How does customer data help drive a successful loyalty scheme?

Customer’s expectations of brands and businesses are ever-evolving and in periods of economic uncertainly, something as little as price sensitivity could sway a customer to reach out to another brand. For this reason, many businesses turn to implementing a loyalty scheme as a quick win to reward and retain their customers, but what are they missing by not taking the time to find out the ‘who’ and the ‘what’ behind each customer?

Data analytics isn’t a word that is new to businesses but is becoming paramount in ensuring that a loyalty scheme is implemented and executed successfully. Advancements in technology are helping businesses make decisions based on data rather than the ‘one type fits all’ campaigns, which could end up turning customers away rather than draw them in.

By implementing a data-led loyalty scheme, it can help improve your overall customer relationship, provide you with analytics that can be used to inform strategic decision making and grow your customer base. Let’s explore in more detail:

It’s all in the prep work

Having tools and services that help generate accurate customer data from the beginning of a loyalty scheme is a must. Analytics can provide an insight into behaviours such as your customer’s spending habits, purchase frequency, social media usage and in turn, will help to guide the design of the scheme.

Choosing an agency to conduct your loyalty scheme means they can help to cleanse your data in the initial registration phase and ensure your account database and key customer details are up to date and accurate. Doing the prep work will result in reducing your customer service costs, uphold your company reputation and improve the effectiveness of all marketing activity.

Following the cleanse you must begin to look at the ‘who and what’ of your customers by segmentation. Segmenting customers into groups such as your top spenders, low or sporadic spenders, or lapsed spenders and understanding their purchasing habits can help define your overall strategy and objectives. Whether that be customer acquisition, conversion, brand differentiation, cross-selling, up-selling, customer relationship management, media planning, and business analysis.

Tailored marketing campaigns

Offering a reward-based incentive for customer loyalty is the bread and butter of most loyalty schemes. However, to gain real and emotional loyalty, businesses need to consider individual needs and desires to deliver customised experiences and relevant offers to their customers.

Research from Havas, showed that 60% of brand-created content is failing to deliver, customers believed that they were receiving a lot of ‘clutter content’, which was either ignored or not relevant to their buying behaviours or habits.

By taking a deeper dive into your customers and gathering insights, allows you to develop quality content and will prove an advantage not only in your loyalty scheme success but also in any other targeted marketing campaigns.

Offering targeted campaigns such as gamification, personalised messaging, bonus points, or deals on popular products, will allow customers to feel more engaged in the scheme and less likely to turn away from the regular churned ‘clutter content’.

Retaining the right customers

Loyal customers are important because they offer the prospect of recurring revenue, predictable profits, and referrals. According to Pareto’s principal, by studying the top 20% of your customers, you can work out how to attract similar customers and increase your future profits (Forbes). So by implementing data strategies on just 20% of your top customers you will help to strengthen bonds with high potential customers and existing loyal customers.

Feedback will also help make informed marketing decisions to create targeted campaigns — which in turn allows for the best possible results from your loyalty scheme. For example, understanding your customer’s patterns throughout the scheme is important such as drops in interaction rates after initial sign up, are customers only spending on certain products? From these insights, you can tier marketing materials to address these issues and retain your customers.

Customer data in a nutshell

By improving your customer data, you can create feedback results that can be used to inform strategic decision-making. Ultimately, you can turn this information into a ‘road map for growth’ that is aligned to your business growth plans and will create a competitive advantage.

Remember, customer loyalty is a marathon and not a sprint, so be prepared to change direction with data and experience.

Find out more about our proven approach

If you’d like to find out more about how your business could benefit from a loyalty scheme, call us on 0113 887 8620 or drop us an email at hello@theloyaltyworks.co.uk.