Tuesday, 21 August 2012

Getting the Most from Loyalty Scheme Data

As the economic climate drives customers to hunt better and better deals, loyalty schemes have become an increasingly popular way to gain discounts and special offers. But while loyalty card schemes offer a wealth of data about customers, using this data to its greatest potential remains a challenge for many companies, as does building true loyalty and brand commitment.

 These challenges have been highlighted in recent research pieces. A Forrester report found that 40% of chief marketing officers are disappointed with the “erratic” performance of their brand loyalty schemes. Similarly, a report conducted by The Logic Group and Ipsos MORI argued that while over two thirds (68%) of consumers are members of supermarket loyalty schemes, less than half (47%) actually feel loyal to their supermarket.

Successful Loyalty Schemes
That is not to say that loyalty schemes are wholly unsuccessful, many companies aspire to replicate the two most dominant schemes today; Tesco’s Clubcard and the Nectar points system. These stand out not only because of their size and reach but because they have permanently influenced the way customers behave and built long standing brand/customer relationships. Achieving a scheme as popular as either of these is unrealistic for most businesses, but through intelligent use of data, it is possible to run a loyalty scheme that drives significant revenue and profits.

What should a loyalty scheme do?
Ultimately a loyalty scheme must offer strong financial rewards and a clear value exchange for the customer. It must also differentiate itself from the myriad schemes out there and ideally provide customers with targeted offers relevant to their behaviour and interests. Naturally the ways you manage your data are key to achieving this.

Research from LinkShare states that 41% of customers have purchased something online that they would never have bought directly because of a voucher or special offer, showing the value of communicating the right deal, at the right time. Such results can be accomplished through effective data management, which can also help to improve customer retention, increase customer engagement and brand commitment through relevant communication. (Read more about The Value of Data Management).

What it shouldn’t do?
Loyalty schemes are not an excuse to bombard customers with offers and are not an extension of your mailing database. Customers join schemes because they want to be rewarded for their purchases and repeat custom, not because they are interested in every sale or offer you are running. As such, a different approach to communication is required, motivating loyal customers to purchase more regularly by clearly stating the rewards they can expect as they collects points, interspersed with offers directly relevant to their data profile.
Intelligently using loyalty data
A loyalty scheme has the potential to gain detailed information about your customers and can help you to engage, build trust and loyalty. This is only possible however through effective data management and responsible, intelligent use of data.

In order to get the best out of your loyalty scheme it is important to make sure your data is kept up-to-date and relevant, as this can help gain your company valuable customer insight. Insight that is crucial for understanding which customers to target, when to target them, what rewards are relevant, as well as their behaviour patterns and interests. Do this effectively and you will see an increase of customer loyalty through building a successful loyalty scheme.

If you are interested in the role data has to play in understanding your customers, why not take a look at our Why Data Management is Vital to Customer Insight blog?

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