Data Driven Approach

How Businesses Can Benefit By Using a Data-Driven Approach to Customer Loyalty Programs?

Customer retention is one of the primary requirements for any business growth model. The higher the retention rate, the higher the revenues will be. One of the most effective ways to ensure a better retention rate is the customer loyalty program. Maintaining the existing customers is far more cost-efficient as compared to acquiring new ones. To leverage the maximum benefits of loyalty programs, it is essential to plan and execute them accurately. Different approaches and tactics can be used to encourage brand loyalty. One such approach is the data-driven approach. Data helps to understand a customer’s identity. It allows businesses to understand the loyalty program member’s behavior. It can also help predict their future behavior, which helps drive more loyalty to the brand.

How can collecting data help companies to drive more sales?

Brands must use relevant customer data to create meaningful programs. Utilizing customer details with research on the entire loyalty buildup can help to outline modern loyalty programs. Data can be considered as a leading force behind the best-performing loyalty programs. Gathering data for loyalty programs allow businesses to:

1. Learn more about customer behavior:

Understanding customers’ behavior and things that interest them the most is important for the success of a loyalty program. Many loyalty programs allow businesses to collect all the relevant customer information. This information is easy to measure, track, and review. The data-driven customer loyalty program starts by encouraging them to fill out their entire profile. It helps businesses develop targeted campaigns, referral programs, personalized rewards, and better customer bonding opportunities.

More than 85% of consumers are okay with monitoring their shopping activity if it results in more personalized rewards. Besides, tracking data related to customer behavior provides a detailed understanding of customer’s spending, like how much they are spending and where they are spending. It also gives an idea about the ROI of a particular loyalty program.

Another plus point of learning more about customer behavior is that it lets businesses see who their loyal customers are via the frequency of their engagement with the brand and how frequently they purchase from the brand.

2. Carry out effective communication with their customers

To maintain a strong relationship with loyal customers, businesses must keep in touch with their customers. Loyalty programs are the best way to keep continuous conversation with the most loyal customers. While signing up for a loyalty program, most members are asked to choose to receive frequent communications from the business. It is vital to note that targeted communications at the right time with customers can greatly help to enhance customer retention rate.

Different types of communication that keep customers engaged with the brand include sending emails or notifications concerning various events, promotions, offers, or in-store sales. Many loyalty programs use this opportunity to send more targeted communications, such as offering a certain number of topmost customers special offers based on their purchase frequency. After sending the communication, businesses can track and review the analytics from their mail to see who is reading the email.

3. Save huge on the loyalty program and enhance sales

The best loyalty programs help businesses to make better decisions. The data gathered by the loyalty programs can be best utilized to save huge money. An accurate and detailed data assists businesses in determining where the most opportunities lie. They can make informed decisions about where they should invest their time and money into their business. Customer data allows businesses to understand which tactics or practices bring the most value and scope to do much better.

Significant information about the customers also helps businesses in creating a personalized shopping experience. This can be done by suggesting the most relevant products based on their search history and spending habits. It encourages customers to make more purchases which ultimately brings more business for the companies. More than 55% of customers are likely to spend more on brands that they are loyal to. Even businesses can encourage customers to spend more by offering them attractive offers and more loyalty points in return.

4. Evolve their loyalty program continuously

The best loyalty programs continue to evolve. The data-driven approach in loyalty programs allows businesses to understand better what’s working best and what’s not. Therefore, they can easily experiment with assorted campaigns and promotion activities. This further allows businesses to make better business decisions. Apart from this, an evolving loyalty program keeps customers engaged and loyal to the brand.

5. Attract new customers

The data-driven loyalty program approach not only helps in retaining customers but also helps to attract new customers. With the help of ad campaigns, loyalty programs can attract more and more potential customers. Gathering data about potential customers like their interests, spending habits, and other details can help a business generate better ROI on its loyalty program.

Generally, companies rely on basic transaction information about their customers, such as the pattern or frequency of their purchases. But this information is not enough. A complete data-driven approach can help businesses build a perfect strategy to retain many customers. It helps to enhance the retention rate and helps attract more and more customers to the loyalty programs. The result is increased loyalty among customers for the particular brand.


If you are confused, have doubts about utilizing customer data in the best possible manner, or want to know how to access relevant data within your loyalty program, then get in touch with the LoyaltyXpert team today. We have experts who can provide the best advice on loyalty program management. Send your inquiry today.