It's easy to review a customer and see what they have purchased, the key is to use customer profiling to link the when and why.
Loyalty Strategy

Using Loyalty To Profile Your Customers

Image by 200 Degrees from Pixabay

Loyalty is so much more than a solution to reward your customers. Loyalty is also about data, insights, analytics, personalised experiences, and above all it’s about relationships.

By: Laura Lloyd

Image by Pexels from Pixabay

If you were new to the dating market, you wouldn’t go on a first date and reveal your favourite brand of toothpaste or give your new love interest your full medical history. Slightly extreme examples, but the point being is that at the start of any relationship you don’t dive in head-first and reveal everything there is to know about you on date one and you shouldn’t expect your customers to do the same either.

Whilst loyalty provides the opportunity to gather a wealth of insights into your customers and their behaviours, it’s important to take your time, build the relationship and in doing so, build a profile of them through a range of different profiling techniques. More information on these techniques can be found here.

The Truths of Loyalty

Before we delve too deep into loyalty profiling, let’s just take a moment to recall some of those oh-so-important truths that surround loyalty.

1) All Customers are NOT equal — you can’t assume that all of your customers’ wants and needs are the same. Some of your customers are more valuable than others. And although in the pursuit of market share, it is normal to drive for a greater customer reach, your focus needs to be on the acquisition of the right customers.

2) Relationships must be proactively built and managed — building strong relationships and the equity that you can build from that rapport isn’t going to be gained instantly.

3) Dialogue is the foundation of customer relationships — it is the two-way interaction and communication between your brand and your members that will really drive and deliver the complex customer insights that will give you a competitive advantage.

Gathering insights — the role a loyalty program (or strategy!) takes

Customer loyalty comes in many different guises and you don’t have to have a loyalty program to have highly loyal customers. Think about Apple, Lamborghini, Harley Davidson, or Google — or even the other end of the spectrum like Heinz Ketchup or Hellmann’s mayonnaise — they are all brands that have a strong loyal customer base. For products like Apple, they are able to track their customers across the different product usage, understand their buying habits and product engagement, and use insights to inform future features. Their loyalty programme is the experience, and they make it their mission to understand and have influence over every element of that experience.

A study by Teradata and Celebrus Technologies found that 57% of consumers are happy to part with personal information, BUT you have to give them context and valid reasoning and make sure that the experience they subsequently have is personalised and bespoke to them.

Linking the When and Why to Identify Next Steps

It’s easy to review a customer and see what they have purchased; the key is to use customer profiling to link the when and why. In the late 90s, ‘nappy-beer syndrome‘ was identified thanks to the power of data processing on check outs. A correlation between the sale of nappies and beers emerged, digging deeper it was the late-night trips to the store by men to purchase emergency nappies that correlated to the growth of beer sales, likely picking up a few whilst they were there. Through analysing the data, they were able to identify the trends in ‘non-baby’ products of customers regularly purchasing baby products and use that information to target and cross-sell promotions that would trigger an emotional-purchase response.

Accuracy of the Profiling

One of the most important aspects of profiling is understanding the potential weaknesses in your data. Profile data needs to be kept up to date. Customers change, relationships change, products, lifestyles, and even strategies change. There are many external factors that can influence the data you gather — country privacy laws, cultural or religious sensitivities, or even the mood the customer is in on the day they enter the data. There are also internal factors that can affect the accuracy of your data such as the knowledge of the person inputting it, their ability to listen, and their ability to record information. Don’t ask for the data only once. You must keep reviewing the data, asking the customers to keep it up to date and or updating it from difference sources. Make sure you are bringing in data from across the business to inform the analysis and reviews.

Putting it into Practice

Here are 5 key steps you can take to ensuring your data is informing your business strategy moving forward:

1) Gather all the data that you have across the business and assess where it can be linked to a customer.

2) Identify what data you are missing from your customer profiles.

3) Look at how you can request information from your customers at significant points ensuring you are not adding pain points to the customer experience.

4) Identify who in your business needs to have access to the data and what they are going to do with it.

5) Agree who by and how often the data is going to be analysed and how results are going to be presented.

Have a look at three customer profiling techniques you could use in your loyalty programme.

Laura Lloyd is a Loyalty Specialist and Director Of Client Services at Stream Loyalty.

Using Loyalty To Profile Your Customers
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