Creating A Customer-Focused Loyalty Strategy Based On Data

Speakers:

• Marina Ben-Zvi: Director of Product Marketing, Blueshift
• Tatiana Afanasyeva: Head of Marketing, Lob

Welcome and Introduction

Marina Ben-Zvi: Hi, everybody! We've seen a lot of people joining us, so we're going to go ahead and get started. First of all, thank you so much for taking the time to join our webinar today. We're so excited to have you with us. We have really great insights to share with you about a very important topic: customer loyalty. Hopefully, you'll find this webinar useful.

Before we get into our webinar, just a couple of housekeeping items. On the right side of your screen, there's a Q&A chat panel. Please use this panel to submit any questions you have throughout the webinar. We'll answer as many as we can at the end.

To start off, I want to touch on the state of brand loyalty today. For us here, customer loyalty is a key initiative, so that's really great to see.

The State of Brand Loyalty Today

Marina Ben-Zvi: We all know existing customers are a valuable asset. Brands with strong loyalty, like Apple or Trader Joe's, enjoy predictable, strong growth because engaged, satisfied, loyal customers provide a stable, robust revenue stream.

They offer several benefits:

• They tend to spend more per purchase.
• They make repeat purchases more often.
• They allow your business to maintain better margins because loyal customers are less price-sensitive.
• They provide another channel of growth, as engaged customers are your biggest advocates and give ongoing referrals to their friends.

That's why it's no surprise that just a 5% increase in customer retention has an outsized impact, increasing a business's profit by 25% to 95%. And that's profits, not just revenue. We've definitely seen in the last year that as many marketers saw their budgets cut, the focus has really turned to doing more with less and getting more out of your existing customers.

Why is Loyalty Harder to Achieve?

At the same time, while brand loyalty is critical in hitting your goals and driving growth, it's becoming tougher and tougher to achieve and hold. As folks here said, many of you would switch brands for a coupon. Studies definitely show that about half of consumers out there will do that. That makes it just that much tougher to achieve and hold customer loyalty today.

Studies also show that:

• Millennials, the group with the highest purchasing power today, have only 6.5% of them as brand loyalists.
• McKinsey found that in the last year, 73% of consumers tried a new brand as a result of the pandemic, and they plan to continue with that brand.

All these stats make sense. Consumers today have:

• More choice than ever.
• Are more informed and empowered shoppers.
• Have easier access to price information and alternatives.

Brands that were ahead of the curve with their digital experiences have been able to capitalize on the changes in consumer behavior and sentiment. This has left other brands competing fiercely to win and retain customers.

Tatiana Afanasyeva: That makes sense. I'm actually kind of interested, here in the poll, we're seeing that 58% of you said that yes, you will switch brands for a coupon. We're definitely noticing that.

From our customers' perspective, specifically the impact of COVID, we're noticing that consumers, who perhaps in the past had strong brand loyalty (maybe they used to pick a certain brand when they went in-store), had to adjust their purchasing behavior. You simply couldn't buy in the same way anymore. Retail stores might be inaccessible, or your preferred item might be out of stock. So, you're more open to trying out new brands.

This is where quite a lot of our customers really experimented with sending coupons for offers, and they saw an incredible uptick in redemptions. This, to me, is not only a historical trend but one that COVID has really accelerated, specifically within consumer loyalty. All of this data makes perfect sense.

How to Turn New Customers into Loyalists

Marina Ben-Zvi: Okay. So what can you do? How do you turn new customers into loyalists and keep loyal customers sticking around, especially in today's competitive, noisy, and disrupted market landscape?

Loyalty, beyond driving additional purchases, is about deepening relationships with customers. While traditional loyalty drivers have been about delivering your brand promise with consistently high-quality products, competitive pricing, and reliability/availability, today, customer loyalty is increasingly driven by providing a positive total customer experience.

This includes:

• How simple, convenient, and intuitive you make it for your customers to continue to engage and transact with you. Customers want to reduce their effort; they want you to make it easy for them.
• Experiences that are relevant and personalized to where they are in the buying process and what they seek in that moment.
• Service has also become much more important, especially as more transactions happen online.
• People want to feel emotionally connected to a brand's values and ideals. They'll look for brands that align with their identity. The rise in sustainable clothing brands or mission-driven companies like Tom's (giving a portion of profits to grassroots efforts) showcases the value in this.

What we're seeing is that driving loyalty has become much more about catering to your customers' needs, primarily through superior experiences. It's not a one-time effort. It's not limited to interactions that take place around the transaction. Loyalty truly happens as a result of consistently offering those high-quality, positive experiences, which can only happen when you have a strong customer understanding that comes from effectively tapping into your data.

