Loyalty provides the data for stronger engagement

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By: RickFerguson |

Posted on January 5, 2016

By Andy Wood

According to Andy Wood, Managing Director for GI Insight, consumers are not only very aware of how companies are using their personal information, but are also aware of how much value it has. In this guest article, Wood reveals how a new a study by GI Insight illustrates the power of loyalty programmes when it comes to influencing customer behaviour and engagement by putting the data to use to guarantee that customer expectations are being met.

If a loyalty programme is run to its full potential, it will ensure longstanding ties are built between a brand and its customers. But in today�s Big Data, multi-channel world offering freebies, discounts and points is no longer enough for a loyalty scheme to achieve lasting success.

Too many marketers assume that �loyalty programmes� and �reward programmes� mean the same thing and that it is possible to reap the same benefits from both. This is not the case; a loyalty programme is a sophisticated means of tracking every transaction between a customer and a brand and can even involve simultaneously pairing this data with a customer�s online behaviour. Once a company has hold of customers� data, it can use the information to analyse and understand their purchasing habits, needs, personal circumstances, interests and preferences. This reaps far more benefits for a company than a rewards punch card offering free coffees.

Consumers should always feel, rightfully, that the aim of a loyalty programme is to reward them for their custom � however, companies need to have a more sophisticated agenda. Insights garnered from a company�s loyalty programme are the real pay-off � not just the opportunity to offer promotions. The key to keeping long-term relationships with customers is to effectively use the data which has been generated from a loyalty programme. Analysing your customer data provides you with the information you need to target them with relevant and well-timed personalised communications.

A GI Insight survey of 1,000 UK consumers carried out in 2015 confirmed that customer insight generated from a loyalty programme provides the type of long-term business-customer relationships that consumers want, whilst positioning the brand to coax greater and more spending.

According to the GI Insight research, a whopping 87% of consumers say that, where a company has a good loyalty programme they have continued to purchase from that brand and 33% have even switched brands because they liked the programme offered by the other brand. In addition, 82% of consumers have confirmed that, now the economy is picking up, they will keep buying from businesses whose programmes have delivered value in the last few years.

Loyalty programme are nothing new, which is why the research revealed that 76% of consumers expect any credible retail chain to have a programme in place. Businesses need to be on board with the fact that consumers are seeing them as real hallmarks of a well-run and trustworthy business, with 76% also saying they only feel comfortable handing over their data to a company that has a �proper loyalty scheme� in place.

However, companies must not be under any false illusions that getting consumers to sign up to a loyalty programme is enough to keep them returning to that brand. If the resulting insight is not being used effectively to target registered consumers, then there is nothing stopping them taking their business elsewhere. Indeed, GI Insight conducted a survey in 2014 which revealed that, even though 94% of UK consumers belonged to at least one loyalty programme, only 47% of members remained active participants and a mere 27% felt the companies running programmes effectively analysed their needs and sent them relevant offers.

Once you win permission to capture a consumers� data, the work has just begun. You then have to provide members with a worthwhile benefit in exchange for them sharing their data � something which is relevant to their shopping behaviour or they will get use out of in the future. In other words, loyalty programmes need to be treated as a value exchange and only then will companies be in a position to really meet their consumer�s expectations, in terms of both marketing communications and the service or product they are offering.

In the age of Big Data, it comes as no surprise that consumers are rather savvy when it comes to understanding how their data is being used. This means that they expect companies that they buy from regularly to recognise them across channels and interact with them accordingly.

At a time when more and more businesses are seeking omni-channel customer engagement, the loyalty programme can be hugely beneficial. Not only does the loyalty programme help engender relationships by providing a historic single customer view of buyer behaviour patterns that yields long-term insights, but this information can increasingly be tied into real-time online activity to respond to customer actions in the moment.

This is why the loyalty programme is fundamental for companies wanting to achieve a customer-focused approach. Loyalty programmes are one of the few consistent ways companies can ensure they are equipped with the information necessary to truly engage customers across any channel."

Andy Wood is Managing Director for GI Insight.

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