AOV) using this data collection and AI approach. It’s a great example of a more ‘courageous’ approach from a brand saying, ‘Hey, this data is absolutely critical for us to serve you well, and if we take three minutes of your day, we promise it’s going to deliver an incredible experience for you.’”
Loyalty teams that are successful in using zero-party data to deliver personalized experiences and rewards within their loyalty programs are focused on three main areas, according to Erlichman. They are:
“When someone joins your loyalty program it is a critical moment to capture their preferences and interests,” says Erlichman. “Successful brands are transitioning from push emails of dense information to personality quizzes and trivia that ask new members questions about what they want from the program and teach them about the benefits in a fun and entertaining way. Sports gear retailer ASICS® captures 22 data points on every new member of their loyalty program.”
ASICS also allows customers to sign up for their OneASICS™ program with Apple, Facebook, Google, and more, further opening opportunities to engage with customers to earn zero-party data.
Erlichman warns that loyalty members can tune out from the endless barrage of “shop now/buy now” messaging. Instead, loyalty marketers can shift to drive higher incremental sales by giving a few points to get members to engage with monthly challenges, match quizzes, interactive lookbooks, and shoppable images. She highlights clothing retailer Express. The brand has driven millions in incremental sales and decreased the time between purchases through its store style challenges. Finally, Erlichman reminds brands to avoid boring loyalty program members with long surveys, and shares that Jebbit clients instead leverage voting, live polling, and nonlinear visual surveys to engage and get critical feedback.
Share with Us!
While it’s easy to talk about earning zero-party data and convincing customers to willingly share their preferences and what’s important to them, finding the best way to gather that data is crucial in strengthening a brand’s loyalty strategy to increase personalization opportunities. Loyalty360 again turned to its expert panel for ways to incentivize customers and how brands can communicate to them the value proposition of sharing their data.
Watson believes that by the very nature of someone being part of a loyalty program, they will already be amenable to sharing their data with that brand.
“This gives brands a fantastic opportunity to offer not just monetary value exchanges like prizes, coupons, discounts, or points but also non-monetary incentives, such as early access to product launches or sales, access to VIP events, personalized content, and recommendations in exchange for their data,” says Watson.
In Cheetah Digital’s recent research, the company found that 91% of consumers will trade personal and preference data in return for loyalty rewards. Watson goes on to encourage brands to explain to loyalty program members that by sharing their zero-party data, the brand will better personalize their experience.
“Brands should adopt the mantra ‘show them, you know them’ — proving why sharing that data is valuable to the customer, he finishes. “Then they’ll willingly share more, and the brand can deepen the relationship.”
Advice to make voluntarily sharing personal data simple and fun for customers continues to thread its way through the expert advice. Green also recommends that brands be transparent, incorporate it at relevant times within the journey, and use the data by delivering personalized content and experiences based on what customers share.
“If you’re using a data point long-term, it doesn’t hurt to reconfirm with customers if it’s data that could change to ensure it’s still relevant,” she adds. “Brands can show value to customers by actioning upon it immediately with content based on their response, sharing results of polls or quizzes, and telling customers why they are collecting it and what it will be used for — capturing a customer’s birthday is a great example of this.”
Erlichman sees six forms of genuine value that can lead to higher customer engagement and sales. They include saving the consumer time, providing a recommendation, testing their knowledge, teaching them something new, entertaining them, and unlocking a benefit to entice consumers to share their data while driving business outcomes. While some brands use points or other monetary incentives to encourage customers to give information, Erlichman says it is not necessarily what wins when trying to drive engagement.
Thumbs Up or Thumbs Down: Does Your Brand Know What To Do with Zero-Party Data?
Brands successfully implementing the right tools and launching strategic initiatives to collect zero-party data still might face challenges around leveraging it. Creating personalized experiences, offerings, and rewards that enhance customer loyalty and drive repeat purchases must be thoughtfully designed. Brands must seize the opportunity delivered by zero-party data to develop personalized campaigns to excite and entice their loyalty program members.
While customer loyalty programs provide brands with the chance to form deeper relationships and emotional connections with customers, Watson emphasizes that zero-party data empowers personalization — which appeals to passions, interests, and tastes rather than solely focusing on sending transactional messages to “buy this again and get points” or “buy this again and get a discount.”
“Brands should personalize using zero-party data to encourage customers to buy from a category they’ve not purchased in before or to add additional products and increase their basket size based upon relevant preferences or interests,” says Watson. “Or brands can purely surprise and delight them with a unique personalized one-time reward to strengthen brand affinity and create a Wow! moment.”
Green reminds brands that it all starts by asking questions that are actionable. Additionally, tracking changes to customers’ preferences allows the brand to remain agile when developing personalized communications and customer experiences.
“Customers love to have their voices heard, and brands can do simple things like adding thumbs up or thumbs down for content or offers within communications to determine relevance and then use that information to guide future segmentation and personalization,” Green says. “By incorporating strategies like this on an ongoing basis you’ll also learn if customer needs and preferences have changed so you can react accordingly.”
Integrating Customer Data from Multiple Sources
Zero-party data has much to offer in the way of insights, but brands can leverage multiple customer data sources. Successful brands have learned how to combine disparate data to create a comprehensive view of customers and then deliver seamless experiences across all channels.
A key component of the ideal customer profile is zero-party data. Creating a holistic record that includes a profile, engagement history, and purchase data offers brands the opportunity to find more overlapping segments for targeting purposes.
“It also aids decisions on what channel to make which offer, and when,” adds Watson, nodding to the vital role timing plays in execution.
Erlichman advises brands to make the data available to all areas of their marketing tech stack but adds that the data should also go to call centers, retail locations, product/merchandising teams, data and insight teams, and more. She adds, “Smart brands permeate this consumer data throughout their organization to ensure at both a customer level and an aggregate level the business understands what their best customers want from the brand.”
Panzer rounds out the expert advice by circling back to the depreciation of tracking cookies, noting that working with new data sources can have a big impact on brands’ CRM strategies. Panzer recommends managing change by working with a Customer Data Platform (CDP) to collect and unify customer data. Brands need a scalable loyalty solution that will let them import and export loyalty data from any source and use a variety of data points to build complex campaigns.
“When it comes to data management, marketers already struggle to manage data quality. A recent Braze survey found that 36% of marketers ranked collecting, integrating, and accessing data as their top challenge associated with customer engagement,” Panzer explains. “To help combat this, marketers need to be more intentional about what data they collect, mapping their collection strategy to concrete use cases, metrics, and goals.”