Absolutely. As we go into the next part, definitely keep these drivers of brand loyalty in mind.

Strategies for Improving Brand Loyalty

Marina Ben-Zvi: To me, the most common next question is, "Okay, so what can we do and how can we improve our brand loyalty?" This is where we're going to walk you through a couple of things that we think are fundamental to improving your brand loyalty.

1. Create an Intentional Strategy: Your strategy should not just be focused on channels. We see this very often: marketing teams have robust strategies for their email nurturing, but your customers don't care about that. Make sure your strategy is centered around your customer, not necessarily the channels you have.
2. Leverage Your Tools and Technology: Many marketing teams have very good technology, but unfortunately, it's often not used in the right way. As you think about and develop your strategy, ensure you have the right tools to implement it effectively.
3. Identify Themes, Programs, and Best Practices: Focus on those that will truly engage your customer. Our current customers consistently show three key themes for brand loyalty strategy:
   • Reduce Friction: Create workflows based on action milestones and relevant events to reduce friction at each step of the customer journey.
   • Personalization: This has become a buzzword, but it's absolutely true. We've noticed across our entire customer base that each addition of personalization leads to higher conversion rates and higher brand loyalty. You already have the right data about your customers in your tools, so integrate it into your strategy, making personalization fundamental.
   • Real-Time Optimization: Track and measure actions in real-time to optimize performance and maximize conversions. It's no longer acceptable for marketing teams to just set an annual strategy and look back quarterly. Especially with COVID, we've all had to change strategies almost in real-time, pausing and restarting campaigns. Ensure you have the right architecture and tools to do this in real-time.

The Role of Customer Data in Loyalty

Tatiana Afanasyeva: The next part of our strategy is around customer data. Marina, I'm going to pass this off to you.

Marina Ben-Zvi: Yeah. We've mentioned driving brand loyalty, forming an intentional strategy that aims to reduce friction, personalization, and incorporate real-time optimization. That all goes back to deeply understanding your customers: what they want, their interests, what they're likely to do next, and then using that insight to deliver what they need.

How do you become that mind reader? How do you best engage each customer throughout the customer journey? It's about being customer data obsessed and picking up on the cues customers reveal about themselves through their data and behaviors.

Developing that deep customer understanding and translating it into better, frictionless, personalized customer experiences really starts with a strong foundational first-party data strategy, specifically how well you can harness and act on that first-party data.

Collecting and Unifying First-Party Data

Marina Ben-Zvi: The first step here is collecting all of the data from across your organization and tying it together into a single, complete view of your customers. The good news is, most likely, your company is sitting on more first-party data than you know what to do with. Customers today are generating a growing number of data points through their online interactions with your brand, as well as their offline behaviors, which are also increasingly trackable.

But this is also where you find the biggest roadblock to loyalty strategies. Valuable customer data is usually siloed across your organization and inaccessible to marketers and loyalty leaders. However, unlike five years ago, there are now solutions for this. Brands are finding they can successfully centralize their data with solutions like a CDP (Customer Data Platform) that can unify all their data and create complete 360-degree customer profiles.

These profiles encompass the complete history of your customers with your brand. That means all historic, real-time, and predicted data and behaviors, as well as demographic data, CRM data points, marketing engagement, purchase history, online behaviors, and any other relevant data point from across your channels and systems can be stored, accessed, and centralized here in a really privacy-safe way. So this is really step one of becoming customer data-obsessed: getting that unified view of your customers.

Extracting Actionable Insights

Marina Ben-Zvi: Now, a lot of marketers who successfully get their data in one place and have these customer profiles find that acting on the data reveals its own challenges. Either because they don't know what to do with that data, or they don't have the right tools to put it into action.

So the next step, when you're armed with that centralized source of truth about your customers, is to start developing a deep customer understanding and extracting actionable insights. You want to understand:

• Who are your most valuable customers, and what's different about them?
• What are their shopping behaviors?
• Which channels are most profitable?
• Which channels are these most profitable customers using to discover, research, and purchase?
• What are their product affinities and communication preferences?
• What behaviors actually drive these high-value customers? You can start thinking about how to encourage more of it.

Not everyone's going to be a high-value customer, so definitely identify those you want to retain or grow loyalty and value with. Then work to understand and give them the experience they want.

