Beyond points and discounts: Driving customer engagement and loyalty

To truly drive growth, businesses should take a more holistic, customer-centered approach to building brand loyalty — incorporating personalized offers and experiences into each touchpoint.

Enter: intelligent loyalty programs. Powered by AI and advanced data insights, these programs represent the next evolution of the customer engagement strategy, going beyond the early days of running rewards points programs and emailing mass discounts. They focus on gaining a deeper understanding of the entire customer journey — from acquiring new customers to personalizing checkout options and driving repeat purchases.

By gathering data throughout this journey businesses can meet shoppers with customized loyalty offers and experiences. With that in mind, we’ll explore strategies to help businesses increase customer loyalty, harness valuable insights, and prepare for the future of customer engagement.

Leveraging personalized experiences as the foundation of intelligent engagement

One way that businesses can potentially increase customer engagement is by prioritizing personalization strategies throughout the shopper journey. According to Statista, approximately 75% of global customers surveyed expect improved personalization in exchange for sharing personal data with businesses, and 73% expect more-personalized experiences as new technologies emerge and evolve.¹

The right hyper-personalization tactics can unlock benefits for both businesses and customers. They can help shoppers access product recommendations, loyalty rewards, and customer service experiences that are tailored to their specific needs and preferences — and that may encourage them to come back.

As Statista reported, 80% of global business leaders surveyed acknowledged that customer personalization leads to increased spending, and 62% confirmed that it had a positive impact on customer retention.²

So, how can businesses effectively deliver these personalized experiences to boost revenue and engagement? They can start by leveraging customer insights from each platform.

Data is the fuel for personalization

Customer data is the backbone of any successful personalization strategy. By gathering advanced analytics from across platforms, businesses can gain a comprehensive view of each customer journey and meet shoppers with real-time personalization strategies that enhance results. To better understand customer behaviors and preferences, for example, you might track key metrics such as:

• Engagement. Where do customers engage most with your brand? Which products and content types do they engage with most? Do they comment on your social media pages, open your email newsletters, and check out on your app? Gain a deeper understanding of customer behavior by tracking engagement metrics such elements as clickthrough rate, unique page views, bounce rate, and time on page.

• Purchase frequency. How many times do existing customers make purchases within a given timeframe, such as a quarter or year? Does purchase frequency increase or decrease at certain times or among certain customer groups?

• Churn rate. What percentage of existing customers become inactive and stop engaging with your business over a certain period? What behaviors do customers exhibit before they become inactive? Are there any trends that could help you predict and prevent customer churn?

• Customer lifetime value. How much revenue does your business earn from each customer over the span of their relationship with your brand? Which customer groups or demographics have the highest customer lifetime value? Which have the lowest, and how can you continue to engage them to boost revenue?

With these metrics at their fingertips, businesses can build a 360-degree view of the customer journey. This involves integrating purchase data with existing customer relationship management (CRM) platforms to understand how and when shoppers engage with a brand. This holistic view should include each customer’s purchase history, preferred payment methods, on-site behaviors, and customer service interactions.

Businesses can then use this customer data for audience segmentation. That is, they can create unique categories of shoppers based on different criteria, including:

• Demographics. Segment audiences by gender, location, age, income, occupation, and education level.

• Psychographics. Segment audiences by values, beliefs, interests, and personality traits.

• Behaviors. Segment audiences by engagement rate, content preferences, and purchase history.

So, how can businesses effectively gather, analyze, and activate large data sets from vast customer bases in real time? One way is to use forward-thinking solutions such as artificial intelligence (AI) and machine learning (ML). These tools can help businesses mine data for valuable customer insights and predict the outcome of certain strategies.

It’s also essential that today’s businesses consider the privacy risks and ethical concerns of data-gathering and personalization. As the International Association of Privacy Professionals reported, 68% of global customers surveyed are concerned about their online privacy.³ To build trust, businesses must strike a delicate balance between protecting customer information and leveraging that information to improve experiences. The following strategies can help them do this:

• Provide transparency. Explicitly display and communicate your privacy policies so customers can see how and why you’re collecting their data.

• Clearly ask for consent. Allow customers to opt in or out of these data collection processes and maintain control over how their information is used.

