The marketing sector can be a complicated place as new marketing tools and techniques are launched, almost on a weekly basis. Powered by The Drum Network, this regular column invites The Drum Network's members to demystify the marketing trade and offer expert insight and opinion on what is happening in the marketing industry today that can help your business tomorrow.
The value of data to the loyalty and engagement industry
Earlier this year, Marketing Week featured an article on how Tesco “revolutionised loyalty with its clubcard”. We couldn’t agree more; it was the first programme of its kind and proved the immense customer, brand and commercial value of a data-focused loyalty programme. Gartner found recently that only 29% of marketers actively participate in advance analytics modelling. Quite shocking for 2019. It inspired us to have a look at data-led loyalty and engagement. What’s changed, what’s new and what’s interesting?
How focused is the industry on data?
Data is now firmly at the forefront of every loyalty programme’s strategic agenda. It was particularly interesting at last week’s Loyalty Awards to see that three of the 20 categories were overtly about data, and all the winners had a strong data-led story to tell. Data and loyalty are frequently in the marketing press. Everyone’s talking about it. In the last couple of months we’ve seen everything from CrowdTwist’s webinar on “How to Leverage Data to Drive Customer Loyalty via Personalization”, to Loyalty Magazine’s article on the use of blockchain loyalty to gather data. Brands are talking about it too. Shell, for example, have recently revamped their loyalty programme, changing Shell Drivers Club to Shell GO+. Shell have rolled it out within the UK and are gathering data for the next six months before deciding on expanding it to other markets.
How data drives success
Data driven programmes are, for the most part, hugely successful. For example, Sky’s VIP programme is a tenure-based approach, with prize draws, freebies and access to exclusive channels. Rewards are staggered dependant on whether customers are new or if they have been with Sky for a certain number of years. More rewards are unlocked as you continue with your Sky contract. Data is key here for Sky’s customers as Sky can reward customers based on their watching or purchasing habits.
Marks and Spencer also have a data-led loyalty programme where perks increase as you gain more “Sparks”. M&S will also donate to your chosen charity each time you shop with them. It was reported last year how using data the programme has collected on its customers has enabled it to get hyperpersonal. M&S’ new chief data office is now tasked with using the Sparks data to “join up the loyalty programme and help customers find the merchandise they want”. A Clubcard-like application of loyalty data to optimise the overall business.
Sainsbury’s Nectar programme is going through an overhaul. They want to genuinely reward loyalty. They trialled an aspect of Nectar where customers could choose their own offers online from a curated list of products that they purchase the most. Using data in this way really enhances customer loyalty as they are getting offers completely personalised to them on products that they want to buy.
Challenges of Data
Where loyalty programmes are utilising the data that they have collected, there are inevitable challenges. Privacy and security being the most important two. Customers are trusting brands to look after the data they have shared with them.
There is always the danger of a cyber-attack and a customer’s personal data being stolen. Programmes have really invested in the security of their customers’ data and have strict codes of action for when things do go wrong, enforced by GDPR legislation. British Airways had an unfortunate incident last summer where personal and financial details were comprised. British Airways did however handle the GDPR incident rather well, despite the hack and stolen personal details. They announced the incident within 24 hours of discovering it themselves, well inside the 72 hours imposed by GDPR law.
Smart use of Data
We recently wrote an article on Improving loyalty programmes with smart technology and how the use of data was key. But here we look at using the data itself in smart ways, not just using technology.
Vodafone’s Very Me Rewards programme is a great example of a programme using data in a smart way. A world of rewards built around what you love is the promise. Vodafone ask their customers what rewards they want, and then offer those rewards. The programme learns what their customers love most over time, and then offers them more of those.
The North Face outdoor gear and clothing brand has a loyalty programme which is another great example of a brand collecting and using data smartly (VIPeak). Customers can earn points for spend, but also for brand appropriate actions – such as attending events and checking in on the app at certain locations. When it comes to rewarding customers, The North Face use the data they have collected on the customer to target them individually. The rewards are tailored to the individual and curated to strengthen that connection between the brand and customer. It’s a 21st century version of Tesco Clubcard – collecting and using data on lifestyle, as well as spend.
At Mando-Connect, we believe that data driven loyalty is the way forward. It is important to make each customer feel unique and utilise the data collected about them effectively. We are continuing to invest in our growing data to get loyalty right. We actively use our loyalty databank on UK audiences to understand what people want from loyalty programmes, why they want it and how to best develop and manage programmes they love and use.
The white paper we created with YouGov, What the British think of Loyalty, yielded many important insights for our clients – at a national, sector and brand specific level. For example, we uncovered how much harder it is for brands to engage younger audiences. 18-24 year olds are significantly less likely to be members of loyalty programmes; whereas only 61% are members of a loyalty programme, compared to a national average of 77%. The data highlighted that in order to engage this age group, brands need to ensure that they are online, engaging consumers through a digital platform, offering instant rewards for signing up and building awareness and understanding quickly. Rewards that offer freedom, flexibility and choice work best.
Taking a data-led approach to loyalty and engagement enables brands and agencies to get it right and develop programmes, propositions and rewards that engage customers and deliver strong results. We think data-led is the only way.
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