Q&A with Loyalty360: State of the Loyalty Industry
Brierley's Don Smith & team was recently interview by Loyalty360's CEO Mark Johnson over the State of the Loyalty Industry. The full article can be found at https://loyalty360.org/content-gallery/daily-news/brierley-partners-executive-discusses-state-of-the
Brierley+Partners Executive Discusses State of the Loyalty Industry
The loyalty industry is a complicated space. Navigating it can be difficult, which is why Loyalty360 engages in discussions with brand and vendor representatives: to learn how to address its challenges and take advantage of its opportunities. Recently, we sat down with Don Smith, Senior Managing Director and Strategy & Chief Analytics Officer at Brierley+Partners, and his team to get a general idea of how loyalty has changed, what it will look like in the future, and what brands should do about it.
How has customer loyalty changed over the last few years?
Simply having a loyalty presence with a traditional do-get value proposition is no longer sufficient. Customer expectations have evolved so that the user experience must be seamless and cohesive as members move, in real time, from channel to channel without knowing where one begins and another ends. This frictionless experience has improved the flexibility in earning and redeeming rewards and enjoying member benefits. It has also boosted customer engagement. This increased interaction with the program, and the overall brand, reinforces the importance of cultivating emotional loyalty. Knowing and acknowledging your customer across channels allows you to surprise and delight them in ways that are authentic and on brand.
What is the biggest challenge that your clients face in driving deeper customer loyalty?
Not trying to boil the ocean. Brands feel a legitimate pressure to fulfill their end of the loyalty contract: leveraging customer data to deliver highly personalized marketing reflective of customer interests, preferences, and need states. A top priority in this mission is anticipating and guiding program members to their next best actions, but this focus on data-driven prescription can quickly become unwieldy, with marketers attempting to propagate too many recommendations, offers, experiences, and calls to action. Focusing on myriad objectives can result in marketing paralysis, leaving personalization on the future roadmap, with short-term focus being on disproportionately generic, discount-driven offers.
If you could recommend one thing to a client to help them with this challenge, what would it be?
Leverage data analytics to winnow down the next best action marketing matrix, allowing marketers to focus on a small set of manageable but highly strategic business objectives. Consider the case of product recommendations. Data scientists can deploy recommendation engine logic and adaptive learning algorithms to populate a seemingly endless array of specific products mapped to specific customers. Unfortunately, marketers wishing to action these recommendations may be unable to pull together the massive visual assets, offer sets, and personalized copy corresponding to these prescriptions. But if we can help marketers identify those (preferably high margin) products or services that are stickiest (i.e., ones that increase lifetime value, shift share, and habituate shopping cadence), we can identify a minimum winning constellation of products that become the focus of a practical and effective marketing regimen.
What can we do as an association to help bring simplicity and efficiency to the industry?
Simplify the marketing narrative. Many brands feel the pressure to move their marketing vehicles from zero to 100 miles per hour right away. Not only is such a trajectory unreasonable. It also leads these practitioners to adopt advanced tech solutions without first developing the solid theories of action and strategic plans that are enabled by the shiny new tools of data science. Industry practitioners benefit most from concise, straightforward case studies and best-practice vignettes. Marketing literature presently resembles a sea of hyperbole, dominated by ambiguous and overwrought buzz words: artificial intelligence, augmented reality, real-time customer journey maps, etc. A series of thoughtful A/B tests positioned as “quick wins” may move the ROI needle more effectively than a loftier, unproven, “holistic” solution.
What is “next big thing” for customer loyalty?
Hyper-personalization. Historically, loyalty programs have relied on data-driven initiatives that look at behaviors that have already occurred, such as transactions. Prescriptive analytics provide brands with a forward-looking approach to loyalty by understanding customers’ intentions and anticipating their future needs. Facilitating this level of hyper-personalization becomes a powerful tool in engaging with a brand’s most loyal and valuable customers in ways that delight them without feeling intrusive and disconcerting.
How sophisticated are most brands’ customer experience and customer loyalty initiatives?
Most brands’ loyalty programs are simple. The basic value proposition is primarily focused on rewarding transactional loyalty, with limited integration into the broader customer experience. When it comes to enhancing CX and loyalty, efforts to make them more sophisticated are often thwarted if they are planned and executed in silos. The owners of the loyalty program and customer experience reside in different departments, and initiatives are developed and managed independently, an approach that leads to a disjointed and underwhelming experience for the customer. The brands who understand that these initiatives must be intertwined and integrated across multiple touchpoints are the ones who have successful and sophisticated programs.
Should all brands strive to have the brand recognition of Apple or Amazon? Why or why not?
Recognition is only one measure of a brand’s value to its customers and the organization. While most marketers would love to have the brand recognition and market dominance of an Apple or Amazon, few organizations will ever have the resources necessary to get to that level. And to paraphrase PT Barnum, although there may be no such thing as bad publicity, there is such a thing as bad brand recognition. On balance, most organizations would be better served investing their limited resources in ensuring their products and services are consistently delighting their customers and making sure potential future customers know just how great they truly are. Your brand doesn’t need to be known worldwide or nationwide. It just needs to mean something very positive and valuable in your corner of the world: where your customers and potential customers are.
How should brands manage data?
The two guiding principles for data management are proactive security and democratization. Regarding the former, brands must be vigilant stewards of their customers’ data, maintaining a security regimen that rises above the formal regulations (e.g., those conferred by GDPR, CCPA, PCI, etc.). Customer data should be used with a customer-centric focus, delivering a better and more relevant experience for the consumer. Data should never be sold or brokered, and affiliate marketing efforts should be done sparingly, with individuals explicitly consenting to participation.
Once anonymized, these secure and protected data assets should be modeled and made available to stakeholders across the brand. In far too many organizations, marketing data is the province of marketers only, and decision makers in other areas (e.g., merchandising, store operations, supply chain, finance, etc.) do not benefit from the rich customer-centric data curated through programmatic loyalty and structured CRM. Democratized data strategies should include the creation of a semantic metadata layer that enables quick queries and visualization by non-technical users, with permissions carefully governed. Propagating a single source of customer data truth is a rising tide which lifts all stakeholder boats.
What strategies should they adopt in relation to stricter data regulations?
The primary strategy we advocate is proactive security, comprised of multiple elements/tactics:
-Support the “right to be forgotten”
-Support the ability to respond to data subject access requests (e.g., consumer queries concerning the kind of data brands keep on them)
-Encrypt data at rest and in transit for all PII
-Collect only the minimum data elements needed, and justify in writing the purpose served by each element
-Put data protection agreements in place between businesses and service providers
-Train staff on PII data protocol
-Actively test and monitor all security solutions, staying ahead of hackers and other threats to privacy
-Document all PII processing
What is the single most important thing that you have done that has helped a client increase customer loyalty?
Understand the importance of retention over mass acquisition. Leveraging the right customer data to deliver a meaningful experience to active members increases retention and grows lifetime value with an ROI not typically matched by acquisition marketing. For example, our proprietary BALOR (Becoming Active Lapsing Out Ratio) analysis helped a client to understand that “increasing loyalty” does not mean a singular focus on member acquisition, which implies scaling the program and then equating it to an increase in the number of loyal customers, because it is even more important to maximize member retention.
In order to understand how to effectively optimize customer retention, clients must be diligent about understanding the needs of their customers, asking the right questions, actively listening, and capturing the right customer data. The best customer experiences are derived when clients analyze and leverage their data, including transactional history, personal profiles, preferences, interests, and any other insights which customers have trusted to provide them, for a truly personal, relevant, and meaningful relationship.
What does the phrase “customer journey” mean to you?
Customer journey is the totality of all experiences, considerations, and interactions customers have with a brand. Contextualized through the lens of maximizing customer loyalty, the journey can be decomposed into myriad paths that reflect different need states and business objectives. Beyond the table stakes of designing intuitive digital and in-store experiences and minimizing obvious pain points like endless phone trees and wait times, it means anticipating and exceeding your customers’ expectations across every touchpoint. Leading firms constantly evolve their customer knowledge, collecting consumer insights and data that they leverage to personalize, differentiate, and enhance communications, products, services, and engagement at every critical point of interaction. Examples include an airline texting a gate change before a customer gets to the airport and a product recommendation that truly appears to be based on one’s past purchases (as opposed to the “most popular” merchandise in market). Following this more elevated approach to the “customer journey” is not easy, but it creates a virtuous cycle whereby customers are transformed from mere prospects to loyal brand advocates.
Have you created the ideal customer journey for your customers? Why or why not?
No. While there is no “ideal customer journey,” we constantly strive to make our clients’ customer experiences as “ideal” as possible. A marketer’s work is never done. Customer journeys must constantly evolve with changes in communication and distribution channels, products, services, consumer tastes, and legal and data privacy concerns, among other factors. Whether designing a new program or evaluating a client’s existing loyalty solutions, we leverage an approach we call TARGET (Touchpoint And Relationship Gap Evaluation Tool) to identify opportunities to improve the customer journey, removing pain points and adding highly targeted, personalized communications and initiatives to drive incremental purchases and engagement. Embracing a strong culture and philosophy of continuously delighting and learning from your customers through journey augmentation enables leading organizations to strive for that perfect customer journey—a seemingly Sisyphean task, but one that leads to invaluable customer loyalty.
If you could ask a competitor or customer one question, what would it be?
How are you preparing today to evolve your loyalty program for the future? This is a critical question given the ever-changing marketing landscape and increasing customer expectations. To meet growing customer expectations, marketers have had to evolve their communication tactics, to think beyond just driving traffic, to provide customers easy access to their brand on every device, at any time, and in any location. Clearly, technology capabilities for the future must stay in sync with customer expectations, allowing for the transfer of the customer’s information to their next chosen device in real time. Also, they must deliver technological innovation that anticipates ongoing increased utility for the customer, delivering more pertinent value to the customer’s daily life.
What is the future of customer loyalty?
Customers are seeking to be seen and acknowledged in ways that make them feel special and important. As brands seek to strengthen engagement and deepen emotional loyalty, the variety and uniqueness of customer experiences becomes critical. From money-can’t-buy experiences to VIP member benefits to a frictionless and easy customer journey, expectations have shifted. For many brands, there will always need to be a component of discounts and coupons, but the loyalty offering should be dynamic and personalized enough to pepper in relevant experiential elements that drive emotional loyalty.
How important is personalization?
Personalization is critical and more than simply inserting a member’s name into an email. By aggregating the purchase and interaction data from the member, the brand can refine marketing collateral and online content, make customized product recommendations and improve customer service. All of these enable hyper-personalization, thereby creating an elevated customer experience that deepens brand engagement and grows lifetime value.
What does authenticity and trust mean to you?
Trust and authenticity are anchors of the relationship between the brand and the member. They exemplify how the brand is there to provide a valuable, rewarding, and sincere experience to the member (authenticity) and that the member has confidence that the brand is willing to protect both personal data and the larger relationship (trust).
How do you project authenticity and trust to your customers?
Loyalty programs can project authenticity and trust by maintaining a member-centric philosophy throughout all actions and decisions. By focusing on how to improve a member’s journey and experience, brands can reinforce and even grow members’ trusted view of a program. Incorporating product reviews, maintaining top industry standards around data security, allowing members to personalize their communication frequency, format, and content—these actions show that the brand is taking reasonable steps to ensure a safe and trusted relationship with their members and customers.
What does your roadmap look like?
We are aggressively investing in technology, analytics, and strategy capabilities to keep our clients’ programs at the forefront of their industries. We are advancing our technology capabilities to enable the differentiated experiences that members are demanding across retail and digital channels. We are inventing new ways to leverage data and advanced analytics to unlock insights that directly improve the members’ experience and drive profitability for the brand. We are rethinking our strategy deliverables and accelerating our delivery timeline to allow clients to more quickly capitalize on technology and analytics-enabled opportunities.
Brierley team members interviewed included Hiba Hamati, Randy Hernandez, Renea Keish, Andrew Lanciani, Grant McCloud, Tom Pfaff and Mike Peeler.