If you love shopping, you probably participate in many loyalty programmes.
They connect you to brands and their promotions, and hopefully leverage your product or service affinity towards companies. Their strategy is similar. Companies and brands want to generate customer data in order to profile, cluster and identify customer behavior for a better customer experience.
Whether it is an airlines’ frequent traveler programme, some retailer’s points system or the good old stickers you find in your mailbox at home, loyalty programmes are there to remind you of brands, retain customer potential and reactivate sales, plus they detect the hunters and gatherers - in a smart manner. But how to leverage this smart data in the right context? How to find the appropriate approach to smart data usage for marketers?
No spam. No stalking. No stress. Companies that deliver added value in their pitches or promotions for up- or cross-selling will become the customers’ friend. And only those brands have understood how to convert big data into smart data.
Still, the difference between big data and smart data needs to be properly understood by marketers. Big data relates to frequency and quantity, smart data more to loyalty and quality. Frequency programmes are simple exchange programs that aim for discount-seekers who love to collect points for their shopping trips. Clever loyalty programmes ask for smart data throughout the whole customer journey to offer products and services which cannot easily be copied by the competition.
Not Just For Companies
If you think loyalty programmes are just for companies, you might be missing the point. In the future, countries too will leverage loyalty systems via smart data insights. The well-known programme by Loyalty New Zealand has recently changed the organisation’s view of its own loyalty programme. Where once the focus was on freebies, it is now heading towards meaningful and personalised insights. With the help of smart data the loyalty programme can give customers - and the government - insights to maintain their quality of life.
The Loyalty New Zealand system uses analysis in order to understand significant changes in society, in business and environmental changes. The aim is to be able to identify if and how people might end up on the street and become a financial challenge to the government. Thus, with the help of smart data, budgeting and forecasting can be planned earlier than previously and the country will not end up with unexpected surprises.
The concept might become another proof for a study conducted by the University of Canterbury that the “feel-good“ factor is more important to people who collect points than big monetary rewards.
Deeper Than Discounting
Another case is Tesco. In order to stay ahead of its competitors, the UK supermarket giant has collected data from millions of consumers through their loyalty cards. Now, Tesco could use that data for discounts on general products, but it won’t. Its approach to smart data goes deeper. Data analysis helps to promote personalised offers for price-sensitive products like butter and shower gel.
Tesco’s strategic approach to smart data is very much selective: from how people are searching for products, to what value-add they want, to why and through which indicators this might be influenced.
The result: years ago, Tesco sent out the same mailing or newsletter to some million customers. With the use of smart data, Tesco is able to target 12m loyalty card customers with 5m variations in order to provide only relevant information to their customers.
The future of loyalty programmes is based on simplification and mobilisation. The hundred good old plastic cards in your purse are not wanted any longer. So why not have them at the point-of-sale in your smartphone when your are paying? Not surprisingly, Taco Bell wants to use data from its mobile app for a unique loyalty program this year.
Connecting All Your Loyalty Programmes
But let’s go even further. Aren’t we all waiting for an app that collects all loyalty programmes and is equally able to connect the smart data dots? Payback in Germany already has that in place. People can collect their points from various retailers and brands offline and online. So the company can track the individual customer journey across brands, retailers and shops.
The future strategy is to create personas which lead to trends and the ability to close an intelligent triangle, for example from pet food to prepaid mobile cards. People who buy pet food are also likely to have kids, who in turn will want to use a mobile phone at some stage. Thus, the company targets parents with prepaid card advertising.
Even SMBs are changing their approach from customer acquisition toward nurturing digital engagement with existing customers, according to a study by Manta and BIA/Kelsey. The opportunities to work with apps and APIs for a better customer experience is offering new opportunities to loyalty programmes.
However, mobile is a very sensitive experience from a customer perspective, especially when smart data becomes obvious to them. By synchronizing different loyalty programmes, tracking of customer calls with sales people, facial recognition, sensors and movement tracking in shops or the analysis of mobile photo data, businesses might be able to deliver much better shopping experiences to their customers, but the real-time smart data exchange between parties in pre-, during and post- purchase stages depends on trust relationships and needs to follow strict legal, governance and data agreements which still seem to be somewhere in the far future.
To sum it up, the world of smarter data and loyalty programmes has just started. Now it’s up to the marketers to understand how to nurture big data in a smart way.