Loyalty Program Benchmarks and the Role of Web3 Tech in Improving Tracking & Integration
Web3 Technology Integration: Web3 technologies, underpinned by blockchain, facilitate seamless integration among disparate customer data management systems, enhancing the tracking and analysis of key loyalty program benchmarks like Customer Participation Rate, Redemption Rate, Customer Lifetime Value (CLV), and Net Promoter Score (NPS). Examples include utilizing smart contracts for automated tracking and tokenization to securely manage loyalty points redemption at Point Of Sale (POS) systems.
Unified Data Management: Creating a unified data layer on blockchain consolidates data from various platforms, serving as a single source of truth for improved data accuracy and consistency. This integration enables real-time tracking and cross-platform notifications, aiding in more informed decision-making and effective strategy formulation for loyalty programs.
Enhanced Loyalty Program Insights: A unified view provides unique insights into customer behaviors, loyalty program effectiveness, real-time performance metrics, and competitive benchmarking. These insights empower brands to optimize loyalty program structures, tailor marketing campaigns, and enhance overall customer satisfaction and business profitability by leveraging data-driven actions.
Loyalty programs have become an integral part of customer retention strategies for businesses worldwide. They aim to reward customers for their continuous engagement and purchases, fostering long-term relationships. However, to ensure the effectiveness of these programs, it is crucial to understand and monitor loyalty program benchmarks.
This article examines key loyalty program benchmarks and explores how Web3 technologies can improve tracking, merge disparate customer data systems, and provide a unified view for enhanced insights.
Loyalty program benchmarks are key performance indicators (KPIs) that help businesses evaluate the effectiveness of their loyalty programs. These benchmarks provide a standard against which the performance of the program can be measured. Common loyalty program benchmarks include customer participation rates, redemption rates, customer lifetime value (CLV), and Net Promoter Score (NPS).
This measures the percentage of customers who are active members of the loyalty program. A high participation rate indicates an attractive and engaging program.
This tracks how often customers redeem their loyalty points or rewards, reflecting the perceived value of the rewards offered.
CLV measures the total revenue a business can expect from a customer throughout their relationship, aiming to increase CLV by encouraging repeat purchases.
NPS gauges customer satisfaction and loyalty, providing insights into the overall customer sentiment towards the brand.
Despite their importance, measuring loyalty program benchmarks comes with its challenges.
Most notably, the lack of integration with other systems. Brands commonly face the challenge of managing too many data collection channels, including websites, point-of-sale systems, call centers, and mobile apps, which may lead to data integration challenges. A recent Global Data Management report reveals that among retailers, 45% experience wasted resources, 39% face issues with the reliability of analytics, and 35% encounter negative impacts on their reputation, all due to poor data quality
Benchmarks such as Customer Participation Rate, Redemption rate, CLV and NPS are each calculated from data that exists on different systems:
Customer Relationship Management (CRM) Systems: CRM systems like Salesforce or Microsoft Dynamics are commonly used to track customer participation rates in loyalty programs. They provide a centralized platform to manage customer data, interactions, and engagements.
Loyalty Management Systems: Platforms like Yotpo or Annex Cloud specialize in loyalty program management and can track participation rates along with other relevant metrics.
Loyalty Management Systems: Again, specialized loyalty management systems can be used to track redemption rates. They offer functionalities to monitor how often customers are redeeming rewards or points.
Point of Sale (POS) Systems: POS systems like Square or Shopify can also track redemption rates at the time of purchase, especially in a retail environment.
CRM Systems: CRM systems can calculate CLV by analyzing historical transaction data and customer interactions over time.
Analytics Platforms: Tools like Google Analytics or Adobe Analytics can also be configured to track and calculate CLV.
Survey Tools: NPS is usually collected through surveys. Tools like SurveyMonkey or Qualtrics are commonly used to distribute NPS surveys and collect responses.
NPS Platforms: Specialized NPS platforms like Delighted or Promoter.io are designed specifically to measure and analyze NPS.
Platforms like HubSpot or Marketo provide integrated solutions that can track multiple metrics including customer participation rate, redemption rates, and NPS. However these platforms have notable drawbacks:
Centralized Data Storage: Centralized servers pose data breach risks, affecting privacy and security, and may allow data manipulation, impacting data integrity.
Unclear Data Ownership: Especially with third-party involvement, data ownership gets murky and interoperability issues can arise, leading to data silos. This complicates co-branded loyalty programs or platform transitions.
High Subscription Costs: Centralized platforms like HubSpot or Marketo incur high data management costs, leading to higher user fees and limiting scalable options without significant costs.
Delayed Data & Rewards: Centralization can cause delays in real-time data access and reward distribution, affecting program effectiveness and user experience.
Larger organizations or those with specific needs might opt for custom-built systems that are tailored to track loyalty benchmarks according to their unique requirements. However, these can be highly expensive and difficult to maintain, especially as the need arises to update loyalty programs to address ever changing customer preferences.
