The Future of Loyalty (part 2): Big Data and Social Media
No excuse for not knowing your customers.
The second in our series of articles analysing the challenges and the opportunities for the loyalty industry in 2014.
Privacy and permission, personalisation and ownership of identity. These are all really important issues that will be the subject of countless debates during 2014, but for those who manage to navigate through the minefield of privacy rules and what the consumer will accept, there are big rewards.
Data, it is argued, is more valuable than a transaction, but acceptance of privacy and permissions rules is crucial, so how private do we as consumers want to be, and what will it take for us to surrender these important rights?
Martin Hayward (right) of loyalty management company Aimia argues that how much privacy we keep and how much we surrender will be down to what agreement is reached between the parties. By parties he means the business, the customer, and the regulators.
While it is naive to think any business has the right to bombard customers with information all day long, few want governments to step in and decide the rules for us. Which means that a considered approach would be sensible from businesses to prevent the necessity of regulator intervention.
The European Commission has already imposed a number of rules, but so far these have left businesses fairly free to do what they like. In fact the infamous ‘cookie law’ actually worked in businesses’ favour, because it means consumers have to agree to the cookies before they can enter the site. Of course most people do, and few read the small print first.
All this could change if consumers become too upset over the unacceptable use of their data, or if there is too much identity theft and fraud.
Hayward outlines several possible scenarios. We could end up with ‘offer anarchy’, a cost based approach where customers decide what their information is worth, or perhaps some companies will achieve real relationships based on trust and reciprocal benefit.
He admits it is very tempting to fall into the offer anarchy trap, but that if there is better connection between loyalty and advertising, then true engagement with the customer is possible.
He commented: “The phrase, monetising customers is a distressing one, that is often heard from banks and in the technology bubble. This is dangerous. It is doing things to the customer, rather than for them. Offers are not about loyalty. They may be part of loyalty but they are not it.”
The internet has made it possible for businesses to collect near perfect data, so what are the big names doing with it and what do they see as their responsibility?
Evin Gaffney, UK & Ireland market lead for Facebook, believes the brand should take responsibility for what is happening on social media and should work to achieve good quality engagement with real offers. He claims that Facebook achieves 91% accuracy in targeting offers to people who want to receive them, but of course it has the job of policing the multiple brands making offers via Facebook.
Does Facebook feel it has a responsibility to police these too? He said: “It is important to show the customer that they are unique. It is possible to get this across using social media through communications, and increasingly through gamification, which can drive traffic to a game or a website. That in itself is not going to drive loyalty, but it is a tool.
“If, using Facebook, a brand just ran a series of games or offers, then this is unlikely to be very successful,” Evin added. “It is necessary to talk to people as individuals. You have to think about the user, and introduce some long term value to them. The brand has to be open for that.”
eBay works with 100 different brands in the UK. Eben Sermon, director of relationship marketing and loyalty for eBay said the company was very careful about which brands were accepted as promotion partners: “We work hard on making sure the right brands get surfaced to the right customers, unless a brand is in conflict with our ideals, in which case, we would not accept them.”
If the goal is to foster and develop real relationships through the use of Big Data, how does a brand get there? Said Sermon of eBay: “They have to provide an experience that leads to real data, for example car data. It is possible to use new channels, such as mobile, to connect, but there has to be something tangible at the end of it.”