How Big Data is Shaping Customer Loyalty and Marketing Strategies (Part 1 of 2)

TechnologyAdvice caught up with LoyaltyGames 2014 World Finalist, Mayur Kapur, to talk about the role of “Big Data” in Customer Loyalty. In this Q&A session, Mayur speaks about how big data and loyalty are related, what big data strategies may or may not work in loyalty Programs, and the future of the exciting industry. Here are some highlights from the interview:

TA: There is a lot of buzz around “Big Data.” Can you start by briefly defining your definition of “Big Data”?

Kapur: Big data is basically a term used to refer to data sets so large and complex, that they cannot be analyzed using traditional data processing systems. When people talk about Big Data, they often refer to the 3 Vs as a means to describe it –Volume, Velocity, and Variety.

The best example I can think of to quickly explain what big data means (in the context of loyalty) – is “tweets”. Let’s take tweets about the company Starbucks. There are tens of hundreds of tweets that are being posted about Starbucks at any given time (“Volume”). Starbucks needs to have sophisticated technology in place that can crunch data from all these tweets super-fast, in a real-time manner, QUICKLY (“Velocity”) if it wants to generate meaningful insights about what people are saying NOW about its products / brands / service, so that it may incorporate the feedback immediately to improve its loyalty programs (Time is Money!). Finally, the tweets people are posting could take any form – phrases, pictures, emoticons…all of which points to the sheer “Variety” of data out there.

TA: What is the link between big data and customer loyalty?

Kapur: To me, customer loyalty is basically about understanding your customers’ needs and/or buying behavior and acting on the same to maximize mutual benefit. And if you look at big data, that’s one of the most powerful tools out there that can be used to achieve this, i.e. to really understand your customers and their needs (both spoken and unspoken needs) by analyzing data about their buying behaviours. It’s as simple as that. If you understand a customer’s needs, you can convert them into a loyal customer. To do this you should visit a site like https://www.salesforce.com/products/service-cloud/what-is-customer-service/ to find out all about how to keep your customers satisfied!

TA: Can you give us a real-life example of a case where big data was used to improve a loyalty program, with tangible benefits?

Kapur: There are many. I recently read a case-study about Denihan Hospitality Group, which owns and operates boutique hotels in NYC, Chicaco, Miami and Washington DC. The Group successfully used big data Analytics in its loyalty program to fine-tune its marketing campaigns for individual customers, resulting in a 300 percent RoI.

It was able to do this by combining insights from both structured data (such as length of customers’ stay, spend amount, etc.) and unstructured data (such as customer reviews, social media activity, etc.) to come up with actionable insights that supported its loyalty initiatives.

TA: Thank you for sharing that. It’s clear businesses increasingly use big data to enhance their loyalty programs and marketing campaigns. Can you talk about how these trends that are impacting companies?

Kapur: I can think of 4 important trends:

Firstly, the explosion in data is leading to generation of lots of “relevant data” that marketers can use for improving their loyalty programs, e.g. – Think about “location-related” data. Marketers can send SMSs with targeted offers to customers who are at or near a point-of-sale. What’s really cool is that they can customize these offers for each and every close-by customer, based on real-time analysis of the past purchases of each customer.

Secondly, a lot of loyalty programs today are still about giving away monetary incentives to current or potential customers to influence their purchase behavior. What’s exciting about big data, is that analysis of large volumes of customer purchase data could actually uncover hidden or underlying motivations that lead to certain kinds of purchase behaviors, which in turn could help marketers come up with cheaper— yet more effective— ways to build loyalty in their customers. This has the potential of significantly increasing the ROI of loyalty programs, since there would be an upward push on revenues, and a downward push on costs

Third, another advantage of big data analysis is that it will make “test marketing” of new products, ideas and concepts, much more faster and more focused. Which in turn will help companies’ loyalty programs. “Faster” – naturally, because we’re talking about the capability to process huge volumes of information in a short period of time to draw meaningful insights, and “Focused” – because rather than spend a whole lot of time, energy and money exploring tens of different ideas, products or concepts, big data analysis could actually tell Companies which are the 1 or 2 the most exciting opportunities and trends out there that should be getting their attention.

