I'm just back from two weeks in Hong Kong, where I'd been invited to give a keynote at the 10th anniversary conference of the Business Information Industry Association. Since I was there, I took the time to meet with some fantastic Forrester clients in industries ranging from travel to insurance to retail to consulting. In nearly every discussion, whether I was speaking to a BT or a marketing exec, we eventually got to the topic of the "privacy-personalization paradox."
This is an issue I've explored extensively, and have written about before. It's a challenge that marketers in the US dabble with when they're considering investments in tools like retail beacons and cross-device identity resolution. But it was enlightening to hear about the challenges that firms in APAC face: antiquated privacy laws, a dearth of third-party consumer data, and even the incredible difficulty of compiling a single customer view across their own first party data. Interestingly, though, the solution in both markets is similar: preference management.
In May, American Express launched Plenti, a U.S.-based coalition loyalty program with eight partners, including Macy's, AT&T, Exxon Mobil and Rite Aid. These types of programs, which let consumers earn and redeem a single currency across multiple partners, are popular in other areas of the world, but coalitions have historically failed to gain traction in the United States.
Plenti's initial progress indicates that it might buck the trend: It signed up more than 20 million members in its first two months reaching around 16% US household penetration. For reference, established coalitions such as AIR MILES, Nectar and FlyBuys have household penetration rates of more than 50%.
But any decent loyalty marketer knows enrollment doesn’t tell the whole story. Three things, in particular, give coalition in the U.S. a fighting chance:
The loyalty program landscape is crowded. Plenti entered the market at a time when companies across industries – from retail to travel/hospitality to automotive – invest in loyalty programs to drive retention, engagement and loyalty. According to Forrester’s Consumer Technographics data, consumers belong to an average of nine loyalty programs. The proliferation of branded programs makes it hard to stand out, and it shows: 58% of loyalty marketers that Forrester surveyed in 2015 indicated they were dissatisfied with their loyalty strategy. Coalition programs offer a differentiated value proposition: members shopping across partners experience an increased earning velocity and wider choices for redemption, which boost the utility and perceived value of the program.
In case you haven’t noticed, the number of smartphone users in Asia Pacific has grown – we estimate that it breached the 1 billion mark in 2014. This is the first time that more people in the region used smartphones than feature phones.
When coupled with the fact that the region is also a leader in innovative messaging apps, such as WeChat, Line, and KakaoTalk, marketing professionals can start to see how Asia Pacific is ripening into a mobile-led commerce and marketing harvest – creating a commercial marketplace where users interact and trade and offering organizations growing sales and marketing opportunities.
However, many B2C marketing professionals today limit that potential by only focusing on promoting flash sales or discounts, as seen on the likes of WeChat and Line. Marketers must consider longer-term use cases to fully mine these apps' potential. Unless a messaging app user is specifically searching for and ready to buy a particular product or service, marketers who continue to pepper the app’s chat room with meaningless discount messages will have wasted their investment. In addition, users will likely move to the next competitive (i.e., cheaper) offering when it comes along, running the risk of marketers facing a race to the bottom with cutthroat pricing.
Most CMOs today have to close gaps in data collection within and across marketing units, integrate the data to transform it into actionable insights, and foster a closer working relationship among these units to achieve the overarching business goals. Building a command center may be a distant priority.
However, I have argued that digital command centers are intelligent nerve centers that let brands quickly track digital moments and respond appropriately to manage their reputation, retarget display ads, drive new sales opportunities, and provide customer support. In effect, it’s a marketing organization’s digital gold mine. On a broader scale, this marketing capability will importantly feed into an entire firm’s system of insights.
Here in the US, we’re gearing up to celebrate July 4, the day that everyone knows signifies America’s independence. But most people don’t know that the 1776 congress didn’t actually declare American independence on July 4. This date didn’t mark the start or end of the American Revolution. America’s Declaration of Independence wasn't even written, signed, or delivered to Great Britain on July 4.
We celebrate July 4 in the name of tradition — and we defer to assumptions rather than unearthing the true story. But when we dive a level deeper and look beyond the surface, we gain new depths of insight. When it comes to understanding customers, it’s time to take a deeper look.
