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Will the Customer Loyalty Data Pump Run Dry?

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By: Bill Hanifin, CLMP™ |

Posted on December 5, 2017

Data Pumps Run DryThe Challenge of Collecting Customer Loyalty Data.

By Bill Hanifin

If data is the new oil, then the customer data collected by loyalty programs must represent refined high-octane fuel at the marketer's pump. There is research, survey, and anecdotal evidence that consumers possess heightened awareness of the value of their personal data to third parties.

It's no surprise then that consumers are developing higher expectations of receiving equitable value in exchange for this data. Continuing with the fuel metaphor, these rising expectations translate into higher prices at the "pump" for marketers seeking to fill their tanks with valuable customer data. And, characteristic of all scarce and perishable resources, there is always the risk of shortage.

For marketer's eager to apply a variety of technologies to grow their quant of customer knowledge, there are distinct areas of risk that challenge the willingness of consumers to share data with their favorite brands:

  1. Consumers have already given lots of data away, but they remain conflicted about how far to go. A recent study from Oracle found that while "57% of 15,607 consumers surveyed from four major global regions want instant one-click checkout that can only be enabled through creation of a payment profile on an e-commerce site, 67% stated they did not want to set up such account profiles". Marketers need to solve this puzzle as it will surely affect their continuing ability to collect incremental bits of data from these disappointed consumers.
  2. There is expressed worry by many Americans about whether Google, Facebook, Amazon and others have truly become "Big Brother" and know too much about us. Though it is probably too late to recapture our exposed identities, governmental bodies are taking steps to enact legislation such (witness GDPR) to limit future use of consumer data.
  3. Demographics in the US are changing and communities of "new Americans" are on the rise. There is already an estimate of about 14% of US population classified as "immigrant". With US immigration policies in flux and general uncertainty about whether the US has a welcome mat out for immigrants from across the globe, there are tangible reasons why these people groups may be less likely to complete loyalty program profiles, completely, much less accurately.

Taking inventory of these influences, marketers have reason for concern. But consumers are giving off conflicting signals about how concerned they are about their personal privacy. For example:

  1. Researching personal heritage is extremely popular these days. We all seem to want to know where we came from and to learn more about our true identity. An increasing number of Americans are suddenly willing to gather their DNA through the swipe of a QTip and send the matter off to a post office box for analysis.  Ancestry.com publishes they have over 4 million customers in its DNA database. Seeking to know more about our family tree by placing a stamp on our DNA and mailing it to strangers for analysis signals that when the perceived value gained in return for our data is high enough, we'll do just about anything to get what we want.
  2. Using Google, Facebook and other apps to login to third party sites is common. Too bad, that most consumers don't truly understand the level of data access being given to these single-sign-on gateways. This is another example of consumers being willing to look the other way while releasing personal data in order to get what they perceive to be worthwhile value in return.
  3. Software license agreements that are presented for signature when buying a new computer, mobile handset or other connected device are rarely read by consumers. It is doubtful that people know what permissions they are giving to the vendor and in this case, their acquiescence is contractual, not voluntary. "Just say no" doesn't work here. If you want your device, you check the box saying "yes".

My conclusion is that consumer attitudes about the data they are giving away is largely a matter of perception. If they sense low value, high risk, and have a degree of control, they push back. If they have a strong desire for your offer, have limited control or are resigned through contractual obligation, they comply.

Where do customer loyalty programs fall in this continuum and what can marketers do to maximize their opportunity to build customer knowledge?

  1. Loyalty and engagement programs are supposed to be "fast, fun, free and easy" (thanks Rick Barlow). Consumers control their decision to participate or stand on the sidelines. If brands sponsoring data-driven marketing programs want high levels of engagement, they must communicate how they will use the data they collect and how they will protect it.
  2. Because consumers are in control of their decision to participate, brands are wise to muster the highest possible perceived value for their members.  Consumers will evaluate the offers presented to them as a central part of their decision-making process to participate.
  3. Because loyalty program members can opt-out at any moment - or just fade away through inactivity - marketers must treat the data they collect with respect. Protect it and use it wisely. It's time to stop talking about "relevant offers" and actually deliver them.

For brands seeking to fulfill a mission to become more "customer-centric", there needs to be a fresh examination of how customer data is managed and protected. There also needs to be a new wave of creativity applied to loyalty program structure and offers. If what you are operating today, or planning to launch tomorrow, looks like your competitor's offer, you had best return to the drawing board.

Though it is the consumer's hand on the spigot of the consumer data pump, the direction they crank the handle depends on how you collect, manage, protect, and communicate about the data you are soliciting from your valuable customers.

Bill Hanifin is Chief Operating Officer at The Wise Marketer and a Certified Loyalty Marketing Professional (CLMP)