New research indicates when brands don’t connect customer data with marketing efforts, the results are inconsistent engagement that leads to lost opportunities, diminished results, eroded margins and fleeting brand value…engendering a loyalty divide. Consumers demand better, authentic connections based on value and brands must deliver. Savvy marketers blend data from multiple sources to provide customer engagement that is authentic, relevant and consistent to the brand, nurturing comfort, familiarity, safety and trust – thus increasing loyalty with their customers.

1. The
LOYALTY
DIVIDE
LOYALTY IN TODAY’S MARKETPLACE DEMANDS
BETTER CONNECTIONS WITH CUSTOMERS

2. EXECUTIVE SUMMARY
New research indicates when brands don’t “The Loyalty Divide” is a follow-up to a previous Loyalty 360/ Acxiom
paper titled, “Making Every Interaction Count: How Customer Intelligence
connect customer data with marketing
Drives Customer Loyalty,” which revealed that brands have the ability to
efforts, the results are inconsistent collect a treasure trove of customer preferences, behavioral insights and
engagement that leads to lost opportunities, predictive analytics and can apply this soup of information to all customers,
diminished results, eroded margins and and not just those in their loyalty programs. However, while marketers
fleeting brand value…engendering a loyalty know they need to use data to better retain customers, the reality is most
are not making optimal use of it to improve marketing results or their
divide. Consumers demand better, authentic
customers’ experiences.
connections based on value and brands
The good news is that marketers are making incremental progress by
must deliver. Savvy marketers blend data adopting new marketing technologies and are trying to use customer data
from multiple sources to provide customer to improve results and make each customer interaction important. The
engagement that is authentic, relevant and desire to do great things with customer data was consistent across the
consistent to the brand, nurturing comfort, entire sample. However, desire and ability are not the same. Success is
prevented by lack of sufficient funding to access and use precious customer
familiarity, safety and trust – thus increasing
data.
loyalty with their customers.
IN THIS UPDATE, WE EXPLORE WHAT SEEMS TO BE
A WIDENING DIVIDE BETWEEN MARKETERS AND
CUSTOMERS’ PERCEPTIONS OF LOYALTY. BRANDS
DON’T OFFER LOYALTY. CONSUMERS GRANT IT.
In late 2012, we surveyed 130 marketing executives from a myriad
of industries. Nearly three-quarters of respondents were in audience
analysis and measurement, with the remainder in broader marketing
and sales roles. We inquired how they’re using customer data to
understand what’s working, what’s not working, and to identify and
share best practices. Our sample included 110 survey respondents,
and 20 qualitative interviews with medium and large brands that
are successfully innovating in their loyalty programs by connecting
customer data with customer experiences.
HIGHLIGHTS OF THE RESULTS AND OUR
RECOMMENDATIONS FOLLOW.
2 Loyalty 360 / Acxiom White Paper • LOYALTY360.ORG The Loyalty Divide Loyalty in Today’s Marketplace Demands Better Connections with Customers

3. DESIRE AND ABILITY ARE
NOT THE SAME
OUR RESEARCH FOCUSED DEEPLY ON THE TOPIC OF Based on the survey results, we conclude that a narrow focus
LOYALTY AND THE CONNECTIONS NECESSARY TO NURTURE on one or two customer data points hinders the business. The
LOYAL RELATIONSHIPS. inability to connect and personalize customer experiences—
across channels and partners, and over time is divisive, not
What enables a brand to do “grand” things for people and
nurturing. Not understanding customer motivations and
to delight them? What enables individuals to live better and
experiences remove us from building connections because we
marketers to perform better? Are these things possible without
neither know, engage nor optimize relationships with customers.
knowing your customers through data? Does data—gathered
from all relevant sources and refined—enable brands to better
engage and optimize the relationship for all?
“ AVVY MARKETERS BLEND DATA FROM MULTIPLE SOURCES TO
S
PROVIDE CUSTOMER ENGAGEMENT THAT IS AUTHENTIC, RELEVANT
AND CONSISTENT TO THE BRAND, NURTURING COMFORT,
FAMILIARITY, SAFETY AND TRUST”
The Loyalty Divide Loyalty in Today’s Marketplace Demands Better Connections with Customers Loyalty 360/Acxiom White Paper • LOYALTY360.ORG 3

