Oracle Report on the Loyalty Divide: Retailer and Consumer Perspectives
If you’re a living and breathing human being, you’ve probably been targeted for a retail loyalty program: “Sign up for our emails and get 10% off!” or “Get rewards for every $100 you spend!” Loyalty programs are a major focus for retailers of all stripes and sizes.
But do they work? As technology gets more sophisticated and offers get more personal, are consumers and retailers forging stronger bonds?
Oracle Retail wanted to find out. It commissioned a report called “The Loyalty Divide: Retailer and Consumer Perspectives,” for which more than 13,000 consumers globally and 500 retail businesses in nine countries were surveyed to uncover the gaps between the type of loyalty programs retailers are offering and what consumers truly find worth their while.
The survey found a large divide between how consumers see loyalty programs and what retailers are offering. For instance:
- Consumers reported that they don’t always find retailers’ offer relevant, that they are generally not as loyal to a brand as retailers believe they are, and that they use loyalty programs far less than often than retailers assume.
- While consumers think it’s “essential” for retailers to be on social media, they trust YouTubers and influencers more than traditional advertising.
For a loyalty program to be effective, it has to know something about the consumer. And that’s where the balance between personalization and privacy comes in. From the report:
Get the formula right and retailers will ultimately drive increased loyalty, which consumers will express through actions and behaviors. However, as more and more stories around misuse of data hit the headlines, and consumers grow wary of sharing their personal information, retailers will be challenged to find new ways to relate and reach customers with offers that are relevant to someone who wishes to remain anonymous. This is where technology and advanced applications in machine learning and artificial intelligence will close the loyalty gap between brand and consumer, and widen the competitive advantage for savvy retailers.
Here at BTM, we encounter this question with our clients and help them navigate the balance between privacy and personalization. Here are some of the key questions we discuss with our clients as they think through the needs of data collection and security.
Where should you store customers’ data?
Do you host this sensitive information yourself or let your third-party vendor – which perhaps has more security expertise and resources – receive, analyze and store it in the cloud? How will the data be transmitted? If you keep it with you, how do you coordinate and decide on the security measures for safeguarding it?
Whether you choose to store the data on premise or in the cloud, there are benefits and drawbacks to each scenario. For instance, the more transactions that the data goes through and the more entities that touch the data, the greater the risk of a security breach. If you host the data within your four walls, you have complete control over it and security questions are usually more straightforward, but you need adequate resources – talent and money – to support housing the information.
Should you share customers’ data?
The question of sharing data can pop up during routine business operations. A third-party partner may be brought in to analyze your data and provide you with a host of business intelligence information, depending on the quantity and quality of the information you’re gathering. That partner may ask for additional data to further segment their work for you.
Providing this extra information may trigger the need for you to ask customers’ permission to do so – in other words, they will need to opt in or opt out of allowing you to share their information with other companies. This could raise red flags in the minds of your customers (“Why are they collecting my data? Is my data safe?”), as well as potential security risks due to the greater quantity of sensitive data being handled by your partner.
Retailers will have to continue experimenting and refining their relationships with customers in order to attract and retain loyal buyers. And with that comes the responsibility of safeguarding personal data and ensuring anonymity when consumers request it.
Go here to learn more and get the full report from Oracle Retail.