With the arrival of cognitive learning that can access as much as 80 percent more customer insight, the power of loyalty programs as a retention tool has grown exponentially and provides you with the potential to literally transform your business through adaptive learning that shapes endearing, personalized customer experiences that deliver true incremental ROI.
The Evolution of Loyalty
Early reward programs were based on observable customer behaviors such as flights flown, hotel stays or purchases made at a particular brand. It encouraged customers to keep coming back to do more of the same, but did not necessarily incentivize them to expand their buying behavior within a brand. Once loyalty programs became ubiquitous, consumers were no longer motivated to enhance their degree of loyalty.
In the late 1990s to early 2000s, email marketing based on a customer’s observable behavior offered a course change. Messaging started to get more relevant based on groupings of customers by segments, which in turn began to influence future behaviors.
With advancements in data collection and analytics, customer insight can now be expanded beyond your customer’s observable history to include information on what they are doing, and NOT doing, in real time across all of your channels. As a result, the data pool on any one customer keeps getting bigger and bigger. Predictive analytics and machine learning tap into these rich data pools and give you a view into the behavioral clues the customer is leaving, and provide insight on how to:
- increase the frequency of customer visits
- increase average order size
- widen the breadth of category purchases
- intervene and incent to purchase if a customer is on the path to abandoning their session
This enhanced insight, based on activity across the various channels, allows you to be more strategic with your loyalty program. As a result, your marketing can be more relevant for a longer period of time than traditional approaches and this will grow lifetime value measurably!
The Arrival of Revolutionary Changes
With machine learning and unstructured data inputs such as social media posts, cognitive capability can now be infused into the customer engagement, which provides us visibility into the individual customer’s behaviors, likes and preferences.
Unstructured data, which typically represents approximately 80 percent of the known information about an individual, combined with the 20 percent known through transactional data, creates a more valuable profile of the customer, which brings personalized customer engagement to a whole new level. The magnitude of this change can be illustrated by the way GPS has evolved: Our first GPS systems used to guide us simply by telling us how to get from point A to B. Now our GPS systems incorporate real-time traffic conditions based on accidents, construction, road debris and weather.
To learn more about how cognitive capabilities can be infused into customer engagement to create powerful, market-leading customer experiences, download the “Positioning for the Adaptive Loyalty Revolution” white paper by Exchange Solutions and IBM Watson Commerce.