Exclusivity Marketing: Personalization in a Post Cambridge Analytica World

Posted on May 9, 2018 · 8 min read

Marketing leaders today face a world of uncertainty – from the ever-shifting tides of public opinion to the legal and ethical concerns over data collection and privacy. Over the past few years, a string of data breaches and violations of trust involving companies like Yahoo, Equifax and major retail brands have raised consumer concern about the security of their personal data. And the recent revelation that  Cambridge Analytica acquired private information from users’ accounts (and their friends’ accounts) on Facebook and Twitter has raised the public consciousness exponentially, shining a harsh light on the issues of data access and privacy.

The fallout from these events has marketers scrambling. How do you engage in personalized marketing without data, and how do you get personalized data without potentially alienating the very customers you want to reach?

In Europe, government regulators are responding to these issues by placing much stronger controls on user data, and they’re going straight to the root: how data is collected. The EU General Data Protection Regulation (GDPR) requires marketers to proactively ask for consent before collecting or tracking a user under any identity, even an IP address. It also provides clear guidance on how a business must communicate with their customers once a breach has occurred.

All this has marketers caught between a rock and a hard place.

You want to get as much information about your customers as possible so you can tailor your messages to them. There’s nothing inherently wrong with that – knowing your customer is important. But if you rely on 3rd party sources for customer information or collect it in the background in a way your customers aren’t aware of, you put your company and brand at risk if that data is ever misused or abused – even by forces outside your control.

It’s time to rethink how you use data.

The very nature of how the inference-based data tracking model is set up is flawed. It either puts you in an increasingly scrutinized position where you have to  lurk in the background and monitor customers for clues of interest, or invest in 3rd party networks that provide a larger pool of potential customers, but put you at the mercy of their ever-changing data policies and access.

For example, Facebook just recently changed their rules on access to data. That was a good move for privacy experts, but it now poses a challenge for brands that rely on that data to target specific groups of customers, leaving marketers with less data, less predictability, and less precision. This makes it harder than ever to provide well-targeted, personalized marketing that engages customers instead of alienating them with unsolicited and irrelevant offers.

Shifting from Inference to Verified Data

Instead of personalizing an offer based on inference, you can deliver an exclusive offer that verifies customer eligibility once interest is established.  Exclusivity marketing is a fast-growing, pull-based marketing approach that allows customers to respond directly to offers that interest them. Their eligibility to access the offer is verified, based on their occupation, life stage or affiliation, such as “college student” or “member of the military.”

Exclusivity marketing is a highly efficient and timely alternative to the unpredictable, inference-based marketing model. Rather than relying on shadowy data, or interrupting customers with unsolicited offers that miss  the mark, it allows you to create an exclusive offer for a specific affinity group and empowers the customer to actively express their interest and give you permission to verify their data in order to get it. This inverts the data tracking model and turns personalization into a consent-based program that reduces your risk, increases your returns, and actually makes customers feel good about your brand. In a recent survey, we found that 95% of the military are more likely to shop at a retailer that provides a military discount.

Exclusivity Marketing by the Numbers

Exclusivity marketing is one of the latest trends in personalization, and is being utilized by leading brands like Lowes, Nike, Sprint, Spotify, Microsoft and Rothy’s among others. In the retail sector, where a high-performing campaign might typically see a return on ad spend (ROAS) of 4:1,  major consumer brands investing in exclusivity marketing are seeing ROAS averaging 18:1 – at the very top end of most brand acquisition campaigns.

And while conversion rates for typical push marketing campaigns are on the decline (averaging between 2% and 4%), the average rate for more than 20 leading brands implementing exclusivity marketing is 35%, with a 2-3 fold increase in shopping trips.

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Fathead experienced a whopping 70% increase in new military customers instantly verified through exclusive offers.

Graphic of Fathead's success with verified marketing.

Why does verified marketing work so well?

It emphasizes the person in personalization, putting the customer – and their sense of belonging to a unique and special group – at the center. It enables you to engage in a very honest and transparent way that makes customers feel special and builds loyalty from the get-go. And the group dynamic creates a positive energy that can both accelerate a sale and generate a desire to share it with others in the group. This amplifies the offer, creates additional brand value, and ultimately lowers your acquisition costs.

Graphic of a major streaming service's success with instantly verified exclusive offers.

A major streaming media service used instant verification to convert 98% of student discount customers to full price and reduce fraud by $33 million.

Make exclusivity marketing work for you

Engaging in an exclusivity marketing campaign is relatively simple to implement, yet highly effective in establishing instant trust between your brand and specific groups of consumers. You develop your campaign, then utilize a digital verification platform like SheerID to mitigate fraud, eliminate friction, and ensure your campaign engages seamlessly with your target customers.

Here’s how the process works:

1) Decide on a segment with a strong group identity. Some of the most successful segments for exclusivity marketing are those who identify – often emotionally – with their life stage, group or “tribe.” This sense of identity is based not only on their title or role, but also on their shared experiences with other members of the group. Some examples are:

  • Occupational: Employer, Business
  • Service: Military, First-responder, Teacher
  • Lifestage: College-bound, student, grad, home buyer, senior
  • Affiliation: AARP, AAA

The potential reach and marketing value of these segments are high and present significant opportunities, especially given the higher ROAS of exclusivity marketing.

2) Identify the type of offer you want to use.

  • One-time discount – Ideal for seasonal campaigns like back to school or veteran’s day. Also good for individual product discounts.
  • Everyday discount – Typically a lower discount that can be used throughout the year, for example the ongoing savings Lowe’s and Sprint offer the military.
  • Seed program – A heavily discounted or free program that pays off when participants upgrade to full-price when their status changes, such as the program run by a streaming media service noted previously that experienced a 98% conversion from student discount to full price.  

3) Protect the offer. This is a very important step – without it, an exclusive offer isn’t exclusive. Most brands experience discount abuse of between 30-40%. To ensure your offer isn’t subject to fraud, you need to verify that the customer who is signing up is a valid member of your target group. When it comes to verifying customers, you have two choices:

  • Manual – You handle verification yourself, manually. This adds to your marketing workload and increases your company’s risk. It can also lead to a high-degree of fraud when verification systems aren’t adequately developed, and friction with the customer if they need to wait too long for verification. (Manual verifications can take up to 48 hours, leading to drop-off rates of up to 31% in customer acquisition.)
  • Digital Verification System – You engage an expert company like SheerID  to verify the customer’s information. A digital verification system authenticates your customers and eliminates fraud by combining  fast access to the most reliable data sources with a highly skilled document review. Real-time verification also provides a frictionless customer experience that drives conversion.

How good marketing is supposed to work

Exclusivity marketing is how good marketing is supposed to work. You create something unique that buyers want and they spread it quickly through their digital connections.

Exclusivity marketing – when powered by Instant Verification – lets you focus on developing offers that appeal to different segments of your customer base. You then promote those offers through your earned media channels, and customers self-select to join in. This protects you from the hazards and whims of intent-based customer data tracking, and increases customer acquisition and conversions by using the power of psychology to engage with customers and spark the next level of loyalty, engagement and value.

You can learn more about why buyers prefer consent-based marketing programs and the impact they have on brand affinity, purchasing habits, and more in 2018 Shopper Study: Personalization, Promotions & Privacy, the new survey report by SheerID, with primary research by Kelton Global.

Tony Coray by Tony Coray