How loyalty programs are helping to solve privacy concerns in a cookieless world
May 3rd, 2021, Hoang Nguyen

How loyalty programs are helping to solve privacy concerns in a cookieless world

Growing user concerns about privacy are prompting changes in how publishers and brands collect and share consumer data. The looming elimination of third-party cookies will have a major impact on the digital advertising landscape, forcing businesses to shift away from third-party data and, in turn, evaluate other sources to identify potential customers and inform their advertising strategy.

First-party identifiers are being touted as a way forward for marketers adapting to a more privacy-driven advertising environment. This type of data is one that a brand or publisher collects with direct consent from consumers and can include data captured through user interactions in a publisher’s ecosystem of devices, apps and websites.

The need to understand consumers is even more critical in a post-quarantine world, especially with the shifts in media consumption and shopping behaviors over the last year. There is also the challenge of incentivizing users and customers to share their personal data given the privacy climate, and that is where loyalty-based marketing comes into play.

Consumers think it is fair to share personal data if they get something valuable in return

Loyalty programs and promotions help provide insight into consumer attitudes and engagement, while also creating meaningful interactions with these consumers as part of a value exchange.

New online polling conducted by YouGov among 1,200 U.S. adult consumers in April 2021 revealed that 88% were willing to share their information if they saw value in the exchange. Consumers aged 18–29 were slightly more likely to say they would share their personal data with a brand in exchange for something of value such as discounts, free products or rewards — 90% versus 88% of Americans overall, a statistically significant difference.

Brands and publishers are also able to scale the collection of first-party data by accelerating consumer interactions and incentivizing engagement through loyalty programs and promotions. Since loyalty programs are aimed at gaining repeat customers rather than one-time shoppers, first-party data can also be used to improve future personalization and customer experiences for those returning consumers.

YouGov asked its U.S. respondents about the benefits of loyalty programs and 68% said they like when a loyalty program sends them personalized discounts based on their purchase history. Among those who said they are willing to share their personal data in exchange for a reward or discount, 74% like when loyalty programs use first-party data such as purchase history to send them discounts and offers that hold value to them. That shows a clear consumer expectation for businesses to use consumer information to personalize the shopping experience — something that can only be done through the proper management and application of first-party data.

While it is clear that personalization, recommendations and convenience are key features to a successful loyalty program, there is also a unique opportunity for brands to partner and amplify their exposure to an audience of loyalty program members. Half of the survey respondents said they like when loyalty programs send them exclusive discounts and offers from other brands, indicating the strong potential for sensible brand partnerships.

What other meaningful benefits do loyalty programs offer customers and brands?

Loyalty programs benefit brands in several ways. The first is increased customer spending, with 67% is our survey saying they spend more with a brand when they are a member of its loyalty program. This figure is a significant increase from when YouGov asked about people’s spending regarding loyalty programs back in 2019 — only 58% of those survey-takers said they spent more with a brand as a loyalty member then.

Another benefit is the emotional connection that loyalty programs forge between members and a brand. More than half of the U.S. respondents said they feel more emotionally connected to a brand when they are a member of its loyalty program (53%) — the share who said this in 2021 has increased since 2019 (46%). The connection a brand builds with its customers can be key in driving a positive experience and even lead to increased sales. According to YouGov data, 88% of people who feel emotionally connected to a brand as a loyalty member are willing to spend more with the brand.

Finally, the third benefit of loyalty programs is its ability to reach non-customers. A majority of those polled said they would recommend a brand to friends and family as a member of the brand’s loyalty program (58%). This sense of brand evangelism appears to be tied to the emotional connection a loyalty member has with a brand. Indeed, 4 in 5 people who feel emotionally connected with a brand would recommend the brand to others (83%).

If utilized correctly, loyalty programs can serve as a powerful and ethical way to understand a brand’s customers, measure how customers engage across the brand’s ecosystem and identify how the customer experience can be improved using first-party data collected with direct consent.

Loyalty members enjoy personalization in the shopping experience and come to expect recommendations and offers based on their purchase history or previous interactions with a brand. With all this, it is important to remember why market research teams are evaluating loyalty programs as a solution to the privacy climate today. Marketers should manage first-party data and apply these insights in a responsible fashion, and this truly comes down to how much value a loyalty program provides to those with the strongest brand affinity.

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Methodology: YouGov polled 1,200 US adults online on April 19, 2021 between 11:02am EST and 1:36pm EST. The survey was carried out through YouGov Direct. Data is weighted by age, gender, education level, political affiliation, and ethnicity. Results are nationally representative of adults in the United States. The margin of error is 4.3% for the overall sample.

This story originally appeared on Digiday.