The role of emotion is one of these “unknowns” in consumer behavior: An incisive view into consumer behavior reveals that emotion is more powerful than commonly thought. More than a mood, emotion is a key driver of customer decisions, actions, and perceived experiences —and pervades each stage of the purchase life cycle. For example, Forrester’s Consumer Technographics® data shows that Etsy inspires extremely positive consumer sentiment before, during, and after making a purchase:
Retaining and delighting empowered customers requires continuous, technology-enabled innovation and improved customer insight (CI). The logic is simple in theory, but that doesn’t make it any easier to implement in practice.
In my recent report, entitled “Applying Customer Insight To Your Digital Strategy”, I highlight the top lessons learned from organizations in Asia Pacific (AP) that are successfully leveraging CI to fuel digital initiatives. It all starts by ensuring that data-driven decision-making is central to the digital strategy. With that in mind, I want to use this blog post to focus on two key lessons from the report:
Lesson One: Establish A Clear Mandate To Invest In Customer Analytics
Successful companies serve empowered customers in the way they want to be served, not the way the company wants to serve them. When building a mandate you should:
■ Expect natural tensions between various business stakeholders to arise. To secure buy-in from senior business decision-makers, start by illustrating the clear link between digital capabilities and data as a source of improved customer understanding. Identify measurable objectives and then link them to three to four scenarios that highlight where the biggest opportunities and risks exist. Continue to justify data-related investments by restating these scenarios at regular intervals.
If you are excited about challenging thinking and leading change for our clients in customer analytics and enterprise marketing technologies, we’d love to hear from you. We have two open Customer Insights analyst positions to focus on these critical coverage areas – customer analytics and enterprise marketing technologies. You will write research for, present to, and advise Customer Insights Professionals to help guide their customer data, analytics, and marketing technology decisions.
A version of this post originally appeared on AdAge.
It's harder than ever to earn your customers' loyalty. They are "always on," have instant access to myriad choices, and can easily find the cheapest prices from any supplier. Many companies think they've solved this with a loyalty program, but the competition is stiff there, too. On average, consumers belong to eight loyalty programs -- the majority of which are ruled by points, discounts and financial rewards. And let's face it: These transactional benefits are more about increasing frequency and spend than influencing emotional loyalty and devotion to a company.
The bad news? Traditional approaches to loyalty don't cut it anymore.
The good news? I'm not going to tell you to scrap your loyalty program. But, in my new report on customer loyalty, I am going to tell you to reframe how you think about your program. It should be treated as one of several tools -- alongside customer experience, brand and customer service -- that helps foster customer loyalty wherever customers interact.
Be A Loyalty Company, Not Just A Company With A Loyalty Program
Truly great loyalty strategies create a meaningful exchange of value between the company and the customer. This exchange encourages customers to share all kinds of profile, preference and behavioral data. And the insights derived from that customer knowledge have broad applications for all customer-facing strategies, and should radiate out across the enterprise to do the following:
CRM is the foundational building block that allows empowered consumers and connected employees to do business in ways we could not imagine just a few years ago. Historically, CRM strategies have focused around operational efficiency gains like reduced marketing costs, increased revenues from salespeople, shorter sales cycles, or better customer service productivity. Its no wonder that CRM is widely deployed in all companies – both big and small.
In my last blog post I outlined Forrester’s key customer insights (CI) predictions for 2015. Now I’d like to drill down into some of the key barriers to CI effectiveness we’re seeing among Asia Pacific-based organizations. This content was pulled from my recently published report, which Forrester clients can access here.
Core competencies of effective CI pros have typically centered on customer segmentation and campaign performance measurement. When extending these capabilities to digital marketing strategies, the goal is typically to enable more effective customer acquisition and onboarding by extending reach. In other words, digital innovation often simply means “better campaigns.”
But what happens once that process is complete? It’s not enough to have a world-class digital capability for acquiring new customers. Empowered customers expect the same type of seamless experience, improved efficiency, and heightened responsiveness in all subsequent interactions with your brand.
So why so many firms struggling to realize the full potential of customer analytics to effectively serve and retain their customers? I’ll give you four reasons: