Hyper-personalisation of Customer Experience Using Data

Pressure on the bottom line, shorter strategy implementation cycles and increased customer expectations require the introduction of solutions based on the latest technology to streamline the purchasing process and improve the overall customer experience. Artificial Intelligence supported by data analytics is increasingly used by companies and is key in addressing the challenge of competitiveness. So, does implementing AI-based solutions lead to building stronger consumer-brand relationships?

The customers no longer base their loyalty on price or product alone. Instead, they remain loyal to companies because of the experience they receive. Artificial intelligence and machine learning are changing the way companies interact with customers. They help to personalise the services and product recommendations by processing previous purchases, interactions with the communication, customer preferences and combining them with a range of other data collected, as well as with analysis of people who have chosen similar patterns.

A customer who is no longer anonymous is worth up to 18 times more to the retailers than the average consumer. This is possible thanks to the advanced personalisation achieved based on contextual and behavioural data. The marketers are choosing to use AI technology to build authentic interactions with customers in real time.

Micro-segmentation and Hyper-personalisation

The concept of segmentation is currently undergoing a transformation. Given the new criteria, and in particular the behavioural data, the companies can now better understand that their existing and potential customers may be very different in terms of their consumption habits. AI allows you to use behavioural segmentation at the micro level. Instead of dividing potential customers into rigid segments, you can define consumer behaviour taking into account even seemingly small differences, at the level of small groups or even individuals.

Over the past few years, the companies have managed to collect huge amounts of customer data, and this allows marketers to take a highly personalised approach, for example by adding more and more criteria to describe the customer. New segmentation techniques focus on supplementing the core data set with complex elements such as behavioural information, psychographic information, data from external sources to understand consumers and predict what they want before they even interact directly with the product. Further refinement leads to personalisation, where each consumer is a distinct segment.

More and more companies are adopting deep personalisation of services — from product design through pricing to creating consumer experiences — which creates a steady rise in expectations among consumers in this context. With machine learning applications such as social media mining, sentiment analysis and customer churn prevention, you can be tremendously efficient in processing large and unstructured data in real-time, and generating accurate predictions to help make marketing decisions.

Hyper-personalisation of marketing activities is the advanced real-time customisation of offerings, content, and customer experiences on an individual level. This reflects a shift in marketing, which was previously product-centric and has now become customer-centric. With micro-segmentation and hyper-personalisation, you can plan effective communication activities in an automated way. With artificial intelligence and machine learning, it is possible to generate qualitative real-time recommendations that allow for better detection of trends in the data acquired, recommendations for working with segments and program mechanics and overall recommendation support in the way the personalisation is done.

On the one hand, artificial intelligence and automation are saving time and costs for the company, while on the other hand, they offer greater customer benefits based on improving the customer experience. The Deloitte study, Connecting with meaning – Hyper-personalising the customer experience using data, analytic, and AI (deloitte.com) shows that hyper-personalisation, when done well, can deliver ROI of up to 800% on marketing spend. Additionally, it can also increase sales by at least 10%.

With hyper-personalisation, the companies can send contextual communications to specific people at the right place, at the right time, and through the right channel. Hyper-personalised marketing offers the opportunity to build meaningful customer engagement, deepen existing relationships and build new ones, and improve the customer experience. Implementing this type of strategy not only improves customer satisfaction, but also increases brand loyalty, purchase propensity and overall marketing effectiveness.

With the growing amount of data, its sources and new points of contact between consumers and brands, there is a wide range of possibilities for personalisation of services. Loyalty program management platforms are one of the tools that make it possible to effectively use this type of customer data. Artificial intelligence-based tools have a critical advantage — they allow you to act in real time.

The data, analytics, and artificial intelligence are essential tools for developing a hyper-personalised strategy that will allow brands to stand out in the marketplace and gain customer trust. Real-time automation and optimisation are becoming the way of doing things in marketing, and machine learning methods are the best solutions available today that not only improve the customer experience but also increase profit for the company.

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Loyalty Economy – How to Retain Customers in Volatile Times?

Typically, about 20% of customers are responsible for almost 80% of brand revenue, so it is important to know your regular customers, their habits, preferences. Knowing what they like and what they avoid, we can provide our company with stable growth. It turns out, it is the customer-oriented companies that grow up to 250% faster than the competition. So what is behind their tremendous success, even more so in unstable times?

High consumer loyalty directly affects a company’s profitability and market position. Even more so now, when almost all industries have been hit by the pandemic crisis, it is crucial to organize business around the needs of regular customers. Unfortunately, the desire for profit, while cutting costs, results in the practice of actions that actually harm customers and in the long run affect the company’s revenue. The loyalty program should be looked at from a long-term perspective. Only then will we realize its potential and see that it is an investment, not a cost.

A Change is Needed

In the face of a pervasive pandemic, we have had to find new ways to life in a world where social distance has quickly become the norm. Most of our existing habits had to change, including our daily shopping or visits to stores and malls. With this comes a change in approach to loyalty programs and marketing. While the stationary stores closed overnight last March, IKEA needed to find a solution to keep kitchen design and sales steady.  As Adam Jankowski Customer Engagement & Loyalty Manager at IKEA Poland points out, this was accomplished with a quick response and adaptation of consultants’ best practices into an online format in just 7 days. “The expansion of technical capabilities in the field of kitchen planning via the Internet, combined with the increase in the number of planners and at the same time the reduction of the price of the kitchen planning service to PLN 1 caused that the niche, until then, online service began to enjoy enormous interest. The number of projects carried out in this way increased over 60 times compared to the period before the pandemic. Caring about the safety of customers, we also introduced appointments with consultants in the store for a specific time. Solutions with a customer-centric approach build trust in the brand, which is especially important in unstable times” – comments Adam Jankowski.

Digital Transformation in the Area of Loyalty

The digital transformation, accelerated by the pandemic and currently taking place in the world, is forcing companies from “traditional” industries to change their business attitudes to more technologically advanced ones. Last year influenced the acceleration of digitalization, which resulted in huge opportunities in the context of data analytics. The number of data sources, the volume of data, and new possibilities for combining them are constantly increasing. A potential that companies need to recognize is their current customer base. To increase customer loyalty and profitability, managers need periodic reports on the performance of each cohort. How much did it cost to acquire new customers? What percentage of customers remain active? How frequent are their purchases? How much does it cost to serve them? What is the revenue per customer? With accurate reporting, employees can draw conclusions for the future and learn from their mistakes or replicate activities that have been profitable. In this way, we can increase the activation of existing customers, regulate service costs, predict behavioral changes, or stay in touch even after the purchase process is closed. We also have greater opportunities to attract new customers and, through antichurn analysis, minimize lost revenue.

The Idea of Reverse Loyalty

A way to maximize the value of the customer base is the idea of reverse loyalty, which is the basis of the solutions implemented by Loyalty Point. A loyalty program is no longer a one-way stream of information from the brand to the customers. The customer and their opinion become as important in decision making as the brand itself. By fostering a positive customer experience at every stage of the customer’s purchase path, a company builds trust and increases overall satisfaction. Customers are no longer mere consumers; they don’t buy a product outright. A customer is a user who uses our service or product and is more aware of the changes and phenomena that occur on the market. The company must build a holistic experience with the brand. Customer centricity enables you to reach the right person with the right channel and the right message – at the right time, and the idea of inverse loyalty helps you deliver long-term and valuable value to your business – acquiring valuable customers and keeping them coming back.

How do these changes look in practice?

It is interesting and significant how, in less than two years, thanks to the support of Loyalty Point, the loyalty program of the Decathlon chain of sports stores has developed. Having a loyalty program gives great potential, because in case of such high dynamics of changes in consumer behavior we can observe these changes in real time, and this knowledge can be used at all levels of the organization: from marketing, communication, through sales, to support of daily work and processes in stores. As a result of our work with the data from the loyalty program, we took the initiative to expand the tool (dashboard), which presents a series of analyses of the current migration of customers and changes in their behavior during the lock-down period, and beyond it for the purposes of marketing activities. For the needs of conscious conducting of communication by people responsible for coordination of local communication activities within the sports category, we have prepared recommendations of the assortment based on the scoring engine. The recommendations can be successfully treated as a communication and sales driver in the following weeks. We have built Persons (operational segmentation) as a tool to support employees to get to know the customers better and understand who they communicate with in a given period, what their motivation for purchase is and what their consumption profile is. We perform all the above activities based on data from the program, as well as external data such as weather forecasts, interactions with web content and communications.

Customer-centric Approach – How to Achieve It?

The new loyalty model takes on particular importance as we look at a world in a time of widespread lockdown. Companies should maximize activities that make them more customer-centric – they then achieve a greater ability to both retain customers and acquire new ones. They gain recognition when they can perceive customer needs, even the unspoken ones. Achieving this depends on two sets of capabilities: design thinking and careful application of state-of-the-art technology. The ability to analyze data and artificial intelligence are key to designing a consumer-centric operation. The flow of customer feedback helps create highly personalized offerings. Using technology to improve the customer experience can provide reduced service costs, among other benefits. Customer-centric companies can deliver useful, relevant content to customers even after the sales process has closed. Our experience shows that online campaigns powered by CRM data are re-educating costs by up to 40% and increasing interest in the products offered by up to 55%.

Nowadays, when consumers are much more cautious in planning and managing their expenditures, reaching them with personalized offers is becoming increasingly important. Meeting this challenge requires marketers to have the right attitude. Although tracking consumer purchase decisions has become commonplace, putting the collected information into practice is not yet the norm. This is a great loss, as you can provide a better brand experience with the collected information. Data-driven scoring models can elevate consumer activity by up to 300% on average. We are moving away from an intuitive approach or one based on general statistics to a model where we can verify with great reliability and precision the effectiveness of actions, real-world yields, compare them to each other, act on a massive scale but in a highly personalized way. With the help of machine learning methods we can isolate unique customer segments based on even several hundred variables. Thanks to this, we gain the possibility to reduce costs for advertising, because the offer is tailored to a given segment.

Loyalty Point’s experience shows that organizing around the value delivered to the customer is certainly a common sense approach. But that doesn’t yet mean it’s a common practice for the entire marketplace. Certainly, understanding the potential inherent in the value delivered by loyal customers requires a maturity of organization that is built over time. As the Loyalty Point team, we look to the future and see the directions in which the industry is evolving so that we can provide our partners with the best and most cutting-edge solutions to help them gain trust and create a strong bond with their consumers.

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If you are interested in our offer, have a brief for us or you want to know how we can support your business, write to us.
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