As the world continues to grapple with the fallout of the Covid-19 pandemic and consumers move — and stay — online, so too are brands scrambling to stay ahead of the curve in an increasingly competitive e-commerce environment. What better way to ensure consumer engagement, growth, and retention than personalizing digital loyalty experiences?
After all, the global loyalty market is massive — just last year, it was valued at US$7.85 billion and is expected to grow to a whopping US$17.6 billion by 2028.
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While loyalty marketing might have ostensibly established a firm place in brands’ marketing strategies, it faces a challenge. Consumers are increasingly concerned with data security and privacy protection, as evidenced by the 71 percent of survey respondents of a Salesforce study, who believe the pandemic has shifted the way they think about their personal information. On top of that, Google’s culling of cookies is also inevitably pushing brands to rethink data collection methods — besides offering personalization, it is crucial for loyalty programs to use first-party data effectively while putting privacy first.
Smart Contracts, Smart Marketing to Deliver Loyalty Experience
With third-party data falling out of favor, the gold rush for first-party data is not surprising — it can translate to actual results when brands use it responsibly. According to research conducted by the Boston Consulting Group, digital marketers that deliver personalized experiences to their customers throughout their consumer journey have seen cost savings of up to 30 percent and revenue increases of up to 20 percent.
One of the most significant drivers of this is the use of first-party data, as it provides critical insights into consumer behavior, attitudes, and segments. Keeping in mind that loyalty programs are permission-based, requiring the customer to opt-in and allow for their data to be harnessed, it is vital for marketers to explain to customers where their data is stored, how it is used, and for what purpose.
Consider the use of blockchain technology
The record of transactions involving the precious commodity that is first-party data can be stored securely on a shared and immutable ledger, where every record is tamper-proof and represents a shared source of truth. Both the merchant and customer have access to the information, promoting transparency and trust, while preventing the misuse or manipulation of loyalty points.
Moreover, blockchain can form the basis of predictive analytics solutions in loyalty marketing. Rather than relying on huge sets of data across multiple agencies, which is historically known to create silos, blockchain allows for the analysis of various datasets in a properly defined model by way of smart contracts. Existing data can be integrated and distilled into digestible and useful insights that can help to inform future marketing decisions and sales opportunities, based on totally different sets of data such as demographics and conversion statistics.
The Potential of NFTs in Creation of Loyalty Experiences
Another innovative use case of blockchain in loyalty marketing that would guarantee privacy is non-fungible tokens (NFTs). From Budweiser selling digital beer cans to Quentin Tarantino auctioning off never-before-seen scenes of the cult-classic film “Pulp Fiction”, the list of brands opting to jump on the bandwagon is ever-growing.
As these digital assets are stored on the blockchain, NFTs do not need to rely on centralized intermediaries to store information. Instead, sensitive consumer information can be stored directly within NFTs, which can then be verified with smart contracts without the need for sharing with any third parties — an especially apt application considering the impending death of third-party cookies. Meanwhile, NFTs can also play a critical role in enabling greater personalization.
With personalization that has become a necessity rather than a luxury, NFTs can represent the provenance of a given customer’s digital identity while maintaining privacy. In other words, customers can expect to receive personalized offers without ever having to unmask their identities as the data tagged to their unique identifiers are encrypted and anonymized.
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Using NFTs in a loyalty program is extremely strategic and advantageous, giving brands an incredible opportunity to unify the asset with their audiences seamlessly. Today, marketing programs are fragmented not only across the supply chain, but within as well — we are conditioned to see audiences, assets, and advertising inventory separately, leading to gross inefficiencies.
Playing the Long Game
Beyond leveraging emerging technologies to offer sophisticated solutions to privacy-first, personalized loyalty experiences, marketers also need to develop a holistic understanding of the consumer’s needs and want in order to improve the overall customer experience and build brand loyalty.
Take American Eagle’s NFT collection, for instance — with themes of “good vibes, uniqueness, and individuality”, the fashion and lifestyle retailer proves that it clearly understands its Gen Z target audience, attesting to its commitment to staying true to its brand. Furthermore, the NFTs can be exchanged for a physical patch that can be sewn onto American Eagle jeans, physically adding another meaningful, “phygital” dimension to brand-consumer interactions. After all, the brand-consumer relationship is not only hinged on trust — emotional connection can also go a long way in driving positive customer experiences and increased sales.
Ultimately, brands can only stand to gain from prioritizing privacy and personalization. With so many new innovations on the horizon, brands need to stay ahead, proactively adopting smart solutions to not only nurture a long-term relationship with their customers but to also stand out in an ever-crowding marketplace.
[To share your insights with us, please write to sghosh@martechseries.com]
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