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Consumers are presented with a dizzying array of promotions for brands that are either not relevant to them or that they were going to purchase anyway. Brands are spending billions of dollars on advertisements and discounts that generate little to no incremental sales. The fast-moving consumer goods industry (FMCG) has long held out hope that personalized offers would solve these intertwined issues of relevance and profitability. So, what’s the problem? Personalized offers have not scaled.
Untie Nots created a SaaS solution, Loyalty Challenge, to deal with these issues directly by providing high-frequency retailers and brands an end-to-end, scalable platform on which to design and execute one-to-one promotional campaigns with profitability guaranteed through offer design.
Mark Johnson, Loyalty360 CEO, spoke with Zyed Jamoussi, Co-Founder and President, and Ken Kaufmann, Managing Director of North America, of Untie Nots about how brands can utilize their platform drive sales, personalized experiences, digital engagement, and, most importantly, customer loyalty.
Cutting-Edge Technologies Used to Scale Personalized Promotions and Profitability by Design
Founded in Paris, France, Untie Nots was established in 2016 with the mission to use modern technologies to build a profitable, customer-centric, and scalable alternative to both unprofitable mass promotions and stalled personalized offer programs.
Loyalty Challenge runs on Google Cloud and uses an innovative application of AI and ML to build personalized continuity promotions named challenges. According to Jamoussi, “What is special in what we do is that the sort of promotion we run in our platform is not only one-to-one, but profitable by design…while being totally customer-centric.”
Designed originally for the FMCG industry and the unique relationship between grocery retailers and consumer packaged goods (CPG) companies, the platform has proven effective in a variety of high-frequency retail and wholesale environments. Challenge campaigns, where a set of personalized challenges are packaged together, are frequency added to an existing rewards program. Kaufmann adds, “Our solution is a bit of a missing piece in loyalty program design. Our offers require incrementality from the customer to earn the reward.”
Transactional Loyalty Begins with Share of Wallet
Customer loyalty definitions vary by organization. “Customer loyalty is a combination of share of wallet, share of mind, and share of engagement,” Kaufmann says, adding, “I’ve often talked about loyalty as Big L and Little L. The Big L is creating customer loyalty and engagement through in-store and digital experiences. The Little L is the loyalty program, what companies put together to collect data and to drive transactional or emotional loyalty from more of a scientific perspective.”
Jamoussi also discusses loyalty not as an absolute, saying what really matters is creating more loyalty. “For us, customer loyalty is about capturing a bigger share of wallet from your customers in a durable manner. People prefer to visit your store or website, rather than your competitor’s, one more time every month.”
Challenge promotions are specifically designed to grow share of wallet by nudging each customer to do a little more than they would have naturally: Spend a little more on the brands they love or visit the physical or online store a little more frequently. The goal is less about asking the customer to spend more overall, especially in today’s inflationary environment; it’s about asking the customer to consolidate their spend and attention with your brand rather than with the competitor.
Customer loyalty, however, is more than a transactional relationship. Building emotional connections are also critical.
Customer Experience Contributes to Emotional Loyalty
As an end-to-end solution, Loyalty Challenges includes the back-end, personalization and offer creation platform as well as the front-end, digital user experience. While not part of the original concept, Kaufmann explains, “We brought gamification into our platform to create an engaging, enjoyable experience.” The result has been increased participation and usage of the platform by shoppers.
Brands also need to take a step back and look not at what the company wants, but what the consumer wants. Successful customer loyalty programs tie in an emotional strategy to win customer engagement. Like gamification, Kaufmann stresses the importance of giving customers a degree of control so it’s “not a one-way street. By introducing choice into the relationship between the retailer and brands and the consumer, it gives them the opportunity to make it their own…to customize the experience.”
Another observation is that companies that deliver on personalization tend to not directly communicate this element of the user experience. Instead, they simply focus on delivery. For example, Jamoussi shares that its clients are “starting to do personalization like Netflix does. So, nobody is going to say this movie was targeted to that population. They just put it in the catalog of Netflix and let the AI do the job of allocating it to the right people.”
Loyalty Programs Success Metrics
There are several KPIs brands can use to measure the effectiveness of their customer loyalty efforts. At Untie Nots, the team encourages brands to measure participation, engagement, and incremental spend.
Regarding participation, Jamoussi states, “If it doesn’t scale, it’s not worth the effort.”
Customer engagement is another KPI, as Jamoussi asks, “do they interact with [an experience] on a regular basis or is it just a one-off because you pushed so heavily your communication on that subject?”
Incremental spend, however, is “that moment of truth” for any loyalty program, according to Jamoussi. This concrete, measurable indicator shows businesses the direct effect loyalty efforts and investments have on customer behavior. Customer retention is also important, but incremental behavior is a better health indicator for most loyalty programs.
Practices That Lead to Success
One of the key design principles Untie Nots had for Loyalty Challenge was that it needed to address key issues and opportunities across the value chain – the end customer, the retail brand, and back to the supplier brands. And within the retailer’s organization, three key stakeholders were considered – marketers, merchants, and digital/IT teams.
After leading customer-centric transformations within several retail organizations, a central truth was revealed when trying to address the “Big L” or the “Little L.” While customer loyalty is often guided by marketing, sustainable success was almost impossible without alignment, cooperation, and engagement within and across organizations.
Kaufmann summarizes this perspective when talking about personalized offer programs, stating, “The barrier to successful scale in the past is the machine hasn’t worked together.” In addition to systems limitations and resource requirements, customer-centric programs have not been designed to satisfy the needs of merchants and supplier partners, in addition to marketers.
The first successful “machine” created by marketers, merchants, and supplier partners was the weekly flyer. The weekly flyer, however, is outdated in its current form and is no longer relevant to brands and customers. Untie Nots is now trying to build a modern, digital, fully personalized interpretation of the flyer that creates a win-win-win for retail brands, supplier brands, and most importantly customers.
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