If there’s any downside to deciding to pursue big-data marketing strategies and data-driven loyalty programs, it’s that you can’t do it on your own. Collecting and utilizing large amounts of information is only possible with the help of a third-party technology provider or two. But which one should you pick, and can some technologies be substituted by others? This article is dedicated to giving you a straight answer by comparing three major players in the field: customer data platforms, loyalty programs and marketing automation.
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What is a Data-Driven Loyalty Program?
In short, a data-driven loyalty program is all about infusing the reward experience with knowledge about the customer. Segmentation and personalization plays a large role in this, but a data-driven loyalty program is far more than that. If you’re using churn prediction to predict the next best action for a customer segment, then target those customers with relevant offers and rewards based on their preferences that you have learned through incentivized surveys – then you have a data-driven loyalty program.
Customer data platforms, marketing automation and a loyalty technology provider all play a role in realizing a data-driven loyalty program. But to what degree? Well, that depends on each company’s approach.
Customer Data Platforms, Loyalty Programs and Marketing Automation: What’s the difference?
When first setting out to pursue segmentation, personalization or any other form of data-driven strategy, businesses often try to look for an all-in-one service provider that covers everything from data gathering to communication and even rewards. Before discussing whether this is possible (or even worth it), let’s take a look at what customer data platforms, marketing automation and loyalty programs excel at individually.
Customer Data Platforms
CDPs can be described in a variety of ways, but in data-driven decision-making, a customer data platform is responsible for collecting customer information and putting it into individual customer profiles. This data gathering happens across all available channels — from website and mobile engagement to in-store purchase data from the POS — and is meant to create one, all-encompassing customer view.
The other major benefit of a CDP is that it uses high-caliber machine-learning algorithms and AI predictions to decide the next best action based on the data. This allows businesses to create more sophisticated segments based on nuanced information, such as product preferences or purchase history. As such, Customer Data Platforms are extremely useful tools for churn prediction.
At the other end of the spectrum is marketing automation, which is responsible for putting your plan into motion. Marketing automation is all about execution: it provides you with unparalleled freedom when it comes to creating and managing emails, newsletters, or any other form of digital communication.
Not only that, marketing automation tools also allow you to A/B test different messages for a segment. This means you can send out multiple variations of email copy and gauge your audience’s response. Doing so provides invaluable insight and helps you perfect your personalization strategy by finding the right tone for each segment.
Loyalty Program Technologies
The technology platform behind a loyalty program is a bit hard to place, because they can both be the source and the end-point for your data. Loyalty programs are geared towards changing how customers behave and interact with a company by rewarding specific actions.
A loyalty program technology provider allows you to increase the number of touchpoints you have with members. They can provide the platform necessary for in-store engagement with treasure hunts, incentivize the completion of customer profiles and online surveys with bonus points, or even get customers to log in to a mobile app on a daily basis with challenge systems. And of course, there are the tiers, rewards and lifestyle-based mechanisms that make the customer experience one-of-a-kind.
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Can a Loyalty Program Provider Substitute a CDP or a Marketing Automation Platform?
Technically, yes, but it’s generally not recommended. Loyalty program providers come in all shapes and sizes, and each has a different set of features. Some may offer built-in churn prediction capabilities, for example, while others might have built-in tools to handle basic email campaigns and functionality.
Let’s say you’re running a premium loyalty program for a very limited (but high-value) audience, made up of only a few thousand members. In this case, the loyalty platform might be able to substitute for a marketing automation provider, for example, handling registration, password reset, and reward redemption emails.
Going Solo Simply Isn’t Worth It
However, the general rule of thumb is that if you’re a growing enterprise, you’ll only benefit from using specialized technology. When it comes to churn prediction and data analysis, CDPs have the upper hand. Similarly, trying to get a loyalty platform to trigger and manage emails for even a mid-sized audience will not only cost a lot of development resources, but will also be less effective than using a marketing automation solution.
Of course, the pendulum swings the other way, too. CDPs may boast built-in reward capabilities, such as points or a referral system. But the truth is, such baseline features aren’t enough to differentiate a business from its competition. A pure-play loyalty technology provider has a robust list of loyalty logic and reward mechanisms to choose from, which is the only way to build a truly unique and custom-made loyalty program.
The Key to Data-Driven Decision Making Is Finding the Synergy
The reality of a data-driven loyalty program is that you shouldn’t be asking “Which of the three is more important than the others”, but rather “How should I use all three to maximize the value?”
Incorporating all three at once no doubt provides the most benefits. For example, loyalty programs incentivize survey completion, which can then be fed to the CDP’s algorithms, while surprise & delight birthday emails can be enhanced with a gift, such as bonus points or a discount on the customer’s favorite product category.
Using a combination of tools is also the most convenient development-wise. The providers behind loyalty programs, customer data platforms and marketing automation tools work hard to enable a huge network of integrations so, no matter which vendor you’re working with, they’ll more than likely have the integration you need, out of the box.
Taking the Next Step
With all that being said, it’s up to you to assemble your dream team of top loyalty program, marketing automation, and CDP vendors. As a pure-play loyalty provider specializing in headless commerce and omnichannel solutions, we’d be more than happy to show you our technology. Simply book a demo or send us your RFP.
Found this article while researching loyalty program providers? Take this handy comparison worksheet to make things easier!
Tamas is a Senior Loyalty Program Specialist at Antavo and a Certified Loyalty Marketing Professional - CLMP. Tamas is known for having a keen eye for loyalty and customer retention research and trends. Tamas is also a true gamer at heart and has an impressive collection of cyberpunk books.