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.

What is loyalty?

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?

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.

What are the most important success factors for 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.

How can the data be used?

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.

How good is your loyalty programme?

Find out and do the loyalty check with us!