Every brand wants to create an individualized experience for its consumers that increases customer engagement and retention, which is only possible with good data. But, with the global movement toward privacy and empowering consumers, so they have control of their data and how it’s used, the question becomes how can organizations acquire relevant, accurate data and allow customers to provide consent?
Here we explore the de-escalation of third-party cookies and how loyalty programs have addressed the concern regarding data accumulation.
Table of Contents
Why did the cookie crumble?
It’s been more than a decade since businesses declared data as the new currency. Literally, every business was using third-party cookies to track and gather customer information to sell their products until consumers and data regulators took a stand for data privacy. This was the beginning of the downfall of third-party cookies. Industry giants like Google, Amazon, and Apple are already phasing out the use of third-party cookies, setting the tone for various other businesses dealing with third-party cookies. With various data regulation acts in place, it’s become imperative to respect consumer consent and regulation guidelines while collecting and storing data. This is why first-party data emerged as a prime commodity.
Retention over Acquisition
It’s common knowledge in business that acquisition costs five times more than retention. Empirical evidence also shows you have a higher probability of selling to existing customers (almost 60% – 70%) than to a new one. When major brands began to focus their attention and marketing strategies on existing customers, the rest soon followed suit. Moreover, in 2020, the pandemic forced various businesses to focus their attention on customer retention rather than acquisition. Not only has a retention strategy proven to be cost-efficient but it’s also highly profitable. This fact further emphasized the significance of first-party data to elevate the customer experience of shoppers that are already part of the roster and turn them into loyal brand advocates.
Why Loyalty Programs Are the Winning Medium to Capture Customer Data
So, with the impending third-party cookie phase-out looming around the corner, how do we collect customer data, which is so crucial for our business growth and retention strategies? What are other businesses doing about it?
Although loyalty programs have been around for decades, businesses are now looking at it as more than just a marketing strategy to engage customers. Loyalty programs are emerging as a popular medium to extract zero- and first-party data. Loyalty marketing gives access to a customer data goldmine while adhering to legal and ethical standards and with due customer consent. You can further leverage your loyalty platform to collect extensive customer information with the help of rewards and incentives. According to an Accenture report, 54% of customers say they’re open to sharing their personal information and shopping preferences with brands in exchange for personalized offers. By incentivizing actions like completing profiles, participating in surveys, and downloading apps you can gather valuable customer data that’s in compliance with global data regulatory laws and guidelines.
The Synergistic Relationship Between Loyalty Programs and Data
Let’s go back for a minute and answer the pressing question of why exactly we need data, be it third- or first-party.
The reason why data is valued more than oil today is because it’s essential for business growth. It’s the key to your customer’s soul, to know what they want, their preferences, factors that influence their purchase behavior, and other relevant information. We need data to improve customers’ journeys with our brand, satisfy them and make them happy, so they return to us, stay loyal, and hopefully bring their friends along. In short, we need data to create personalized marketing strategies and improve the individualized experience.
Similarly, loyalty marketing helps in engaging customers, improving customer satisfaction, and increasing your customer retention rate–and helps with procuring customer data. This data can be used to further enhance customer satisfaction by creating personalized experiences. Factual data supports the fact that customers want a personalized experience. Statista reports 90% of U.S. consumers find marketing personalization very or somewhat appealing. A Smarter HQ study states 80% of frequent shoppers only shop with brands that personalize the experience.
With loyalty programs, you can procure customer data and use it to enhance your loyalty marketing strategies to reinforce customer loyalty and improve overall brand value in the process.
Collecting First-Party Data While Reinforcing Loyalty
To leverage the benefits of loyalty marketing and to improve customer loyalty, you need the expertise and experience of a good loyalty partner.
Annex Cloud’s Loyalty Experience Platform™ helps you collect zero- and first-party data and pushes this data across your entire tech stack to elevate every interaction across every channel. Our modular platform includes the widest range of engagement modules, and it’s easy to mix and match program types and rewards to fit your specific customer segments. For more information and a free consultation contact us today.
Using loyalty to capture first-party data is one of our ten trends and predictions for 2022. Read about all 10.