Former CEO of Tesco, Sir Terry Leahy, credits the company’s loyalty program, Clubcard, as the key reason the company was able exceed the performance of its two biggest competitors. Using loyalty data, Tesco was able to make better data-driven decisions.
“It was absolutely transformational for the business,” he said. “We could treat customers as individuals. And we could learn what they were interested in, what their behaviors were, and we could tailor and target all of their marketing so that it was relevant to that individual consumer.”
Successful loyalty programs are no longer just a brand differentiator, they’re also a valuable source of customer data. Loyalty programs sit on the front lines of customer data collection and for many brands, particularly CPG companies that do not have a direct relationship with customers, loyalty programs may be to the only source of data collection.
Not only will this data tell you about what your customer wants from your brand and why they purchase and engage with you, but the insight gained from a loyalty program is more relevant and accurate than a third-party data source and can tell a company so much more about where to invest their time and money, and where to tweak their strategies to grow their business.
Let’s take a look at some of the areas where loyalty data can drive effective business decision making.
Using data from a loyalty program, retail brands for example, can make informed decisions about price, promotion, and product selection. Brands have the ability to drill down to SKU-level data and understand the products their best customers are purchasing, even to the frequency. Using loyalty data, brands can personalize product and discount offers to improve the customer experience and drive sales.
This data can also be used to help drive better in-store experiences. Knowing the transaction history of customers enables brands to create a more personalized in-store experience. An example of a brand that uses data to provide better in-store shopping experiences is Nordstrom. By using sensors and Wi-Fi signals, the company tracks who comes to their stores, how long they spend and which parts of the store they visit. They have also installed interactive touchscreens in changing rooms in select stores to allow customers to order products and view stock online.
Brands that leverage loyalty data to make better business decisions are already helping set their brand apart from the competition. In today’s competitive landscape where brands are only as valuable as the service they provide, brands have a major opportunity to win customers through creating personalized experiences. This means demonstrating an understanding of a customer’s needs and wants by leveraging data to target customers with the right product recommendations and promotions. For example, Tarte’s “tarte <3 rewards” loyalty program captures data about their members which can be used to make relevant product recommendations. This provides customers with a custom service that not only makes the customer feel valued, but also helps the brand introduce new products to an engaged customer.
Additionally, adding the option to write reviews as a point earning loyalty program activity also provides brands with crucial feedback about the quality of products and services and often, how these compare to the competition.
Brands can make smarter decisions about what to spend their marketing budget on, and even save costs by being more targeted with their approach. Communications and promotions are more relevant and therefore more effective in engaging customers. Brands are also able to determine by looking at the loyalty data based on incentivized engagement activities how customers interact with their brand. For example, if customers are very active on social media, brands can leverage this data to spend more on social media marketing.
The benefits of adopting a loyalty program as a source of customer data insight is incredibly valuable for any brand. Insights can be leveraged to improve inventory management and merchandising strategy. It can help brands compete and provide the most relevant and meaningful experiences for customers, as well as increase sales, loyalty and engagement.
Make sure you understand how to properly manage customer data and use it to its fullest potential. Read “Forrester Report: Getting Customer Data Management Right” for more information.