How to use loyalty program insights to boost your first-party data strategy

The deprecation of cookies and the rise of walled garden data is having a huge impact on how brands will target and interact with their users, making it more expensive and restrictive for businesses to manage their digital marketing. As a result, brands are looking to boost their first-party data strategy in preparation - and are increasingly realizing the potential of their loyalty programs as a valuable source of data. 

Loyalty programs allow brands to establish direct relationships with their customers, gathering comprehensive data about their preferences, behaviors, and purchase patterns. This first-party data is not only more reliable and accurate but also enables brands to personalize their marketing efforts on a granular level. Unlike third-party cookies, which rely on tracking users across various websites, loyalty data provides a deeper understanding of individual customers, fostering a stronger sense of trust and loyalty. 

First-party data is data collected directly from users who interact with a company's website or app. This includes insights into user behavior, preferences, demographics, and engagement metrics. First-party data is essential to personalization and being able to optimize user experiences, as well as delivering targeted content. By better understanding their audiences and tailoring their offerings to meet demand, brands can drive higher engagement, conversions, and long-term customer loyalty.

Third-party data is information collected by external sources, separate from the direct interaction between a business and its customers. It includes data points obtained from websites, apps, or other platforms that are not directly owned or operated by the company. These external sources gather data through cookies, tracking pixels, or user registrations. With increasing concerns surrounding privacy and data protection, the use of third-party data is gradually being restricted - and as regulatory measures evolve, companies are looking to reassess their data collection practices and prioritize user consent. 

The best antidote to the deprecation of cookies is a loyalty program, which offers a huge number of touchpoints to better understand your customers - especially when it’s data customers are willing to share. By building a large and healthy marketing database, companies can move away from their reliance on walled garden data advertising tools and gain valuable insights into customer preferences, behaviors, and purchasing habits. 

Brands can use loyalty programs to build on their customer data strategy right across the customer journey: 

When a member registers to join a loyalty program, they are required to provide personal details (e.g., their name, date of birth, email address, and mobile phone number), which form the basis of their member profile. 

Once the join process is complete, there might be a section or preference center within the new account where the member is invited to share their likes and interests.

Flybuys is an Australian customer loyalty program equally owned by the Coles Group and Wesfarmers. Once users complete the registration process, the Flybuys loyalty program invites new members to fill in a profile section. This includes fields for home and work phone, residential and postage address, number of people living in the household, number of cars, whether the member owns their own business, the month of the year when they intend to review their home insurance, car insurance, and mobile phone contract, how often they take flights for personal travel, which loyalty programs they are a member of, and more. 

This is all highly valuable information for Flybuys to build a comprehensive member profile, while for the member it is entirely voluntary.

When and how members interact with a brand can be tracked at a micro level, and used to better understand and enhance the customer experience. This includes click maps, real-time insights into user behavior across websites and emails, and heat maps for in-store visits.

However, when it comes to integrating interactions into your customer data strategy, transparency is key. A recent report from Merkle shows that 76% of customers are comfortable sharing their data if it leads to a better, more personalized experience - but brands need to be clear about when and how they track user interactions. 

The Body Shop’s loyalty program, Love Your Body Club, is a popular loyalty scheme that grants members access to a variety of exclusive rewards. The brand maintains transparency regarding the collection and processing of members' data, both online and in-store, ensuring clear communication to all participants.

When, where, and how often a member transacts, as well as the amount they spend, provides valuable data regarding members’ lifestyles, habits, interests, motivations, and goals. From there, marketers can use this information to bucket users into certain customer segments, and tailor communication with them accordingly. 

NPD Group, one of the world’s biggest market research agencies, runs a reward program called Snap My Eats in the UK. Members can download the app and register, then earn up to £5 of credit per month just for taking surveys and snapping pictures of receipts from their food and drink purchases.

Snap My Eats requires the member to accumulate £10 of value before they can process a redemption, ensuring the program takes advantage of the endowed progress effect to drive ongoing member engagement, while simultaneously reducing costs.

Loyalty programs often invite members to participate in surveys, which serve two purposes: to capture feedback on loyalty programs and gather additional data on preferences and habits. 

Qantas Airways, the flag carrier of Australia, frequently releases surveys that cover a wide range of topics, with questions including:

Some companies are experimenting with the use of virtual home assistants (such as Google Assistant, Alexa, or Siri) to support new ways for customers to interact. As the capability evolves to better maintain and interpret reasonable levels of conversation, they hold the potential to serve as valuable sources of personal data for loyalty programs.

Marriott collaborated with Amazon to provide Amazon Echo devices in hotel rooms, enabling guests to access Alexa's services for convenience and ease. With Alexa, guests can inquire about hotel details, request services, enjoy in-room music, and more. This fosters a connection between the assistant and users while Marriott can use insights to further personalize and enhance experiences. 

Loyalty programs may link multiple members to a specific mailing address, allowing them to build out their data profile by matching members living in the same household - whether that’s spouses, children, parents, or housemates. Taking a household profile approach means brands gain a broader consumption profile than individual members. 

American ice cream parlor chain Cold Stone brewery awards members with 1 point per dollar spent. Every time the account reaches 50 points, the points are automatically redeemed for a US$5 voucher. The program allows up to seven family members to be added to the same account to help accumulate points - and each family member has their own profile. The terms and conditions warn that while household pooling allows points to be earned faster with no limits to the amount of US$5 vouchers members can accumulate, this also means family members can redeem your rewards. 

Loyalty programs offer brands a valuable alternative as the deprecation of cookies becomes a reality. By embracing the power of loyalty data, brands can build stronger customer connections in an ethical and customer-centric manner.