CrowdTwist is changing the customer loyalty game through data

By Michael Carney , written on March 1, 2013

From The News Desk

Ask most Americans about customer loyalty programs and they’re likely to conjure up images of frequent flier accounts and grocery store rewards programs. But those decades old models are just a fraction of the story today, as brands are increasingly turning to the digital realm to market to, engage with, and reward their loyal audiences.

One company that is at the center of this transition is a three year old New York startup CrowdTwist. The multi-channel customer relationship and loyalty management platform – does that make it a CRLM? – measures the social influence of customers as it relates to real world spending. In other words, CrowdTwist helps businesses understand how a customer’s online actions across Facebook, Twitter, Foursquare, the brand website and elsewhere drives their own spending and that of other consumers.

In monitoring and dissecting 115 million social connections and $600 million in online and in-store transactions in 2012 around brands like Pepsi, JC Penney, the Miami Dolphins, The X Factor, Live Nation, Sony Music, Fox, and Zumiez, CrowdTwist has collected some serious insights that can and should be applied by other brands.

With these detailed insights on an individual consumer’s activity around a single brand, CrowdTwist offers a much more informative and actionable version of a Klout score. Most importantly, by tying influence back to actual spending both by the consumer and those that they directly influence, the company can separate those consumers who are the loudest from those who are the most persuasive and impactful. The company then allows its clients to target advertising and promotions to maximize impact.

For example, through the analysis of over 500,000 Foursquare check-ins, the company discovered that users who check in at a client’s location spend five times more on average than customers who do not check in. The company found similar results with users checking in via Facebook Places spending more than those who do not, in the case of most of its brands. Based on this knowledge, when a company that knows their most valuable customers just checked in, they would be advised to engage with that customer in person and tailor service to drive further spending and social impact.

Similar insights can be drawn from online product engagement. Those customers who sign in with Facebook or Twitter and comment on or rate products online are both likely to spend more money during their next encounter with the brand and more likely to redeem loyalty rewards points than those customers who do not.

CrowdTwist has been able to distill insights such as those above to inform brand activity and increase the average purchase size of it clients' customers by 37 percent. For example, a program initiated with its client Zumiez awards customers points for a wide variety of online and in-store actions that touch the brand, including buying clothes, Tweeting, liking the company’s Facebook page, checking in on Foursquare, and rating or reviewing products. Points can then be redeemed for limited edition products or experiences with the brand’s endorsed athletes. CrowdTwist found that VIP rewards of this nature were more effective than discounting in lifting brand sentiment and driving commerce.

Getting more granular, the value of the rewards offered has a significant impact on engagement. For example, CrowdTwist found that those who redeem high-value rewards through loyalty programs spend 60 percent more than those who redeem low-value rewards, and engage three times more often. Also, in the company’s experience, experiential and opportunistic rewards drive up to a 47 times greater engagement than do product-based rewards.

CrowdTwist has raised $6.75 million across two funding rounds from SoftBank Capital, Fairhaven Capital Partners, Bertelsmann Digital Media Investments, kbs+ Ventures, Bob Pasker, and TechStars. The company has tripled its team in the last year to 27, and is working to offer mobile and retail point of sale integrations in 2013.

Consumers are growing more comfortable sharing data with brands online. Fain boils this shift down to a “give more, get more” philosophy. And the days of this being about coupons and discounts are long gone. With today’s loyalty programs, consumers commit their time, engagement, personal information, and dollars in exchange for status, opportunity, access, and experience.

The big difference between the old and new paradigms of loyalty marketing is that in the past brands could only monitor engagement at the moment of transaction – a grocery store shopper swiping their loyalty card or a frequent flier entering their membership number to enter a private lounge. What was missed were all the moments when consumers interact with a brand elsewhere in their lives. In today’s world, the data is collected pre-, during-, and post-transaction and can be aggregated back to the individual consumer, making targeted marketing dramatically more of a meritocracy. CrowdTwist CEO Irving Fain calls it “comprehensive loyalty.”