Loyalty & customer data - a chicken-and-egg problem

Loyalty & customer data

A chicken-and-egg problem

Loyalty & customer data

How can the chicken-and-egg problem be solved?

Let's talk about loyalty! No good loyalty programmes without data. But how do I get the data I need for this? What can companies achieve with a loyalty programme? What makes a loyalty programme successful? And how is customer data collected and evaluated?

In an exciting episode of the EHI podcast, Kira Wiesner from the Cologne-based retail research institute EHI and Julian Drees, Head of Loyalty at KPS, discussed these and other questions. In this blog article you will find a summary of the most important points from the podcast. 

In very simple terms, loyalty describes a customer's faithfulness to a brand. This customer loyalty is crucial for long-term business relationships. At KPS, we engage intensively with our customers in order to strengthen customer loyalty. We ask ourselves questions such as: How do I get to the customer? How can I get them to buy from me again? And how can I stay in constant contact with my customers?

Challenges

What are the differences in loyalty in retail vs. online retail?

Customers are often anonymous in retail

One of the main problems in setting up loyalty programmes in the retail sector is the anonymous customer who pays in cash and therefore leaves no data behind. According to the latest figures from EHI, the proportion of cash payments in total retail sales is falling. Nevertheless, these customers still account for 35.5 % of sales. It is therefore important to develop programmes to promote customer loyalty.

Customer data in retail

Know your customer

Data in the world of online retail

In the world of online retail, things are different and companies can capitalise on this. When shopping online, it is easy to find out who the customer is and what their interests are. This can be determined, for example, through product selection, frequency of purchases and similar data. This helps in the introduction of a well-founded and data-supported loyalty programme, which in turn allows you to gain further customer data.

One of the most important motivations for such a loyalty programme is to offer the customer added value so that they provide as much additional data as possible, which forms an important basis for the further personalisation of the customer approach. The more personalised, the more sustainable and closer the customer relationship.

Offer added value

What are the goals and benefits of a loyalty programme?

Companies generally pursue two objectives with loyalty programmes: On the one hand, there is the issue of customer loyalty and, on the other, the issue of customer data. You want to get in touch with your customers - and stay in touch with them for as long as possible.

Customers need good reasons to stay in contact with a company. Customers must see added value. Only then are customers willing to disclose their data. However, you can offer the best added value if you know your customers well. A typical chicken-and-egg problem.

Every company needs data to make business decisions. The more data, the better. In today's world, we see more and more data coming into focus and data is used to make decisions.

A loyalty programme therefore offers the perfect opportunity to enrich the database with increasingly accurate customer data in order to offer customers real added value and win them over as loyal customers. Even if you only have a small amount of customer data available at the beginning, it is worth starting with a broad-based loyalty programme and gradually expanding the loyalty campaigns in order to collect more data and get to know your customers better and better.
No loyalty programme without customer data - but no customer data without a loyalty programme. A classic chicken-and-egg problem.
Success factors of a loyalty programme

A successful loyalty programme comprises many factors that should be taken into account.

Firstly, you need to take a close look at your customers: What kind of customer base do I have as a company? Do I have many different customers or do they tend to belong to a homogeneous target group?

Then the company's product portfolio and the purchase frequency of the products also play an important role in deciding whether a loyalty programme makes sense at all.

Do I offer many products that are bought more frequently by customers? Depending on the industry, it can be more difficult to establish effective loyalty programmes. For example, if higher-priced products are offered, these are usually purchased less frequently. As a result, there are fewer touchpoints with the customer where you could award loyalty points or collect further data.

Master data and transaction data

How does data collection work and which customer data is important?

 

 

Collection of customer data for a loyalty programme

Added value plays a major role when collecting customer data. As a brand, you need to think about what incentives will motivate a customer to sign up to a loyalty programme and pull out their loyalty card when shopping. These can be loyalty points for discounts, additional services, invitations to events, VIP offers, rewards or other formats. One option is the gamification approach. Customers can compete with friends in online games, take part in prize draws or collect awards.

All of these measures help to build long-term and close customer loyalty. Initiatives such as customer referrals can also help to build an organically growing customer base. The main thing is that the loyalty programme suits the company and the customer!

Loyalty is the key between offline and online shopping. If you combine data from both areas, you can create a complete profile of the customer - a single customer view. This allows the customer to be stored in the right customer segment in the database - an important basis for personalised marketing.

When customers register for a loyalty programme, two types of customer data are collected

  • On the one hand, master data such as first and last name, address, e-mail, date of birth are collected.
  • On the other hand, transaction data is also collected. These reflect every type of interaction with the brand. Both types of data mean that a customer profile can be created from the various sources. The next question to ask yourself is: What can I do with the data?

Comprehensive data helps to identify top customers and supports companies in rewarding desired customer behaviour that is conducive to company growth. Often a lot of customer data already exists, but is stored in different systems and databases that are less accessible. It is therefore essential for a data system to store data collected across various touchpoints in a central location and assign it to the customer. The aim is therefore a single customer view.

The simplest way to use data is with scores. For example, there is the customer lifetime value, which describes how much a customer has spent on a brand in their lifetime and which value scoring they fall into as a result.

