If data is the new oil – is that now a toxic asset when the world goes to renewable electricity?
The Value
Exchange Scale
If out of balance it can be destroyed in an instant
Affordability
Desirability
Acquiring customer data and sustaining customer loyalty for long periods is a never-ending challenge that every business faces. While most consumers are members of more than 12 customer loyalty programmes, they are active in less than 50% of those programmes. What makes some programmes more successful than others and how do you make your customer loyalty programme one of those that people use, share and talk about?
At Collinson we work tirelessly with customers to unlock the magic within their business, to design build and deliver the best loyalty programmes that set them apart from their competition and drive desired change – more mindshare, wallet share, advocacy, and Loyalty.
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To learn what we’ve done for businesses like yours and how we can leverage Salesforce loyalty management technology across Customer 360 to help you achieve your customer vision and bring your loyalty strategy to life, please get in touch.
Desirability
Affordability
If out of balance it can be destroyed in an instant
The Value
Exchange Scale
In the digital era, empires have been built on the value and power of data, with it being seen as a key goal, and benefit, from an effective loyalty programme. But, as customers wise up to the value of their data and how it’s used, do brands need to re-think their approach to ensure they’re still getting it right for customers when it comes to their data, as well as feeding the company’s desire for ever more information?
Indeed, a core tenet of loyalty is rewarding and recognising a customer’s specific behaviour, and creating tailored added value experiences for them, using the collected and self-declared data available.
Creating this balance, therefore, needs careful consideration.
The clear distinction between tactics and strategy is key to all aspects of business, but is even more critical in loyalty, considering it’s a longer-term play. This requires a strategic approach to situation evaluation, goal setting and phased-action planning – particularly as customer loyalty decisions are taken at a tactical level on the fly, with potentially damaging consequences.
And, when it comes to loyalty data understanding and managing that long-term view, combining a clear strategy with effective underlying tactics becomes even more crucial.
As the Ping Identity research showed, customers will not tolerate poor handling of their data. According to the data, over half are more concerned with data handling than they were a year ago. That’s why it’s so important that, when it comes to their loyalty programmes, brands collect the right amount of data at the right time.
Even if brands are communicative, open, and transparent about how they use customer data, there still remains a significant elephant in the room – who ultimately controls that data?
Collinson
As we’ve seen in many instances, strategic data advantages can lead to market dominance, as the likes of Amazon has shown. Loyalty programmes create a huge amount of data, yet managing the sheer volume, velocity, and variety can be an overwhelming concept for many organisations. Yet, at the same time, it’s a key goal.
As technology advances to handle new, real-time data structures on an organisation-wide basis – and as customer needs evolve regarding their rights to own and profit from their own data – the industrial ‘big data mining’ process may not be right in all cases.
If you can be transparent about data collection, clear about who owns what, ask for information at the right time, utilise smart data and set about data strategically, you will be building firm foundations for the future.
Considering the impact and aAchieving a balanced approach to customer data in these five areas should help you adopt a modern approach toview towards creating and executing your data strategy as a key pillar of loyalty-based success, for both your brand and your customers.
Be careful of a fossil fuel-type addiction to data
For today’s digitally-savvy consumers, having a say on what information they give to brands – along with more control over how that information is used – is more important than ever. At the same time, consumer rights to control their own data are now embedded in tough legislation with stiff fines for organisations that breach data protection rules. The legal ramifications of breaching data regulation (such as GDPR) are business crippling. Big brands like Amazon and Google have fallen foul in the past couple of years, with fines stretching into the hundreds of millions of pounds.
That said, consumers increasingly want brand experiences and relationships to be tailored and personalised to their individual needs and wants, and they expect companies to know about how to use their data to the advantage of the consumer.
Consequently, data can be considered a bit like crude oil, a key driver of business success, but with the potential to be extremely toxic if used in the wrong way. This creates a need for careful balance in customer data strategy, which has left many companies re-evaluating how they can provide stand-out, personalised experiences to their customers, without compromising their privacy and data protection rights.
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DATA, an asset or liability?
Three quarters of consumers would
stop engaging with a brand online
following a data breach
The use of data to push campaigns to customers with the aim of driving a short-term response, typically a sales uplift, but at the risk of damaging the overall customer relationship and trust in your brand relationship.
Promotional
Tactics
The planning, management, development, and use of customer data and insights as a core asset, used to inform critical decision-making across the business, and to support long-term strategic goals.
Data strategy
vs
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Data
Smart data, tracked and managed on a near real-time basis across an enterprise’s various departments or loyalty ecosystem of partners is much easier to track, manage and respond to than big data and might have almost all the same level of customer needs predictability. Also, from a customer perspective seeing an almost immediate response to an action could add tremendous value. For example, after earning a certain level of loyalty points or rewards in a store, an offer of a free coffee at a nearby coffee shop.
As with all points raised in this discussion there is a need for balance and to combine big data to understand customers and smart data to spot and react to their current interactions. Both have value to add and, in some cases, simple, instant smart data-based responses might have greater customer impact and WOW than a pre-planned historic data driven offer or recommendation.
