What’s wrong with existing loyalty programmes, and the way forward
Every business-to-consumer brand is looking for one thing: it wants to build a relationship with its customers. Martech tools have made it possible for brands to communicate with consumers in a variety of ways: in stores, online, in their inboxes, or even on their mobile phones. But new privacy regulations are sending these strategies out of the door and making it more difficult for companies to engage with consumers in the ways they’ve relied on for the last few years.
It’s widely known now that Apple and Google are implementing stricter privacy policies that give consumers more control over how companies track their data. The result, however, is that brands will have less access to data that helps them engage with consumers.
Needless to say, the brand-to-consumer relationship is ripe for reinvention. While strict privacy regulations present a challenge for marketers, it was already time for brands to reevaluate how it reaches consumers. This is the push companies need; after all, moving away from cookies is not a bad thing.
This we know for sure: consumers want more control over their information, how it is used, and how they interact with brands. New privacy and data regulations only demonstrate this further because they are geared toward providing consumers with a certain degree of personalisation, a certain degree of ownership.
This is the key factor marketers must recognise if they want to—and they should want to—earn their customers’ loyalty.
Building loyalty by cultivating trust
Customers want to be treated with respect, and they want brands to acknowledge that they are unique individuals, not simply data points on a chart. In order for a brand to build a loyal customer base, it must cultivate trust.
But many consumers (72%) say that modern marketing efforts, namely the use of cookies to track a consumers’ behavior across websites and platforms, are “creepy.” In a 2021 digital consumer trends survey, Cheetah Digital found that 66% of consumers think ads that follow them across devices are off-putting. Even further, 77% wanted brands to pull ads from Facebook altogether.
Marketers, in response to this data, must embrace the fact that cookies are on their way out and find new ways to connect with their consumers by building trust. Marketing technology, when implemented poorly or in a way that consumers find invasive, works against brands, not for them.
Want to build loyalty? Start by building trust, based on connection to the customer.
Loyalty based on shared exchanges
The problem with most existing loyalty programmes is that brands throw discounts, promotions, and small rewards at customers without forging a personal connection. This acts against what brands are trying to cultivate because it sidesteps the very thing customers want—personalisation.
Most brands use an invasive quid-pro-quo strategy with their customers: you send us your information, we’ll give you 10%-off (or whatever the value exchange might be). But consumers, as we noticed above, are wary about sharing their data. Similarly, brands that use cookies as a chief element in their marketing strategy only further ostracize customers because the value exchange—”creepy,” cookie-based ads in exchange for personalised recommendations—is not worth it to the consumer.
But not personalisation derived from the back-end, third-party cookies that follow users from site to site. The next generation quid-pro-quo is this: consumers willingly offer information about their buying preferences, and brands, in turn, offer them recommendations, discounts, and promotions based upon that information.
It’s an open and honest data exchange that puts control back in the hands of consumers.
There’s a formal name for this strategy: zero-party data. In contrast to third-party data—like cookies that brands “rent” from other providers in order to gather information about their markets—zero-party includes information that’s intentionally and proactively shared by customers with a brand. This offers a greater level of visibility and transparency, which in turn cultivates trust. This includes purchase intentions, personal context and how the individual wishes to be recognised by the brand. Brands can even ask the million-dollar (or perhaps multi-million dollar) question directly to their customers: what are you looking to buy?
Zero party data is sometimes confused with first-party data. The latter is also collected directly from customer interactions on a brand’s own channels and includes purchase history, where they live, their contact information, and so on—through customer interactions or marketing programmes including straightforward questionnaires, surveys, or prompts on a website or app.
Zero-party data strategies benefit brands as much as they benefit consumers. Instead of guesswork or wasted efforts pulling unreliable data from cookies (because, as we know, third-party data isn’t always accurate), brands can get more accurate and precise information directly from their consumers. This also combats the problem of situationally loyal customers—those consumers who are not consistently loyal. A brand can, using zero-party data, engage those customers in a more targeted way, time after time so that their loyalty is sustained long term. Then, they can make moves to meet consumers’ needs. It’s a win-win situation.
The brand-to-consumer relationship was long overdue for reevaluation. Customers are more sparing with their loyalty; they will only give it to brands that offer a reasonable value exchange. Companies can and should change the way they relate to customers and build loyalty programmes and not just “points for purchase” incentives. It’s time to focus on trust, longevity, and mutual value exchanges in every B2C relationship. Customers want more, they want experiential exchanges with the brand and a feeling of a sense of belonging. This is achievable for brands; but only through a combination of will and the right technologies, used strategically.
The brand to consumer relationship has come into a new era. For more insights on the topic, Cheetah Digital is hosting its annual Signals conference, where participants can expect to learn about the biggest threats to meeting marketing goals, including sessions on loyalty, and get inspired to take them head-on.
By Richard Jones, CMO, Cheetah Digital
