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Data derived from customer loyalty: more valuable than ever before?

By Contributor, Mon 10 Jan 2022

Article by Cheetah Digital, VP go-to-market APAC, Billy Loizou.

With the death of cookies, the 'value exchange' between businesses and their customers' willingness to share personal data has never been so important. Activating cookie-less data to enhance customer experience and derive insights is a craft and skill that marketers need to invest in and develop. 

Marketers agree they need to survive, lead and stay relevant in a cookie-less society - a reality that is right around the corner. Leading with loyalty and adopting a Zero Party Data strategy will help marketers survive by creating long-lasting customer relationships with a clear and concise value exchange. 

It's time for a new marketing recipe.

How will life change for marketers?

It's a stressful time for marketers. Many believe that their lives will be disrupted to the nth degree without cookies. However a quote from Apple CEO, Tim Cook gives reprieve to stress and shows there will be life after the death of cookies.

"Technology does not need vast troves of personal data stitched together across dozens of websites and apps in order to succeed. Advertising existed and thrived for decades without it. And we're here today because the path of least resistance is rarely the path of wisdom. If a business is built on misleading users, on data exploitation, on choices that are no choices at all, then it does not deserve our praise. It deserves reform."

This reform to digital marketing, which is leading to the death of the cookie, is based on international regulations. The General Data Protection Regulation (GDPR) is a regulation on data protection and privacy in the European Union. This model is being adopted for the APAC region, which will disintegrate the use of cookies in digital marketing. 

Brands, publishers and big tech could face legal ramifications, potential class actions and regulatory penalties for breaking GDPR. Firms will no longer be able to assume that if they cannot identify someone through their IP address, for example, that the Privacy Act does not apply to them. Under lawmakers' proposals, it will. 

Challenges, opportunities and saying no to 'renting' data

But there is life after the death of the cookie. Zero-party data can help marketers connect with their customers. This preference data comes directly from the consumer. There are no intermediaries and no guesswork — it's psychographic data that includes the customers' values, attitudes, interests and personality traits.

The CEO of one research centre notes how data processes are clunky and outdated. 

"Research shows that 70 per cent of consumers accept [consent] terms, even if they are not comfortable with them. When we ask them why, three quarters say it's because it's the only way to access the product. There isn't any way for consumers to express their preferences and acquire products that meet those preferences – because it's a take it or leave it proposition.

"More than 90 per cent of Australian consumers are uncomfortable with how their data is collected and shared, and they're disempowered to do anything about it. They want the government to intervene and protect them."

Consumers are more protective of their personal data than ever. In the Australian Community Attitudes to Privacy Survey 2020, 7 in 10 respondents nominated privacy as a major
concern for them, whilst 87% wanted more control and choice over collecting and using their personal information. 

So what is the solution? Companies need to stop renting data and build their own database through direct-to-consumer (DTC) relationships. The key to future success is building a loyalty initiative that offers mutual value. Customers can willingly provide their personal details in exchange for a better customer experience. 

Why loyalty?

Loyalty nowadays has become a multifaceted tool. It helps bring customers back to a brand and simultaneously helps brands understand their customers. 

Loyalty began as a simple token program in the 1700s in the United States. Then, American retailers began to give customers copper tokens with purchases that they could later redeem on future purchases. 

In the 1800s, UK company Green Shield awarded stamps for purchases at select retailers that could later be redeemed for catalogue products. Fast forward 200 years, and loyalty programs have evolved from the run of the mill stamp card to sophisticated programs benefiting both retailers and customers. 

The objective of customer loyalty programs has historically been to create levers that marketers can pull to incentivise desired behaviours among consumers, namely, to increase basket size or reduce the time between transactions. But now, they are so much more than that. Loyalty programs aren't just about offering discounts and vouchers to members; they're an extension of the brand and provide an 'experience' beyond the product or service that retains customers. 

But what makes a great loyalty program? Another CEO shares seven zones. They recommend that organisations implement each of these points to ensure they have a strong, steadfast loyalty program that will benefit both customers and brands. 

1.    Business: First and foremost, a loyalty program must be profitable and sustainable
2.    Members: Organisations should understand their loyalty member's behaviours and beliefs to the brand
3.    Program: The loyalty program needs to be meaningful and desirable to consumers 
4.    Team: The organisation's employees need to buy-in to the loyalty program and be willing to endorse it
5.    Technology: The technology enabling the program should be fit-for-now and fit-for-future 
6.    Data: Ensuring the loyalty program captures the data necessary for analysis and for relevant action 
7.    Dialogue: Any company dialogue to the customer needs to be dynamic and personal at all times

A multifaceted loyalty program

One iconic brand provides an example of an evolved loyalty program. This year they launched a mobile-first loyalty program rewarding customers for engaging with the brand via social media.

The loyalty program delivers added value to customers and, in turn, allows them to develop a deeper understanding of their customers. This symbiotic relationship has created better customer experiences while growing to 12 million members in just two years. In addition, nearly 50% of all DTC revenue comes from their loyalty members, and they see significantly higher spending from loyalty members vs non-members.

Loyalty data has helped this brand in five ways:

1.    Identification: Being able to identify customers across devices and channels
2.    Insight: Learn more about what customers love to do
3.    Personalisation: Help create messaging that resonates with customers and therefore drives trust and data enrichment
4.    Preference: Understand and activate the relevant brand message on customers' preferred channel
5.    Attribution: Measure the results of marketing campaigns

Unlocking the value of loyalty in a cookieless future

The importance of loyalty programs should not be overlooked as a critical part of a marketer's toolkit. Loyalty programs are the perfect replacement for connecting customers with brands in new and innovative ways now and beyond a cookie-less world. They give organisations a clear, zero-party data approach to unlock deeper insights into their customers, unlock fresh CX opportunities, and open powerful new ways to forge more long-lasting and meaningful customer relationships.

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