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Most brands dream of creating customer loyalty programs that stack up to the likes of Starbucks, Sephora, United Airlines, and Amazon. These loyalty-leading brands build deep relationships with customers by offering them exactly what they’re demanding from modern loyalty programs, and in order to do it they use solutions like personalization, gamification, and real-time offer optimization.
Building happy and loyal customers results in increased revenue, customer lifetime value, and decreased churn rates for brands. On top of that, according to BCG, redirecting 25% of mass promotion spending to personalized or dynamic offers can increase return on investment (ROI) by 200%. With numbers like those, it’s a no brainer for brands to start focusing their marketing efforts towards programs that build customer retention and loyalty.
In today’s customer-centric commerce, some of these leading brands are utilizing Dynamic Offer platforms in their loyalty programs to achieve this modern customer loyalty success.
Dynamic offers are highly flexible and personalized offers that allow brands to react quickly and to experiment to ensure their offers engage customers to the fullest potential. Customers are presented with offers that are personalized to their unique shopping habits and preferences and as the customers engage with their offers, machine-learning optimizes future offers to maintain and increase the best possible personalization per customer.
This type of offer provides a proven way to engage known customers with valuable content and also provides a unique way to introduce customers to new products, new services, or new activities they may otherwise not try. Additionally, by no longer sending mass offers to consumers who would already be spending with your brand, or suggesting purchases that are not relevant, brands are able to create efficient loyalty programs that have an impact on revenue and customer lifetime value.
The emergence of dynamic offer platforms solves historical issues of scale, automation and optimization challenges we’ve seen in existing personalization technologies and approaches.
By using dynamic offer optimization, brands can easily create offers that are both relevant and valuable - making it possible to engage your customers, enhance your business, and increase customer satisfaction and loyalty at the same time.
Harnessing the power of dynamic offers is a game-changer for loyalty programs. Before you jump into implementing dynamic offers, assess your tech stack to determine if you’re ready to get started today, or if you should consider a few more additions that will enable your team to make dynamic offers successful.
Determining Tech-Readiness for Dynamic Offer Optimization
When brands move from their traditional way of managing offers to a more dynamic model, they’ll progress along a spectrum of technology for offers, discounts, and targeting toward continuous, data-driven personalization. Each step along the spectrum builds on the one before it and ensures offers more effectively create customer loyalty.
Here are some criteria to evaluate where you are on the offer spectrum:
Stage 1: Mass
- You may not have a well-developed tech stack and may rely solely on traditional eCommerce systems or direct mail to reach existing customers.
- You may collect some customer data but may not be sure whether or not you’re collecting the right data to develop insights about your customer base.
- Your digital marketing and loyalty marketing groups may not be aligned within your organization’s structure, or you might not even have separate groups for each within your marketing function.
- Your offers feature no personalization at all – every customer gets the same mass offer regardless of demographics, geography or other factors.
Stage 2: Segmented
- You have implemented a customer data platform (CDP) of some sort. You also have loyalty program software in place collecting data on how often customers return and re-engage with your brand.
- You segment your customer data based on a number of demographic and purchase history factors. Your data collection points are mostly connected, although there are still discrepancies between your online and offline channels.
- You may have digital, eCommerce and loyalty marketing groups, and each may have programs based around key audience segments. These groups have some alignment around how programs overlap.
- Though all customer offers are mass, the messages individuals receive are customized.
Stage 3: Dynamic
- Your marketing tech stack includes a dynamic offer optimization platform that has machine learning-powered optimization of offer journeys;
- Your team has automated offer generation, execution and fulfillment through a marketer-enabled self-service platform.
- Your data includes individualized customer files that have one source of truth within the customer data platform and which are regularly updated from any new activity. All systems that house data can talk to each other. Models regularly refresh customer insights, audiences are refreshed regularly to account for changes in consumer behavior, and updates are applied to all offers and communications.
- Your digital, eCommerce and loyalty marketing groups have aligned their programs, as well as their analysis reporting and feedback loops, to ensure programs are continuously optimized for the customer and the business.
- Your offers are personalized for each customer based on previous purchase history, demographics and preferences. Those offers are optimized so the organization spends its reward dollars most efficiently. The machine learning algorithms learn from campaigns so each new campaign is more efficient and personalized.
How to Successfully Move Your Brand to the Dynamic Stage
Once you have determined where your brand falls in relation to tech-readiness, it’s important to understand how to successfully move into the dynamic offers stage. We’ve put together a list of steps you can follow. Keep these steps in mind when discussing business objectives and technology tool selection as you get ready to make the move to dynamic offers.
Here are the key steps requires to move into the dynamic stage:
- Classifying your business model;
- Setting up best practices for identifying business objectives around specific customer segments;
- Putting the right team in place to think strategically about how to meet those business objectives;
- Fostering a test-and-learn culture that allows for experimentation with the types of offers shared with consumers; and
- Implementing the right technology that will allow you to do this work at scale.
As you’re thinking about whether or not your company is ready for dynamic offers, you need to determine where you are on the offer spectrum and then assess which type of business model your brand uses.
The first step is to look at the stages above and honestly evaluate where your brand is right now. Every business has a unique set of circumstances, but if most of the bullet points you see in a specific stage apply to your brand, that’s probably where you’re located.
What’s critical is that you have a customer data platform so you have access to the data you need and a cross-channel campaign management solution in place. Without those tools, you won’t get the value out of a dynamic offer optimization platform. With those in place, you can accelerate that process toward implementing dynamic offers that will increase your brand’s revenue sustainability.
Want to learn more about how to successfully move your brand into the dynamic stage?
Get an in-depth step-by-step overview of each stage in the move to dynamic offers with our modernizing loyalty guide. We’ll break down how to identify where your brand is in each stage and how to navigate through as you build out your strategy.
Implementing Dynamic Offers With Formation
Formation is the pioneer of Dynamic Offer Optimization. Our team is made up of experts in personalized experiences in a number of industries – banking, retail, gaming technology, and more. Over the last five years, our patented machine-learning technology has powered the offer programs for some of the world’s largest Fortune 500 companies.
How it works
Formation’s Dynamic Offer (DYNO) platform automates the execution, fulfillment, and measurement of personalized offers at scale. Marketers build campaigns focused on a specific business objective from a wide range of single-action or multi-action offer types. The platform then automatically generates a unique offer for each customer within the guardrails determined by the marketer and continuously optimizes each campaign automatically, enabling the marketer to focus on gaining new consumer insights and designing campaigns to achieve new business objectives. Formation’s platform integrates with any marketing stack to ingest and process data from a CDP, deploy campaigns through existing distribution channels, and fulfill rewards through current loyalty systems.
To learn more about Formation’s dynamic offer platform and how we can help your company implement dynamic offers, click here.