Maintain compliance. Stay up to date with the latest data privacy standards and regulations, such as the General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA). It is always a good idea for businesses to consult with legal counsel on how to stay compliant with the ever-evolving landscape of privacy regulations.

Transforming rewards: Beyond points and discounts

Businesses have an opportunity to transform customer engagement by meeting shoppers with dynamic, playful, and personalized experiences that go beyond just points systems and discount codes. For example, enterprises can offer the following rewards to not just help drive repeat purchases but capture customer attention and interest across platforms:

• Personalized loyalty programs. Create tiered membership rewards programs that use loyalty gamification tactics to reward customers each time they make a purchase. This can help incentivize shoppers to unlock new benefits, such as gift cards, early access to new products, and cash back on certain transactions. Build brand advocacy into these programs by motivating your most-loyal customers to spread the word about your business and share their positive experiences with others.

• AI-powered recommendations. Use your customer data to re-engage shoppers with personalized recommendations based on their demonstrated preferences, buying histories, and behaviors. For instance, you can try to upsell and cross-sell shoppers with suggested products that match their interests and complement their past purchases.

These personalized customer experiences can be effective because they may resonate with shoppers on psychological and emotional levels. More specifically, they can appeal to customers' core values, such as:

• Exclusivity. Help customers feel special and valued by providing exclusive access to new products, promotional deals, and experiences.

• Cost efficiency. Especially in tough economic times, customers may be looking for brands to help them save money and spend wisely. With personalized rewards programs, businesses can help customers feel that they're offsetting the costs of certain purchases. According to Omnibus, Gen Z and millennials are most likely to feel that they’re “getting something for free” if they buy a gift using rewards.⁴

Create a seamless customer experience

Acquiring new customers can be challenging. Once you've converted them, take proactive steps to help keep them engaged and coming back for more with personalization. This is more complex than just sending “Thank you” emails or monthly texts with discounts. To truly nurture customer relationships and increase ROI, you should deliver seamless customer experiences across physical stores, e-commerce sites, mobile apps, and other interaction points. This may include improving each channel for optimal accessibility and easy engagement.

For example, businesses can help drive repeat purchases with these omnichannel marketing strategies:

• Leverage social commerce tools. Help drive sales from platforms and marketplaces with shoppable ads and in-app stores. Deloitte found that global social commerce sales are expected to reach $2 trillion by 2025, comprising 28% of all online retail sales.⁵

• Sync online and in-store experiences. Personalize customer interactions at each touchpoint, creating a comprehensive and intuitive experience for every shopper. If a customer repeats an in-store purchase, for example, you can invite them to sign up for an online membership program so they can earn rewards with each transaction.

• Anticipate customer support issues. Proactively engage shoppers with product setup guides, troubleshooting advice, and informative resources through your app, email alerts, and website content. This can help reduce customer service calls and streamline post-purchase experiences.

What lies ahead for customer engagement?

As customer behaviors continue to evolve, AI and ML can help businesses predict people’s preferences and deliver truly individualized offers.

For instance, businesses are already improving customer experiences with AI chatbots for customer service and product research, AI algorithms for continuous learning, and AI-based fraud protection.

Still, businesses will also need to balance these advanced automated tools to nurture customer relationships through loyalty programs.

PayPal's new advanced offers program is designed to help boost your growth and help reduce costs with product innovations that build intelligence, personalization, and speed into every customer touchpoint — to help businesses adapt to this new world of customer experiences. Backed by PayPal's extensive data set, it gives enterprises the tools to help reach new customers with AI-powered offers. These innovative solutions include:

• PayPal Smart Receipts. Deliver personalized product recommendations and rewards directly via shoppers' digital receipts. With 300 million Smart Receipts reaching PayPal users each month,⁶ businesses of all sizes can maintain customer engagement through rewards earned on purchases and relevant offers powered by transaction history.

• PayPal CashPass. Reach customers with personalized cash-back offers and rewards through the PayPal app.

PayPal Package Tracking. This feature has helped enterprises reduce “items not received” disputes by as much as 80%,⁷ helping to increase efficiency and improve customer experiences.

Are you ready for the future of personalization? Learn more about how to build a forward-thinking customer engagement strategy with PayPal.