LOYALTY MARKETING Data Fuels Personalization Strategies and Better User Experiences Lured by an immediate discount and the promise of future rewards, consumers hand over basic personal information such as email addresses and income levels to retailers, restaurants, hotels and airlines when they join loyalty programs. But too often that doesn’t translate to a long-term relationship. presented by Dear eMarketer Reader, eMarketer is pleased to make this report, Loyalty Marketing: Data Fuels Personalization Strategies and Better User Experiences, available to our readers. This report is a great example of eMarketer data and insights that explores how brands are leveraging data and consumer behaviors to enhance loyalty programs and increase engagement. We invite you to learn more about eMarketer’s approach to research and why we are considered the industry standard by the world’s leading brands, media companies and agencies. We thank you for your interest in our report and Lexer for making it possible to offer it to you today. Best Regards, Nancy Taffera-Santos Nancy Taffera-Santos SVP, Media Solutions & Strategy, eMarketer eMarketer, Inc. www.emarketer.com 11 Times Square, Floor 14 [email protected] New York, NY 10036 LOYALTY MARKETING: DATA FUELS PERSONALIZATION STRATEGIES AND BETTER USER EXPERIENCES Lured by an immediate discount and the promise of future rewards, consumers hand over basic personal information such as email addresses and income levels to retailers, restaurants, hotels and airlines when they join loyalty programs. But too often that doesn’t translate to a long-term relationship. ■ Successful loyalty programs use the opportunity Consumers in Europe, Latin America and North to collect first-party data to better understand how America Who Are Satisfied with Their Loyalty to engage with customers and deliver relevant Program Membership, by Category, Jan 2018 experiences. According to experts who spoke with % of respondents eMarketer, these are the three tactics that should be Grocery 50% employed when structuring a loyalty program: Credit cards 48% ■ Personalization. Using data to get a deep Dining 48% understanding of loyalty members, going beyond Gas 47% demographic profiles and buying preferences to learn Hotel 47% what content in messaging will best engage members. Specialty retail 44% ■ Customer experience. Using data to guide the brand Drugstore 44% as it tracks the consumer journey, so a marketer can Car rental 43% anticipate which benefits members will most likely Consumer packaged goods 42% engage with after the initial sign-up. Movies 40% ■ Omnichannel. Learning through interactions from Apparel 38% members how they access the loyalty program and Airline 36% ensure that the program functions across multiple channels, both online and off. Note: ages 18+ Source: Bond Brand Loyalty, "The Loyalty Report 2018" in partnership with Visa, March 19, 2018 WHAT’S IN THIS REPORT? This report looks at how brands 236804 www.eMarketer.com are leveraging data and consumer behaviors to enhance KEY STAT: A January 2018 Bond Brand Loyalty survey loyalty programs and increase engagement. It also gives found that across most industries, less than half of loyalty examples of marketers successfully using personalization, program members are satisfied with their programs. customer experience and omnichannel tactics. CONTENTS 2 Loyalty Marketing: Data Fuels Personalization Strategies and Better User Experiences 3 Loyalty Sign-Up: The Start of a Beautiful Relationship? Not Always 4 Personalization 6 Customer Experience 8 Omnichannel 10 Key Takeaways for Loyalty Program Marketers 11 Editorial and Production Contributors LOYALTY MARKETING: DATA FUELS PERSONALIZATION STRATEGIES AND BETTER USER EXPERIENCES ©2018 EMARKETER INC. ALL RIGHTS RESERVED 2 LOYALTY SIGN-UP: THE START Ways in Which Membership in a Rewards Program Influences US Internet Users' Shopping OF A BEAUTIFUL RELATIONSHIP? Behavior/Decisions, by Demographic, Nov 2017 % of respondents in each group NOT ALWAYS Gender Age Total Female Male 18-34 35-54 55+ Loyalty programs can be a great tool to gather Tend to shop more frequently at 41% 31% 43% 37% 31% 36% first-party data, understand what motivates your stores where I can earn rewards Schedule my shopping to take 23% 19% 24% 21% 19% 21% customers and create personalized experiences. But advantage of rewards-related too many marketers are not taking advantage of the specials and promotions Tend to shop at stores where I can 20% 20% 19% 23% 18% 20% opportunities presented by their loyalty programs, earn retailer rewards and rewards that help me save on fuel discouraged by failures to engage and sustain Tend to shop only at stores where 14% 19% 19% 17% 13% 16% relationships after the sign-up. I can earn rewards Will switch brands or shop at a 14% 17% 22% 17% 9% 16% different store if I can earn more “Those monetary means of enticing a customer to a valuable rewards or save more