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As a result of constantly increasing digital connection between brands and consumers, brands have access to an enormous amount of customer behavior and purchase data.
However, for many the question is how to action on that data and leverage it in impactful ways to drive personalization, engagement, and customer loyalty. In the 2023 Customer Loyalty Trends and Perspectives report, Loyalty360 found that while many brands are still early on in their personalization efforts, it continues to be a trend top of mind for marketers.
Loyalty360 spoke with some of our supplier partners to hear their recommendations for brands to utilize personalization in their loyalty efforts, how to effectively collect and use customer data, and how to measure the success and ROI of personalization.
The Current State of Brand Personalization Efforts
Loyalty360 supplier partners are optimistic about the growth of brand personalization efforts, but often see a disconnect between understanding the value of personalization versus effectively implementing it in a way their customers will accept. In 2022, 98% of organizations interviewed by Dynamic Yield revealed they believe in the benefits of personalization, with a majority looking to further investment into personalization.
“Our research shows that while there’s still work to do — especially when it comes to putting the right processes and methodologies in place around KPI setting, audience strategy, and test result circulation (to name just a few areas),” says Ori Bauer, CEO of Dynamic Yield. “Brands are advanced in their personalization efforts and becoming more sophisticated by the day.”
While brands understand the value of personalization, many are still developing procedures and technologies to effectively implement personalization into their loyalty strategies.
“Personalization is a bit like playing bass guitar — easy to do poorly and really difficult to do well,” says Colin Eagan, Partner, Experience Strategy for ICF Next. According to a 2022 Twilio survey, 62% of consumers said brands will lose their loyalty without effective personalization while only 35% of brands said they were successful at omnichannel personalization.
Although there is a disconnect between the desire of the consumer and the implementation of brands, both statistics Eagan cites from the Twilio survey have increased since 2021. This increase shows how brands focus on personalization becoming more prominent in customer loyalty, as personalization becomes more important to consumers and more brands seek to implement it effectively.
According to Loyalty360 supplier partners, brands like Smartbox and Airbnb are currently implementing successful personalization on their platforms. These brands utilize first- and zero-party data to build trust with consumers while simultaneously providing meaningful advertisements and offers.
“Airbnb delivers a consistent authenticated experience from app to website to email, and make this look easy, even though on the backend it’s extremely complex,” says Eagan. “Definitely not a personalization program many can hope to replicate, but definitely worth looking up to.”
Tim Glomb, Vice President of Content and Data for Cheetah Digital, adds, “Smartbox instituted a zero-party data acquisition strategy using Marigold Experiences to understand the psychographic data from customers that would allow them to truly personalize email and owned channels.”
Due in part to effective technology integration and part to building trust through using customer-offered data sources, brands looking to improve their personalization efforts can learn from the ROI Airbnb and Smartbox have experienced. These brands are seeing great increases in program revenue and customer interaction with their targeted communication through email, push notification, and SMS.
Collecting and Using Meaningful Customer Data
The key to first- or zero-party data is consent. First-party data is collected when a brand pulls information on customer purchases or reward redemptions from its own loyalty platform. Zero-party comes directly from the customer in the form of surveys or preference selections.
The key to successful data collection is to provide a meaningful value exchange for customers. Customers want to know if the brand will use the data responsibly and brands can show this through quickly providing customers with discounts, promotions, or offers that directly tie in with the data collected. When customers see the brand uses their information to provide meaningful communication and advertising, they feel more comfortable providing more data.
“93% of global consumers have claimed they would share personal data with favored brands,” says Glomb. “70% of U.S. consumers said they would offer data on their hobbies in a value exchange with favored brands. 83% said they are interested in sweepstakes. 61% claimed a simple discount would be enough.”
Consumers want their favorite brands to know more about them, because those brands can then provide more customized offers. Additionally, consumers like receiving discounts in exchange for the data. Brands should take advantage of this kind of customer engagement, especially since zero-party data is much easier to collect than it seems.
