Build Your Customer Loyalty Loop Using Formation

Build Your Customer Loyalty Loop Using Formation

Brands that used to compete on factors like price, quality and value are now battling it out in a more critical arena: customer experience. In order to come out on top, your brand will need to move beyond focusing on acquisitions and invest in customer loyalty long-term.

The good news is that you can expect a great return on your investment. Keeping an existing customer costs 5x less than acquiring a new one, and loyal customers deliver more revenue and a greater lifetime value or LTV (on average 10x as much as than their first purchase with your brand).

However, retention is not without its challenges. Broad transactional offers are no longer enough to create loyalty—research from Epsilon revealed that 80% of customers are more likely to purchase when brands offer personalized experiences. Customers now expect every contact they have with your brand to be highly relevant to them, which means you need to personalize every stage of the customer journey for each individual. This 1:1 personalization is where Formation can help.

What is a customer journey

Your customer journey is the complete sum of a consumer’s experiences with your brand, for their entire lifetime as a customer. Post-purchase interactions continue to re-engage the customer, leading them to choose the brand again and again in what’s called a “customer loyalty loop.”

But the customer loyalty loop only works well if each brand interaction is relevant to your customer and beneficial to your brand. Formation designs customer journeys that achieve both of these goals, delivering the individually personalized experiences your customers want while creating the repeat purchase opportunities you need to sustain growth.

Our solution gathers customer data from all of your disparate sources, such as loyalty programs and data platforms, and uses machine learning (ML) to gain actionable insights into each customer’s motivations, interests and habits. Our artificial intelligence (AI) then develops personalized loyalty offers for each individual customer, and distributes them automatically across all of your marketing channels.

That’s just the beginning, though, because our ML algorithms never stop learning. They continue to study each customer interaction, and fine-tune each customer’s offers and experience accordingly. This intelligent automation allows you to scale to millions of individualized offers that get ever more effective—what we call true 1:1 personalization.

Building the world’s most personalized brand

One recent example of Formation’s 1:1 personalization in action is a loyalty program from a global quick service restaurant (QSR). The company has always invested in retention by providing robust rewards, but they wanted to take their customer experience to the next level. Their ambitious goal was to become the world’s most personalized brand, and use individualized offers to grow revenue among their 18.9 million program members.

The QSR used Formation’s powerful offer automation system to synthesize their disparate data sources – including transaction, product, loyalty and store data. Using this data, our machine learning algorithms personalized and optimized the offer selection for each rewards member.

Offers were individualized in numerous ways, including the number and type of actions required, the offer categories and products, and the amount and type of rewards. Formation also made it easy for the global QSR to deploy offers across channels by automating offer assembly, offer management, reward fulfillment and KPI measurement and tracking.

Using Formation, the QSR was able to increase their number of offer variations 100x, while reducing the time required to develop and launch offers 10x, ultimately resulting in a 20% increase in spending by U.S. loyalty program members.

Personalization meets gamification

Brands like the global QSR are able to achieve such dramatic lift thanks to Formation’s unique mix of 1:1 personalization and gamification. Of course, gamification itself is nothing new—marketers have been applying elements of game play for decades to boost customer motivation. In loyalty offers, it’s been prevalent since United Airlines introduced the first modern frequent-flyer program in 1972. And who can forget the now-infamous McDonald’s Monopoly game of the 90’s and 00’s.

Today’s use of gamification applies game mechanics like tiered status, leveling up, unlocks, missions, goal setting and progress markers to foster engagement and ongoing loyalty. Even gaming skeptics will see the subtle use of gamification in their daily lives: LinkedIn’s progress bar prompts you to complete your profile, while Reddit’s upvote system and Karma scores motivate users to keep engaging with the platform.

Gamification can be highly engaging for customers because it taps into goal-oriented motivation, but the way it’s typically practiced has a couple of drawbacks. The first is that creating and launching a gamified experience is usually very resource intensive. Secondly, it’s usually a one-size-fits-all experience, which means your brand and your customer are both missing out on the benefits of personalization.

Formation is unique because it’s the only marketing solution that combines these two highly effective motivators, 1:1 personalization and gamification, to access the untapped growth potential in your existing customer base. Our technology enables us to meet your customers wherever they are on their journey, and deliver them individually relevant offers that also nudge their purchasing behavior to meet your goals. Offers can be developed to increase buying frequency, reward and reinforce behavior, introduce new products (cross-sell), upsell to high value products or even onboard new customers and re-engage inactive ones.

Formation’s offer library has proprietary customer journey templates that help brands combine 1:1 personalization with proven gamification techniques. Each section of these templates can be uniquely tailored to your individual customers. As our solution leverages machine learning algorithms to analyze your customer data, these templates are pre-wired to ingest data insights to configure the templates quickly and automatically, getting out to market in just days instead of months of manual work.

How Formation offers work: customer journey examples

We’ll use the example of the global QSR customer to illustrate how Formation offers guide the customer journey to reinforce the loyalty loop.

Let’s say our customer is a fan of black coffee. Formation’s ML and AI system will analyze his motivations and interactions with the brand to date, and deliver the following series of offers:

Increase frequency: The customer is given a repeat action offer that we call a product dash, e.g. buy a black coffee 5 times to earn 500 points.

  • The product, number of visits and incentive are all personalized to the customer, helping to motivate them to visit more often.
  • Over time, the product dash reinforces the behavior more effectively than a one-size-fits-all offer like a punch card.

Introduce new product (cross-sell): Once the customer is visiting more frequently, their offer may shift to introducing a higher margin item such as a breakfast sandwich.

  • The new product may be introduced as part of a quest, a series of different actions that earn an incentive at the end.
  • Quest actions for this customer might include purchasing two black coffees one week followed by a black coffee + sandwich the next week.

In the above scenario, 1:1 personalization delivers a clear message that recognizes the customer’s habits and preferences, while gamification incentivizes the steps they need to take and tracks their progress to create natural recursion. This combination of motivators works for any industry that can utilize a loyalty program, from grocery and retail to hospitality and financial services.

Formation’s personalized offers increase customer engagement 2x. Here are a few more examples of offer types:

Category Exploration: Multi-step experience to increase engagement and introduce new product categories and behaviors.

Pick-Your-Path: Incentivize cross-sell and up-sell while giving customers more control over their experience

Frequency: Offer designed to increase frequency and reinforce engagement by incentivizing high propensity actions.

Become more relevant to access more revenue

You may already realize that the majority of your business comes from existing customers. Yet these customers will remain a largely untapped revenue source if you don’t deliver the right experience to motivate them.

Formation was designed to do exactly that. By analyzing large amounts of your customer data, our AI and ML solution identifies every customer’s unique preferences, motivations and desires. It uses that information to generate gamified offers that are personalized to each individual. This keeps your brand hyper-relevant to them throughout their journey, maximizing engagement, conversion and revenue.

Formation delivers these results much faster than traditional methods, enabling your team to scale to millions of personalized offers in weeks, not months. Over time, our AI and ML engine continues learning from each customer interaction, so offers keep getting smarter and more effective.

Customers using Formation to engage their most loyal customers are already seeing up to a 3x increase in net incremental revenue, 2x increase in marketing efficiency and 10x faster marketing execution. Find out how much growth your brand can realize. Contact us to schedule a demo.