Latest / The CMO Podcast with Fexingo: Marketing Leadership, Budgets, and Executive Strategy / How CMOs Are Using First-Party Data from Loyalty Programs
Transcript
- Lucas: So you walk into any grocery chain or department store these days, and they practically beg you to join their loyalty program. Free sign-up, points on every purchase, birthday rewards. It's everywhere. Luna: Right, and for years I think a lot of us viewed those programs as just a cost of doing business — a discount vehicle dressed up as a membership. Lucas: Exactly. But that perception is changing fast. With third-party cookies crumbling and platform targeting getting more expensive, CMOs are realizing that their own loyalty data might be the most valuable asset they have. Luna: And it's not just about collecting points anymore. I've seen programs that now ask for things like dietary preferences, pet ownership, even home renovation timelines. Lucas: Yeah, the ambition is to build a purchase-history graph that's richer than anything a data broker could sell you. Let's talk about a specific example. A major US retailer — I won't name them, but think big-box with groceries — overhauled their loyalty program two years ago. They shifted from a simple points for purchase model to a tiered system where members could earn bonus discounts by sharing more data. Luna: So they essentially traded discounts for data. Did it work? Lucas: According to their internal disclosures, within 18 months they saw a 30 percent lift in customer lifetime value among active members compared to the previous program. And their ad targeting costs dropped by about 15 percent because they could serve offers based on actual purchase behavior, not inferred segments. Luna: That's a concrete number. So the data didn't just help marketing — it improved the bottom line. Lucas: Exactly. But here's the nuance: the CIO had to get involved. The data infrastructure needed to handle transactions, preferences, and real-time offer triggers wasn't trivial. The CMO had to collaborate with IT in a way that many marketing leaders aren't used to. Luna: That's a big shift. CMOs often think of themselves as the brand stewards, not the data architects. Lucas: Right, and that's where this episode's theme comes in. If these conversations about data-driven marketing have sparked something you've actually applied — maybe you've started a loyalty program or revamped your data strategy — and you find value in the show, consider supporting it at buy me a coffee dot com slash fexingo. It's a simple way to keep these interviews and deep dives ad-free. Luna: Yeah, listener support really does make a difference. And we're back to the retailer example: they also faced a tough choice on privacy. Lucas: Absolutely. They had to be transparent about what data they collected and how they used it. Some customers opted out of the tiered program, staying on the basic points system. That's a segment you can't ignore. Luna: So there's a risk of creating a two-tier customer experience. Members get personalized offers, non-members get generic ones. That could backfire if it feels exclusionary. Lucas: It can. But the data shows that loyalty members tend to be higher-value anyway. The key is to make the basic program still feel valuable — maybe free shipping or a small sign-up bonus — so that you're not penalizing privacy-conscious shoppers. Luna: And that's where the CMO's brand instincts come in. The data team might want to push for maximum data collection, but the CMO has to balance that with trust. Lucas: Precisely. Another interesting angle is how these programs feed into product development. The same retailer used purchase data to identify that customers were buying plant-based protein alongside frozen vegetables. So they created a meal-kit bundle specifically for that segment. Luna: That's marketing-led product development. The CMO essentially became a product strategist. Lucas: Yeah, and that's a theme we've touched on before. But the loyalty data gives it a real-time feedback loop. You can launch a product and within days see which customer segments are buying it. Luna: How do you measure success beyond CLV? Are there other metrics CMOs should track? Lucas: Great question. A few I've seen: redemption rate, which tells you if the rewards are motivating behavior. Data completeness — what percentage of members have filled out their profile. And then the holy grail: share of wallet, or how much of a customer's category spend you're capturing. Luna: Redemption rate is interesting because if nobody's redeeming, the program might not be compelling enough. Lucas: Exactly. And if redemption is too high, you might be giving away margin unnecessarily. It's a balancing act. Luna: What about the cost of running these programs? The retailer you mentioned — they had to invest in technology, data storage, maybe even a dedicated team. Lucas: Yeah, the upfront cost can be significant. But many CMOs argue that it's cheaper than buying third-party data or paying for targeted ads on platforms. The ROI comes from reduced customer acquisition costs and higher retention. Luna: So it's a long-term play. Not a quick fix. Lucas: Correct. And it requires organizational buy-in. The CFO has to see the CLV projections. The CIO has to sign off on the tech stack. The CEO has to champion a customer-centric strategy. Luna: That's a lot of alignment. But if it works, the CMO becomes a central driver of business strategy, not just a campaign manager. Lucas: That's the real opportunity. I think we'll see more CMOs taking ownership of the entire customer data platform, not just the marketing use cases. Luna: Well, and that brings up a question: what about smaller businesses? They can't build a multi million dollar loyalty infrastructure. Lucas: True. But there are off-the-shelf solutions now — Shopify has a loyalty app, for example, and many POS systems have built-in programs. A small business can start with just capturing email and purchase history. The principle scales down. Luna: So the message is: start somewhere. Even a simple punch card with a digital twist is better than nothing. Lucas: Exactly. And as cookies fade, that first-party data becomes your moat. Luna: Alright, so to wrap: CMOs should view loyalty programs as a data engine, not a cost center. Collaborate with IT, measure CLV and redemption, and balance personalization with privacy. Lucas: And don't forget the product development angle. The data might reveal opportunities you never considered. That's where the real growth lives.