Archive for September 2013

How Loyalty Programs Should Leverage Big Data

With so much buzz around Big Data, it seems like virtually every industry is scrambling to figure out what to do with it.  I had the honor of speaking at the Loyalty Americas 2013 conference this week to experts in the Travel and Loyalty industries about that very topic, namely "how should Loyalty programs leverage Big Data".

Since the topic generated so much interest and a lot of great questions, I thought I would share the highlights of what was discussed.

First, loyalty programs may not have the Volume part of Big Data's three Vs (volume, variation, velocity) but it definitely has Variation and Velocity.  As such, Big Data technology solutions still have relevance.

However, processing Big Data is not an objective unto itself.  It's a means to an end.  For Loyalty, Big Data capabilities open up new sources of data that are fast moving and sometimes unstructured (e.g., social data).  The real question is what do the new sources of data help enable.

Regardless of Big Data, Loyalty's key levers to motivate, engage and reward their members are:

  • Points accrual offers and opportunities
  • Points redemption offers and opportunities
  • Cross / up sell offers of merchant's core products
  • Customer service - either 'surprise and delight' or recovery actions.

The Loyalty industry should think of Big Data as an exciting new input to better execute against one of the aforementioned levers.  I stress the word 'input' because Big Data is just that.  Predictive analytics / decision frameworks that leverage Big Data are the true enabler of value.  

Yes, processing Big Data into a usable format is critical and foundational.  However, you must still extract 'intelligence' out of the data in order to take action.  That's where predictive analytics / decision frameworks like complex event processing, machine learning algorithms, optimization algorithms, rules engines, etc. come in.  To capture value (i.e., improved execution against one of the value levers), the output of the enablers must be plugged into business processes in order to take action.

For Loyalty, the goal must be to take action based on the input in real time.  Loyalty is all about engagement with members to gain and retain stickiness.  There is a huge opportunity to engage with your membership in real time based on actions they are taking on web, mobile and social channels and experiences in your operation.  It's the loyalty program of the future and it's here now.

With that said, there is also tremendous value to be gained from using Big Data to build a deeper understanding of their members over time.  In parallel, loyalty programs should be enhancing their CRM to capture these data insights but this effort should not be in replace of real time decisions and actions.

What do you think about Loyalty and Big Data?  We'd love to hear your thoughts.