The fascinating crossroads of CX, Data, Loyalty and Technology

Over the past 5 years, I've spent a lot of time talking loyalty. How to design or redesign the perfect loyalty program, what the critical success factors are, how to implement, how to measure, how to operate – I could go on and on.

But having a best-in-class loyalty program isn't everything. In fact, it's only one piece of a somewhat larger puzzle. A puzzle that many have been trying to solve, but only a few can get right. Why is this?

This blog discusses my view on the intersection of these four major areas. Consider this simple equation –

Long-term Active Customer Engagement (LACE)? = f(CX, Data, LS, Tech), where LS means Loyalty Strategy.

CX

The simplest definition of #CX is the total sum of all interactions that a customer will have with a company over the life of their relationship with that company. Touchpoints can be quite broad and varied. A major telco like Telstra will have physical stores, a website, an app, member portals, call centers and more. A local supermarket might only have a physical store and a website.

51% of experts surveyed in the Global State of Customer Experience 2021 report agreed that customers are willing to switch brands if unsatisfied. In other words, 1 in 2 people will start spending with a competitor if they have at least one or more unsatisfactory experiences.

When surveyed for the Forbes Insights Report: Proving the Value of CX, almost 74% of consumers reported that they are at least somewhat likely to buy based on experience alone. In other words, experience is the precursor to loyalty.

I've undertaken dozens of audits on the customer and member experience (specifically relating to loyalty programs) over the years. Interestingly, in many cases, the company isn't even aware of identified friction points. This is an area that all companies must look at constantly to ensure the CX is working as expected.

A couple of key questions that companies must ask themselves when thinking about customer experience are: "What are the key customer pain points?" and "What is the impact of those pain points if we don't rectify them?"

Data

Being data-driven means that a company uses #data to help deliver on its overarching business strategy. Data should be at the center of all decision making, informing all actions, strategies, and future evolution (which for many companies will also include a loyalty strategy).

Recent research showed that 84% of digitally driven organisations cite the importance of becoming a real-time enterprise in order to meet customer demands, but only 12% of businesses are truly using real-time data in a data-driven way. Although I’m not suggesting that all companies must engage with customers in real time, this statistic shows the size of the gap.

Many companies have data literacy issues, where a large cohort of their staff do not fully understand how to use data in decision making. Others have company readiness issues, and they might fall into the trap of sourcing technology before being clear on how said technology infrastructure and tools will enable usage.

In other words, before engaging any kind of technology, it's worthwhile considering the overall readiness of the company, specifically the resources they have in place and the overall culture of the company to support a data driven approach.

A couple of key questions that companies must ask themselves when thinking about being data driven are "Do we have an existing data strategy?" and "How are we using the customer data at our disposal in the most meaningful way?"

Loyalty Strategy

Ask 10 loyalty experts what their definition of loyalty is and you'll likely get 10 different responses. The way I see #loyalty within the context of a program is that it is an outcome that stems from engendering both a transactional and an emotional connection from a member of a structured program. However, as this article alludes to, loyalty is broader, and will generally result from a customer’s perception of the total experience provided by a company.

So, repeat transactional behaviour must occur at the expense of the company's competitors (despite factors such as convenience being at play). If there’s a clear behavioural change, as well as advocacy, then the program is impactful.

The program must also be underpinned by best practice design principles, sound applications of loyalty psychology, the right framework, a stimulating lifecycle management strategy, robust commercials and, naturally, a seamless CX.

The important part is that a company with suboptimal CX isn't going to drive loyalty, no matter how good their program is. The only exception may be industries that have few choices, where the customer is forced to choose the best of a bad lot.

The Wise Marketer stated that 67% of consumers who frequently buy from the same company say they are not necessarily loyal to that company. Habit isn’t the same as loyalty. A good quality loyalty strategy can significantly supplement a company's competitive advantage, so long as all the other parts are well oiled and working.

A couple of key questions that companies should ask themselves when considering implementing a loyalty strategy are: "Is our existing customer experience good enough?" and "What are we trying to achieve by implementing a loyalty strategy?"

Technology

Within the realm of this article, the two main purposes of #technology should be 1) to enable great customer experiences, including those delivered by a loyalty strategy, and 2) provide the ability to support the data strategy.

There are no two ways about it: companies that do not have sufficiently evolved and flexible technology stacks will hamper the customer experience. This is why a more modular and flexible architecture is becoming more prevalent, to allow the easy swapping in and out of parts that may need to be replaced. This approach also serves to reduce technical debt.

For instance, if one of the goals is to power customer experience and support the marketing function, then a highly evolved Customer Data Platform (CDP) is worth considering. Indeed, many Australian companies have recognised the benefits of using them, especially in the last few years. Complementing a CDP should be a marketing engagement platform, which allows for direct engagement with customers across multiple touchpoints in a seamless way. A loyalty strategy will require a specialised loyalty platform, and so on.

Technology must also enable the ingestion of data from all channels that your customers engage with. That is point of sale, website, app, social, call centres, etc. That data should be able to be surfaced, analysed and used in data driven decision making. This must be done in a clean and structured way. It is never a good idea to retrofit a customer experience, data or loyalty strategy to a technology stack, because you’re not solving for the customer.

A couple of key questions that companies should ask themselves when looking for a new technology stack are: "What specific customer experience is this technology enabling?" and "How does this technology help us drive better decisioning?"

Final thoughts

And so, we circle back to what most companies truly want –

Long-term Active Customer Engagement (LACE)? = f(CX, Data, LS, Tech).

Achieving LACE? will stem from a combination of a well thought out customer experience that is supported by organisational readiness & tools for a data driven approach, enhanced by a well-designed loyalty strategy and fully enabled by a robust and highly modular technology stack.

Aristotle's saying, "the whole is greater than the sum of its parts" most definitely still applies today. Ensuring these four areas are working together cohesively will go a long way to companies keeping customers active, happy and loyal.

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Max is a CX and loyalty expert with over 15 years’ proven experience of developing and implementing successful strategies for clients. Max has worked on key projects for major brands such as McDonald's, Schneider Electric, Australian Venue Co, Loyalty NZ (Flybuys), NRMA, Origin Energy, Rest Superannuation, HOYTS, Mastercard Loyalty and more.

Max currently consults on four key business areas: #CX, #Loyalty, #Data and #Technology. Intrinsic Consulting is built on three key pillars – transparency, trust and integrity.

Let's have a conversation. Contact me on [email protected] or send me a note on LinkedIn .