The Three Pillars of Customer Loyalty: Why, Who, and How

Siba Padhy, the Head of Salesforce Business at EPAM Systems, Inc., outlines why the three pillars of customer loyalty depend on establishing the “why,” “who,” and “how.” This article originally appeared in Insight Jam, an enterprise IT community that enables human conversation on AI.

Modern consumers expect personalized experiences and will abandon brands that fail to deliver them. While all brands recognize the necessity of such experiences, many companies struggle to form a comprehensive view of their customers, and an even higher number struggle to deliver contextually relevant, personalized customer experiences.

Companies recognize that they need to take loyalty more seriously—the problem is that they don’t know where to start. This article explores how customer data platforms (CDPs), AI agents, and machine learning (ML) tools can solve this challenge.

Outline the “Why: Behind Customer Loyalty

First, it is crucial to outline the “why” behind customer loyalty. Loyalty is meant to increase customer lifetime value, acquire more customers, increase revenue, improve customer satisfaction, etc. These outcomes are interrelated and will influence each other in some way. It is also important to align on frameworks that help define customer lifetime value and identify key growth drivers. A well-established value capability matrix (KPI tree) is essential to connect these value drivers with measurable outcomes. By setting up a feedback loop, organizations can also measure the impact of loyalty initiatives and make continuous improvements utilizing pre-established lagging and leading indicators.

Establish the “Who”

To truly understand their customers, brands must first identify “who” the customer is, which requires building a unified view of each individual, collecting attribute, engagement, and interaction data across touchpoints. Accessing this data across all departments is essential for delivering personalized and compelling customer experiences.

A CDP solution integrates an enterprise’s customer data from sales, commerce, marketing, contact center, and other systems into a single, easily accessible source of truth. This platform merges every detail, from demographic information to behavioral insights, to help brands achieve a 360-degree view of their customers. Without a CDP, a company may have multiple versions of the same customer across different systems, sometimes in the same system. A CDP resolves this identity dilemma with direct or fuzzy matches to create one unified record for that customer, such as determining that three email addresses and two different physical addresses belong to the same person.

A CDP can also help companies enhance and enrich their data. For example, by connecting a CDP with various external and internal data points, brands can ascertain a customer’s total lifetime value, including their preferred channels of engagement, favorite products, and other behaviors like price sensitivities.

In addition to CDPs, marketers can use tools like conversational AI agents to give them a list of customers who fit a specific criterion, anywhere between one and over two dozen dimensions. These dimensions could include demographics, location, purchase history, etc. Utilizing AI and ML models on top of this data acts as a catalyst where a CDP not only creates insights but also can recommend the next best actions for various roles within the organization to bolster customer loyalty.

Customer Engagement: The “How”

Now that an enterprise understands its customers, it is time to determine “how” it will engage with them. While customer loyalty can be enabled in many ways, the most common engagement types are:

• Point-based loyalty management
• Tier-based loyalty management

The drivers behind these types of loyalty management can be simple tracking based on customer spending behavior and habits, gamification, or an ecosystem of partners. It is also worth noting that many point-based systems ultimately transfer to some form of tier-based system as a customer progresses along a loyalty program.

Starbucks, for example, uses a gamified point-based system where customers get promotions based on their purchases, encouraging them to make more purchases. Alternatively, Marriott’s Bonvoy program uses a tier-based approach, where points lead to tiers, and there is very little gamification. Marriott also expanded its loyalty program with a partner ecosystem. Marriott allows members to use points on airlines and rental cars; likewise, certain credit cards give members points.

The “How” Continued: Customer Segments and Journeys

It stands to reason that the highest tier customers of nine years want to feel different and should receive a more personalized experience than someone who just became a member. As such, successful loyalty programs segment customers accordingly, providing them with tailored experiences. With a CDP, brands can harness customer data to create cohorts or segments of customers. They can then place those groups into corresponding marketing or promotion journeys.

For example, a customer spending a significant amount of money on a website should go on a different marketing or promotion journey than someone who merely pops up on the website once a year. A CDP allows organizations to uncover these pivotal data points and tie customer segments directly to specific marketing journeys with reward structures associated with their unique attributes and behavioral patterns.

Some advanced CDPs, like Salesforce Data Cloud, have powerful generative AI capabilities that can generate sets of segments based on data, accelerating the creation of customer segments. AI agents can also recommend that marketers actively target certain customer segments with promotions and other incentives. Specifically, these agents examine the CDP data to determine which customer segments have the highest response rates, conversion rates, etc., and then place them on journeys powered by self-learning AI and ML tools.

Case in Point: Modernizing Customer Loyalty

A global sunglasses retailer wanted to create a 360-degree view of its customers to support better segmentation and targeted marketing. However, its legacy marketing platform left much to be desired, as it could not provide the essential capabilities necessary to automate its loyalty program based on real-time data. To achieve its mission, the retailer partnered with a digital engineering and transformation services specialist to implement a CDP using Salesforce Data Cloud.

The partner helped modernize the retailer’s business-to-business (B2B) and business-to-consumer (B2C) marketing and loyalty initiatives. This enabled it to gain a holistic view of the customer and segment based on real-time behavioral or transactional data. The solution also included AI-powered engagement, helping the retailer deliver timely, personalized customer journeys with the right messages to correct customer segments.

Additionally, an automated feedback loop to Salesforce Data Cloud permitted the retailer to maintain the 360-degree customer view from both a B2B and B2C perspective. In the end, the retailer increased customer satisfaction by 20 percent while boosting campaign return on investment and improving marketer productivity and campaign speed to market.

Finding a Business and Tech Savvy Partner

Building a successful customer loyalty program can be an enormous task, requiring a comprehensive understanding of the business, associated processes, and relevant technical tools that help solve strategic and complex challenges. Getting help from a partner who possesses such expertise is a critical first step in the journey.

The right partner can assess holistic customer engagement models to align loyalty goals with broader business objectives and develop a corresponding roadmap with well-defined checkpoints and processes to measure impact. Likewise, an experienced partner can help streamline the implementation of solutions like CDPs and AI agents.

A partner with deep technical expertise in data is also necessary to understand the relevant data domains, establish the right data governance, create a unified customer 360-degree view, and expose insights to the best channels for activation with the correct feedback loops. This approach ensures customer loyalty solutions will be measurable and adaptable, while delivering personalized experiences at scale to increase customer engagement, loyalty, and lifetime value.