Got Loyalty Data? It Might Need Rethinking

The majority of retailers have loyalty programs to drive customer engagement and additional purchases. In fact, 90-plus percent of retailers have loyalty programs. The explosion of these programs is driven by today's empowered consumer. In the era of the consumer review, an ever-increasing number of digital channels and a 24/7 shopping cycle, retailers have less control over consumer shopping behavior than ever before.

However, organizations can still influence the customer experience and ensure consumers come back to make additional purchases. Since the cost to acquire new customers is so high, retailers look to increase the lifetime value of each customer to drive additional revenue. This is often accomplished through loyalty programs.

One of the main requirements for a successful loyalty program is an engaged customer who sees benefit in the program and as a way to better connect with the brand. This all starts with customer signup.

Customers can sign up for loyalty programs in a wide variety of places. In fact, according to a recent Experian Data Quality study, individuals can sign up for loyalty programs across an average of 2.15 different channels. The most popular channel is a company's website, followed by point of sale and the call center.

During the sign-up process, organizations collect a lot of data. Forms can vary considerably in length, but on average, customers must complete more than three different fields to sign up for a loyalty program. The most popular field is email address, which is requested by 76 percent of retailers.

While retailers see many benefits from loyalty programs — 70 percent see a return on investment from them — they also come with challenges. Seventy-six percent of retailers say they have loyalty program challenges, with the two biggest being too few customers signing up and poor contact data.

Good contact data is essential to a successful loyalty program. Without it, a new member won't receive promised communications, benefits and much more. Furthermore, we all know that if the customer doesn't see any benefits from the loyalty program, their opinion of the brand certainly diminishes.

The impact of poor contact data is so significant that improving data collection is the top priority for loyalty programs this fiscal year. It's no wonder that organizations are concerned. Companies believe that about a quarter of their contact data is inaccurate, which means that a large percentage of their loyalty program database will most likely experience the negative effects described above.

To achieve loyalty program success and aid in customer retention, revenue generation and brand promotion, retailers need to take steps to improve the customer sign-up and data collection processes. There are three simple steps to take:

1. Use progressive profiling. Consider limiting the number of fields required for sign up to a bare minimum. Since some of the top channels are point of sale and mobile, you have very little time to collect information without aggravating your customer. The easier it is for a customer to sign up for a program, the more likely they are to do so.

Progressive profiling is a marketing technique that acquires information over time from a customer. By getting them to offer up pieces of information at each interaction point, you can start engaging with the customer (e.g., through email) and then gradually gather more information to expand channel interactions.

2. Validate data upon entry. Customers are making a commitment to the organization when they sign up for a loyalty program, and they're expecting their benefits and communications to be delivered as promised. Poor contact information can get in the way of that agreement.

Putting data validation in place means information is accurate upon collection and ensures poor data won't get in the way of initial messages and loyalty onboarding. You can leverage software in all channels where information is collected and can correct any inaccurate details while the customer is still engaged.

3. Monitor data over time. Data frequently deteriorates over time as individuals move, gain new email addresses and experience other life changes. To ensure customers are continuing to receive loyalty offers and benefits, make sure to monitor their information over time. If you notice a lack of engagement for several months, consider a reactivation campaign or communication through a different channel. While the customer could certainly have lost interest in your brand, it could also be that contact information changed and you're no longer able to reach them.

Driving additional revenue from existing customers requires providing those consumers with strong incentive to keep coming back. Loyalty programs are a great way to provide mutual benefit. However, the challenges facing these programs are great, especially around data. By making it easier to sign up and by validating data collected, you can produce better quality data and support the success of your loyalty program.

Courtney Cunnane is the marketing director at Experian Data Quality, a provider of contact data management solutions.