Finally, I think the marketing automation space itself will evolve to accommodate the changes happening in the big data & loyalty space. Right now, marketing automation software seeks to automate primarily the “transactional” elements of traditional marketing (such as lead management at a very high level). Going forward, I see marketing automation software “moving up the value chain” to automate more value-added marketing activities.

Expert Interview Part 2: How Big Data is Shaping Customer Loyalty and Marketing Strategies (coming soon)

Mayur Kapur was ranked Top 12 in the World in the 2014 Loyalty & Gamification World Championships (www.theloyaltygames.com), which saw participation from 1500+ professionals and students from 100+ countries. In addition to his day-to-day work which primarily focuses on Management Consulting and Corporate Strategy design & implementation, he takes active interest in Loyalty, Big Data and Gamification trends / issues. Mayur can be reached on LinkedIn at www.linkedin.com/in/mayurkapur and on Twitter @mayurkapur

This interview was provided by Loyalty Games media partner TechnologyAdvice, an Inc. 5000 company that connects buyers and sellers of business technology through meaningful relationships. Interview conducted by Clark Buckner.

3 Ways to Achieve Apple’s Cult-Like Loyalty [PODCAST]

One of the biggest issues for a company using social media is how best to respond to negative posts about the brand. Irate consumers are prone to posting highly negative updates when they’ve experienced poor customer service, or when their expectations for a product haven’t been met.

Customer loyalty experts Barry Kirk and Ashley Tate recently spoke with TechnologyAdvice’s Clark Buckner about how brands can combat this with “social loyalty,” which is created when a company or brand increases customer loyalty through the effective use of social media.

Kirk and Tate said there are a few key moves every brand can make to increase loyalty, even when the initial interaction between the consumer and the company was poor.

Hire a Qualified Social Media Manager

Many companies make it difficult for their customers to directly contact them, whether through endless redirections on the phone or a contact page without helpful contact information. However, companies with up-to-date social media accounts can often be contacted directly in a matter of seconds. Furthermore, today’s social media-savvy consumers expect such companies to answer in a timely manner.

Consequently, Tate encourages companies who care about their brand’s online image to hire qualified and highly trained individuals to manage their social media accounts. As a first line of defense for customer inquiries — and critiques — social media managers need to know how to deftly handle customers online so that the brand is enhanced every time a social media user engages with the company online.

Go Beyond What’s Expected

Kirk offered Kimpton Hotels as an example of a company that goes beyond what their clients might expect of them. Through their recently rebranded “Kimpton Karma” program, the U.S. boutique hotel chain may instantly respond “in real life” to a customer’s social media update about their experience at one of their hotels by placing something in their room, “reflecting that they paid attention to the tweet you just made or the post you just made to their Facebook page.”

In other words, Kirk suggests that it’s just as vitally important to brand loyalty to reward positive experiences as it is to adeptly take care of consumers who’ve had a negative experience.

Drive Cult Loyalty

“The real goal you should have, ultimately, is driving cult loyalty, the highest form of loyalty possible,” said Tate. He cites Apple and Harley-Davidson as two prime examples. Apple inserts two Apple stickers into every product they ship, but doesn’t tell users what to do with them. Often, these stickers wind up on cars, not so much to tell other people that the driver is an Apple user, but more to signal to other Apple fans that “I’m one of you.” It’s a tribal signifier that engenders loyalty and connection.

For Harley-Davidson fans, there’s the special “Harley wave” that motorcyclists give each other when on the road, another example of a tribal identifier. In a similar vein, Mini Cooper drivers have an unspoken ritual where they always let other Mini Cooper drivers merge in before them.

Translating this kind of cult loyalty to social media can be challenging — especially for companies who sell services instead of highly visible products like motorcycles and cars — but Tate and Kirk believe that creative marketers can discover creative ways to make it happen. To start, many best customer loyalty platforms are designed with badges and rewards that encourage social media conversation around the brand and create identifiers for brand advocates.

The biggest key is understanding the value in having a consistently engaging social media presence. In doing so, companies can increase loyalty to the brand as well as their customers’ connections with each other.

