Customer Loyalty Retail Insights

25 July 2013

The Retail Bulletin Customer Loyalty conference took place recently in London featuring insights from many leading retailers, loyalty and CRM specialists on how to drive profits and customer retention through cost-effective and engaging loyalty strategies.

With many interesting and diverse topics discussed throughout the day, we’ve outlined below some insightful commentary around the more compelling themes.

Maximising the value of data


The growth and importance of delivering a more targeted and tailored marketing strategy should place customer data and insight firmly at the forefront of any organisation.

Consumers increasingly understand and appreciate the value of their own data and the value of their information to an organisation, which increases the pressure on brands to recognise individual needs and the expectation to treat customers accordingly. Therefore brands need to respect the data they have access to and use it wisely to treat their customers as individuals and utilise it as the basis of an on-going relationship to build longer term commitment and advocacy.

Gathering actionable insights from customer data informs the strategic direction not just of marketing, but product development, new business development and customer services. Identifying the unique essence of a customer through their individual profile allows a brand to create a personal, relevant and 1 to 1, two-way relationship, whether that is through customer service, communication, product and service or reward and recognition.

Boots Advantage Card is one of the most established loyalty programmes in the UK. The data gathered from their 17.9 million active members is a core asset for the entire organisation. With 68% of sales coming from Advantage Card members, Boots are able to use this transactional and purchase behaviour data in conjunction with other customer preferences and interaction data, to power key commercial decisions – including that of product development. In recent years, the core direction of the No.7 cosmetics range development was driven purely by Advantage Card data. As a result this year they launched a world first foundation matching service.

Opportunity to create true customer value


The idealistic end goal for a brand is to design and deliver individualised 1 to 1 customer value propositions. In reality it often starts with establishing more sophisticated messaging and communications. When brands create true value for the customer this sends out a hugely powerful message and helps to keep them engaged and loyal. Truly understanding who your customers are and treating them accordingly is becoming vital in this data centric age.

Combining this with data analysis, and using more advanced RFM/RFV modelling allows for the creation of a unique set of customer value propositions relative to an organisation – that are relevant, personal and flexible for each advanced customer segment.

Understanding each segment allows individual customers to be targeted across multiple touch points – marketing, sales or customer services. Within these segments there may be differing customer tiers, giving brands the opportunity to drive growth, aspiration and improve retention, whilst maintaining a consistent brand experience.

Costa Coffee use RFM modelling to understand their customers, utilising the data their loyalty programme offers, which allows them to understand and define key customer segments based on more than just transactions.The recency, frequency and monetary value of a Costa customer is analysed allowing them to identify their VIP customers. This is not based solely on total spend because in reality this could be a one-off purchase. The top value segments are identified where there is consistent and frequent higher spend and frequency of visits – they can then target them in a different ‘exclusive’ way to stimulate a longer term brand relationship.

Loyalty is owned by the whole organisation


It is crucial that brands understand the importance of the whole organisation buying into the loyalty vision. From board down, everyone must believe in and understand the importance of loyalty. Value can be added to the customer experience when employees understand the organisational loyalty goals, employees are a key asset in creating long term brand advocacy among customers.

It is important for employees at all levels of an organisation to be involved in the day-to-day operational customer experiences. Actionable data insight can be leveraged across the organisation to drive strategy change beyond the marketing department.

The quality of the people experience is one of the most important elements for a retailer in building long term loyalty and brand advocacy. In-store employees are often on the front line getting direct feedback from customers and finding out what they think of their shopping experience. Logging this data by customer, store, date and time gives the organisation invaluable insight to complement their other sources of data.

Carphone Warehouse gives in-store colleagues the opportunity to log interactions and feedback from customers on their tablets in exchange for rewards and recognition. This forms part of a wider performance management and e-learning programme, with individual performance reviews and competition across their retail stores. With this additional stream of data being generated from the ground up, the loyalty starts to become a responsibility of staff across the organisation.

Relevant 1 to 1 communications


Whilst data driven marketing and customer experience are core areas of focus for today’s loyalty marketer, the traditional mantra of right person, right message at right time still needs to underpin all communications strategies.

Maximising the brand-customer relationship from the very beginning is key – therefore a clear welcome programme is critical. Based on their sign up date, key dates or actions within their initial few months as a member should be acknowledged and acted upon. The communication journey needs to be based on the individual journey of each member, with relevant, targeted messaging and content based on their transactions, interactions and customer segment.

With the big data versus small data debate raging on, there are key benefits of both. Somewhere in the middle sits the data insight gathered from customer experience and interactions and utilising this to target customers on a more tactical level:

  • Welcome programmes – triggered relevant programme to introduce the new member to your brand, it is essential not to group them into the standard ongoing marketing communications
  • Lapsed/reactivation campaigns – in segments where the transactional data is dwindling or the engagement metrics from previous communications is in decline run a ‘come back’ campaign to these members
  • Personalised content – relevant messaging, imagery and propositions based on geographic/demographics of the member base. This can be as simple as gender or regional splits, to more advanced persona or postcode targeting
  • Consider introducing a communications preference centre to allow the customer to control the frequency and preferred channel of communication. This is aligned to the results of consumer research we conducted in association with Forrester Consulting, where customers want brands to respect messaging preferences and deliver much more tailored and customised communication.
  • UK fashion retailer M&Co. is able to tailor their messaging for optimum results based on the geography of their members. If members live within a specific geographical area of one of their stores, they will target specific messaging and any relevant promotions to drive in-store footfall. If outside of a store catchment area, they will tailor their approach with the website messaging to drive visits and highlight relevant promotions for their online store.

Similar Resources If you would like to learn about retail loyalty, why not check out these similar resources?

1) 9 Ways The Retail Relationship Is Changing

2) Report: The Future Of Loyalty In Retail