Create More Relevance for Loyal Customers With Zero-Party Data

Loyal customers expect brands to treat them differently than the average customer. Forrester’s Consumer Benchmark Survey, 2022, shows that 50 percent of U.S. online adults who belong to a loyalty program(s) say they join to get messages, offers or promotions that are more relevant to them. However, today’s marketers struggle to deliver on that expectation. According to Forrester’s Marketing Survey, 2022, personalizing communication, experiences and interactions is one of B-to-C marketing decision makers’ top challenges related to marketing execution. A loyalty program without relevant experiences is like a boring movie; your customers may fall asleep or even turn it off.

Loyalty programs already capture rich permission-based first-party data, but knowing your customer and delivering relevance still isn’t easy. Loyalty marketers face the same barriers to effective personalization as many of their colleagues, and too many are narrowly focused on transactions. Today’s customers are privacy-aware and often reluctant to share data with brands — although some will share data if they’re incentivized. But even when consumers are willing to share more about themselves, marketers collect too much data, privilege quantity over quality, and find themselves drowning in a sea of data they can’t mine for insights. For example, marketers over-rely on transaction and browsing history as a personalization lever, which can present unclear — or even false — representations of customers’ behaviors and preferences.

While there’s no quick fix to loyalty marketers’ data woes, zero-party data (ZPD) can help. ZPD is data that a customer proactively volunteers to a brand, typically in exchange for value (e.g., loyalty points, discounts, product recommendations, etc.). ZPD collection works best in microexperiences embedded in the context of a customer journey, such as onboarding into a loyalty program or downloading a brand’s app. Forrester’s research reveals four key benefits of incorporating ZPD into your loyalty strategy.

Augmented Customer Profiles

Many marketers think that enough data from enough sources will complete their customer understanding efforts. In reality, they can do a lot more with a lot less data. Collecting information such as product preferences from customers provides marketers with powerful tools for segmentation. For example, instead of using purchase history to infer preferences, a coffee company might collect data on the frequency with which a customer drinks coffee: every morning, every afternoon, or all day, every day. That information can then be used to deliver relevant offers for loyalty members at their preferred coffee-break time.

Incremental Sales

Customer enrichment — i.e., getting your customers to buy more products and services — is a key outcome of loyalty programs. But sometimes even your loyal customers don’t know what their next purchase will be. Collect ZPD about their needs and interests and leverage that information to serve relevant product and content recommendations. An airline loyalty program might understand that some customers primarily book business travel but are also dreaming of their next vacation. A ZPD microexperience can ask about their vacation style and use that data to tailor suggestions (e.g., destinations, flights, and hotels) accordingly. These quizzes can drive a big sales lift, as Forrester’s data shows that 34 percent of U.S. online adults say they’re more likely to purchase from brands that share content that interests them.

Enhanced Emotional Understanding

Today’s sophisticated loyalty strategies have evolved from a rote transaction of program points into a way to develop emotionally rich relationships with customers. But to achieve this, you must first understand how they feel about your brand. Use microexperiences to collect emotional information, like satisfaction, about specific products or the brand at large, then use that data to build segments that reflect the emotional range of your customers and identify segments that need additional nurturing or outreach.

A New Customer Feedback Channel

Showing loyal customers that you value their opinion and giving them opportunities to share feedback is another way to build trust and loyalty. A microexperience could ask customers to share feedback on products or the purchase experience — or solicit stories on disappointing brand experiences they’ve had. The benefit is twofold: Customers feel valued and like they're meaningful contributors to the brand, and you collect important insights that can help optimize products, product development, or even the loyalty program itself.

To get started with collecting ZPD from your loyalty program, work with your customer insights teams to identify gaps in customer understanding, then determine what volunteered data would help get you closer to the objectives of your loyalty program. Remember, this isn’t a data-hoarding exercise — each data point you collect should explicitly connect to a specific use case. Once you have a concrete strategy, address any technical gaps for ZPD collection and activation. And for all the data you seek to capture, do it in a way that's transparent and beneficial to the customer. Doing so will engender trust and, yes, loyalty.

Stephanie Liu is an analyst, and Cole Walsh a researcher, both of Forrester, a global market research company that helps organizations exceed customer demands and excel with technology.