Inundated With Data, Loyalty Programs Going Back To Basics

January 23, 2014 Ben Myers

What’s the future of loyalty programs in Canada? Getting back to basics, according to Jeff Berry, Senior Director, Research & Development at LoyaltyOne.

Jeff Berry - Senior Director, Research & Development at LoyaltyOne

Jeff Berry is Senior Director, Research & Development at LoyaltyOne

During the Jan. 9 Ernst & Young breakfast panel in Toronto, Berry made the comments to some leading Canadian retailers and brands.

“Lots of loyalty programs have gone far afield [from] what they originally intended to do, which is all about profitably changing customer behaviour,” he told the Dx3 Digest following the panel.

Loyalty distracted by data

An abundance of customer data across multiple platforms has put brands into a novel conundrum: What to do with all the data,  and how to best engage customers on each of these platforms in order to achieve the original goals of their loyalty programs.

With the added challenge of, perhaps, becoming distracted by these tasks.

“Now they’re worried about: How do they bring this technology in, [or] how do they incorporate social media into what their offering is,” Berry said. An objective of many brands for this year will be to cut out the distractions.

Getting actionable data

“What I’m seeing is this real focus on, ‘Let’s actually cut out things that are not giving us data that we can do anything with’,” he said.

“So if I capture social media data, it’s great, there is insight there, but if I’m not in the position to be able to do anything as a company… then why do I really need that data?”

The competition for customers’ attention in Canada is fierce. The average household now has an average of 8.2 loyalty programs among its members.

Panel observers ranked relevance and abundance of choices as top factors impacting their loyalty programs.

Panel observers ranked relevance and abundance of choices as top factors impacting their loyalty programs.

What’s the point of all the points?

Paula Smith, Partner, Assurance Services at Ernst & Young in Toronto said more so than points, Canadians are looking for experiences or more tangible perks to create loyalty to a particular brand worth their while.

“You’ve got to not only give them the points, you’ve got to give them the experience.”

“People are starting to discount what they can get, in terms of the value, from these programs,” she said. “You’ve got to not only give them the points, you’ve got to give them the experience.”

Smith said Loblaws’ PC Plus loyalty program, which customizes the recipes it sends to customers based on their purchase habits, is a great example.

“That’s how you’re going to differentiate yourself from the rest.”

Panel observers ranked changing customer behaviour and personalization as factors impacting program effectiveness.

Panel observers ranked changing customer behaviour and personalization as factors impacting program effectiveness.

Commoditization of points

“The points don’t mean anything anymore to people,” Smith said. “There’s a commoditization going on in the industry, and unfortunately, when you’ve got so many programs out there, it’s hard to figure out which ones are the good ones until you get up to the cash register.”

Encouraging customers to redeem their points, and finally see the benefit of their membership, is one of the best ways to build loyalty. Berry said that some retailers are now offering bonus points when a customers redeems in order to encourage them to finally see a tangible reward for their loyalty.

Berry said profitably changing customer behaviour – the ultimate objective of loyalty programs – always need to be kept in mind when collecting or using data. In 2014, getting back to basics could mean a bigger benefit for retailers and brands, less points, but more and better customers.

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