Gone are the days of anonymous punch cards. Today’s customer loyalty programs incorporate sophisticated data segmentation efforts to better understand the end customer and purchasing patterns. Brands are working to personalize communications, offerings, and recommendations to build relationships with their customers beyond the transaction.
Loyalty360 spoke with supplier members to discuss the topic of segmentation and personalization, and the effects they have on customer loyalty.
Raising the standard with a new standard
Nearly every brand is working on incorporating personalization efforts into its loyalty program, but the level of sophistication varies depending on a number of factors.
Ingrid Sierra, VP International Marketing and Customer Experience at Tenerity, believes that all brands are making some personalization efforts. Some are still in the initial stage of only personalizing on demographics or using explicit raw data (such as name, location, previous purchases); however, most brands are now looking to go further, using complex algorithms to present next best offers to customers based on a contextualized and commercially influenced parameters.
She says, “The exciting part of this is that we don't need to try to make consumers look like each other to be successful anymore. We can treat individuals as individuals. We can really focus on their behavior, not just their demographics. We can make sure that we're responsive to the diversity of behavior, of thought, of timing, of context. Because at the end of the day, personalization is a more advanced way to achieve the #1 objective of marketing, ‘reaching the right customers, with the right offer at the right time.’”
Matthew Kates, SVP, Strategy, Clarus Commerce agrees, saying, “Nearly all brands understand the value of personalization.”
Furthermore, Kates states two specific areas where most brands are still testing and trying to figure out how to optimize their personalization:
- The degree of personalization – eventually there can be a diminishing return to personalization – meaning the effort to personalize to smaller and smaller groups outweighs the benefit derived from increased personalization.
- Collecting information for personalization – brands should never collect information for the sole purpose of having as much data as possible.
Brands need to strategically collect data based on their personalization strategy. In addition to the cost of collecting and storing data, brands may be increasing friction with their consumers by perpetually asking for more insight.
Says Kates, “We’ve seen success in helping brands ask for this data in ways that make it fun and engaging, i.e., awarding points for filling out a brand-specific questionnaire or taking a poll in exchange for points. By collecting a few points of data here and there over time and building out gradually, it feels like less of an ask to the customers and gives them an incentive.”
“Most brands today are doing their best to build personalization into their loyalty and CRM strategies, because it works; but it doesn’t come without its own unique challenges,” says Cassie Preston, Director of Client Services, CRM & Loyalty at Baesman. “A primary component to leveraging personalization in marketing is identifying and understanding a single customer view of a member – what are their shopping habits with your brand, where else do they shop, what values are important to them and what problems can your brand solve for them? These are all big questions that help brands unlock the power data-driven personalization can have on a brand’s business.”
“Generally speaking, there is much room for improvement in leveraging data - especially using transactional and behavioral data simultaneously,” says Joe Pino, VP of Solutions & Strategy, at Clutch. “Many brands have yet to get past the concept of personalization. They know it’s important but cannot or do not execute on it. These brands do understand they need to do it, but there are other aspects of their organization which have become blockers.”
At Dynamic Yield, a Mastercard company, its annual state of personalization maturity report
, which surveys across roles and industries, shows that brands are moving to advanced levels of personalization maturity for the first time.
Says Ori Bauer
, CEO of Dynamic Yield, “
We believe businesses are embracing personalization because the stakes are higher than ever. Brands are not only recognizing the importance of personalization but are also now putting the right resources and processes in place to make their personalization goals a reality. In turn, brands are also reporting a heightened delivery of personalized campaigns as well as quantitative success stories to back them up.”
Successful personalization efforts require two-way communication
Incorporating personalization is one thing. Doing it well is another.
Joe Pino, VP of Solutions & Strategy, Clutch cites New Seasons Market as a brand that does an exceptional job with personalization by driving target offers based on shopping behaviors. Explains Pino, “Personalization goes beyond just first name and email. Content allows customers to set their own preferences and standards and allows clients to choose the type of messages they receive.”
Bauer has seen success with Build with Ferguson, stating, “Build with Ferguson
is an amazing example of a brand that has transitioned from a merchandising mentality (focused on products) to one focused on customer-centricity (based on actual consumer input). We helped its team implement a scalable segmentation framework
for personalization that allowed them to focus on key audience groups and continuously learn from their behavior while also institutionalizing insights that brought them closer to who they are and what they needed from the brand.”
In doing so, Build with Ferguson was able to better personalize its product recommendations for an 80% increase in purchases from these experiences.
“Sephora is a company does this really well in two ways,” says Kates at Clarus, “Omni-channel data collection – specifically connecting online and in-store data, and creating frictionless, data collection and use.”
Preston finds brands that do it well are those that have an always on feedback loop with their customers and members – whether it’s in the form of data collected at time of sale, or the opportunity for customers and members to provide feedback via survey or social media poll, or even a brand call center contact, the brands that succeed with personalization collect and implement customer feedback early and often.
“Interestingly, the only brands I can think of that are ahead of the game on personalization are 100% based on personal data,” says Sierra. “For example, Whoop, the fitness tracker, has incredible personalization because it’s only sending me information about myself, my data and how to optimize my health.
“From a more consumer point of view, I can’t think of any brand that is exceptional. Some have great personalized lifecycle customer journey, for example Patch plants sends you regular comms about your plant from the day you get it, with a very engaging tone of voice.”
Meet the customer where they are on the journey
Brands starting out with personalization and segmentation need to determine the best cadence for member communications, whether it be through email, SMS or push notifications. But what is the best way for a brand to establish what is best for its customers?
“Brands should really start with understanding their customer’s current journey with their brand based on customer behavior to date,” says Preston.