Web3 technologies, rooted in blockchain, present a robust framework for harmonizing disparate customer data management systems, especially when coupled with APIs (Application Programming Interfaces). Here's a breakdown of how these technologies can be leveraged, with examples from the systems used to track loyalty program benchmarks:
Smart Contracts: Utilize smart contracts to automate the tracking of customer participation in loyalty programs. For instance, a smart contract could automatically update a customer's participation rate in Salesforce or Microsoft Dynamics whenever they make a purchase or interact with the brand in some way.
API Integration: APIs can serve as bridges between Salesforce or Microsoft Dynamics and the blockchain. For instance, when a new customer joins the loyalty program, an API could trigger a smart contract to record this on the blockchain, which in turn updates the customer participation rate in the CRM systems.
Tokenization: Tokenize loyalty points and have them redeemed at Point Of Sale (POS) systems like Square or Shopify. For example, when a customer redeems a tokenized loyalty point, the transaction is recorded on the blockchain, ensuring the accuracy of redemption rates.
Real-Time Data Syncing: Blockchain, along with APIs, can ensure real-time syncing of redemption data between the POS systems and the blockchain, allowing for accurate tracking and reporting of redemption rates.
Blockchain & APIs: Store all transaction data related to a customer on the blockchain and use APIs to feed this data to Google Analytics for CLV calculation. For instance, every purchase made by a customer could be recorded on the blockchain, and an API could pull this data into Google Analytics to update the CLV metric.
Smart Contracts for CLV Calculation: Develop smart contracts to automate the calculation of CLV based on the transaction data on the blockchain, reducing the manual effort needed to update and analyze CLV data.
Blockchain for Data Integrity: Collect NPS data through SurveyMonkey or Qualtrics and store the responses on the blockchain to ensure data integrity. For example, after a customer completes an NPS survey on Qualtrics, the responses could be recorded on the blockchain via an API, ensuring a tamper-proof record of customer feedback.
Smart Contracts for Automated Analysis: Utilize smart contracts to automate the analysis of NPS data, providing real-time updates to relevant stakeholders whenever the NPS score changes.
Unified Data Layer: Create a unified data layer on blockchain that integrates data from Salesforce, Microsoft Dynamics, Square, Shopify, Google Analytics, SurveyMonkey, and Qualtrics. This unified layer can serve as a single source of truth, ensuring data consistency and accuracy across all systems.
Cross-Platform Notifications: Employ smart contracts to trigger notifications across systems. For instance, if a customer's CLV crosses a certain threshold, a smart contract could trigger a notification in Salesforce or Microsoft Dynamics.
By leveraging the capabilities of web3 technologies and APIs, retail brands can create a seamless, secure, and real-time data management framework that enhances the effectiveness and efficiency in tracking loyalty program benchmarks across various systems.
A unified view can provide a plethora of unique insights, driving more informed decision-making and effective strategies. Here are some examples of insights and corresponding actions that can be gleaned from a fashion retail brand leveraging blockchain technology to consolidate its loyalty program systems:
Insights: Understanding purchase patterns, redemption behaviors, and engagement levels across different customer segments.
Actions: Tailor marketing campaigns, design new products, and adjust pricing strategies based on these insights to better cater to different customer segments.
Insights: Analyzing the impact of loyalty programs on customer retention, spend, and overall satisfaction.
Actions: Optimize loyalty program structures, rewards offerings, and promotion strategies to enhance program effectiveness and customer satisfaction.
Insights: Real-time tracking of key performance indicators like sales, redemptions, customer participation, and NPS.
Actions: Make timely decisions to address issues or capitalize on opportunities, such as launching flash sales or addressing customer concerns promptly.
Insights: Observing the evolution of CLV across different customer segments or in response to changes in loyalty program structures.
Actions: Develop targeted marketing and retention strategies to enhance CLV and improve profitability.
Insights: Gauging customer satisfaction and feedback through NPS and other feedback channels.
Actions: Implement improvements based on feedback to enhance customer satisfaction and loyalty.
Insights: Understanding the correlation between loyalty program engagements, redemptions, and inventory levels.
Actions: Better plan inventory levels and manage supply chain operations to meet customer demand while minimizing excess stock.
Insights: Identifying how customers interact across various channels - online, in-store, mobile, and social media.
Actions: Create seamless omni-channel experiences and targeted campaigns to enhance engagement across all channels.
Insights: Detecting unusual patterns or discrepancies that might indicate fraudulent activities.
Actions: Implement enhanced security measures, and address vulnerabilities to prevent fraud and ensure the integrity of the loyalty program.
Insights: Understanding individual preferences and behaviors to identify personalization opportunities.
Actions: Offer personalized promotions, recommendations, and experiences to enhance customer engagement and satisfaction.
Insights: Comparing loyalty program performance and customer engagement metrics against industry benchmarks or competitors.
Actions: Strategize to improve competitive positioning by enhancing loyalty program offerings, customer experience, and marketing strategies.
Ultimately, the unified view enabled by web3 technologies not only provides a holistic understanding of various facets of customer engagement and loyalty program performance benchmarks but also empowers brands to take data-driven actions that can significantly enhance customer satisfaction, loyalty, and business profitability.