According to a recent Monetate survey, 93 percent of companies with an advanced personalization strategy experienced revenue growth in 2018, and 77 percent of businesses that exceeded their revenue goals had a documented personalization strategy in place. This is solid attestation that customers reward personalization with wallet share; in a Segment report, 44 percent of consumers said that they are likely to become repeat buyers after a personalized experience with a company. This improved customer experience ultimately translates directly into an increase in revenue for companies.
A Personalized CX Drives Customer Loyalty
Personalization is now table stakes for marketers because it drives customer loyalty, which is why according to research from a Harris Poll survey sponsored by Redpoint Global, 37 percent of consumers will stop doing business with a brand that fails to offer a personalized experience. Retaining and growing a brand’s customer base requires that marketers prioritize personalization investments across the board, for loyalty program members and non-members alike. While loyalty programs serve a core constituency, delivering personalization to non-members also enhances CLV by fostering an emotional bond that strengthens brand loyalty apart from loyalty rewards.
Loyalty Members Crave a Hyper-Personalized CX
Successful loyalty programs produce many benefits, which illustrates the importance of the customer experience. According to an Accenture Interactive study, loyalty program members generate up to 18 percent more revenue for retailers than non-members. By incentivizing repeat customers, loyalty programs also increase retention, reducing acquisition costs. A recent Brand Keys study indicates that brands spend 11 times more on recruiting new customers than retaining existing ones, yet a loyalty increase of 7 percent can boost lifetime profits per customer up to 85 percent and a loyalty increase of 3 percent can correlate to a 10 percent cost reduction.
A Superior CX that Drives Loyalty Means All Rewards Are Not the Same
To produce these gains, loyalty programs can no longer rely on the traditional buy-and-get model that fails to impress today’s connected consumer. A Bond Brand study reports that just 25 percent of loyalty program members are satisfied with the level of personalization in their programs. A loyalty program member is not incentivized to remain loyal to a brand if they receive the same benefits as everyone else. According to a Forrester report, 59 percent of US online adults who belong to a loyalty program say that receiving special offers or treatment that are unavailable to other customers is important to them. Of regular loyalty program participants, 69 percent say that special treatment is “important”.
To Provide a Differentiated Customer Experience, Truly Know Your Customers
To provide special treatment, a brand must know and understand a customer throughout the entire anonymous and known customer journey. Offers, discounts, rewards, and other benefits of loyalty program membership must be relevant for a customer at a precise moment of interaction, and customized to align with the complete customer lifecycle. Far more than transactional, a modern loyalty program treats a customer according to the customer’s behaviors, purchases, needs, and wants in totality across the entire omnichannel journey.
This is where brands are failing customers, according to the Harris Poll survey. An analysis of the customer experience gap revealed that consumers rated brands 15 points lower than marketers rated themselves across every dimension of customer experience – privacy, personalization, customer understanding, and consistency across channels. Based on this data, marketers are clearly underestimating the importance of customer experience.
Close the CX Gap for Members and Non-Members
A customer experience gap is also detrimental to loyalty outside the confines of a loyalty program. Just as loyalty members demand personalization across an omnichannel journey, non-loyalty program members are still capable of developing strong brand affinity when a brand provides a superior customer experience. An Acquia study reveals that 75 percent of consumers say that they are more likely to be loyal to a brand when a brand understands them at a personal level. The survey of 5,000 consumers was not restricted to loyalty program members.
In addition to valuing personalization, customers develop emotional bonds with a brand when a brand shares certain values or connections, such as environmental, social, or even political issues. The Havas Meaningful Brands 2019 report reveals that brands seen as “meaningful” and viewed as making the world a better place have seen wallet share increase nine-fold, with a 24 point greater purchase intent.
While understanding a customer’s values may be getting ahead of the game for most brands, the thrust of the point is that driving increased relevance for each and every consumer is the true objective of personalization, and an imperative for increasing loyalty and customer lifetime value. At the core of this heighted relevance is the capability to know everything there is to know about a customer.
Loyalty, CX and the Customer Data Platform
To know everything there is to know, a brand must unify all sources of customer data (social, transactional, marketing responses, website visits and behavior, call center interactions, demographic information, preferences, etc.). With a single view of the customer across the enterprise, also known as a golden record, marketers can deliver the most relevant offer, message, or action through whatever channel the customer shows up in next.
A golden record, which contains data from first-party, second-party, and third-party data, as well as structured, semi-structured, and unstructured data, provides insights needed to treat each customer as an individual. Armed with a golden record, a brand goes far beyond understanding transactions to also understanding the customer’s needs, attitudes, preferences, and intents. It is a critical asset for driving loyalty through customer understanding, which unlocks the omnichannel consistency that customers say is an imperative if they are to become repeat, loyal customers.
A customer data platform (CDP) provides marketers with a persistently updated golden record and an operational environment that ingests any volume, veracity, or velocity of data from any touchpoint. A CDP is the foundation for a single point over data, including ingestion, advanced identity resolution and curation while making this data accessible across the enterprise. By applying in-line analytics and intelligent orchestration through a customer engagement hub (CEH), marketers also have a single point of control over decisions and interactions across customer journey stages and touchpoints.
With a single point of control, marketers are continuously attuned to a next-best action for loyalty program members and non-members alike, greatly increasing the propensity for repeat, loyal customers. Research from Forbes Insight indicates that 44 percent of organizations surveyed report that a CDP helps drive customer loyalty and ROI in their organization.
A Differentiated CX Places Personalization over Product
In the not-too-distant past, brands were confident that producing the best product at a fair price was enough to drive customer loyalty. But an explosion of interaction touchpoints and buying options has put the customer in charge of the omnichannel buying journey, and this trend has largely commoditized price and product in lieu of customer experience. Personalization is now what differentiates the customer experience, and customers have shown that they will reward a brand with loyalty if the brand recognizes them as an individual across channels, and across the entire customer lifecycle. Customer loyalty, in other words, is a two-way relationship based on a value exchange. With the right investments in personalization, brands can ensure that they will always deliver on their end of the bargain.
Frequently Asked Questions
[ultimate-faqs include_category=’customer-experience’ ]
RELATED ARTICLES
Personally Identifiable Information (PII) and the Value Exchange
Going Beyond Compliance to Infuse Loyalty into Customer Relationships
Be in-the-know with all the latest customer engagement, data management, and Redpoint Global news by following us on LinkedIn, Twitter, and Facebook.
