How loyalty programs combat customer identity management challenges

Customer identity management is a puzzle that many brands can't quite solve.

A study on identity resolution from Forrester Consulting commissioned by Epsilon found that brands aren't driving maximum value and are continuing to make the same mistakes. The study reports that, without strong identity management, brands can’t deliver relevant messages, reduce waste, and optimize their ROMI (return on marketing investment).

As marketers struggle to “connect the dots” between the ever-expanding number of devices customers use to connect with their brands, they often overlook an important ally in resolving customers’ identity across channels: a loyalty program.

For years, marketers have known that loyalty programs play an important role in tying customers’ transactional behavior back to a known individual in order to optimize marketing efforts. For instance, retailers can tie in-store purchases back to a customer simply by connecting to a loyalty account.

However, in today's age of hyperconnectivity, many loyalty marketers miss out on how their loyalty program can help fuel their customer identity efforts. A recent Epsilon research report found that over half (64%) of respondents indicated that companies don’t do a good job using personal information to create personalized experiences.

Customer identity management is foundational to modern marketing. It helps brands understand who an individual customer is across multiple channels (and devices) to better target and optimize marketing efforts, including digital advertising. When marketers attribute customer behavior and interactions accurately, they can build better customer relationships.

In order to manage the myriad of customer touch points that capture customer identities, many marketers have chosen to build or partner with companies to maintain an identity graph or CDP (customer data platform) in order to create a single view of the customer across channels and devices.

Unfortunately, what is often overlooked is how a loyalty program can help fuel such identity management platforms in order to help a brand better recognize a customer across all channels.

Loyalty engagement powers identity

Winning loyalty programs are all about member engagement. Receiving early access to promotional events, offering special discounts on products, and challenging them to reach the next level/tier are all examples of how a brand engages with a customer and provides better customer experiences through a loyalty program.

With each engagement, the marketer has the opportunity to capture important data that ties a known member profile with the device they are engaging with. Additionally, since your loyalty program data is opted in, you can leverage it using an anonymous customer ID that makes it easy to have back-and-forth conversations with your customers and deliver powerful, human experiences.

For instance, upon enrollment, a customer provides some level of identifying information (e.g. email address, phone number, and in some cases physical address), which can easily and immediately be tied to the device they are using to perform the enrollment. Most times, the customer must go through the process of a multi factor authentication to also prove they are a real customer.

Further, as a member interacts with the loyalty program communications (e.g. emails) and touchpoints (e.g. mobile app, website, and even the call center) they reinforce the connection between the customer and device. All of this loyalty engagement data is incredibly valuable to the marketer. It provides a high-volume source of customer-to-device connective identity data, empowering loyalty marketers to communicate with their customers seamlessly by offering personalized interactions.

Identity insights in action

Retailers, for example, will find numerous benefits by leveraging the customer identity data fueled by a loyalty program. The continual refresh of this data can be used for targeting “next best product” offers via digital media to program members, as identified audiences with purchase history can be used to target highly relevant digital advertisements.

Marketers can also expect a significant increase in identified web traffic on first-party sites, which can be used for better site personalization and browse-behavior-driven email retargeting.

Additionally, loyalty program profiles containing multiple identifiers, such as a physical address, email address, phone number, social media handles, etc., can serve as a “golden thread.” This thread stitches together data from other channels where a full profile is not captured, in many cases to make the interaction seamless (e.g. capturing a phone number at the POS instead of having to provide a loyalty card).

**This post first appeared on L360.