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The Power of Loyalty & Rewards Data
Sourcing customer insights for data-driven marketing

Febuary 27th 2024 | Authored by: Cyder

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Loyalty and rewards programs have existed for decades, but with the ongoing shifts in the consumer data ecosystem, they’re emerging as a powerful tool to gain deep insights on customers and personalize the customer journey.

Loyalty and Rewards programs are gaining popularity amongst brands looking to improve customer experience. According to Gartner, a third of brands without a loyalty program today will establish one by 2027. This is largely due to consumer data opportunities, with 87% of Americans willing to share data through loyalty programs in exchange for personalized rewards and brand experiences. 

 

Through these loyalty and rewards programs, brands increase customer lifetime value and improve customer experience by:

  1. Improving Customer Retention - Customers collect points when they interact with your brand. 

  2. Incentivizing Purchasing Behaviors - Customers can redeem their points for rewards, product promotions, or discounts. 

  3. Sourcing Customer Data - Understand customer behavior through every interaction.

 

But there’s an issue. Many brands struggle with the customer data part. While loyalty programs are a promising tool for data-driven marketing, brands fall short when gathering and using loyalty data in their campaigns. 

 

This article will cover how brands can leverage loyalty data to improve their marketing efforts.

Collecting Loyalty Data

One of the main advantages of loyalty program data is that it comes directly from customers through first-party or zero-party interactions. Brands can even gather third-party data as well depending on the type of rewards program.

Zero-Party Data: Information that a customer intentionally and proactively shares with a business. Zero-party data is directly provided by consumers. Examples include surveys, sign-up forms, and redemption forms. 

 

First-Party Data: Information that is gathered through direct interactions with your website, marketing, or mobile apps. First-party data is based on observations you make about your customers, rather than what they have explicitly shared.


Third-Party Data: Information gathered by a third party that is shared with your brand. Third-party data is typically available when your customers are using a third-party rewards program when interacting with your brand.

Marketing is only as good as the data behind it. Building data-driven marketing strategies requires collecting the right data from your loyalty and rewards programs. The following are methods through which customer data can be collected from loyalty programs.

Point Of Sale (POS) 

One major challenge that loyalty programs solve is identifying customer purchases at multiple points of sale. Loyalty programs typically award customers at the point of sale. This allows brands to collect information on a customer’s purchases across brands, channels, and store locations. 

 

Loyalty identifiers can easily be added to customer transactions and keep a record of the products they purchase. Examples include member loyalty cards and in-app QR codes that are swiped at the moment of purchase. Based on this information you can stitch it to their behaviors and acquire first-party data on how customers interact with your products.

Sample data collected through this method includes: (1) Product Purchases and Returns, (2) Customer Identification, (3) Channel Engagement

In 2021, Gap Inc. launched an integrated loyalty program where members can redeem rewards for shopping in-store and online across four brands: Old Navy, Gap, Banana Republic, and Athleta. Customers can use their credit or loyalty cards to earn points for rewards while brands get insights into their shopping behaviors across multiple stores.

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Surveys and Forms 

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Beyond motivating purchasing behavior, rewards programs can also collect zero-party data on customers throughout their loyalty journey. 

 

This is done through forms and surveys. For instance, asking a customer to complete a short survey or form when signing up or before redeeming a large reward provides valuable zero-party insights. This includes information such as emails, home addresses, and product interests, that can be used to retarget the customer.

 

Sample data collected through this method includes (1) Email Address, (2) Home Address, (3) Demographics, (4) Preferences and  Interests

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Drop is a US-based loyalty program where users link their credit cards and earn points for shopping. Users can complete surveys and play games in exchange for points, which they can redeem for discounts and rewards. This encourages customers to share their feedback, which is useful in gathering zero-party insights on consumer preferences.

Customer Engagement Channels

Brands channels (web, app, extension, etc.) with built-in data collection tools can engage customers in their loyalty programs and better understand their preferences.

 

For example, loyalty programs that use mobile apps can collect location and purchase data on each customer. Programs like Starbucks Rewards use this information to provide timely, personalized offers to customers based on where they are and the types of products they purchased in the past.

