Designing brand experiences between purchases and strengthening customer engagement through "new customer relationship building" in the digital age. The new value provided by the "Action-Based Loyalty Program."

Due to the impact of COVID-19 and rapid technological advancements, more companies are focusing on digital loyalty marketing. However, many businesses face the challenge that even when they create touchpoints with customers through their own apps, this often fails to translate into sustained purchasing.

To address this challenge, Cheetah Digital Inc., Dentsu Inc., and Dentsu Digital Inc. have collaborated to launch the "Action-Based Loyalty Program" in April 2023. This program focuses on enhancing customer trust and affection through actions beyond purchasing. Leveraging each company's strengths, they are working to create new value in loyalty strategies. For this article, we spoke with Ms. Misa Ueda of Dentsu Inc. and Mr. Katsushi Koshikura of Dentsu Digital Inc., who were involved in this project, about the program's overview and future vision.

A New Form of Loyalty Strategy: Maintaining Customer Relationships Through Data Analysis of Customer Behavior

Q. First, could you explain the overview and background behind launching the "Action-Based Loyalty Program"?

Ueda: Recently, more companies are strengthening their loyalty marketing as a strategy to encourage continued purchases. A common method involves offering point rewards or discount coupons through their own apps or various platforms. One challenge with these purchase-based point programs is that customer interest can wane during the gap between purchases, leading to churn.

Of course, many customers appreciate discounts as "great deals that make them happy." However, there is also undeniable, less tangible affection for brands—feelings like "I need this brand" or "I love this company so much I want to spend money with them." Viewed from this perspective, we questioned whether our proprietary apps and platforms, which represent our connection with customers, should be limited to serving only as points of contact for instant purchases. This awareness of the issue was the catalyst for launching the "Action-Based Loyalty Program."

This project provides various experiences between purchases—such as watching videos or participating in events—to help customers grow even fonder of the brand, thereby strengthening engagement. It supports the enhancement of long-term corporate loyalty through actions beyond purchasing.

Q. This project is being conducted in collaboration with Cheetah Digital. What strengths arise specifically from the three companies working together?

Ueda: Cheetah Digital is a globally proven tech vendor that was quick to focus on loyalty in the U.S. and has prepared various mechanisms to support it. They've also been early adopters in collecting zero-party data to enhance customer data and customer resolution, including marketing automation and loyalty. Being able to work on this project with Cheetah Digital, who excels at relationship marketing, is incredibly reassuring.

By partnering with Cheetah Digital, we believe the value lies in not just providing tools to our client companies, but in accompanying them all the way through to the operational side of the system. This includes exploring what kind of customer experience we can create together and, based on the results achieved, determining what next steps to take.

Q. Cheetah Digital already has a strong track record in the US. Are solutions like this one already common overseas?

Ueda: It seems quite advanced in the U.S. For example, various initiatives to boost customer engagement are emerging, like services where customers can give their favorite names to products they regularly buy within an app. These services that connect with users' hearts become triggers for continued purchases and lead to positive word-of-mouth on social media and other channels beyond a company or brand's direct reach. The idea that such user actions should be valued as loyalty is permeating marketing as a whole, especially in the U.S. lately.

Transforming the mindset to enhance project effectiveness

Q. How has the response been since the release of the "Action-Based Loyalty Program"?

Koshikimura: From my department's perspective, we've released five or six other programs this year besides this one, but this one generated significantly more inquiries. We received very positive feedback from various teams, including advertising and creative teams, who expressed interest in using it for client proposals. As the provider, this is very gratifying.

Ueda: Regarding strengthening post-purchase initiatives to continuously increase purchases and LTV (Life Time Value), many client companies responded, "This addresses an exact challenge we recognized but hadn't been able to tackle," and expressed enthusiasm, saying, "We definitely want to implement this."

The Action-Based Loyalty Program can be implemented not only as a new solution but also retrofitted onto platforms clients already use, such as their own apps or CRM (Customer Relationship Management) systems. We've received positive feedback on this technological aspect as well.

Q. On the other hand, are there any challenges you currently perceive in expanding this solution?

Ueda: I think even if companies understand the importance of strengthening loyalty, they haven't fully grasped the practical steps to take. If we can accumulate insights and create success stories demonstrating how much loyalty improves through the Action-Based Loyalty Program, client companies will likely feel more confident taking action.

Koshikura: Many companies invest heavily in purchase touchpoints but neglect post-purchase communication. This often stems from the perception that it doesn't immediately translate to sales. Ultimately, we aim to demonstrate value through increased sales or by developing and improving specific metrics. We're still in the middle of this journey and want to enhance the effectiveness of this project together with our client companies.

Supporting business growth through CX, aiming to be a trusted business partner

Q. Rather than this solution being born as a reactive fix to an existing need, I see this project as a challenge to create a world enabled by advanced technology, thereby generating new value. Do you have any target audience in mind at this stage?

Ueda: We envision both companies already engaged in loyalty marketing and CRM, as well as those just starting out. However, our initial focus is on identifying the needs of the former group. Particularly for companies with their own apps where initiatives are limited to point programs, we often see cases where customer interest wanes and accounts become dormant. We believe the strength of the "Action-Based Loyalty Program" lies in reactivating these dormant customers. If you have any doubts or concerns about your current initiatives, we strongly encourage you to consult with us.

Q. Finally, could you share your vision for how you plan to grow this project and team going forward?

Ueda: While my team at Dentsu's CX Planning Center primarily handles marketing communications, collaborating with Dentsu Digital Inc. on projects like this expands our scope into both BX and DX. This truly embodies the synergy of our group. We'd be delighted if clients first recognized that Dentsu Group has a reliable team for tackling loyalty strategy challenges.

Furthermore, rather than relying solely on "short-term promotions" that instantly boost interest or awareness to drive purchases, we aim to accompany client companies' initiatives with a medium-to-long-term perspective, continuously supporting their business growth. We want to achieve this through CX, building a relationship as a business partner that ultimately contributes to our clients' sales.

Koshikura: I believe technology has the power to transform organizations, operations, and customer relationships. If you have a desire to change systems or relationships to realize new ways of selling, please feel free to consult with us.

The approach of building loyalty through actions beyond the point of purchase, driven by technological advancements, is expected to become a new market in Japan going forward. Designing CX with a medium-to-long-term perspective is crucial for building sustainable relationships with customers. As customer needs diversify, companies and brands will likely require deeper customer understanding and continuous communication more than ever before.