Practical example

How Harrods achieves a single customer view

Harrods Case Study about Creating a Golden Record
Harrods is a good example of the harmonisation of customer data in a single customer view. The growth of London's most famous luxury department stores' led to more and more touchpoints with customers and consequently more and more data. However, this data was less accessible. We at KPS were able to help harmonise the internal Customer Relationship Management (CRM) data and bring all touchpoints together. The company now has all customer data available in a ‘golden record’. You can read more about the project in the latest Harrods case study.

Conclusion

Loyalty and customer data are more important than ever

Whether in retail or online, loyalty and customer data are hot topics. Those who do not use a well-developed, integrated loyalty programme are missing out on the opportunity to collect customer data. Today, it is more important than ever to know your customers well. Only with a centralised and data protection-compliant management of customer data can you address your customers appropriately, interact with them and create long-term loyalty to your own brand. If you understand your customers and their needs and wishes precisely, you can create special and inspiring customer experiences. The analysis of customers' personal information and behavioural data guarantees in-depth insights and therefore a highly personalised customer approach and tailored recommendations as well as positive effects on the company's success.

It is important to take a holistic approach so that you can personalise your customer approach across all channels. A coherent loyalty strategy, customised to the company's customers, is an important success factor.

How good is your loyalty programme?

Find out and do the loyalty check with us!

 

Contact us if you want to optimise or reorganise your loyalty programme. We will be happy to support you on your way!

More Insights

You might also be interested in...

Gamification

Gamification

Level up your Loyalty-Program

Competitions, badges and animal levels - companies rely on gamification elements to incentivise customers to interact with their brand and motivate them to buy and spend.
EHI LAB Podcast Episode #71: How do I solve the chicken-and-egg problem?

EHI LAB Podcast Episode #71

How do I solve the chicken-and-egg problem?

Good loyalty programmes need good data. But how do I get the data I need for this? A classic chicken-and-egg problem. Listen to the podcast (in German) on which the above blog is based. 
Customer Loyalty | Customer retention with KPS Instant Personalisation

Personalisation Enablement

Customer Loyalty

The world of eCommerce is becoming more competitive by the day, and the pressure to stand out from the crowd and stay in the minds of consumers is greater than ever.

Learn how to know your customers' habits, anticipate their needs and desires, while engaging them in a personalised way.

Privacy settings

We use cookies on our website. Some of them are essential, while others help us to improve this website and your experience. With your consent, we use cookies to analyse the usage of our website.

We also use cookies for marketing to help us measure the success of our marketing efforts. In the settings you will find detailed information about the individual cookies, and you can refuse the use of cookies.

You can change or revoke your selection at any time on any KPS.com page in the footer under Privacy Settings.

Essential Cookies

Essential cookies enable basic functions and are necessary for the proper functioning of the website.

Cookie Banner

  • Cookie Name: kps-privacy-settings
    Value: PrivacyLevel_0#a
    Storage Duration: 4 weeks
    Description: This cookie is required to save cookie settings. It is a purely technical cookie.

HubSpot:

  • Cookie Name: __hs_opt_out
    Storage Duration: 6 months
    Description: This cookie is used by the opt-in privacy policy to prompt the visitor to accept cookies again. It is set when you allow visitors to disable cookies. It contains the string "Yes" or "No."

  • Cookie Name: __hs_d_not_tracking
    Storage Duration: 6 months
    Description: This cookie can be set to prevent the tracking code from sending information to HubSpot. It contains the string "Yes."

  • Cookie Name: _hs_initial_opt
    Storage Duration: 7 days
    Description: This cookie is used to prevent banners from being displayed every time visitors access your website in strict mode. It contains the string "Yes" or "No."

  • Cookie Name: __hs_cookie_cat_pref
    Storage Duration: 6 months
    Description: This cookie is used to capture the categories a visitor has consented to. It contains data about those categories.

  • Cookie Name: __hs_gpc_banner_dismiss
    Storage Duration: 3 months
    Description: This cookie is used when the Global Privacy Control banner is dismissed.

  • Cookie Name: hs_ab_test
    Storage Duration: Until the end of the session
    Description: This cookie is used to ensure that visitors see the same version of an A/B test page they were shown previously. It contains the ID of the A/B test page and the ID of the variant selected for the visitor.

  • Cookie Name: __cfruid
    Storage Duration: Until the end of the session
    Description: This cookie is set by HubSpot's CDN provider in accordance with its rate-limiting policies.

  • Cookie Name: ___cfuvid
    Storage Duration: Until the end of the session
    Description: This cookie is set by HubSpot's CDN provider in accordance with its rate-limiting policies.

  • Cookie Name: ___cf_bm
    Storage Duration: Until the end of the session
    Description: This cookie is set by HubSpot's CDN provider in accordance with its rate-limiting policies.

Functional cookies

Functional cookies are used by third parties or publishers to display personalised advertisements. They do this by tracking visitors across websites.

Google Analytics

Cookie Name: _ga
Storage Duration: 2 years
Description: Used to distinguish between users.

