With new technologies and methods appearing each day, it's important to remember the basics of customer segmentation.
Data-Driven Marketing

Customer Segmentation in Loyalty Programs: Continuing the Conversation

Our recent webinar on customer segmentation featured Mary Pilecki, VP, Principal Analyst at Forrester, Suryaveer Singh, Head of Loyalty at ENOC, and Bartosz Demczuk, Managing Director at Comarch. Christopher Sandstrom, Director of Marketing, North America at Comarch moderated the session. The experts discussed how today’s companies can use AI to identify patterns in loyalty program member behavior, divide clients into groups based on personal interests & preferences, and ultimately – build stronger customer relationships. Didn’t get a chance to view the webinar earlier? It’s available on-demand

After the Experts’ Roundtable, we opened the webinar to questions. We didn’t have time to answer all of the questions – so we’re continuing the conversation and providing answers below!

Q: What is the difference between creepy and unique when it comes to personalization?

Suri: Your consumer today knows exactly when they’re giving out data, they know why they’re giving out data, and they know what you’re going to do with that data. If you are not going to be using the data, you shouldn’t be asking for it. Many organizations collect and gather a lot of data with no plan of what to do with it. But the game has changed — that’s not how it works anymore. You need to have goals, plans, and strategies and it has to play into the logic of what you are going to do with any data you acquire. Your consumer knows what he wants, where he wants it, and how he wants it , and it’s your job to deliver it to them. And for that, nothing but relevance works. And you can only be relevant if you’ve got the right data and you use it the right way.

In terms of customer segmentation, the journey is constantly evolving and companies need to come up to speed with technology and how they adapt and use that technology — but the main goal is customer relevance.   

Q: How do we differentiate between loyalty and gamification?

Suri: Loyalty and gamification work hand-in-hand. Gamification is creating new routes of engagement, and loyalty is all about engagement. With gamification, you’re moving away from transactional loyalty to a more engaging mechanism where customers engage with your brand at different opportunities. It’s become far more easy and accessible to companies to be able to incorporate these kinds of things. Gamification simply allows you to engage with your customers in a more fun way. 

Q: Looking ahead at 2022, what should be the data points that people are focusing on? What are the lifestyle triggers we should be paying attention to?

Suri:  One thing that’s never going to change is collecting transactional data. That is something companies are going to continue to do because, at the end of the day, you need to have transactional information to tailor-make offers, to understand your product movings, and so on. But having said that, you need to move on to collecting social behavior data. It could be affinity to certain social groups, or what we call tribes, and various associations to different kinds of interests that consumers may have, which may be beyond your business because your consumer is interacting with various brands and different lifestyles. 

A brand that does this very well is Redbull. It’s one of my favorite brands as far as owning a space is concerned. They’ve acquired a particular space where no competitors are really present. It has nothing to do with the product — we all know what Redbull is at the end of the day. 

You must embrace technology. Look at what you offer to the customer within your own brand, and what value do you offer outside of your brand? There are 24 hours in a day — how long can you associate with your customer within that day? It’s not just about wallet-share — it’s becoming about mind-share.

Bart: From our perspective, we should gather data across all available channels. We should ask these questions openly. Once we have the data, we can clearly predict customers’ lifestyle triggers. For example, if you’re a pet owner, there are important lifestyle triggers that are different from non-pet owners. Thanks to AI, we can predict these lifestyle triggers and use customer data accurately. 

Q: Is loyalty only about earning points and getting rewards? 

Bart: From my perspective, we don’t need points anymore as long as we are able to say ‘thank you for being loyal’ in a proper way. In many cases, actually, points are very frustrating from the customer perspective, because after being very loyal to a brand, they often do not have the proper amount of points to feel truly appreciated. Rather, it may be better to surprises and award the consumers at the right time.

Suri: If you look at the data, you might be surprised how much customers love and value points only if brands give the points real value. And it’s not about points — it’s about perceived value. Human beings work on perception — the perceived value is all that really matters. 

Q: How do we strike a balance between budget control and the effectiveness of loyalty rewards?

Suri: There is always the question of what is good and how much is enough when it comes to budgeting and rewards. It’s important to consider how important customer loyalty is to you. Brands should be looking at customer value in the long run. What is your long-term goal and what is the lifetime value that you’re looking at for your customers? 

Q: Do you have any insight on personalization and segmentation techniques from a B2B perspective?

Bart: In a B2B environment, you’re rewarding a totally different set of behaviors. For example, we launched a B2B program for Coca-Cola in Turkey. This was on a huge scale — nearly 250,000 stores. The beauty of the B2B program is we are rewarding business partners for being loyal while educating them. The key to staying different in B2B is by improving awareness of the product. 

Q: What are some tips to ‘hook’ the user on the loyalty program? Since the rewards of loyalty programs come after users’ effort and time, how can you make them ‘sticky’ throughout the journey (while they aren’t attached enough to stick with the brand yet)?

Bart: Some popular ways to ‘hook’ the user include anniversary based rewards, which are guaranteed if a member is active in the program long enough, future instant benefits, which reward important milestones in the customer journey, and of course — a bit of mystery and gamification to bring more emotion (like mystery offers that allow a member to redeem them immediately, but the longer they wait, the greater the reward will be). 

Q: What is the importance of Influencer marketing in loyalty programs?

Bart: You should not consider influencers as long-term partners (since they are not loyal, and motivated only by your budget). This is the main problem when working together on loyalty programs — as the approach from influencers is not necessarily to focus on the long term, but rather on instant benefits.  Be very careful while selecting who you choose to work with — if you choose the wrong person, it could harm your brand values. Assume you have no direct influence on their actions post-campaign. You should rather focus on micro-influencers or even guerilla social marketing. 

Interested in learning more about customer segmentation in loyalty programs? Download our eBook: The Road to AI-Driven Tribal Segmentation

This article is republished with permission from Comarch.

Customer Segmentation in Loyalty Programs: Continuing the Conversation
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