How loyalty programs combat customer identity management challenges

In a study on identity resolution from Forrester Consulting commissioned by Epsilon, Forrester found that, at best, only half of brands are capable of fundamental identity solution capabilities, like finding customers across devices, controlling messaging frequency and building a unified customer profile. 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 with the scan of a loyalty card.

However, in our new digital-first age, many loyalty marketers miss out on how their loyalty program can help fuel their customer identity efforts. Customer identity management is foundational to modern marketing, as it helps brands understand who an individual customer is across multiple channels (and devices) to better target and optimize marketing efforts, including digital advertising. This in turn helps improve customer experiences which can lead to more sales transactions.

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.

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Loyalty engagement powers identity

Winning loyalty programs are all about member engagement. Getting a customer to enroll, updating them on their point balance, 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. And, 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 to communicate on a 1:You level.

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 as it provides a high-volume source of customer-to-device connective identity data.

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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

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

Additionally, loyalty program profiles containing multiple identifiers, such as 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 frictionless (e.g. capturing a phone number at the POS instead of having to provide a loyalty card). With a frictionless interaction, you will be able to provide a much better customer experience.

The bottom line

While marketers have long used loyalty programs to tie transactional data back to a known customer, many miss the opportunity to use the same customer identity data to tie consumers to devices and, ultimately, fuel their larger customer identity management efforts. So, if you have a loyalty program today, ask how you are using customer identity data to feed into your brand’s overall identity management strategy. You might just uncover an untapped source of customer identity data to help connect your brand to your customers and provide a better experience.

**This post first appeared on L360.