Cookie Name: _gid
Storage Duration: 24 months
Description: Used to distinguish between users.

Cookie Name: _gat
Storage Duration: 1 minute
Description: Used to throttle the request rate. If Google Analytics is provided via Google Tag Manager, this cookie is named dc_gtm<property-ID>.

Cookie Name: hide-cookieinfo
Storage Duration: 30 days
Description: Cookie set for querying the cookies.

HubSpot

Cookie Name: __hstc
Storage Duration: 6 months
Description: The main cookie for visitor tracking. It contains the domain, the user token (hubspotutk), the first timestamp (of the first visit), the last timestamp (of the last visit), the current timestamp (for this visit), and the session count (increases with each subsequent session).

Cookie Name: hubspotutk
Storage Duration: 6 months
Description: This cookie tracks the identity of a visitor. This cookie is passed to the HubSpot software when submitting a form and is used for deduplicating contacts. It contains an opaque GUID to represent the current visitor.

Cookie Name: __hssc
Storage Duration: 30 minutes
Description: This cookie tracks sessions. It is used to determine whether the HubSpot software needs to increment the session count and timestamps in the __hstc cookie. It contains the domain, the number of page views (viewCount, increases with each page view in a session), and the session start timestamp.

Cookie Name: __hssrc
Storage Duration: End of session
Description: Whenever the HubSpot software changes the session cookie, this cookie is also set. It determines whether the visitor has restarted the browser. If this cookie is not present when HubSpot manages cookies, it is considered a new session. It contains the value "1" if present.

External media

Content from video platforms and social media platforms is blocked by default. If cookies from external media are accepted, access to this content no longer requires manual consent.

LinkedIn Tag

Cookie Name: bcookie
Storage Duration: 365 days
Description: Browser Identifier cookie to uniquely identify devices accessing LinkedIn to detect abuse on the platform and for diagnostic purposes.

Cookie Name: bscookie
Storage Duration: 365 days
Description: Used for remembering that a logged-in user is verified by two-factor authentication and has previously logged in.

Cookie Name: JSESSIONID
Storage Duration: Session
Description: Used for Cross-Site Request Forgery (CSRF) protection and URL signature validation.

Cookie Name: lang
Storage Duration: Session
Description: Used to remember a user's language setting to ensure LinkedIn.com displays in the language selected by the user in their settings.

Cookie Name: lidc
Storage Duration: 1 day
Description: To facilitate data center selection.

Cookie Name: sdsc
Storage Duration: Session
Description: Signed data service context cookie used for database routing to ensure consistency across all databases when a change is made. Used to ensure that user-inputted content is immediately available to the submitting user upon submission.

Cookie Name: li_gc
Storage Duration: 180 days
Description: Used to store consent of guests regarding the use of cookies for non-essential purposes.

Cookie Name: li_mc
Storage Duration: 180 days
Description: Used as a temporary cache to avoid database lookups for a member's consent for use of non-essential cookies and used for having consent information on the client side to enforce consent on the client side.

Cookie Name: UID
Storage Duration: 720 days
Description: Cookie used for market and user research.

Cookie Name: UserMatchHistory
Storage Duration: 30 days
Description: LinkedIn Ads ID syncing.

Cookie Name: AnalyticsSyncHistory
Storage Duration: 30 days
Description: Used to store information about the time a sync took place with the lms_analytics cookie.

Cookie Name: lms_ads
Storage Duration: 30 days
Description: Used to identify LinkedIn Members off LinkedIn for advertising.

Cookie Name: lms_analytics
Storage Duration: 30 days
Description: Used to identify LinkedIn Members off LinkedIn for analytics.

Cookie Name: li_fat_id
Storage Duration: 30 days
Description: Member indirect identifier for Members for conversion tracking, retargeting, and analytics.

Cookie Name: li_sugr
Storage Duration: 90 days
Description: Used to make a probabilistic match of a user's identity.

Cookie Name: _guid
Storage Duration: 90 days
Description: Used to identify a LinkedIn Member for advertising through Google Ads.

Cookie Name: BizographicsOptOut
Storage Duration: 10 years
Description: Used to determine opt-out status for non-members.

Cookie Name: li_giant
Storage Duration: 7 days
Description: Indirect identifier for groups of LinkedIn Members used for conversion tracking.

Cookie Name: oribi_cookie_test
Storage Duration: Session
Description: To determine if tracking can be enabled on the current domain.

Cookie Name: oribili_user_guid
Storage Duration: 365 days
Description: Used to count unique visitors to a website.

Cookie Name: ln_or
Storage Duration: 1 day
Description: Used to determine if Oribi analytics can be carried out on a specific domain.

Cookie Name: ar_debug
Storage Duration: Session
Description: Supports Google attribution reporting API integration to mitigate signal loss.

Lead Forensics

Cookie Name: __lfluuid
Storage Duration: 10 years
Description: The _lfuuid cookie allows a website to track visitor behavior on the sites on which the cookie is installed. Tracking is performed anonymously until a user identifies himself by submitting a form.

Changing privacy settings

Imprint

Data protection statement