Loyalty Program - What are sources of Data

What is the biggest weapon in the hands of marketing manager? Data. We often hear the cliché “data is the new oil” and though it seems trite, but it is true. Data has the capability of digging profit from thin air and hence it is no surprise that every organization is trying to beef up their data capabilities. Customer loyalty is one of the processes that rely a great deal on data to be able to generate positive returns for the organization.

The easiest way to design a loyalty program is by providing benefits like discounts, rewards, etc, but the true driver is to give personalized experiences so that the customer keeps coming back. The aim of any customer loyalty program should be to get the customer become its advocate. Discounts would get some advocates but the compounding effect likely to be low while experiences are something that customers are likely to remember much longer and even talk about it on social media and social circles. It is intelligent use of data that can drive personalized experiences. The survey below from MIT Sloan Review highlights the importance of emotional benefits (experience led which are depicted in orange color bars) and need for creation of coalitions.

There are a lot of articles around why data is important, so I decided to write an article on how to collect the data for a robust loyalty program. Below are some of the ways in which organizations can jump-start data collection. Each organization is different and hence a different strategy would be needed but the basic tenets are likely to remain same.

Know the data you really need

The marketeers have a habit and urge for collecting more than necessary amount of data. They feel that database is like a cookie jar which they can reach out to wherever required. I have filled in innumerable hotel loyalty programs with each asking for information around preferences for kind of rooms, pillows, etc. but rarely this information has been used on checks in. In a loyalty program I was asked about the type of vehicle I own, kind of house I live in, etc. I understand that the company was trying to segment me but then I did not get any personalized offer from the company or for that matter, I did not even get a single email from them. What is the use of this data collection? Many people do not sign up for a loyalty program because they get intimidated by amount of data that is required to fill. Marketeers need to be cautious in their approach to data collection and more so when there is so much focus on privacy & GDPR.

Collection of Data is not a onetime exercise

So often the marketeers try to get all the demographic data to segment the customers in one shot at the time of sign up. I have observed that most customers let go of the opportunity to become the loyalty member if they have to fill the form at the point of sale. In my opinion, the sign up should be as simple as getting just three data points – name, email address and mobile number. All the other data points are irrelevant at the time of sign up. Post sign up engage with the customer and get more insights about him. One way to build the customer profile could be to ask questions over time and give rewards to customers in return for the data provided. As a loyalty program grows over time, offering additional incentives to gain more detailed information about a customer, like their birthday, or age of kids or family size, allows a brand to draw even more powerful insights. Most people are happy to share their information if they get something in return instantaneously.

Source data from multiple touch points

Direct data collection by marketing team should not be the only source for information. There is wealth of data in other functions like after sales, call centers, etc. There is a need to have a cohesive strategy within the organization to collect all the information across different functions and tag to the same customer. All the customer interactions and touch points are additional sources of information apart from direct sales data. There are times when marketing team is sending out promotions to the customers while the customer is unhappy with the experience with customer center. Such situations should be avoided, or promotions should be made keeping in mind the current customer interactions with the customer center, e.g. if a customer is getting his phone repaired and if the phone is already one and half year old then a promotion could be sent out giving loyalty discount on a new phone.

Don’t rely on 3rd Party data for Loyalty

Digital marketing folks swear by third party data and look alike audiences. With deep integration with loyalty programs, marketeers can help create “look-alike” models to reach new prospects that resemble a marketer’s most loyal customers. In my opinion, this data is good for customer acquisition but is not reliable for retaining and enhancing value from existing customers.

When it comes to integrating the third party data to reach out to loyal customers, the data could be dated or might have wrong information, e.g. if a person goes and checks out a new online game which is getting very popular, the cookie captures it and he might be marked as a gamer or a worse a person who like Thai food might be marked as Thai speaking. The deeper a customer’s engagement with your brand, the more precise they expect your messaging to be. With third party data, you are never sure how fresh is the intent of the customer and if it is indeed the same customer.

Go create or join loyalty coalitions

It is important to remember that the customer is not interacting with the brand in isolation. There is always a synergy and opportunity to cross sell if the information is available on purchases from partners. More importantly, it is possible to give exclusive experience to a customer, e.g. if Singapore Airlines is sharing the data of its PPS customers with loyal members of Ritz Carlton, there are chances of creating a compelling offer together. Similarly, if there is an Ambassador member of IHG and visits a coffee shop for the first time in a new city, the coffee shop can give the customer better experience or service. Loyalty coalitions are the best way to drive value not only for the organization but also for the customer.

In summary, data is critical for the success of loyalty program else the program gets converted into a discount program. However, the organizations need a robust strategy for collecting and managing data. The data collection is too important to be left to just the marketeers, there is a need for the data scientists and commercial function to get involved. A cohesive data strategy would go a long way in increasing the return on investment on loyalty programs.

The writer has co-founded Tuzo which aims to bring innovative solutions to retail industry to help them connect with shoppers in a newer and better ways. Tuzo is planning to create First Pan-ASEAN loyalty platform with multiple partnerships in travel, service, financial & retail industry. The platform uses Blockchain to drive fiction less transactions across merchants/brands. Visit Tuzo at www.tuzo.io for more information.