Retail media networks are enjoying a meteoric rise to prominence, but how do you know if they’re a good investment for your company? In this series, we’ll explore common misconceptions about these networks from both the retailer and brand perspective, providing you with everything you need to know to make informed decisions when it comes to retail media commitments.
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Don’t get us wrong—we are all about the loyalty data. When it comes to sources of first-party data, loyalty programs are a primary option. But if you’re planning to launch or scale your retail media network (RMN), you need more than a loyalty program to gain enough first-party insights to succeed.
Make no mistake, loyalty programs are great
There’s a reason the loyalty management market is worth $5.57B and has a projected 23.5% annual growth rate. Many organizations are doubling down on loyalty, with 69% of brand executives reporting an increase in loyalty investments over the past two years. Point blank, loyalty programs are good for business.
Sixty-four percent of loyalty program members spend more money to maximize points earnings, and 62% of consumers spend more money on a brand after signing up for a paid loyalty program.
From increased basket size to a greater likelihood of customer referrals, what’s not to love about a loyalty shopper? Plus, with the deprecation of the third-party cookie looming, they’re a source of first-party data to power targeted marketing campaigns.
But they can’t be the only 1P data source
Despite the many positives of a loyalty program, their newfound use case as a source of first-party data for RMNs is not their strongest. Yes, the first-party data you get from loyalty programs is valid. Even the best loyalty programs, however, leave data gaps that create an incomplete picture of customers and undermine personalization and targeting.
Successful loyalty penetration rates are generally between 25-40%, with exceptional programs hitting 50-70%. Even if you have a highly successful rate of enrollment, the insights you pull from program data will not reflect 100% of your customer base. And that’s assuming consistent participation from those who do enroll.
According to the Harvard Business Review, only 42% of brand executives think their customer loyalty strategies are effective.
Keep in mind that a loyalty participant is someone with an above-average affinity or interaction level for/with your brand. So, your loyalty data is not giving you any insight into the purchasing attitudes, preferences and behaviors of the average shopper. Also, you should expect at least some degree of loyalty fatigue. The average American consumer belongs to 16.7 customer loyalty programs. What are the odds they remember to participate actively in each and every one?
Identify & enhance, then engage
When it comes to launching an RMN, you don’t just need shopper insights. You need shopper insights at scale to make the most of the brand dollars at your disposal. Loyalty data is a good start, but you should absolutely look to expand and enhance your first-party foundation. If your operation has a brick-and-mortar component, you will need to make sure you can identify the individual behind in-store transactions—something a quality identity resolution solution can help with.
Credit and debit card payments provide abbreviated shopper information that, if leveraged in a privacy-safe way, can help you identify and understand more in-store customers. In addition, make sure you’re pulling data from each and every customer touchpoint—from social to email to website and beyond. You can also enrich your 1P data with second-and-third party data to create more comprehensive profiles with a greater number of attributes for segmentation purposes.
Go beyond loyalty with Bridg
When it comes to retail media, there’s a lot of opportunity—and a lot of competition. Don’t launch an ineffective offering and miss out on market share because you don’t have the proper data scale. Loyalty is a good start, but it’s not nearly enough to power a truly effective retail media network.
We help our customers significantly grow their first party shopper data to create and maximize monetization opportunities with market-leading offline identity resolution capabilities, as well as a proprietary database and highly sophisticated algorithms. By helping brick and mortar operations leverage credit and debit cards to identify the individual behind in-store transactions, we unlock new monetization opportunities, precision targeting, reporting transparency, closed-loop measurement and more.
Contact us today to learn more.