Marketers work diligently to educate consumers on their offerings and inspire those consumers to find solutions that fit their lifestyles, but doing so is challenging.
Consumers are more connected than ever; they also interact with brands across multiple channels, and they compare prices in the blink of an eye. However, marketers can still help drive additional purchases from their current customers.
For many companies, that effort takes the form of a loyalty program.
Benefits of a Loyalty Program
Though not new, loyalty programs are growing in popularity. A whopping 91% of retailers have loyalty programs, according to a recent Experian Data Quality study. Those programs are marketers' way of motivating customers to keep coming back and engaging with their company and their content.
Though loyalty incentives vary widely, the most popular format is for a company to provide points based on given actions that ultimately lead to a reward. This process is followed by offering free shipping and coupons.
The good news is that the bulk of companies are seeing benefit from these programs.
Three quarters of companies say they are seeing a positive return on investment from loyalty programs. Top benefits mentioned include customer retention, revenue attribution, and increased lifetime value.
Challenges of a Loyalty Program
Though there are clearly benefits to loyalty campaigns, there are also challenges. Some 81% of companies face challenges related to their loyalty program.
The top challenges mainly relate to poor contact data and lower-than-planned volumes of individuals signing up for the program, but marketers also say their challenges include not having enough customer data and consumers not engaging with messages.
A lack of consumer insight makes loyalty programs less effective, but it's important to note that the lack of insight also decreases the effectiveness of marketing programs as a whole.
Loyalty members can provide valuable insight to marketers on their best customers. Marketers can then translate this information into profiles to find more consumers that fit a given profile, and ultimately, improve conversion.
Problems around consumer insight arise from two sources:
- Large amounts of inaccurate contact data
Some 23% of marketers are challenged by poor contact data in relation to their loyalty campaigns. It is such a large problem that 63% percent rated "data collection" as a top strategic priority for loyalty programs this fiscal year.
Companies believe about a quarter of their contact information is inaccurate in some way. That means marketers are unable to communicate with individuals across multiple channels and that they also will have issues analyzing information and gaining actionable insights from their data.
To correct this issue, marketers need to clean up customer and prospect contact data. This includes data already existing in the current database but also any information coming in across a multitude of channels. Though marketers do not always control the information outside of the marketing database, they need to work with stakeholders from around the business to ensure information feeding marketing analytics, in particular those pieces of data related to a loyalty program, are accurate. - Lack of consolidated customer information
To gain insight from data, the information needs to be consolidated, accurate, and accessible. We have already addressed accuracy, but many marketers also lack consolidated information.
On average, companies have about six different databases. Though all loyalty information may be contained within one database, it frequently can contain duplicate records or information about the customer may exist in other databases around the organization.
Marketers need to try and get all information about each consumer into a single record for analysis. This will make analysis far more accurate and quicker. Moreover, doing so allows insights to be gained much faster so they can make a material impact on how marketers message to their loyalty program members.
To increase the lifetime value of each customer through valuable loyalty messaging, marketers need to understand their consumers and what is most relevant to them. That level of personalization cannot be reached without reliable data and analysis. This all starts with a foundation built on data quality. Be sure to review your data strategy as you look to optimize your loyalty program.