According to Baesman, 58% of consumers are more likely to buy from a brand that makes personalized product recommendations.
“Journey mapping can be incredibly insightful for brands looking to improve their CRM contact strategies, as it can highlight over saturation of touch points, help identify customer purchase cadence, and illuminate areas where personalization can influence the customer better when they’re already in the mindset to consider your product or service,” adds Preston. “It’s also important to collect feedback from your members regarding their contact preferences. Knowing what customers want to hear about, when, and in which channels can be matched up with segmentation strategies to create a highly personalized journey for your members that will return dividends for your brand.”
“The best advice I can give a brand is to make sure they have a testing process in place.” Says Bauer. “The only way to determine the right cadence of communication or interaction with a specific audience is through proper A/B testing.”
Bauer gives two examples:
- To understand whether a request to leave a review works, a brand can run an experiment where a particular segment receives a request for an app store rating following a positive experience and a control group does not receive any request.
- They could test whether triggering a push notification with personalized recommendations after a shopper abandons their cart worked better than offering a discount code to incentivize the shopper to finish their transaction.
Explains Bauer, “Though simple, it’s an effective test to understand how successful the communication is in driving behavior. Once they’ve identified the “winner”, the brand can (and should!) optimize the result over time to maximize performance.”
“There is no right or wrong cadence,” Sierra agrees. “The best example is push notifications from your credit card provider. As a customer, I expect to see a notification when I make a payment. So, my personal tolerance for messaging is high; if I make 10 purchases in one day, I expect 10 messages. This is a simple example to say that if communications are highly relevant, linked to customer activities and add value, the volume doesn’t matter.”
Sierra explains that the best way to find out is to test and precisely measure the level of engagement as well as the trend of opt ‘outs to find the right balance for your audience. Different types of comms and channels impact customers differently.
Kates agrees, saying, “There isn’t a ‘one size fits all’ answer to this question. At a minimum, its once per month. The answer to ‘how much more frequently than once per month’ depends on how relevant, valuable, and newsworthy your brand is to your members. Frequency has to match content value to members. If a brand ups its frequency without delivering meaningful, valuable content, then increased frequency equals SPAM.”
Joe Pino offers this advice. “Start by following along with the purchase cycle. If someone purchases, send a thank you or helpful information about the product. Do not send a reminder to visit the store - they just did! Know what the customer is up to, what they want and integrate a communication strategy and cadence accordingly.”
Keep personalized content relevant
While personalizing communications is beneficial, and most customers enjoy the recognition, too much can become too much. Brands need to be aware of when they cross that line, and keep communications relevant and engaging, and more importantly, keep customers loyal to your brand.
But Joe Pino at Clutch warns brand not to be afraid to use personalization. He says, “The ‘creep factor’ is used as an excuse to not be personal. If a customer is giving you their information, they are expecting to receive personalized offers. They understand when they give you information, you will use it to both the companies and their advantage.”
He offers this advice to companies that are still wary of personalization:
- Use the information wisely
- Customers are okay with giving data if they are expecting something in return
- Act as if you are talking to a friend - you know how to talk to them about their interests
- Don’t ignore the customer
- Collect information with simple feedback via surveys and integrate into marketing strategy
Kates defines the “Creep factor” as when content is based on things about a customer that a brand wouldn’t naturally know based on their relationship with the brand. He says, “Asking someone what they think about a shirt that they bought from the brand yesterday at their local mall is okay because it makes sense that the brand knows that about them.”
However, for content that is based on things about customers that a brand wouldn’t naturally know based on their relationship with the brand, the content needs to be more subtle than overt.
“For example,” Kates adds, “if through third-party insight the brand learns that a specific customer love dogs, the content shouldn’t say ‘we know you love dogs.’ Instead, brands should try to make it more “coincidental” by simply featuring a dog cause marketing campaign in their content.”
At Tenerity, they suggest measuring engagement as the best way to track customers sentiment, as well as utilizing surveys and NPS tracking.
Sierra adds, “Customers have a lot more awareness of how their data is being used. They realize personalization is occurring and that they are giving away data to feed it. The first thing to do is to make sure they trust your brand enough to do so. Brands can proactively develop the value exchange to ask their customers for information about them in exchange for something back. Then, customers will perceive this exchange is profitable; i.e., getting valuable content or money will make it worthwhile sharing data.”
She is quick to add, “But trust can be lost very quickly and once it happens there’s no way back, so brands need to make sure they maintain the trust level and keep providing value to extend the relationship with customers.”
Preston mentions a myriad of ways to collect customer feedback ranging from sophisticated technological preference centers and review portals to a simple social media poll. She says, “We know from industry polls that consumers prefer personalized contacts – in fact, they’re more likely to provide their contact information to a brand in return for the promise of personalized content and offers. Today’s consumer is savvy – they know you have their information, and they want to see you use it responsibly. Gone are the days where a first name mention in a subject line of an email makes customers feel connected to your brand.”
Think about companies like Amazon, Netflix, and Spotify that successfully deliver frictionless and highly tailored user experiences with every interaction,” advises Bauer. “You never told them what your favorite movie or music genre is, but you’re pleased when you get a relevant recommendation. This type of personalization feels subtle but has completely re-set consumer expectations across the board.”
Adds Preston, “The real creep factor comes in when marketers use incorrect data, or uninformed data to create personalized content that isn’t truly personalized. Personalization should be about solving the needs of your customer, not your brand.”
Bauer sums it up, saying, “The most effective way to meet those expectations is to make sure your personalization strategies make sense within the customer journey and add value that doesn’t require extra participation from the user. The best kind of personalization is invisible, meaning consumers walk away from an interaction feeling like the brand understood what they wanted without them having to ask.”