brand for the first time do good work up front in the money Link my rewards program to 13% 16% 16% 13% 16% 15% relationship,” said Scott Robinson, vice president of my credit card so that all of my design and strategy at Bond Brand Loyalty, a customer eligible purchases automatically earn rewards engagement agency. “But those aren’t the things that Will spend more money or buy 13% 15% 24% 13% 5% 14% sustain engagement over time, and brands are starting to more than I originally planned if I can earn more rewards or save realize that.” more money Wait for members-only promotions 13% 12% 13% 14% 9% 12% Loyalty programs aren’t even that great at enticing that help me earn more rewards or save more money customers to be loyal. Just 36% of loyalty program None of the above 15% 16% 8% 16% 20% 15% members would patronize stores where they could earn A rewards program does not 20% 24% 22% 18% 26% 22% rewards more frequently than other places, according to influence where I shop Note: n=1,086 research from loyalty programs company Excentus. Only Source: Excentus, "The Road to Rewards 2017: Loyalty in the Fast Lane" 21% of respondents said they scheduled their shopping conducted by Ipsos, March 12, 2018 to take advantage of reward-related promotions, and 236312 www.eMarketer.com slightly more said a rewards program did not influence “The biggest challenge we see with loyalty programs is where they shopped. Just 16% said a rewards offer that there are so many options—loyalty has become less would motivate them to switch to a different brand loyal,” said Rachel Bicking, senior vice president of data or store. and analytics at Connexions Loyalty, a loyalty marketing support firm. LOYALTY MARKETING: DATA FUELS PERSONALIZATION STRATEGIES AND BETTER USER EXPERIENCES ©2018 EMARKETER INC. ALL RIGHTS RESERVED 3 A loyalty program that works, however, can offer Brands face two challenges in this process. First, marketers a chance to reap their own rewards and lead they must be able to cultivate a feedback loop where to better customer relationships if the right data is being messages, offers and the like encourage a response. captured and then employed to deliver relevant offers Second, brands have to sort through the data received and messages. via those responses to begin to understand consumers’ preferences. “It’s all about the data,” said Don Yee, senior consultant at ecommerce consultancy FitForCommerce. “One of the “How you approach a consumer depends on a lot of primary reasons to have a loyalty program is it provides different variables,” said Don Black, director of product a means for the brand to collect data on customers. The management at global information services provider more customers who sign up for a loyalty program, the Neustar. “How they engage with the brand from the initial more opportunities you have to grow your business. sign-up process—the reason they opt in, the products they express interest in, how they found the initial offer “You need to understand the customer to deliver the from the brand, contact information—those are all value they expect, and make sure that the rewards they different pieces of information a brand can gather.” receive are relevant to them,” Yee said, adding that if that’s not happening, there’s no engagement, and no loyalty. But that’s just the beginning. Brands will then work to segment loyalty members. Companies such as Neustar Another challenge: Consumers now expect companies work with brands to create “clusters”—groupings they have a relationship with to tailor experiences of customers based on identifying elements such as to them. lifestyle, life stage or purchase history. The clusters allow marketers to begin tailoring relevant messages. “Being an identifiable customer is the new norm,” said Sean Claessen, executive vice president of strategy and For example, loyalty program members from a particular innovation at Bond Brand Loyalty. “If Starbucks teaches cluster will go to the brand’s website, where they will be me that I don’t have to wait in line for a $3.50 purchase, shown an offer specific to that cluster. “If they initially if Uber teaches me that I don’t wait outside in the rain responded to a discount offer, that’s what you show them for a cab, then I now have that expectation in many when they come to the site,” said Lori Walker, Neustar’s aspects of my life. Brands are increasingly realizing they senior manager of product management. “You know can do a better job for their better customers if they can that’s what they respond to.” identify them, can change the experience for them and personalize in ways that better suit the consumer.” It builds from there, according to Walker, as subsequent interactions reveal more information such as device Marketing and industry experts interviewed for this preferences, time of day they are most engaged and report continually came back to three key tactics to use the wording that is most effective.