Used properly, loyalty reward programs offer a chance to create a dynamic, customized marketing campaign down to the level of the individual and create a more effective message that offers the individual consumer exactly what they prefer at the moment they need or want it.
Market segmentation that divides customers into groups made sense when gathering data on an individual’s path to purchase was nearing on impossible. Now that it’s possible to gather intel on the entire buyer’s journey at the level of the individual, both online and offline, why cloud your focus for hazy, imprecise results.
Take the example of two women, both aged 34, with roughly the same income in the $85,000 range, homeowners in the suburbs and both with kids. One woman prefers sporty clothes and spends her time and money on adventure travel. The other prefers wine tasting in the Niagara region, wears modern clothes and spends money on cultural events in the city core.
More general marketing segmentation would lump the two women together in the same group and market to them in the same way and with the same message—and be not nearly as effective as if they were to know and address their individual preferences.
Create a unified online and offline view of the customer’s behaviour
The first step is to create a unified online and offline view of the customer over time. That means gathering data on an individual that is linked specifically to that person and tracks their engagement with businesses across all devices and channels. It’s now possible to track a consumer online with cookies and tracking pixels that link actions to individuals.
The Loblaws reward system is an excellent example of how online behavior is linked to offline purchases. The grocery chain offers a points card free to all customers that combines a financial incentive (20,000 points for $20 dollars off a purchase of groceries) with personalized marketing designed to introduce new products and retain customers.
Customers swipe their card at each purchase and receive a weekly email with points offers catered to their individual preferences. Loblaws can control the amount of points it offers at an individual level and customer-wide basis. Even with some of the highest prices, it can appear as if there is a reward for shopping when the points offered, e.g. 500 points for a single purchase, are translated into cash (50 cents).
The rewards system at Loblaws is limited by at least one factor. Even though they have apps, they don’t make use of the phone number or text messaging. If a customer doesn’t click on their email and has not visited their store, they have less power to attract customers back. For this reason and others, it is becoming increasingly critical to gather a customer’s phone number in additional to their email address.
Collect a phone number for better access and data
A phone number is the most stable personal identifier of a customer and connects the business to the most underused channel for marketing—text messaging. Text messaging has an astonishingly high open rate of 97% (email open rates pale in comparison with a cross-industry rate of just 20%). The control customers feel and its unobtrusive presence all contributes to that extremely high open rate. In fact, customers prefer this channel as means of marketing even over social media.
Text messaging to connect rewards programs
No other channel has the same 24/7 access to customers as text messaging. With a penetration rate of nearly 80% in the U.S. for smartphones, more people are connected and take their phone with them absolutely everywhere. This unlimited access to a customer enhances any market research data by leaps and bounds.
First, by offering customers the option to receive reminders by text messaging, your rewards program improves the chance it will gather the most data on a customer. Phone numbers also offer access to rich profile data on a customer that outstrips what’s provided by email, including income, pets, children, education, job title, address, home ownership and more. That rich profile data opens a door to more hyper-personalized messaging to the customer that combines online behavior with offline data and actions.
Text messaging to retain customers
As an added bonus, by linking an outbound text message reminder to the individual cycle of a customer, the phone number also becomes means to reduce customer churn. When a customer hasn’t visited the story within their typical buy cycle, a short reminder via text can be the push needed to bring them back.
Once you have a unified view of all customer behavior, online and offline, through the phone number, online cookies, and a rewards system such as the one by Loblaws, the critical question is: can you act on that data?
Save data for 400 days
Gathering and saving that data for at least 400 days becomes an exercise in futility if that data doesn’t provide a direction to act. That direction involves two processes, relevant messaging based on hyper-segmentation that delivers timely, cross-channel communications, when the customer needs and wants it.
Create personalized ads on the fly
Soon, ad creative per market segment will be the dinosaur in the room and seen as archaic and coarse. There are already companies such as Conversant that can serve up hyper-personalized digital ads built in the moment and based on online behavior in just milliseconds. Combine that with the insights gathered through the phone number identifier, the ads become 10 times more powerful.
Let’s return once more to the example of the two women, one who prefers modern clothes and the other who leans toward sporty wear, but both who shop online and in-store at the same clothing retailer.
Knowing the purchase history of the sporty woman and her browsing history, the clothing retailer could feature items from their collection geared to sporty wear. But if she starts searching for evening wear, the options can be immediately updated to feature options that fit into her needs and wants at the time. The same goes for the woman who prefers modern wear.
The point is that the system needs to be continually updated and reflective of their needs at the time. This is the power of a truly integrated rewards system – it gathers the most data on current customers to speak to them in the right moment and using the right channel.
This article originally appeared in the December 2016 issue of Direct Marketing.