Big Data’s Role In The Loyalty Equation

This is Part 3 of Retail TouchPoints’ three-part Customer Loyalty Report. This feature spotlights the rise of the SoLoMo shopper and how today’s retailers are keeping pace with educated and hyper-connected consumers. Part 3 identifies how Big Data offers a challenge and unique opportunity for merchants to better connect with shoppers and garner long-term loyalty.

Shoppers are growing more comfortable using digital tools to research potential purchases, price compare and share ratings and reviews. As a result, the overall dynamic and relationship between retailers and their customers is shifting. Retailers are seeking ideal strategies to not only offer the best prices and merchandise, but also create memorable shopping experiences, tailored to shoppers’ preferences.

Due to the variety channels at consumers’ fingertips — including mobile, social media and the web — merchants are facing a daunting sea of data. This sea, according to Chris Cunnane, Research Analyst for Retail and Hospitality at Aberdeen Group, is becoming more difficult to manage, largely due to obstacles in overall data collection and analysis processes.

“Retailers are pulling customer data from myriad sources — online, social, mobile, call center, and in-store,” Cunnane told Retail TouchPoints. “While collecting this information is important, without appropriate data collection guidelines in place, retailers will be sitting on disjointed data streams without a way to make sense of anything.”


Findings from the Aberdeen Group report titled: Enabling Access to Big Data with Data Integration, revealed that data analysis not being detailed/granular enough is a top pain point for 33% of all companies. Moreover, approximately 44% of organizations indicated fragmented and siloed data was an ongoing issue.

“To say Big Data is foundational to measurable and sustained success for a customer loyalty strategy is an understatement,” added Carlos Dunlap, Director of Business Development and Strategy for Kobie Marketing. “Big Data is what separates successful marketing programs that have incremental impact, from promotional, goodwill or long-tail campaigns.” However, the underlying problem, according to Dunlap, is that many retailers “are data rich and knowledge poor.”

“Loyalty programs have always helped track customer transactions and have generated large quantities of data,” added Jonathan Marek, SVP of Applied Predictive Technologies. “The advent of machine generated and social media data has further added to that data. Currently, many retailers are building the infrastructure, either on-site or in external clouds, to store and access ‘Big Data.’”

While many retailers are still struggling to manage these disparate systems, merchants are acknowledging Big Data’s growing role in future marketing and technology investments, as well as loyalty programs. A vast majority (87.6%) of retailers “strongly agree” or “agree” that Big Data access/use is very important to their ad spending during 2012, according to the Advertiser & Agency Survey from 33Across, a social marketing analytics company.

Developing Data Guidelines

However, best-in-class retailers have firmly established data collection guidelines for all store associates and teams across enterprise channels, Cunnane reported. “This involves appropriate training of employees and a top-down approach to customer intelligence,” he explained. “By standardizing data collection guidelines, customer information is more easily analyzed in a central analytics application.”

To create more effective SoLoMo marketing and engagement strategies, retailers must implement optimal tools and technologies to aggregate and analyze data efficiently. As a result, they will obtain a detailed, 360-degree view of customers and more efficient marketing investments and communication best practices.

With a detailed understanding of consumer preferences, as well as browsing and buying history, merchants will be armed with the information to release more personalized offers, item recommendations and marketing messages. As a result, retailers will be able to develop more effective loyalty programs.

Understanding The Preferences Of Loyal Customers

By aligning and integrating customer data, merchants can create more efficient offers, brand messages, events and even inventory assortments for specific locations, Nikki Baird, Managing Partner of RSR Research, told Retail TouchPoints.

“If retailers could effectively bring together a full picture of their customers, they wouldn’t spend so much money doing the kinds of things that destroy loyalty,” Baird explained, “such as retargeting a customer online after they already purchased that same item in a store.”

Additionally, companies will be able to build more meaningful relationships with customers, with Big Data adding “richness to the potential of customer information, while giving IT and analytics teams new data to process,” reported Joyce Chen, Head of Loyalty, Engagements and Mobile Commerce Solutions for Acxiom.

“With the ability to create a single, holistic view of customers,” Chen noted, “retailers can leverage their current data to understand who their high-value, loyal customers are, where they are in the purchase lifecycle, and listen to their needs based on data points gathered from various channels.”

The Future Of Customer Loyalty

As SoLoMo shopping behaviors continue to evolve, retailers are recognizing the financial and customer engagement opportunities that come with revamping loyalty strategies and programs.

“The future for retailers is omnichannel loyalty, and it begins now,” Dunlap explained. “The customer recognition, personalized treatment and loyalty value proposition needs to be consistent, regardless of channel being used. And just like any other corporate initiative, omnichannel loyalty strategies require an enterprise-level commitment, complete with involved C-level support.”

To create more personalized brand experiences, retailers are asking shoppers to share detailed insights on their location, age, and other information, according to Tim Ritchie, VP of Sales and Account Management for OpenMarket.

“This information should be combined with purchase history and other engagement history – like technical support queries – for that particular customer to deliver a personalized experience,” Ritchie explained. “Loyalty is driven by relationships, and strong relationships are built when consumers feel understood and valued. Fortunately, the tools and communication vehicles exist today to deliver this experience.”

In fact, it is more important than ever for retailers to refresh their loyalty programs to address these new and emerging customer engagement strategies, according to Joy Liuzzo, President of Wave Collapse. “Having a foundational program with elements related to each channel — social, mobile, in-store and online — is a potential option to complete this update,” she reported. “Loyalty programs can be tailored to drive behaviors in specific channels when necessary and in turn, create a connection with consumers.”

Although traditional loyalty programs were developed with the goal of igniting purchases and driving foot traffic, this is no longer a top priority for loyalty, Baird explained. Instead, retailers must focus on leveraging tools and strategies to drive customer engagement and delight.

“The key is to create experiences, not offers,” Baird explained. “The more you delight a customer, the more loyal they will be to you. That means over-delivering on what you promise.”

Retailers should focus more on exclusive experiences that they can provide their most loyal shoppers, Baird added. “Hopefully they will invest more in putting a genuine local face on their brand,” she said, “utilizing targeting and segmentation to great better offers and targeting that next level of granularity in how they engage with their shoppers.”

Click here to access a PDF version of Retail TouchPoints’ Customer Loyalty Report

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