4. THE LOYALTY DIVIDE
ORIGINATES WITHIN
OUR RESEARCH CLEARLY INDICATED ONE KEY CHALLENGE:
MARKETERS RECOGNIZE THE BUSINESS VALUE OF ENGAGING
WITH CUSTOMERS BASED ON THEIR NEEDS AND EXPECTATIONS,
BUT MOST AREN’T GETTING IT DONE.
Marketers’ efforts are stymied because brands don’t devote the resources, LOYALTY SHOULD
technology or necessary budget. Too often, critically important data is
inaccessible and isolated within systems (e.g., service, finance or sales) that FOCUS ON
are difficult to integrate with marketing systems. This disconnect creates
the divide between loyalty as part of a holistic, customer-centric enterprise BEHAVIOR, AS
strategy, and loyalty as an afterthought. Loyalty should always be focused
LOYALTY MARKETERS
on behavior, as loyalty and engaged brand advocates exhibit a unique
and desired form of it for the brands they are engaged with. Disconnected AND ENGAGED
customer data leads to disconnected customer experiences, damaging
loyalty as a behavior potential. BRAND ADVOCATES
EXHIBIT A UNIQUE
AND DESIRED FORM
ARE HINDERED BY A LACK OF FEEL THE NEED TO ENGAGE
INFORMATION OR ACCESSIBILITY CUSTOMERS BASED ON THEIR OF IT FOR THOSE
TO CUSTOMER DATA NEEDS AND EXPECTATIONS
BRANDS WITH WHICH
56% 66%
THEY ARE ENGAGED.
OF MARKETERS OF MARKETERS
4 Loyalty 360 / Acxiom White Paper • LOYALTY360.ORG The Loyalty Divide Loyalty in Today’s Marketplace Demands Better Connections with Customers

5. SWIMMING IN A
SEA OF DATA
While marketers collect
lots of customer data from
many sources, a lack of
68% OF OUR SURVEY RESPONDENTS COLLECT OUTSIDE
CUSTOMER DATA FOR THEIR MARKETING CAMPAIGNS
coordination and integration
53%
DO NOT APPEND OR INTEGRATE 3RD PARTY DATA INTO
CUSTOMER RELATIONSHIP MANAGEMENT (CRM) EFFORTS;
widens the divide between ISOLATING THOSE RELATIONSHIPS FROM OUTSIDE INDICATORS
the loyalty that companies
want and the potential
loyalty that customers give.
87% DO NOT ACCOUNT FOR THE COST OF SERVICING CUSTOMERS WHEN
MARKETING TO THEM; THROWING A BLANKET SPEND OVER THEIR
CAMPAIGNS INSTEAD OF FOCUSING ON THE MOST VALUABLE CUSTOMERS
MANY MARKETERS ARE MISSING
THE DEEP, MEANINGFUL
UNDERSTANDINGS OF THEIR
72% OF MARKETERS DO NOT RECOGNIZE
AND LEVERAGE REFERRAL VALUE
AUDIENCE—NECESSARY TO
PERSONALIZE CREATIVE THAT
94% IGNORE INFLUENCER SCORES
ENGAGES AND PLEASES. FOR
EXAMPLE, IN OUR RESULTS:
89% DON’T USE NET PROMOTER SCORES FOR SEGMENTATION
AND MEASUREMENT, DISREGARDING SOME OF THE
STRONGEST INDICATORS OF LOYALTY THERE ARE
The reasons for these lost opportunities to increase customer understanding include; lack of easy access to data (85%), an unfulfilled
desire to locate and access all customer data in a single location (57%), and being limited to only using customer data available at
hand to drive engagement (46%). ON THE BRIGHT SIDE, OVER 55% OF MARKETERS ARE COLLECTING SOCIAL DATA. BUT,
THEY CONTINUE TO STUMBLE WHEN TRYING TO OPTIMIZE THIS INFORMATION WHEN SELECTING AUDIENCES AND
MEASURING RESULTS:
HAVE A HARD TIME ARE NOT COLLECTING
DO NOT
INTEGRATING AND SOCIAL DATA
RECOGNIZE THE
ACCESSING SOCIAL DATA REGARDING
REFERRAL VALUE
TO ACTIVATE ALL MEDIA COMPETING BRANDS.
75% 72% 70%
The Loyalty Divide Loyalty in Today’s Marketplace Demands Better Connections with Customers Loyalty 360/Acxiom White Paper • LOYALTY360.ORG 5