Automating Personalized Experiences

Marina Ben-Zvi: Armed with this data, you can actually develop personalized messages and recommendations, offer relevant promotions, and upsell and cross-sell to each customer with relevant products and services. With the right marketing platform, these insights and this intelligence can be identified for you and automatically incorporated across your messages, lifecycle campaigns, and customer interactions.

Lastly, being customer-obsessed isn't just a marketing initiative. You want this data and intelligence to be available in real-time throughout the organization. The right marketing platform will allow you to do that.

For example, if you have a contact center or associates, you want to arm them with this centralized view of your customers so they can:

• Quickly pull up customer profiles.
• Access transaction history, preferences, affinities.
• See personalized product recommendations.
• Quickly resolve issues or point customers to the right product or solution.

Tatiana Afanasyeva: Thank you, Marina. This is definitely very helpful. And before we get into our last part around how you can improve your brand loyalty, we actually would like to do our last poll. So we'd love to ask you what channels are using as part of your omnichannel loyalty campaigns. I'm going to start the poll right now. Okay. It is open. We're really curious to see what are all the different channels that you are currently using. And you can select multiple channels.

Omnichannel Loyalty Campaign Channels (Poll Results)

Tatiana Afanasyeva: All right. It looks like we have most people have voted. So here's what we're seeing here. Okay. So there's a little bit more data coming through. But so far, it looks like, and to be honest, it's probably not surprising:

• Quite a lot of you are currently using email (40%).
• We see a little bit less social/influencer usage (around 25%).
• SMS is definitely surprising to me; only 11% of you are currently using it.
• We're seeing a little bit of an uptick in direct mail, but it also definitely looks like it's an underutilized channel.
• About 9% of you are using other channels.

This is not surprising. When we think about omnichannel, we often see one or two channels that are very popular, but it's very rare for companies to efficiently deploy an omnichannel strategy utilizing all the different channels available. SMS and direct mail tend to be very underutilized.

Delivering Continuous Omnichannel Experiences

Tatiana Afanasyeva: Let's get into our next strategy, which is: in order for you to improve your brand loyalty, you'll really need to focus on delivering a continuous omnichannel experience. This is why we asked that poll, just to see how omnichannel you and your company are.

First of all, we've all heard "omnichannel" for so long; it's been a buzzword for the last 10-15 years. But the truth is, now we are operating where we have the right tools and the right data to actually facilitate truly omnichannel engagement. Our customers are increasingly expecting that. They expect us to be able to speak to them at the right time, on the right platform, with the right message. This is really the key to creating your omnichannel engagement.

1. Orchestrate Campaigns in One Place: It is very important for you to orchestrate your campaigns in one place. Honestly, there's nothing worse for marketers than having 10 different tools when you need to orchestrate a campaign. I have one of those horror stories from my early days as a marketer, where we used one tool for self-service customers and a different tool for mid-market enterprise customers. Full sets of data lived in both tools. I once sent an email that I thought was for self-service but accidentally sent it to all our mid-market enterprise customers. This is probably one of the biggest nightmares you can have as a marketer: sending a completely irrelevant message to your entire customer base. The reason that happened is because we didn't have one central tool that allowed not only email, but also all the other channels. That's definitely key to your omnichannel orchestration.
2. Actually Use the Data: A lot of us have access to a lot of information about our customers, but unfortunately, it doesn't actually translate into our strategies. Make sure the data you have, you're actually utilizing it.
3. Leverage the Right Channels: We saw that many teams rely heavily on email, social, and a little bit of SMS. Direct mail is often underutilized. The key is now, as a marketer, you need to figure out which channel will work for you or the mix of channels that will work for your customers.

Deep Dive: Direct Mail in Omnichannel Strategy

Tatiana Afanasyeva: I'd love to get a little bit deeper into specifically direct mail, since this is one of the channels that we definitely see underutilized. The reason it's so underutilized is that historically, it's been difficult to leverage in your technology stack; it was very outdated and existed completely outside of your CRM.

But now, with platforms like Lob, you can actually fully integrate direct mail into your omnichannel strategy. Direct mail now really operates like any other digital channel. If you're already using email and social, you need to absolutely try SMS and direct mail. Trust me, your competitors are trying those channels and seeing success.

Direct mail can now be extremely personalized. Just the same way you send an email ("Hi, first name"), modern direct mail platforms also use HTML, so you can personalize everything in that direct mail piece.

Finally, modern direct mail is incredibly fast. Specifically with our technology, we see direct mail get to the end consumer within two days, at longest four days. Imagine a scenario where you can have this omnichannel campaign: maybe you first try somebody with an email. If they don't respond, wait four days and send them an SMS. If they don't respond, wait X amount of days and send them direct mail. This is what we mean by having a truly omnichannel strategy.