Data strategy versus data tactics: know the difference
Data strategy versus data tactics: know the difference
Smart data, one step beyond
Smart data,
one step beyond
Ask for the right data at the right time
Ask for the
right data at
the right time
Customer data: Who owns what?
Customer data:
Who owns what?
Data collection: Be transparent and communicative
It’s critical that companies are aware of the potential conflict between their desire for more data, and the privacy rights of their customers. Misuse of data – or storing data in an insecure way – is a sure-fire way to erode customer trust and lose their business forever, with research from Ping Identity revealing: three quarters of consumers would stop engaging with a brand online following a data breach.
Importantly, brands must still closely scrutinise what data they’re asking for as part of a loyalty programme, and why. And, most critically, this must be communicated clearly to the customer. What is the purpose of each particular piece of data, and what is the value exchange for the customer? This could come in the form of rewards, benefits, targeted offers and content, or simply, a better customer experience. It’s crucial each data point serves a tangible purpose that ultimately adds value to the business and/or customer relationship.
Data collection: Be transparent and
communicative
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What follows are five areas to address as part of a successful loyalty data strategy:
Ultimately, this isn’t just about giving customers more control over what they share, but how that data is used, and exactly who is using it.
The selling of customer data to third parties represents a considerable revenue stream for many loyalty programmes, just look at the likes of Tesco and Sainsbury’s with their respective loyalty cards and the insight they feed to their FMCG partners for considerable fees. Of course, this can be an extremely delicate situation. Customers typically want their data to be used by the company they willingly gave it to, not by unknown third parties – unless a decent value exchange is established.
To overcome this obstacle, a new model comes in the form of permissioned data passports, where the customer explicitly indicates which third-parties can use their data, and for what purposes. Going even further, some companies are even monetising the third-party experience, by asking for customer permission to manage all third-party data use on their behalf, and paying the customer a monthly fee for the privilege.
Whether these initiatives take off is yet to be seen, but the key consideration remains – ensure your customers feel they retain ultimate control of their data, or risk them taking their loyalty elsewhere.
Who
ultimately controls customer
data?
The Customer Journey
Customers sign-up to a loyalty programme
Sensitive and detailed information can then be requested
time to build trust
For example, consider a childcare brand requesting the child’s date of birth during the initial sign-up process for their loyalty programme, which is incredibly valuable, but also potentially very sensitive information for such an early stage of the customer lifecycle. Asking for this much information so soon could represent a considerable barrier in the onboarding process. More detailed and sensitive information can always be ascertained later on in the customer journey, but it’s critical that trust is built before then. If you ask for extensive data at the very first conversation point, you risk losing their attention.
Which parts of the brand experience will you let someone else control, with their brand, at the risk of ceding your relationship power to that brand?
If you’re outsourcing how far should you go to enforcing brand and customer service standards with your partners?
Which part of the end-to-end customer experience should your brand or loyalty programme control in-house?
It’s another balance that needs to be struck: Demand too much data up front, and you’ll compromise the fast and seamless online process that customers crave. But don’t ask for enough, and your ability to personalise further down the line will be affected.
Having a clear data strategy, which results in action and execution to build and protect data as an asset (and customer relationships at the same time) is the first step. Without this, marketers often execute promotional tactics that are detrimental to longer-term loyalty.
Even worse, they can become stuck in an indecisive loop of asking for more and more insight and data, without a clear plan on how to action it. Unfortunately, this ‘analysis paralysis’ is a common repercussion among big companies who lack a clear plan of action on using customer data.
A simple, yet key, lesson can be drawn from one of the leaders in delivering strategic data value to its businesses: supermarket chain Tesco. Its highly-successful Clubcard loyalty programme was built around a board-level approach that dictated all business decisions must be informed by customer data, wherever possible.
When it comes to loyalty programmes, many companies rely on deep data mining and historic information collection for customer management actions and outcomes. The question is, does that really create a relevant and compelling customer picture, when the data collected could well be outdated or generic?
Of course, analytically-created customer profiles have a place in delivering a personalised experience for loyalty programmes, but perhaps the use of real-time contextual and behavioural data is more effective.
The need for balance in loyalty data
30+
21+
55+
Smart data
This ‘smart’ data – even if that’s just a few indicative current behavioural markers – enables real-time customer journey management, such as next best action decisioning like relevant and personalised offers.
When combined with historical, data-derived profiles, the results can be extremely powerful – a real-time, data-driven approach or single customer view (SCV) that encourages the flow of key information quickly across the entire organisation, hitting every touchpoint of a loyalty customer journey.
Similarly, advanced powerful analytics like Artificial Intelligence (AI) and machine learning (ML) can be integrated within chatbot functionality, general communications, or offers decisioning systems, helping these emerging technologies learn more about customer preferences and provide stronger, more tailored recommendations and experiences.
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Awny Elafghany
Head of Sales - Middle East & Africa
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