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Brand loyalty: How to build your customers' loyalty with big data

Business and Technology Writer

Brand loyalty is harder to come by in a retail landscape that offers shoppers an unprecedented array of options. Building a faithful customer base in a massively competitive market is a key challenge facing today's CMOs. To foster consumers' loyalty to brands, retailers are tapping big data to access a more granular read on the return on investment of their marketing efforts and to generate personalized offers that reflect a deeper, more holistic, understanding of just who each shopper is.

Stoking brand loyalty with 'system two' thinking

All kinds of businesses have made the mistake of drawing blanket conclusions from data, and the retail industry is no exception.

"With analytics, there are two culprits to avoid in particular: using aggregate data, and mistaking correlation with causation," Filip Matous writes in the Harvard Business Review. Matous references psychologist Daniel Kahneman, who coined a term for the misguided approach that tends to fuel both "culprits." He called it "system one thinking," and it refers to the mistake of using quick, intuitive and emotional data shortcuts to jump to business conclusions.

In order for data analytics to generate actionable solutions, Kahneman would recommend a second approach ("system two thinking"), that encourages a focus on slow, logic-based examinations of discrete facts to unearth the true causes behind them. For example, if a firm sees increased website traffic and a boost in leads, a "system one" inclination might be driving more traffic to the site, but gaining insight into the true cause of the traffic is more useful.

To glean that insight, businesses can separate out the traffic data by each source in their marketing mix: email marketing, social media, public relations outreach, etc. Then, by matching each source to a lead, "and tracing it all the way to purchase, the [analytics] team is able to identify the top performers," Matous concludes.

Just like any other business, the key to retail is detail. By linking the source of a retailer's e-commerce traffic to conversion rates, retailers can dole out their marketing dollars more efficiently.

https://kapost-files-prod.s3.amazonaws.com/uploads/direct/1453490562-45-5731/customer-loyalty-blog.jpgRedefining loyalty

Today's shoppers can find the lowest price for an item in seconds on a smartphone, so retailers need to think beyond discounts and coupons when it comes to their brand loyalty programs.

Walgreens, for one, is offering long-term wellness incentives and special solutions for ill shoppers by utilizing data analytics technology. The drugstore chain has customized its app to suggest relevant, timely purchases by way of data-driven platforms that recommend items as shoppers walk through the store.

"For example, users who recently ordered tissues and cold medicine for delivery receive discounts on nose spray and vitamin C tablets during their next store visit," according to consumer and retail research firm PSFK. Users can also connect their wearables and earn points based on their fitness activity. By helping their customers live healthier lives, Walgreens is one of many retail brands that are redefining brand loyalty as it aims for a deeper bond between shopper and store.

One-to-one marketing

Amazon pioneered the use of big data with its much-copied product recommendation engine. The online giant's "customers who bought this item also bought..." recommendation feature reportedly generates an additional 10 to 30 percent in revenue, according to eConsultancy. The recommendation engine also reset customer expectations. Cookie-cutter merchandise offers didn't cut it anymore, as Amazon had discerned, and their solution changed the online retail industry.

Today, personalized consumer marketing is integral to boosting brand loyalty. There are myriad creative ways retailers can accomplish that. OwnOnly, which sells custom-made menswear online, taps into a database of its shoppers' measurements and style preferences, so when a customer provides his height and weight, the retailer can generate a measurement that's a perfect fit for that shopper. "The benefit is removing the extra work for the customer, and making it incredibly easy to buy something that's tailor-made for him," Brian Zeng, CMO of OwnOnly, wrote in Internet Retailer.

Smart use of shopper data not only removes barriers to purchase for consumers, it also establishes a one-to-one, customized experience. Using big data analytics is a great way to foster brand loyalty.

Learn more about IBM solutions for retail.