Why Loyalty Programs Should be Identity-Driven Convenience Programs

Remember the days of punch cards that stores gave out to encourage customers to return, typically by offering discounts or freebies? In today’s world, the punch card has been replaced by digital identity: customers join loyalty programs by creating personal accounts on a website or app.

A lot of online rewards programs nowadays are still following the same basic concept as the punch card program, offering customers not much more than monetary benefits such as discounts, store “cash” and other deals. However, in today’s fiercely competitive retail landscape and with real-time price comparisons literally at the fingertips of consumers, discount rewards have become less and less attractive.

Instead, digital-native customers first and foremost are expecting companies to maximize their personal convenience and make it easy for them to engage in business with a brand. Successful digital loyalty programs will keep customers from standing in line when getting coffee on their way to work, direct them to the closest store, and ensure staff there knows their preferences when they enter the door. A successful loyalty program will also put appointments and reminders on customers’ calendars and allow them to change those appointments at any time and from any device without the need for a phone call. They will promote only those services and products that make sense to the individual based on their personal preferences and history, or offer services ranging from expedited shipping, priority access to new products, and parking reservations for store visits.

Despite the possibilities digital systems offer, only 55 percent of brands personalize content, offers and user experiences, according to a Forrester Research survey. Not being equipped to use the data brands collect is one of the most frequently cited challenges by loyalty marketers.

A common, yet often underestimated barrier to an identity-driven loyalty program is account creation and the management of the resulting digital identity data, ranging from login credentials to contact information and preferences. Even if this data comes in via different engagement points, such as websites, mobile apps and point-of-sale (POS) stations, it needs to be unified and consolidated into one database that can feed the marketing automation chain. If a company's website, app and POS all have their own databases, bringing that data together is a challenge. Data silos are a serious problem that loyalty marketers might not even be aware of. They assume “we don’t have the data I’m looking for,” when in reality the data is there — it’s just distributed across disparate systems, making it incredibly difficult to integrate that data into a CRM or campaign automation system. Marketers are well advised to look under the covers.

Brands should also take a close look at the registration and login procedures of their digital properties. Are they truly user friendly? Do the pages load fast? Can people easily recover forgotten passwords in a self-service fashion? Data shows that the deeper consumers go into a transaction, the more committed they are to completing it, and are therefore more patient. However, the experience at the early stages of registration and login will make or break conversion rates. No matter how great your loyalty app is once you’re inside, getting inside is key and has to be as easy and convenient as possible.

This convenience, however, must not come at the expense of account security. Customer profile data contains sensitive personally identifiable information (PII), which is subject to privacy and data protection regulations. Data breaches might not just mean legal trouble, but could result in a brand-damaging public relations nightmare that quickly erodes everything loyalty has built up.

Is my loyalty program an identity data-driven convenience program that keeps customer data secure and private? The question is a mouthful, yet a critical one to ask. Retailers must analyze their program's intuitiveness and ease-of-use and establish standards for user engagement.

You'll end up with more questions, but also almost certainly be able to identify low-hanging fruit for improvement.

Sven Dummer leads product marketing, Identity Cloud at Akamai Technologies, a globally distributed intelligent edge platform.