Listen to this week’s episode Social Media, Cult Loyalty, and Social Rewards.

Customer Loyalty Experts Offer Insight into Creating Better Rewards Programs

This interview was conducted by Clark Buckner from TechnologyAdvice.com (they provide resources on the best customer incentives, software options in employee engagement, innovative training games, and much more). Also, be sure to check out their technology conference calendar.

Listen to the interview in iTunes

Why Customer Personas Matter in Loyalty Rewards Programs (Ep1)

Customer loyalty industry experts Barry Kirk, VP of Loyalty Strategy at Maritz Motivation Solutions, and Ashley Tate, Director of Marketing at BigDoor, discussed understanding and validating customer personas, data-gathering strategies, and the importance of knowing your customers before creating a loyalty initiative with TechnologyAdvice host Clark Buckner.

Kirk emphasized that the term “consumer” is extremely reductionist in nature. It’s as if marketers view customers as a consumption machine that buys products or services, when in fact a marketer’s goal ought to be to create a relationship with them.

Customers are human beings. Likewise, so are marketers, and marketers would do well to remind themselves of both facts. From a loyalty standpoint, marketers need to move out of a “numbers” mindset and into an “actual person” perspective.

Moreover, Kirk stressed the importance of understanding not only loyal customers but “pre-loyal” customers as well. These are people who, before even buying a product, already show interest in your offering. They work to get to know the product, so they read up on the product’s origin or why it exists.

Kirk also illustrated the four core drives that explain why people become motivated to engage in an experience:

• The drive to acquire stuff: People like getting stuff, whether that’s actual stuff like rewards, points that they can redeem for rewards, or just certain status markers, like “Premium Member.”

• Drive to defend: When people become attached to an experience or brand, they’ll defend it when others might say something negative about it.

• Drive to bond: Customers love to interact with others, and especially within a loyalty program.

• Drive to create: Customers love to add their own touch to any kind of experience.

Pondering on these four core drives allows marketers to understand their customers’ wants and behaviors. When talking about their brand, marketers can then leverage their knowledge of their customers’ drives in order to build better relationships with them. 

Customers today often want to be as involved as they can with the brands they’re passionate about. They care deeply about why these brands exist and what such brands offer to them. It could even be argued that they essentially want to marry themselves to brands that align with who they are and offer products, services, or experiences they desire.

A Shift into Persona Marketing

In order for any successful loyalty marketing campaign to begin, marketers should shift their mindsets from value-based segmentation to a persona marketing perspective. Instead of analyzing data for the purpose of determining who buys more products than others, use such data to understand who your customers really are. Ultimately, that results in knowing them on a more human level.

It’s critical for loyalty marketers to create personas by factoring in these pieces of information:

• Job title or level of seniority
• Customers’ daily lives
• Customers’ reasons for visiting their site
• The value your product brings to them
• Customers’ goals in the experience
• The experiences they seek to get out of your product or service
• The duration of the journey you want your customers to take

Data-Gathering Tips for Loyalty Marketers

Heat maps enable marketers to see their customers’ online behavior based on where they’re clicking and what pages or links they’re visiting. Consequently, marketers get to follow a visitor’s journey throughout their online experience.

Customer advice reports allow marketers to test new ideas in order to receive feedback from all kinds of customers. Gathering data from loyal customers is not sufficient, as you will most likely receive the same results, the same likes and dislikes, etc. What marketers ought to seek is unbiased data, which you can get from those who have bounced from your site or from those who originally bought your product or service but decided against further purchases.

Survey methodologies help marketers understand the values behind their customers’ behavior. Why is the brand important to them? How do they spend? Since different customers have different values, marketers can use surveys to pinpoint the dominant value systems that drives their target customers to act. 

Ultimately, knowing who your customers are at a human level is of foundational importance when launching any customer loyalty program. Understanding what drives a customer toward action is essential to knowing what kind of value you should offer through a loyalty rewards program. Most importantly, you may have gathered all the data you need about your customers, but what’s critical is how you use that data to show your customers that they’re more than just a number.

Be sure to download the next available podcasts now for free in iTunes: The Customer Loyalty Space!