Everyone has loyalty campaigns, but few get the data right

November 19, 2014 by Erin Haselkorn

It seems that every time I go into a store today, I am offered a loyalty card. From one of my favorite local restaurants to my shoe store VIP program, I feel like I am getting a host of emails and points at every turn. Statistics support my theory: according to a recent Experian Data Quality study, 91 percent of organizations use loyalty programs.

Why did they become so prevalent? Today’s consumer is more empowered than ever before and driving major change within business. In the era of Yelp, digital channels and a 24/7 shopping cycle, organizations have less control.

Just look at the shoe market, which you can tell I pay attention to. It used to be that you would purchase whatever your local department store or brick-and-mortar retail had to offer, which might be 50 different options. Now, you can go online, read reviews and browse hundreds of different choices based on style and color. In fact, last night I went online and searched for black boots and scrolled through six pages of different options!

Loyalty programs are a counter balance to that choice and empowered customer behavior. They make sure that while I am shopping for shoes, I am probably doing it through my preferred store and earning reward points for free merchandise.

And through the loyalty process, companies are collecting a lot of data. Customers usually need to provide more than three types of information to sign up, the most popular being email, followed by name and phone number.

However, collecting this information accurately isn’t always easy, which is why poor data collection is one of the leading problems for loyalty programs. Eighty-one percent of companies face challenges related to these programs, the two biggest being not enough customers signing up and poor contact data.

Inaccurate data means that a customer has signed up, but the marketer is unable to communicate with them in the desired channels. This clear drop in communication and a potentially bad customer experience could be by improved data collection. Sixty-four percent of respondents say this is a needed improvement.

Let’s go back to my shoe retailer example. If they had collected my email wrong, I wouldn’t get my email confirmations or offers around upcoming sales. If they got my address wrong, I wouldn’t be receiving my shoes. Considering how much money I spend on shoes annually, which I am ashamed to admit, if any of those items went wrong, I might switch to a competitor. That can equate to a lot of money annually, especially when you look at it across a large number of clients.

When a customer chooses to sign up for a loyalty program, they are making a commitment to the company and expecting something in return, be it points, free shipping, coupons or just company updates. However, if bad contact information is collected, then the consumer often never receives the benefits, resulting in a bad customer experience.

In the next year, marketers need to data validation in place to ensure information is accurate upon collection. This type of software can be implemented across all channels where information is collected and ensure data is accurate while the consumer is still engaged.

If information is accurate when it is collected, then loyalty programs have a better chance at engaging consumers and actually seeing the benefit that a loyalty program can provide.

To learn more about loyalty programs and the research mentioned above, please read our new white paper, Driving customer loyalty.