Leverage a CDP to Improve Customer Loyalty and Retention Rates
Are you looking for a way to build a loyal customer base that engages, spends more money, and advocates for your brand? You can do it, but it requires creating great experiences that keep customers coming back for more over the entire customer lifecycle.
That's where a Customer Data Platform (CDP) comes in. With a CDP, you can gather customer data from all your applications, giving you a 360-degree view of your customers and their relationships with your brand.
But first, let's talk about the difference between customer loyalty and customer retention.
Customer Retention vs. Customer Loyalty
Retaining customers is the ability to get them to come back, such as being able to sell a new pair of sneakers or renewing a subscription. But loyalty is different. It goes beyond just keeping customers from switching to competitors.
It's about making them engaged, happy, and willing to stay with you forever, as long as you keep the experience good for them.
Why Customer Loyalty is So Important
If businesses fail to retain their customers, they're not going anywhere. According to a study from PwC, 55% of surveyed consumers reported that multiple bad experiences would cause them to drop a brand they liked, and 37% of them cited a bad experience with products/services as the main reason.
The point is that focusing solely on retention won't get you far. You must build loyalty to really grow your business.
How A CDP Reinforces Loyalty Programs
By connecting all your customer-facing applications, a CDP gives you instant access to data about customers' preferences and interests. Leveraging this data allows marketers to create highly personalized experiences with:
1. Hyper-Personalized Experiences
Do you have a rewards program or digital wallet? Connect it to your CDP for a seamless, relevant experience. Instead of generic content and info, customers get tailored benefits. Brands can also create chatbots with access to customer profile data in the CDP to provide helpful messages and support.
2. Relevant Services
By utilizing historical data from past purchase history, current engagement on websites, or prior customer support requests from the CDP, service teams can offer personalized experiences tailored to individual needs.
3. Accurate Targeting
Zero-party data is stored in the CDP, so you know exactly how customers want to be engaged. So there's no guesswork involved when sending out advertisements or offers. With precise targeting based on preferences and interests, brands see higher ROI and better efficiency with their campaigns.
4. Next Best Action Recommendations
These recommendations use AI-powered predictive analytics, which helps marketers focus on those activities like marketing and communications that influence customer behavior positively, leading to improved loyalty and retention rates over time.
Taking Customer Loyalty To The Next Level Beyond A CDP
So now you have a 360-degree view of your customers and all this valuable information at your fingertips. But what should you do with it? Well, one thing the KPMG study found was that 85% of company growth comes from loyal customers. Companies must continue nurturing their relationship beyond acquisition by understanding how they want to be communicated with throughout their whole lifecycle. Here are some ways to take customer loyalty beyond just using a CDP:
1. Get Feedback From Customers
Gathering feedback gives brands insight into what people like/dislike about products/services and user experience (UX), allowing them to make changes accordingly to tailor more effective experiences.
While it's important to ask customers for feedback and act on it, make sure the survey questions are relevant and don't take up too much of their time.
2. Provide Omni-Channel Support
By providing smooth omnichannel support (from email communication through social media channels and other methods used), businesses build trust within communities while ensuring each person has easy access to assistance whenever they need it.
From simple automated messages to AI-enabled chatbots, providing a seamless customer service experience across multiple channels is essential.
3. Nurture Longtime Relationships
This includes creating exclusive promotions and offering comprehensive services depending on customers' preferences - emails sent regularly highlight loyalty programs or special discounts for long-term users.
Further incentives will strengthen brand awareness towards longtime members, creating life-lasting relationships across all channels.
4. Utilize Behavioral Triggers
Understanding how shoppers interact within shopping journeys enables defining actions that trigger loyal efforts, such as sharing performance metrics through emails in return for potential upsells and cross-sells.
What's more, tracking customers' activities is a great way to identify preferences and personalize offers for individuals.
What Should You Invest In First?CDP or Loyalty?
A loyalty program will give you plenty of data, but without a precise way to store it, analyze it and use it effectively in actionable campaigns, what's the point? That's why investing first in a CDP makes sense. It gives you an easy-to-use platform on which to store your collected data so that it can be analyzed quickly and efficiently.
But if your current marketing strategies show limited segmentation or lack historical knowledge, investing in loyalty programs could also be beneficial. A loyalty program is key to engaging with customers directly, gathering insight about their preferences through surveys, and rewarding them for their engagement with offers/discounts tuned to each individual's needs.
Let's take a look at a key example:
Black Box Wines, a premium wine brand, used its loyalty program to collect different types of customer data. Through the "Black Box Rewards" scheme, customers have proactively shared Zero-party information such as personal and profile preferences, which allows Black Box to build tailored and exclusive experiences for returning customers.
With this data, Black Box Wines was able to boost loyal customer relationships further through timely offers, surveys, and even feedback regarding their loyalty program's structure.
Final Words
We now know that focusing exclusively on retention won't get you far. True growth comes from loyalty, and CDPs can help acquire it. By gathering Zero and first-party data from sources like websites, apps, CRM systems, or call centers, CDPs provide brands with a comprehensive view of their customers so they can become truly engaged and loyal over time.
But businesses must couple CDP investment with other initiatives such as feedback collection per customer segmentation strategies creating better UX and support for existing ones if they want true value from this technology.
So when deciding whether to invest in a CDP or loyalty program, focus on your current digital maturity level and consider the importance of qualitative and quantitative data collected to drive effective customer engagement. Doing so will help you make an informed decision that maximizes your return on investment.
