Why CDP Based Loyalty Programs are a Win-Win for Marketers: Q&A With SessionM (a Mastercard Company)

“A CDP helps break down internal silos and creates a single source of truth as a launching point for everything else, this is really the “brain” of personalized marketing and consumer engagement.”

After MastercardOpens a new window acquired SessionM, a customer data and loyalty platform in 2019, CEO Lars Albright has embarked on an exciting journey. By focusing on innovation, growth, and customer results, he began to look at ways to improve engagement rates across iOS apps and found customer loyalty and engagement are deceptively complex to create. 

To bridge that gap, Albright shares how brands can use customer data platformsOpens a new window to tailor the brand’s interactions in a single view for the customer. In this edition of MarTalk Buzz, Albright talks about whether businesses need to invest in a CDP based loyalty programOpens a new window . He also sheds light on why user experience has the power to impact incentives and rewards in loyalty marketing.

Key takeaways on why CDP based loyalty programs are a win-win for marketers:

• Have a direct and data informed connection with your consumers to make them feel known and valued.
• Look at metrics like frequency, basket or order size, customer lifetime value and churn to measure customer loyalty.
• Gather opt-in first-party data through loyalty programs to reward consumers.

Here’s the edited transcript from our exclusive interview with Lars Albright:

1. What is “relationship commerce” and why is it important to move forward post COVID-19? 

Commerce has clearly been turned on its head because of the coronavirus pandemic. Yet, looking at the businesses that are doing well through this disruption, the one thing they have in common is a strong relationship with their customers. What we are seeing emerge is an economy where commerce is much more strongly built on relationships. Companies that have a direct and data informed connection with their consumers can make them feel known and valued. Those are the brands that are going to vastly outperform those that do not. More specifically, the most successful companies will combine this with personalization of communications and efficiency of the user experience, along with incentives and rewards to further motivate repeat purchases. 

2. With the ‘no touch is the new high touch’ philosophy, what are the key challenges surrounding loyalty programs? 

Before COVID-19, brands showed appreciation to high-priority customers by lavishing more time and attention on them to create a higher quality experience. That, “high touch,” philosophy has made a 180-degree turn in today’s social distance era. Today, fewer attendants, fewer hands, and less interaction are the signs of a quality experience. 

For brands, this means digital engagement is more critical than ever before. Loyalty programs are often the lens through which consumers see your brand. The challenge with loyalty programs today is creating an authentic and seamless connection with consumers despite ensuring distance from physical touchpoints. Digital channels play a key part in that.

3. Why and how user experience has the power to impact incentives and rewards in loyalty marketing, which motivate repeat purchases?

The user experience is a critical component to motivating repeat purchases today. Each good or bad experience reflects on the brand as a whole and impacts whether consumers will do business with you again. Furthermore, omnichannel excellence is the new necessity – a bad experience on one channel reflects poorly across the entire brand. Consumers expect the same level of service, whether they are interacting in-person, via email or on a call. Compounding this issue, with so many brands making their goods and services more easily accessible online, competition has never been fiercer. If a customer has a bad experience, alternatives have never been easier to come by.

Also Read: Why Oracle Now Offers Customer Data Management to B2C BrandsOpens a new window

4. How can marketers extend their existing loyalty programs with a customer data platform (CDP)? What steps can they follow to integrate overall marketing with loyalty marketing with practical aspects around data, deployment, and challenges?

When we think about loyalty, we see it as an outcome of great interactions and engagement. What makes one interaction stand out from another? What type of content do consumers truly engage with? It all comes back to how you tailor interactions to their needs and preferences. 

That is where a CDP comes in. The first step in using data to tailor a brand’s interactions is creating a single view of the customer. It essentially is an operational profile that takes the individual’s preferences into account no matter where they tell you those preferences are. A CDP helps break down internal silos and creates a single source of truth as a launching point for everything else, this is really the “brain” of personalized marketing and consumer engagement. 

5. Loyalty/rewards programs are emerging as a CDP business use case. Which metrics can be used to evaluate whether businesses need to invest in a CDP based loyalty program? Can you share a few examples where loyalty programs with CDP have performed optimally?

Loyalty programs done poorly can not only fail to move the needle on areas such as purchase frequency and purchase size, but also actively detract from the bottom line. It is typically obvious when a loyalty program is not built on the foundation of a CDP.

As an example, we worked with a leading quick serve restaurant that was launching a new rewards program. It was collecting very limited customer data and had no way to use the data it was collecting to incentivize customer behaviors. The loyalty program they had piloted for three months the previous year cannibalized margins rather than driving incrementality. By creating a program that captured important customer data, in a fully transparent way, they were able to execute a variety of campaigns that motivate specific behaviors. With these changes, one campaign resulted in a near 25% lift in average ticket size.

Another leading retailer leveraged CDP capabilities to create advanced tiering functionality that enables them to set up three different levels within their program: Member, Silver, and Gold. Members can progress up those levels by engaging in certain actions that are valuable to the brand, such as making a purchase, writing a review, RSVPing and attending an event, subscribing to email. Additionally, experiential benefits such as early access to new releases or invitations to exclusive events motivate members to consistently interact with the brand between purchases. 

Also Read: Why Customer Data Management Is Essential to Airline Marketing: Q&A with Edward Bell of Cathay PacificOpens a new window

6. It is critical for brands to measure outcomes or results from the platforms they invest in. How do you know if the investment in a CDP to run the loyalty program has paid off or not? 

Businesses should look at metrics like frequency, basket or order size, customer lifetime value and churn. There is not one metric that tells the whole story of customer loyalty, but brands that are doing it right will see marked differences in these metrics. It is our belief that a CDP should always underpin an effective customer engagement strategy and loyalty program. 

Also Read: Why are Customer-Centric Enterprise Marketers Prioritizing Customer Data Management?Opens a new window

7. As the world bids goodbye to browser cookies, what does the future of CDPs for loyalty programs look like? 

Cookies are not only ineffective, but we are living in a privacy-conscious society where tools like this can often run counter to the goal of fostering loyalty and trust between consumers and brands. The solution is gathering opt-in first-party data, and one of the best ways to do that is through loyalty programs, which reward consumers for voluntarily sharing information about them to receive benefits they never could as an anonymous customer. This value exchange is critical and will be even more so in the future. 

About Lars AlbrightOpens a new window : 

Lars has helped build SessionM into the market leader for customer data management and engagement, working with the world’s largest and most innovative brands to help them build stronger relationships through smarter engagement. Prior to co-founding SessionM, he was a member of the executive team iAd, Apple’s mobile advertising business unit. Before Apple, Lars was a Co-Founder and SVP of Business Development at Quattro Wireless, a leading mobile advertising platform that was acquired by Apple. Prior to Quattro, Lars was Vice President of Business Development at m-Qube, North America’s dominant mobile aggregator that was acquired by VeriSign in 2006. 

About SessionM (a Mastercard Company)Opens a new window :

SessionM is a customer engagement and loyalty platform empowering the world’s most innovative brands to forge stronger and more profitable customer relationships. The platform scales for the enterprise, globally. SessionM is headquartered in Boston with offices around the globe. 

About MarTalk Buzz:

MarTalk Buzz is an interview series where marketing leaders and marketing technology companies that are making a difference, connect with us and share their stories. Join us as we talk to them about their product journeys, insights on the categories they serve, what works for them, and some bonus pro-tips.

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