What we're finding is that you will be surprised what type of demographic will respond best to what type of channel. I'll give you one example that always really surprised me personally: ThirdLove. They had a robust omnichannel strategy but noticed a block of customers unsubscribing from their digital communication (email and SMS). The team initially decided to give up on that cohort. Then they started leveraging direct mail. They orchestrated a campaign where if somebody unsubscribed from email and SMS, they would trigger a personalized direct mail piece with similar items they used to purchase. What they found was surprising: they saw close to 50% redemption on the direct mail pieces.

What they realized is that they still had brand loyalty; that specific cohort was just a little too tired of their email and SMS communications. To me, the point of that story is that until you try all the different channels and can truly test and optimize, you might not know which channels your individual cohorts and customers prefer. So make sure your omnichannel strategy is truly omnichannel, using the right tools to test your SMS, social, direct mail, and every other channel, and rapidly test and optimize.

Marina Ben-Zvi: I just wanted to add on the omnichannel note that people today are becoming more channel agnostic. As you said, no channel on its own is going to be a silver bullet. Loyalty today is built through continuous omnichannel engagement, by effectively orchestrating your channels to create timely, connected, contextually relevant experiences that your customers expect.

I've heard a stat that customers interact on average on nine channels to browse products, seek advice, and make purchases. As people become more channel agnostic, they're not necessarily thinking in terms of channels the way we do as marketers. Your customers basically just want to find a product or the information they need, regardless of channel. It's on us marketers to understand the interplay between our channels and how to use them to create the right set of touchpoints for our customers.

The focus should be: how do you actually synchronize all these brand touchpoints to create frictionless, intuitive, timely, simple, enjoyable experiences that our customers seek and expect? Make it simple and fast for them, meet customers where they are, and engage them with relevant messages, offers, products, and information based on what the customer data is telling you.

It's really important to think about continuous engagement. Loyalty is about nurturing relationships; it's not simply about incentivizing the next purchase. Think about how to continue providing customers with useful information. How do you engage them in between transactions? How do you become a go-to destination for them? Like any relationship, it's give and get. You need to provide value. You need to continue to stay top of mind. By making every interaction enjoyable and personalized, that's what helps get you there. You basically want your customers to be excited anytime they receive a message or have a touchpoint with you.

How do you actually do this effectively as customers are jumping between channels and are at different points in their customer journey? Orchestrating these continuous customer engagements across your channels requires a single platform, a single control center from which you can create, automate, and scale these connected omnichannel experiences that drive loyalty.

Smart Hub CDPs are becoming a market essential. They partner with and deeply integrate with all the key channel delivery systems and have a journey builder built in that allows you to orchestrate and iterate on your customer experiences and your journeys. Because Smart Hub CDPs run on customer data, when an important customer behavior, event, or milestone occurs, it can immediately trigger that next best action, offer, or message on the appropriate channel, or set off a series of communications to be delivered at the right place at the right time, making this whole process and experience more seamless for both the marketer and the end customer.

How it Works in Practice

Marina Ben-Zvi: Here's what this looks like in practice. To create these engagement loyalty-driving workflows, it starts with:

1. Combining your first-party data and creating individual customer profiles that are enhanced with insights like product affinities and communication preferences.
2. From this data, you can pull out intelligent insights and also create the best way to engage.
3. You can determine what product content or offers are relevant to each customer, so you can include those in your messages.
4. You can also determine the best time to send your messages to maximize engagement, as well as the best channel to capture customers' attention, which will be a mix of online, digital, print, or potentially offline.
5. Pulling all these insights together in a central marketing platform, you can create and automate these superior, seamless, personalized, loyalty-driving customer experiences that are run by and triggered by your customer data.

Tatiana Afanasyeva: Great. And thank you so much for sharing that. I'm definitely a very visual person, so it's really nice to see it that way. And with this, we are going to move on to questions. We do know that we are a little bit past half an hour, so if you can stay, please do so. We'll try to get through a couple of questions, and then we will definitely make sure to answer all of your questions when we reach out to follow up. I see we actually have quite a lot of questions that came through, so let's see how many we can go through.

Q&A Session

Tatiana Afanasyeva: The first one is actually addressed to me. We've talked a lot about data and the importance of data and tracking performance. How do you exactly do that with direct mail? Direct mail historically has been very difficult to see ROI from.

Q: How do you track ROI from Direct Mail?

