Customer loyalty programs are a massive catalyst for building brand loyalty and increasing customer spend. The question becomes how to construct an effective loyalty program. Should you compare cash back rewards vs brand rewards (like points or miles), or even cash back vs financing options?
Answering these questions will have a great impact on customer retention and spending rates and impact the robustness and accuracy of your customer data.
With top search engine providers like Google making the conscious choice to phase out cookies for third-party data collection by 2024, customer loyalty programs are an essential tactic to capture first party consumer data now and into the near future. So what's the strategy moving forward? How does your business optimize its loyalty program to keep customers satisfied without sacrificing access to information?
- Consumers prefer the instant gratification of cash back rewards over delayed rewards like miles or points.
- It's easier for brands to personalize messaging using loyalty programs to gather first party consumer data.
- Brands can enhance their targeting without third-party cookies.
- Starting in mid-2024, Google is phasing out support for third-party cookies, with plans to finish the phase-out by late 2024.
Instant gratification: why cash back is king
When evaluating cash back rewards vs delayed rewards, marketing and trends studies ultimately lean toward using cash back strategies for many reasons — the main one being the psychological "instant" gratification obtained from the transaction. Consumers immediately see that money going right back in their pocket when they make a purchase associated with a cash-back rewards program.
That's the opposite effect to other traditional programs such as points or miles, which require a significant amount of time before the benefits can be reaped — delaying the consumer gratification.
Cash back is also generally easier to manage, understand, and earn from the consumer’s point of view compared to other programs — you spend money, you make money. In fact, 54% of loyalty program memberships are inactive. The number one reason being that it takes too long to earn points or miles for rewards.
The rising importance of loyalty data
Implementing the right elements of a customer loyalty program isn't just critical for revenue purposes but also for the advanced insights acquired through the data collected. Using an enticing loyalty system means you can ensure meaningful performance and behavioral insights are brought in and analyzed, to uncover the most engaged and valuable customers.
This powerful source of first party customer data lets you improve your personalized messaging toward your customers and makes it easy to design individualized promotional offers based on a buyer's behavior and previous purchases.
There's even the added benefit of improved campaign measurements over time to see which content, deals, and messaging works best for its respective audience compared to others. Collecting this necessary loyalty data provides a better customer experience and a strengthened relationship between consumers and the brands they shop with.
Expand the power of loyalty data with Cardlytics
Brands can strongly enhance their market targeting through Cardlytics’ Purchase Intelligence™ and digital ad platform. Cardlytics, for instance, partners with financial institutions, such as banks, and leverages their online, mobile, and email channels to deliver ads based on first party consumer spending insights.
In conjunction with data collected from loyalty programs, Cardlytics becomes a powerful tool to evaluate where your customers are shopping, when they are shopping, how much they’re spending, if they are brand-loyal, and if there are potential competitive market disruptors in your space. This information can then be used to develop purchase insights and make more informed business decisions.
Give cash back, get loyalty data
Loyalty programs increase customer spending, brand loyalty, and ultimately the total customer relationship value. Additionally, they offer premium data collection capabilities. That said, it's important to create a loyalty program that your customers will love and actually participate in.
Therefore, you’ll need to diligently compare program structures such as cash back rewards vs points or miles and roll out the right rewards system. While traditional loyalty programs such as points or miles may have worked in the past, consumer behavior now shows that instant gratification in the form of cash back is more popular than ever before, as well as one of the easiest ways for the customer to manage and earn their rewards.
By utilizing an effective rewards program with a first party data solution like Cardlytics, you can take data utilization to the next level. The platform's collection and analysis process brings data from critical customer channels to improve marketing strategies for your target audiences. Want to learn more about improving your targeting with advanced consumer insights? Contact us today to speak with an expert and learn how to take your data to the next level.