Recently, Forrester's VP Principal Analyst, Mary Pilecki, joined Epsilon's VP Strategic Consulting, Tamara Oliverio to talk about how marketers can leverage their customer loyalty programs to unlock invaluable zero- and first-party data. As a follow up to their conversation, we asked Mary a few key questions that can help marketers start to use their loyalty program data in unique, strategic and actionable ways to connect with customers.
Q: How can loyalty programs accelerate zero- and first-party data collection? Can you share some examples?
Pilecki: Many customers want value in exchange for sharing their personal information. Loyalty programs support this by offering some sort of currency, such as points, miles, or experiential rewards like personalized offers or early access to new products. The Forrester Analytics Consumer Technographics® Benchmark Survey, 2021, shows that after cash rewards, loyalty program points were the second highest motivation for consumers to share personal information across the US, UK, and Australia. Sparkling Ice, a US beverage product, offers its members points in exchange for completing a short personality quiz and identifies a flavor based on the results.
Q: Once the zero- or first-party data is collected, what do you see as brands’ biggest challenges for using it?
Pilecki: A key component of leveraging zero-party data is delivering relevance. In other words, the data collected should only be data used to build personalized experiences for the end customer. Brands need to ensure that the data collected does not go into the void. Rather, it should enhance the customer experience with better product recommendations or personalized offers.
Q: How does gamification play into this strategy? Can you share some examples?
Pilecki: Marketers use gamification to learn more about consumer behaviors, product affinities, and purchase intent and it’s popular. Seventy-six percent of US online adults state they are “a gamer” according to Forrester Analytics Consumer Technographics Technology, Media, And Telecom Topic Insights Survey, 2021. Kellogg’s launched an updated loyalty program in 2022 that gives tokens for performing activities like taking quizzes, uploading receipts, and watching videos. This is a mutual value exchange for both Kellogg’s, which learns more about its customers’ preferences as well as drives purchase behaviors, and the consumer, who gets a relevant gamified experience.
Q: In addition to data collection, what other strategies should loyalty marketers keep in mind to improve personalization
Pilecki: Customers shouldn’t have to tell you the same thing about themselves twice. Brands need to leverage the zero- or first-party data collected from their loyalty programs across the enterprise, but data silos often prevent other teams from tapping into those insights. Align your marketing, product, customer service, and sales teams to maximize your collected data’s impact and infuse insights across your organization.
Q: How should brands measure the success of their loyalty programs and prove ROI to stakeholders?
Pilecki: Loyalty is an outcome that has traditionally yielded customer retention, enrichment, and advocacy. The business case for loyalty involves estimating revenue and calculating any savings or efficiencies gained from the initiative. Brands are saving by reducing the amount of third-party data they buy and substituting first- and zero-party data. They should then subtract the costs — typically for technology, rewards, implementation, and ongoing operations — and multiply the result by their risk factors, such as cost overruns and missed goals. The end result will show the ROI of the loyalty initiative, which is typically less than one year.