Tatiana Afanasyeva: Really, really good question. And honestly, this is a question that we hear quite a lot. How do you determine ROI from direct mail? And how do you track performance from direct mail?

There are a couple of key points to that:

• Make sure the platform you're leveraging for direct mail (or a unified platform like Blueshift) allows you to track ROI analytics.
• You can add unique QR codes or coupon codes on each individual mail piece (very easy to implement). Post-COVID, we're seeing QR codes really pick up. If somebody has redeemed that QR code, you can track it in your automation or CDP platform on either an individual or campaign level.
• We also recommend cohort testing. Have a control cohort and a cohort that received the direct mail piece. Look at the overall lift in your campaign from that group. Consider that direct mail can have a longer redemption time (e.g., a week later).

Modern direct mail is definitely not a black box. You can very much track ROI, not only on the individual mail piece but also from your entire campaign.

Tatiana Afanasyeva: Next question, Marina, I think is for you. How do you select which channels to include and identify which channels your customers prefer without a data science team?

Q: How to Identify Preferred Channels Without a Data Science Team?

Marina Ben-Zvi: That's a good question. It all goes back to a deep customer understanding:

• What are your customer shopping patterns?
• Which channels have high and low engagement?
• What is the role of each channel in the shopping or user experience of your brand?

From there, you can really start orchestrating channel touchpoints that make sense in your customer experience, keeping in mind that you want to be flexible because different customers have different communication preferences.

To identify the channel each customer prefers without a data science team, it comes back to having the right platform, like a Smart Hub CDP that uses AI to analyze all available customer data and behaviors from across your channels. It extracts channel affinities for each customer, assigning them a score based on their likelihood to engage on each channel. Based on these scores, marketers can incorporate them into their campaigns and journeys and have the message trigger on the most appropriate channel for each customer.

Tatiana Afanasyeva: Great. And actually, Marina, I think we have another question for you, which is, "We aren't doing Omnichannel today. What's the best way to get started?"

Q: Best Way to Get Started with Omnichannel?

Marina Ben-Zvi: That's a great question. Omnichannel, I think when you first think about it, it sometimes can seem a little bit overwhelming. So Blueshift, we always suggest a crawl, walk, run approach.

• Start with your two or three primary customer engagement channels and map out what that ideal interplay between these channels would look like to create more frictionless, intuitive experiences.
• Then test your strategies, iterate. Once you have a good engagement approach in place, you can start adding in additional channels one by one.

More importantly, you need to have the right technology to enable omnichannel campaigns. You can't have true omnichannel engagement that's centered around your customers and their needs when you have one system for email campaigns, another for mobile, and so on, and when each of these channels executes off their own siloed data. You need that unified platform that unifies both data and experiences and is able to orchestrate and trigger the right actions at the right time across your marketing execution systems and channels.

Tatiana Afanasyeva: This is actually a very good question for me: "Does Lob only support postcards? We would like to test a campaign where we send branded letters."

Q: Does Lob Support Branded Letters and Other Formats?

Tatiana Afanasyeva: Of course, Lob supports not only postcards; you can actually send postcards, letters, and checks through Lob. We also have different sizes of postcards and different types of letters, like color or black and white. So Lob actually gives you quite a lot of flexibility there. I'm glad you asked about wanting to send personalized letters. One other thing you can do with Lob letters is you can actually brand the envelope. If you have a very colorful brand, if you want to stand out from the crowd, you can do that with not only just the letter but also the envelopes.

For all the marketers on the call, one thing we often see is that marketers tend to always think about postcards. What we actually find is that letters work really, really well for marketing use cases. This was one of the lessons we've learned by working with our customers who tested different campaigns. They found that in certain instances, letters actually work better, especially if it's a membership enrollment or if you are rolling out a new type of membership program. This is where letters tend to work really well. So definitely don't think that just because maybe you're a marketer, the postcard is the only option; definitely try to experiment with all different types of formats that we're able to support.

Closing Remarks

Tatiana Afanasyeva: On that note, I know that we are already running just a little bit over. So we'd like to thank you everybody so much for joining our webinar. We definitely saw the rest of your questions, and we will absolutely get to them. We'll make sure that in our follow-up, we will answer your question. Also, keep in mind that you will get a copy of this recording, and also some useful ebooks. We'll make sure to definitely follow up with everybody. In the meantime, please definitely reach out to any of our teams. You can see our email addresses here: hello@lob.com or hello@blueshift.com. We will be absolutely happy to answer any other questions. And definitely, Marina, thank you so much for joining our webinar today. And thank you.