Today’s consumers have seemingly countless options for purchasing any product they set their heart on. So, when customers return to the same brand or store more than once, that retailer has the opportunity to build a genuine relationship. Customer loyalty programs are one way to drive those repeat visits, but data shows many retailers aren’t leveraging those programs as well as they could.

According to the 2020 State of Retailer/Consumer Data survey, half of consumers are willing to give up data about themselves for loyalty points. Nevertheless, half of consumers also say retailers need to take measures to step up their loyalty programs. The key to building and sustaining a successful customer loyalty program is data — consumers want loyalty programs to drive more personalized offers and recommendations, and without clean, accurate data, these highly-tailored activities are nearly impossible.

For retailers still on the fence about offering, or revamping, a loyalty program, consider these two ways loyalty programs — powered by data — are critical for improving the customer experience.

Improving the short-term experience: getting customers into the store or onto the app

Call it the gamification of retail, but consumers are more likely to complete tasks (e.g. connect their social media profiles or write a review) for incentives. Think extra points, store cash, discounts and the like. In fact, 75% of customers said they are more likely to purchase from a brand again after receiving an incentive.

Incentives drive customers deeper into a brand’s app or site, allowing retailers to collect data such as their likes and dislikes, the frequency in which they shop, and the way they talk about the brand online. Some apps even track a shoppers’ cell phone Wi-Fi signal, allowing a retailer to know what departments they visit or how much time they spend in a certain place — data that’s easier to collect if the loyalty program incentivizes in-store visits.

By collecting and carefully cultivating this data, retailers can offer more personalized offers that will keep their customers coming back. The numbers don’t lie: according to the 2020 State of Retailer/Consumer Data survey, two-thirds of consumers agree that “the more personalized the experience a retailer offers, the more positive relationship I have with that retailer.”

Improving the long-term experience: demonstrating you understand what’s relevant to customers

Although discounts and rewards are important for today’s digitally-minded consumer, shoppers want retailers to create emotional connections, too. According to a study by Wunderman, 79% of U.S. and 72% of U.K. consumers only consider brands that demonstrate they care about their customers. By properly leveraging the data collected via a loyalty program, retailers can cut through advertising noise and form a deeper relationship with the customer.

So, how do you ensure all communications with your customers are relevant? Sending coupons based on past items purchased, gearing advertising toward special interests or recommending “you may also like” items during the checkout or on product pages, shows a retailer understands and anticipates customer needs. As a customer builds status within a loyalty program, deeper rewards (i.e. an invitation-only sales event, a complimentary upgrade to say thank you or a free gift with a purchase) can keep the relationship strong.

Through thoughtful, targeted offers, brands are more likely to keep their customers from looking to other retailers. And extending the customer lifecycle has its benefits — in the apparel space, for example, Bain and Company found the average repeat customer spent 67% more in months 31-36 than in months zero-to-six.

Data drives it all

Today’s retailer counts on data to stay one step ahead of the competition and meet evolving customer demand. Loyalty programs are a great way to keep the steady stream of data flowing.

However, it’s also critical that any data collected be kept up-to-date and available across departments — for example, a retailer’s marketing team needs access to sales data to improve targeted ads. Solutions such as master data management can help ensure consistent customer records and break down silos between departments, allowing retailers to collaborate and take full advantage of loyalty program data.

Bottom line: loyalty programs are crucial for retailers looking to build long-term customers. They’re a great way to drive customer interaction and build a deeper pool of data — but as your customer knowledge grows, make sure your leveraging the right data management tools to provide more relevant deals and offers to your customers. That’s how you build a customer for life.