6. BRANDS THAT LACK BROAD-BASED, HOLISTIC CUSTOMER UNDERSTANDING ACROSS MULTIPLE
CHANNELS AND VARIOUS TOUCH POINTS, TO UNDERSTAND THEIR NEEDS AND POTENTIAL
LIFETIME VALUE, STRUGGLE TO CULTIVATE BETTER RELATIONSHIPS WITH THEM.
Sending irrelevant, inconsistent and disconnected messaging reinforces customers’ perceptions that “brands don’t know me”
and fosters large customer disloyalty and margin compression issues.
Consider that a majority of our respondents (63%) “always or frequently treat new customers the same when choosing
advertising media.” This reflects the bias toward acquisition versus retention. Are we surprised when customers say or act as
if “we don’t know them?” Consider that 99% of customers’ activities fall outside of your brand’s touch-points. How valuable
would it be to narrow that 99% gap?
Some individuals read the newspaper and watch sports while others listen to traditional radio and others subscribe to
satellite radio. One engages with Facebook and Twitter while another bounces around the Web unpredictably. Generally,
consumers may only engage with 5 to 6 brands in social media channels as they have finite capacities in this arena. Shouldn’t
all brands want to be part of their potential best customers’ consideration sets? Certainly! Yet still, social media is not
often well-blended into the marketing / loyalty mix because it’s hard for marketers to understand ‘social signals’ and use
them appropriately. There needs to be a concerted effort from the brand to converse with consumers vs. just to ‘push’ to
consumers.
DISCOUNTING ≠ LOYALTY
Savvy marketers invest in data analysis “frequently use price discounts” as part of
UNDERSTANDING
that yields the deep segmentation and their promotion mix. This relegates the issue
audience targeting necessary to recognize of trust between the brand and customers as THE WIDE VARIETY OF
valuable behaviors when customers will pay secondary in importance.
a premium for some things and on other AUDIENCE ATTITUDES
Marketers that indiscriminately use price
items, won’t budge on price. Understanding discounts underestimate the negative impact AND PREFERENCES
the wide variety of audience attitudes and to their retention efforts. If consumers
preferences reveals opportunities for brands perceive loyalty as a discount program REVEALS
to understand and act upon differences in only, they will buy only when they receive
price elasticity. discounts. Thus, marketers actually train
OPPORTUNITIES
In the early 1980’s, automobile dealers their customers to promiscuously shop FOR BRANDS TO
discovered that offering rebates increased based on price alone, instantly dumping
automobile sales and changed customer one brand over another, creating a behavior UNDERSTAND
behavior, but not loyalty. Customers that a brand will struggle to change. We
started to expect rebates and would rarely are taught in Marketing 101 to never focus
AND ACT UPON
consider a car without one. Yet, 47% of solely on price as a paradigm; it has the DIFFERENCES IN
our respondents use “everyday low prices” least amount of cache or uniqueness as a
as part of their core brand message, or, differentiator for the brand. PRICE ELASTICITY.
6 Loyalty 360 / Acxiom White Paper • LOYALTY360.ORG The Loyalty Divide Loyalty in Today’s Marketplace Demands Better Connections with Customers