“There’s no reason it has to be hard to collect zero-party data,” says Rachel Bicking, Chief Digital Officer for Tenerity. “We aim to keep things as seamless as possible — with a very easy and friendly onboarding experience. Customers can indicate preferences and select reward categories.”
This kind of data collection allows brands to quickly act on the data collected and deliver hyper-relevant communications and offers. The result is that brands keep learning about their customers and keep them engaged.
Katie Berndt, Senior Director of Strategy, Experience, Research and Insights with ICF Next adds that this data collection should not be a long or arduous process for the consumer. She says, “brands should collect zero-party data (also known as declared data) in bite-sized moments so it doesn’t feel overwhelming to customers.”
Brands should keep data collection efforts short while providing immediate reward for providing the information. Brands who keep this value exchange swift and beneficial for their loyal customers see the return through increased engagement.
The Cadence of Effective Communication
As the name implies, personalization requires brands to use their collected data to understand what their customers want from a product/service standpoint and which methods, how often, and when customers want to receive brand communications. Loyalty360’s 2023 Preference Center & Privacy Report reveals there is no one-size-fits-all approach to brand communication because preferences on communication channel and cadence can vary significantly from brand to brand.
“The only way to determine the right cadence of communication or interaction with a specific audience is through proper A/B testing,” says Bauer.
Every brand will go through a certain amount of this testing with its communications. The key to affective experimentation is to lean into the customer data, especially zero-party data. Sending short surveys on how and when customers like receiving communications simplifies the process.
“First and foremost, ASK what each member really wants and needs,” says Glomb.
Berndt adds, “Having a robust preference center is an investment brands need to make to have a central repository for any zero-party data that has been shared by a member.”
Leaning into first-party data helps brands follow trends in customer engagement with communications. Brands can use that data to determine which methods receive the most responses at which times.
“It’s important for brands to audit the types of one-to-one communications they are sending,” says Berndt. “Then set up a governance strategy to help ensure the right message is being sent at the right time and through the right channel without overdoing it.”
As customers continue to change, their communication preferences will also change. Brands must continually listen to customer preference data to keep up to date on the cadence of communication.
“Treat individuals as individuals such that no single customer will experience the same cadence,” says Bicking. “The idea behind member communications is that it’s just another opportunity to have a conversation with a customer.”
Loyalty360 supplier members recommend using communications beyond informing about a product or service. As Bicking says, it’s about recreating the kind of conversations members would experience with in-store associates.
Cheetah Digital’s Glomb recommends, “Aim to enhance and elevate their lifestyle with your messaging that isn’t ‘selling’ them. Over 30% of consumers love early access or exclusive content, beyond just a sale or promotion.”
ROI: Measuring Effective Personalization Efforts
As previously mentioned, only 35% of brands believe they deliver successful omnichannel personalization. This statistic presents two challenges for brands:
When it comes to measuring personalization, brands have multiple options to measure the success of their efforts. One method involves brands measuring customer holdout. They can measure either individual tactics with campaign holdouts or holistic efforts with global holdouts.
“By comparing the holdout to the treated group, brands can measure behavior change, calculate lift, and significance of that lift,” says Emily Merkle, Senior Partner of Analytics + Data Science for ICF Next. “If there is significance, then use the lift amount to calculate incremental impact and subtract out costs to get ROI.”
Brands can also measure engagement with brand communications. Because of various privacy controls — such as Apple’s tracking restrictions — metrics like open rates can often be skewed. However, there are other communication metrics that help brands determine ROI on personalized communications.
“Strive to increase the speed in which you deliver triggered messaging,” says Glomb. “These are easily measured in both speed of delivery and engagement or result of the send.”
Additionally, brands should check for pain points in the overall customer experience and address those. For example, if the brand sees high bounce rates on its homepage, then it should deploy personalized banners or widgets to increase engagement.
“There are different success metrics to look at through different parts of the journey,” says Bauer. “It’s about understanding the key DPIs to influence and tracking them against specific campaigns launched, refining those results over time, and understanding how they all play together as part of the overall program’s growth.”
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