Personalization is the most economical way to drive customer behavior, boosting incremental sales and a company’s bottom line. Indiscriminate sales or discounts offered to all customers on products and services they may (or may not) be interested in have minimal value to a retailer. The best loyalty and customer engagement programs will reward the customer behaviors marketers and other executive decision-makers want – with rewards and offers that entice customers to remain loyal to their brand and drive additional revenue and sales.
Several recent surveys and reports, including Eagle Eye’s Grocery’s Great Loyalty Opportunity, show that during the current inflationary climate, shoppers want to conserve their cash in various ways, including dining out less and switching from name-brand to private-label goods. They also want to take advantage of loyalty programs that provide offers, discounts, or other benefits to lower the overall cost of their everyday purchases.
Global consumers, particularly younger shoppers, also perceive personalized retail interactions as welcome, important, and an effective way to save. Loyalty programs are ideal channels for retailers to deliver personalized interactions to their customers, giving them savings opportunities through discounts and other offers. The more customers interact with a brand through loyalty programs before, during, and after a shopping journey, the more information a company can collect on their buying habits, communication preferences, and other customer behavior. The more data, the better insight the company has to inform strategic initiatives.
Ultimately, customer data is the key to developing better pricing and promotional structures, helping retailers understand their customers’ priorities, values, and behaviors, and developing more sophisticated and impactful personalization strategies.
Personalization Boosts Customer Lifetime Value
Personalization helps loyalty programs achieve two fundamental goals: delivering value and a positive brand experience to customers today while laying the foundation for giving customers something of value tomorrow. The earlier a company invests in the necessary technology, the sooner it will reap the rewards and the more it will increase customer lifetime value (CLV).
Our survey report, Grocery’s Great Loyalty Opportunity, found that 84% of consumers believe personalized recommendations will help them save at the shelf. Investing, therefore, in solutions to improve personalization efforts can help retailers achieve several aims: demonstrating value to customers and improving promotional acceptance rates and, thereby, the overall efficiency of their promotional strategies.
Yet nearly one-third (31%) of grocery loyalty managers said that delivering personalized offers was their biggest challenge.
To provide loyalty members with the offers that give the most value- that is, offers for products they are most likely to redeem- they must be personalized based on their purchase history and contextual behaviors.
Advanced Personalization
Our research shows that some grocers can see up to a 16% increase in average basket size by providing customers with personalized offers. For example, after implementing advanced loyalty technology, Woolworths Australia has delivered up to 13 times more personalized offers to their customers. The merchant has also seen record numbers of members redeeming bonus offers, with a 14% increase reported after launch. Woolworths Australia has also saved on significant resources by automating and scaling offer creation.
Personalization strategies are also important in retaining customers once a brand has them, reducing customer acquisition costs and overall marketing expenses. Using purchase data to personalize new member offers within the initial journey can provide as much as a 40% decrease in new member churn.
Brands with loyalty programs and multiple customer touchpoints already have the data they need to fuel personalization strategies and engage with their customers on a one-to-one level. The more touchpoints, the more opportunity a brand has to make the right offer when the customer is at the critical buy/don’t buy decision point of the shopping journey.
Marketing in the Moment Heightens Personalization 2.0
To take that idea to the next level, a retailer needs to embrace Marketing in the Moment, which provides the contextual information to help deliver highly personalized and timely content such as offers, promotions, or messages to an individual shopper at the optimal moment to influence their purchasing decision.
More than half (56%) of consumers we surveyed want retailers to make it easier for them to find discounts, showing that context-based marketing can be highly effective. Consumers are more likely to be motivated by loyalty program initiatives that reach them when they’re most likely to respond, such as quick service promotions around mealtimes or offers tied to weekly or seasonal sales.
Advances in digital technology and customer analytics have made Marketing in the Moment possible, a concept seen as retail marketing’ next big evolution. Retailers investing in this technology are already reaping the benefits, including increased customer lifetime value (through increased interactions and targeted engagement, as discussed earlier) and a boost in incremental sales. A cross-industry analysis and forecast from Gartner found organizations that invested fully in personalization, including personalized, contextual marketing like Marketing in the Moment, would be outselling those that hadn’t by more than 30%.
But even companies with limited budgets and legacy technologies can deliver personalized marketing by analyzing customer purchases and offer redemption history. Such a review will show what offers are most likely to be redeemed by customers and which aren’t.
Final Thoughts
Customized loyalty experiences pay off for both the companies offering them and the loyalty program members who use them. According to Monetate, 93% of businesses with personalization capabilities experienced revenue growth. Additionally, using customer data to create more relevant promotions increases offer usage by up to a factor of 8.
Loyalty programs that focus on personalization positively affect topline sales and encourage customers to interact with a brand more frequently and increase purchases, adding substantially to a brand’s revenues while reducing overall marketing expenses.
The sooner companies orient their engagement strategies around tailored offers and a more bespoke loyalty experience, explore next-generation tactics like Marketing in the Moment, and identify the technology partners that can help them do more with data, the sooner they’ll enjoy the financial benefits these approaches promise.
