The long road to true customer centricity

5 minute read

More and more companies are trying to put the customer at the centre of their actions and thoughts. With a data-based understanding of the customer, not only should your marketing activities be made more efficient, but the customer's loyalty to the company should also be increased. But achieving genuine customer centricity is a lengthy and complex process.

For a long time, companies knew little or nothing about their customers. Telecommunication companies were among the first to recognise personal data’s value and try to capitalise on it. With the advent of the age of digitisation, this changed increasingly. Driven by the pioneers of digitisation from Silicon Valley, more and more companies are trying to “get to know” their customers – i.e. to collect data about them and use them systematically. Both the collection and the use of personal data pose significant challenges.

Use of existing data vs collection of new data

The thought leaders and market leaders in customer centricity benefit from large amounts of data they have collected about their customers over the years and decades. When we talk about data here, we essentially mean personal, behavioural, and transactional data. In addition, these companies had the unique advantage that they and their processes were created around this data. So they faced the challenge of adapting their structure and approaches to the new circumstances much less than many traditional companies.

Companies that are only now beginning to become customer-centric usually encounter one of the following two initial situations: There is no or very little data from the above categories available, or large amounts of data are already available for a variety of reasons not to be used. These reasons often include the following:

  1. Lack of appropriate marketing permissions (meaning the customer has never consented to the use of their data for any purpose other than order fulfilment)
  2. The data is scattered in numerous silos/legacy systems
  3. The quality of the data is insufficient (outdated data, incorrect contact details, duplicates, etc…)

Most of the time, it is a combination of all of these. Ultimately, these reasons inevitably lead to the following consideration: Does it make sense to clean up this data and make it usable in a very complex process, or is it better to start from scratch and build an entirely new database?

Whatever the decision, one of the biggest ongoing challenges will be continuously generating and keeping up-to-date customer-related data better to understand your customers’ needs, interests and situations.

The customer loyalty program as a tool to generate data

This is precisely where loyalty programs can play a significant role. Ultimately, the basic idea of ​​a loyalty program is to offer the customers incentives to provide information about themselves in return for special advantages and to make them usable.

This gives rise to two key questions that need to be clarified in advance:

  1. What incentives might your customers be interested in, and, as a result, which system makes sense?
  2. What data should be collected, and for what purpose?

The answer to the latter question is critical to prevent in advance data is collected for its own sake that is never used and thus quickly turns your system into a data dump.

In our strategic guide, we go into these and many other aspects of planning and introducing a customer loyalty program, including different loyalty mechanics and concepts and their upsides and downsides. In addition, we give food for thought on the business case and system selection and finally provide recommendations on possible operating models.

Loyalty Program : Part 1

A step-by-step guide to building a loyalty program, we dive deep into considerations, concepts and logic, and a business case

Patrick Graab

Head of Marketing DACH

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