Tech siloes and data issues key barriers to adoption of personalized discounts and promotions

Many brands are still failing to implement personalized promotions and incentives – with tech siloes and data management issues a key barrier. That’s according to new research carried out by Harvard Business Review and sponsored by Talon.One, the leading incentives platform

The personalization paradox

The study of 420 respondents at organizations with promotions strategies found that well over one in three (38%) say their businesses today are still not offering personalized promotions or discounts. Of these, there remains a stubborn cohort of almost one in four (22%) who say their organization has no plans to personalize promotions or discounts, while 17% say they plan to start personalizing offers soon.

This is perplexing because moving away from mass discounting towards personalized incentives drives clear value for businesses and for customers. Among those at businesses that have started personalizing promotions (56%), 94% say they are reaping rewards, such as increased sales (62%), improved customer loyalty (47%) and better customer experience (44%).

The advantages are particularly compelling today amidst a challenging economic environment, as the data suggests brands have a growing focus on profitability. In the next 12 months, 65% are planning to increase their focus on the profitability of promotions and discounting, and 66% are planning to increase their focus on the profitability of customer loyalty programs*.

Data and technology key to unlocking personalization

Inadequate data and technology issues are primary barriers to personalizing promotions. Almost a third of those respondents at businesses that haven’t personalized offers yet cite issues with customer data, such as siloed, inaccessible, or low-quality data (32%), and the same amount cite tech/software issues (32%).

It’s no surprise then that 57% of respondents say their organization is interested in updating the software it uses to execute promotional efforts, perhaps part of a broader shift toward data-driven loyalty program strategies. And beyond promotions, 61% say their organization is interested in updating the software or tools it uses to execute its customer loyalty program*.

Christoph Gerber, CEO at Talon.One commented: “Personalized incentives should be a no-brainer for brands, but too many are held back by siloed data and legacy tech stacks. So, while incentives strategies might traditionally be the remit of the marketing team, increasingly brands are relying on tech teams to build the tech stack needed to unlock the power of personalization.”

The integration opportunity

A lack of integration between innovative loyalty programs and promotions is another key factor at play. Nearly one in four respondents (22%) say their organization has distinct and separate strategies, teams, and budgets for customer loyalty programs and promotions*.

There is an evident payoff to breaking down siloes between promotions and loyalty activity and establishing an integrated incentives strategy. Respondents at businesses who have already partially or completely integrated promotions and loyalty strategies report significant benefits: improved customer loyalty (60%), increased sales revenue (58%), better customer experience (56%), improved data capture opportunities (41%), and increased ROI of marketing efforts (40%).

Encouragingly, the study suggests greater integration is gaining momentum, with 60% of respondents saying their organization plans to increase the integration of their promotions and customer loyalty program strategies over the next 12 months*. This will necessitate an increasing use of data and technology to optimize and execute this integrated approach, which will in turn enable brands to take a more targeted, personalized incentives approach.

Gerber continued: “If mass discounting offers a vicious circle, integrated and personalized incentives programs represent a virtuous one – with more data, greater personalization opportunities, and added value for businesses and their customers. Unlocking this virtuous circle might require resource and tech investment, but it’s important that brands hold their nerve and make smart strategic changes that will give them competitive advantage.”

*Answered by those with both promotions and a customer loyalty program

You can read the full report, Getting Strategic About Incentives: Building Value Through Promotions and Loyalty Programs here