7. CONSIDER THE NUMBER OF DAILY DEALS SITES THAT ENTICE MARKETERS WHO
CUSTOMERS TO BUY FROM A MERCHANT AT A STEEP DISCOUNT. ARE LIMITED TO MASS
MARKETING TACTICS
Many first time customers take advantage of be made much more effective if used wisely
HAVE VERY LOW
the deal, never to return. A 2012 Raymond in concert with targeting the best audience
James survey of more than 100 merchants likely to be a repeat customer.
RATES OF RETURN
found that 39% of merchants were not likely WITH RELATIVELY
Excessive reliance on discounts creates
to run another similar promotion for the expectations and reliance on them, which HIGH COSTS. What
next couple of years due to the low rate of about loyalty? Forget
erodes brand value because it incentivizes
repeat customers. 40% reported this was customers to look for the discount, rather about it. Brands need
less effective than other types of marketing than creating loyalty to the brand. Not all
where if the merchants instead used their to invest in relationships
companies have the necessary infrastructure
data to score and target their best audiences, to be the low-price leader. Any customer
proportional to the
they would likely have a higher success expected or potential
relationship built on low price only lasts until
rate of repeat customers using daily deals. a competitor offers a lower price. return opportunity of
Discounting isn’t necessarily bad, but could
the individual versus
the tried and true mass
media approach of
equal investment into all
potential participants.
CLOSING THE DIVIDE
A sporting goods store might tune its advertising during a down to all of the relevant buying signals. If brands properly
local sports telecast (e.g., Big Ten Network in the Midwest) and coordinate this information, they can get a more holistic, nuanced
through online and social media (e.g., NFL.com). However, view of the customer.
without access to customer information such as sales data, or, For example, take two customers who spend $200 a month at a
advocates following specific advertised promotions, they will big-box, do-it-yourself store. They may look the same in terms of
continue casting too wide a net and investing too much budget the transactional data immediately available from the company’s
for diminishing results. If instead they customized the local systems. One customer spends the same or more at similar stores
circular for their specific audience with the right mix of emails and in the area every month while the second customer has a smaller
display ads, they may see signs of increased customer activity. overall budget and spends only at that store. Which customer
In the digital age of empowered consumers, companies can’t could be more loyal? Armed with this data, a marketer would
afford to not have multidimensional insights into their customers’ know that earning the loyalty of the first customer could produce
habits and buying behaviors. No one signal will ever consistently more lifetime value than the second.
describe or predict consumer behavior, so it’s best to have as
many data elements as possible, then refine that information
The Loyalty Divide Loyalty in Today’s Marketplace Demands Better Connections with Customers Loyalty 360/Acxiom White Paper • LOYALTY360.ORG 7

8. OVERALL, BASED ON THIS MOST RECENT
RESEARCH AND OUR EXPERIENCE WORKING
WITH THOUSANDS OF BRANDS AROUND
THE WORLD, WE RECOMMEND THAT FIRMS
TAKE THE FOLLOWING ACTIONS TO CLOSE
THE LOYALTY DIVIDE:
Utilize all available customer data (finance, marketing, etc.)
1 to create useable information.
Collect data from outside the brand. Use the combined information to
2 optimize media and campaign decisions.
Make sure you can effectively recognize the consumer across all channels
3 and touch points they may have with your brand.
Activate and refine insights such as transactional, customer lifetime
4 value and net influencer scores to recognize your lifetime customers and
prospects who think, look and act like them.
Be aggressive but considerate when gathering customer information.
5 Just because a company can gather information doesn’t mean that it
should. Customers will happily provide certain information (e.g., zip code,
e-mail) as long as they know how it will be used and what type of value
it will provide back to them. But if it is misused, they will quickly distance
themselves from the brand. Remember that marketing should be to do
things for customers, not to customers.
Use data and insights to precisely determine which customers should
6 receive short term rewards (eg. daily deals) while seeking to build long-
term trust – this will make your marketing spend more effective.
Remember that loyalty marketing is a process. Making sure the data your
7 brand collects is accessible, integrated and usable is the key to refining
customer understanding and testing and measuring to get closer to
boosting marketing ROI, customer profitability and pricing power.
8 Loyalty 360 / Acxiom White Paper • LOYALTY360.ORG The Loyalty Divide Loyalty in Today’s Marketplace Demands Better Connections with Customers

9. ABOUT LOYALTY 360 ABOUT ACXIOM
Loyalty 360 is an unbiased, market driven, voice of the Acxiom is an enterprise data, analytics and software as a
customer focused clearinghouse and think tank that is service company that uniquely fuses trust, experience and
committed to bringing loyalty to the forefront as a critical scale to fuel data-driven results. For over 40 years, Acxiom
marketing strategy. A trusted source for cutting edge research, has been an innovator in harnessing every important source
best practices, and networking opportunities, Loyalty 360 and use of data to strengthen connections between people,
gives members the expert insights and guidance they need businesses and their partners. Utilizing a channel and media
to better understand loyalty and develop programs that neutral approach, we leverage cutting-edge, data-oriented
effectively engage their customers and employees and build products and services to maximize customer value. Every
stronger relationships with them. week, Acxiom powers more than a trillion transactions that
enable better living for people and better results for our
7,000+ global clients.
The Loyalty Divide Loyalty in Today’s Marketplace Demands Better Connections with Customers Loyalty 360/Acxiom White Paper • LOYALTY360.ORG 9