Sample data collected through this method includes: (1) Online behavior, (2) Location, (3) Customer Intent Signals

Browser extensions are a powerful tool for gathering insights into consumer online behavior across the web. Cyder uses a model where consumers give explicit consent to share their data with trusted brands in return for rewards. This approach informs brands about when a customer is searching for relevant products online, enhancing clarity and efficiency.

Using Loyalty and Reward Data

Loyalty data creates a more detailed understanding of how your customers interact with your brand. Here is how you can use it to improve your marketing. 

 

  1. Unified View of The Customer: Capturing loyalty data at the point of sale allows brands to consolidate customer information across channels into a single profile. This unified view enables tailored offers by segmenting customers, improving analytical models, and enabling precise marketing actions.

    Rewards programs make this possible by assigning a customer ID to each transaction that occurs across brands, channels, and locations. 

     

  2. Predict What Your Customer Wants Next: Analyzing purchase history and zero-party feedback allows brands to anticipate customers' needs and provide hyper-personalized offers. This can be done through analytical models such as propensity modeling, which predicts the likelihood of a specific action, or next-best-action modeling, which determines the most appropriate marketing decision.

    Reward programs make this possible by understanding the products that customers have purchased to predict what products they would want next.

     

  3. Activate Customer Journeys: Once inputted into a predictive analytics model (ex. propensity modeling), loyalty data can then be integrated into marketing via Customer Data Platforms or Journey Management tools. This enables brands to launch tailored marketing campaigns across both owned and paid channels. When paired with always-on campaigns and customer intent signals, marketers can send hyper-personalized offers that are relevant to the individual customer. 

    Rewards programs make this possible by capturing the information required to retarget customers. These programs streamline the marketing workflow, allowing seamless transitions from gathering customer insights to activating campaigns.

Outcomes

Loyalty and rewards programs have a proven track record of improving marketing efforts when leveraged correctly. They provide valuable data that helps increase efficiency, brand awareness, and customer experience. 

 

Drive Marketing Efficiency

 

Data from loyalty and rewards programs allow for the delivery of tailored, automated offers directly to customers. These offers boost engagement and conversion rates compared to generic marketing campaigns. Highly personalized communications not only encourage repeat purchases but also strengthen the relationship with the customer.

 

This is especially true when paired with product recommendation engines, as customers look for products on your email, website, or mobile application. 

 

Increased Brand Awareness 

 

These programs significantly increase brand awareness by encouraging active engagement across multiple platforms. Participating customers often share their positive experiences through word-of-mouth and social media, drawing in new customers and expanding the brand's visibility. Effectively, loyal customers act as brand ambassadors, promoting organic growth and improving the brand's reputation in the market.

 

Improve Customer Experience
 

Loyalty programs improve customer experiences by allowing brands to customize interactions based on individual preferences and behaviors. This tailored approach, from product recommendations to personalized rewards, makes customers feel recognized and valued, strengthening their emotional connection with the brand. Such customization not only boosts satisfaction but also builds a base of customers who are committed to the brand long-term.

Privacy Compliance

As privacy concerns rise, brands must find solutions that comply with emerging regulations. Loyalty programs are a win-win situation as they provide the opportunity to implement transparent and permission-based data collection practices.

 

Data Ownership & Consent: Loyalty programs can empower users with the ability to customize their preferences and opt-out of data collection. These programs also incentivize users to share their data through rewards. This builds a more engaged and informed customer base.

Data Minimization: Focus on collecting relevant data through your loyalty program. This approach not only ensures data quality and compliance with privacy regulations but also enhances decision-making with precise, relevant insights.

Transparency: Openly communicating your privacy practices with your customer base is crucial for building trust. Transparency in how data is collected, used, and protected makes customers feel valued and respected, reinforcing their loyalty to the brand.

Get Real-Time Customer Intent With Cyder

If you're looking to thrive amidst a cookieless future, Cyder's data and AI strategy can help. We encourage you to book a one-on-one demo today with Cyder’s Customer Intent Solution Experts.

The power of loyalty programs in today's dynamic market cannot be overstated. These programs are much more than just a means to reward customers; they are a strategic tool that provides brands with accurate insights into their customer base. As companies look for new privacy complaint ways to source data from their customers, Loyalty programs will emerge as a top strategy in the future.

February 27th 2024 | Author: George Miron

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