Tips for Harnessing the Power of ‘Smart’ Data

Two powerful forces are shaping today's retail sector. Separately, each can pose huge challenges if not harnessed correctly. However, combined they can create vast opportunities for deeper, modernized customer loyalty.

The first phenomenon is data. Retailers have access to tons of detailed data about today's customers — information from websites, email lists, social media, online shopping carts, credit/debit card payments and transactions, loyalty programs, CRM systems, and mobile devices. Worldwide, business data volumes grow about 40 percent a year, according to Oracle.

And those mobile devices? They represent the second major retail phenomenon. Smartphones and other mobile devices are quickly becoming shoppers preferred companion tools for searching, comparing, reviewing and purchasing from their favorite retailers. According to one survey, 90 percent of consumers use smartphones as they shop.

Leverage ‘Smart’ Data and Embrace Mobility
The solution to both challenges? A data-and-mobility mash-up.

In short, leverage big data, turn it into smart data, and then make it actionable within the mobile environment to create entirely new and meaningful ways to segment, communicate with and market to today's mobile-empowered customers.

Done correctly, the results can be what every retailer wants: customers who shop more frequently, marketing that hits the target, communications that take place in real time on customers’ preferred devices and channels, and satisfied shoppers who keep coming back.

An example comes from the Fuel Rewards program's recent update of its loyalty framework for the mobile marketplace. It did so by analyzing billions of transactional data points from MasterCard Advisors (the partner payment card that powers the Fuel Rewards' nationwide loyalty program) and using targeted, "smart" data to overhaul its segmentation and marketing efforts. Members of the Fuel Rewards program earn rewards when they shop at participating merchants and retailers; the rewards are built into card-linked payment transactions and redeemed as cents-per-gallon gasoline discounts at the pump.

Here's how Fuel Rewards’ data-plus-mobility venture played out:

The Data Solution: The Fuel Rewards team layered aggregated, anonymized transactional "big data" from MasterCard Advisors onto activity data from its loyalty program members. Data modeling identified common behaviors, patterns, tendencies and member engagement with retailers and the rewards program. By turning big data into smart data, the loyalty program identified eight new customer segments, each based on specific, repeatable behaviors or tendencies — e.g., exactly how and where consumers spend their money.

From this exercise emerged a clear high-value customer segment in classic 80/20 fashion — a recognition that a smaller percentage of customers contributed a far disproportionate value to the program and its participating retailers. From this baseline level of understanding, the Fuel Rewards program leveraged the information to facilitate better customers for its retail partners.

The next step was to clearly understand the attributes associated with high-value customers. At this point, the massive data funnel started to narrow, helping the program identify the specific attributes of the best customers and the differentiating behaviors that make them that way. For the Fuel Rewards program, three key insights emerged from the sea of data:

• First and most important, the best customers used their loyalty card (or numerical ID) within the first 30 days of program registration to reduce the price they paid for fuel.
• Second, they successfully linked credit cards or other retail loyalty cards to their accounts during registration — a critical step in a coalition loyalty program.
• And finally, they opted in (and subsequently consumed) promotional marketing messages about the program and its full suite of benefits.

The Mobile Component: Concurrent to the segmentation project, the program also was revamping its app strategy and going "all in" on mobile, influenced primarily by members’ email consumption trends. Nearly 57 percent of all emails were being opened on mobile devices vs. desktop, and that number was growing month-over-month with no signs of slowing down.

Since it revealed the desired attributes of high-value customers, the MasterCard Advisors project helped shape the development of the mobile strategy. The marriage became seamless, as mobile technology was the ideal platform to address the three key insight areas. To facilitate reward redemption in the first 30 days, for example, the mobile app is location-aware and can offer driving directions to guide a new member to the nearest Shell station, for example. The mobile app also holsters a “virtual” loyalty card so new members don't risk forgetting the plastic card, a common barrier to the first redemption experience. Customers also can add their virtual card to Passbook or Wallet platforms for additional convenience.

The new mobile app also uses "camera capture" technology to make it simple for new registrants to link payment cards or retailers’ loyalty cards to their Fuel Rewards account. This singular behavior makes members 266 percent more likely to find their way into the top customer segment. Finally, program communications become exponentially more powerful with rich push messages delivered in real time via the consumer’s desired platform.

Smart data ultimately moved the app design beyond the simple capability to check an account balance; it now serves as a powerful platform to cultivate better customers.

Smart Data and Mobile-Powered Loyalty
Flash-forward to early 2016, when nearly 61 percent of all Fuel Rewards emails are opened on a mobile device — a number that grows month over month. Recent analysis reveals that members who use the mobile app are nearly 11 times more valuable to the program than those who do not. Return on investment analysis for these high-value customers is so strong, in fact, that it drove the program to invest in the behavior. Program members can now earn an additional five cents per gallon simply for downloading the mobile app. And as long as these members continue to deliver that level of financial return, the Fuel Rewards program sees no reason to move way from this kind of incentive.

For retailers, the solution lies in taking advantage of vast pools of available data, analyzing it in targeted, smart ways that illustrate customers’ behaviors and transactions, and then optimizing the retail-loyalty experience for retailers and members alike in the always-on mobile environment.

Not only does a smart-data approach to marketing and engagement make sense for retailers, it provides a foundation for creating benchmarks, measuring activities and tracking results.

The boom in data and shoppers reliance on their smartphones no longer have to loom as confounding challenges for retailers. Combined, they can be turned loose to create successful, real-time, 24/7 engagement between retailers, customers and loyalty programs.

Greg Phillips is senior vice president, business intelligence and CRM for Excentus, a provider of private-label fuel loyalty programs, products, technology and services.