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January 18, 2017

How to unlock the data rewards of the loyalty card

When Tesco introduced the Clubcard in 1995, it was such an innovative concept that Tesco chairman Lord Ian MacLaurin said that he had more insight into his customers after three months than he did after 30 years in the business. 20 years later and despite numerous technological advancements in retail, the loyalty card is yet to be disrupted. CBR's Ellie Burns sits down with Andrew Fowkes, head of retail centre of excellence at SAS UK & Ireland, to talk about the business rewards waiting to be reaped from loyalty card schemes.

By Ellie Burns

EB: Are retail loyalty card schemes still important?

AF: While loyalty card schemes themselves are no longer as important as they once were, this doesn’t mean that the resulting customer data isn’t still as valuable. If leveraged correctly, data can provide insights into buying behaviours and preferences and enable stores to drive a more personalised service.

In fact, today’s customers are hyper-aware of the value of their personal data. Our research with Future Foundation shows that 65 per cent of millennials now expect brands to have a total recall of previous interactions to deliver hyper-personalised services. Retailers must embrace data from various channels, including loyalty card schemes, by using omnichannel analytics to ensure they make the customer’s experience richer and more relevant whenever and however they come into contact

Andrew Fowkes, SAS

Andrew Fowkes, head of retail centre of excellence, SAS UK & Ireland.

with them.

 

EB: How can they be improved for both retailers and customers?

AF: If loyalty card schemes are to succeed in today’s market, they must establish a two-way relationship between the customer and retailer, something which has been lost in recent years.  This is supported by our research which highlights that only 36 per cent of millennials believe retailers use personal data to benefit them.

Today, too many retailers are positioning their ‘loyalty’ schemes as personal, when in actual fact they are only offering three or four ‘flavours’ of a message or an offer. For example, a voucher with an individual’s name on it for a reduce price cup of coffee once a month, is not a personalised experience.

There is now an opportunity to utilise data to make relevant and personal offers to customers. By applying analytics to the data resulting from the loyalty cards, retailers have the ability to truly recognise customer spending patterns and needs. This information is invaluable and can go a long way to delivering a more personalised experience on the customer journey, offering discounts on products or services that the individual actually desires or has purchased in the past.”

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EB: How integral is data collected to the overall customer relationship management efforts of retailers?

AF: Many retailers are coming to realise that this data is much more than a validation of whether their marketing content was successful. This data is crucial to retailers succeeding.

Such information collected provides retailers with a unique opportunity to tailor offers based on the customer purchase and browsing history, something that we have worked with Shop Direct to help to deliver.

100 per cent of Shop Direct’s transactions take place online, with 63 per cent of those completed on mobile devices. The analytics partnership between SAS and Shop Direct, which provided the retailer with a flexible, hosted suite of analytics, data visualisation and real-time decision capabilities, allowed multiple users to explore massive volumes of data. They could then create descriptive, predictive models allowing the retailer to organise, integrate and analyse its data much easier.

This data intelligence can be acted upon with ease and has been used to ensure the right types of product for that consumer come up in response to a search – e.g. the right set of black dresses, rather than a random sample of all black dresses followed by endless scrolling.

All the data collected allows the retailer to better understand how the customer experience plays out. This is done by joining post purchase information with the pre-purchase and can result in an improvement in net promoter scores for the retailer.”

tesco loyalty card
EB: Has the value of this data diminished at all over the years?

AF: Whilst the availability of data has grown greatly, deriving value from it has become an increasing challenge for many retailers; simply due to the vast amounts of information available.

Retailers such as Shop Direct are blazing a trail with innovative ways of gathering value from data, as they have identified the benefits of correlating a complete and timely view of their customers to offer that personalised experience.

Omnichannel analytics is helping retailers gain predictive insights about a customer’s buying journey. It can improve the precision and relevancy of a retailer’s assortment planning and marketing campaign effectiveness plus allow the business to make data-driven decisions regardless of the channel involved.

Previous attempts to monetise data with suppliers has been shown to be of less value. The leading consumer goods companies now have the ability to drive direct contact value with their consumers easily through simple social media campaigns.”

 

EB: How do you make these loyalty card schemes work alongside online data, social media and IoT devices?

AF: Today’s digital age opens up huge opportunities for retailers to join loyalty card data with all other points at which customer data is gathered, both online and in-store, including data driven by IoT devices. Omnichannel analytics then gives them the insights they need.

Across the industry we often hear retailers discussing the “creepy vs. cool” test to ensure they do not disengage customers. However, consumers are very accepting of the services and experiences where this use of connected data improves their experience and provides them with a direct added value making them feel appreciated by the retailer. Our recent study confirms that 69 per cent of millennials view their own personal information as bargaining chips for better deals.

As long as retailers put the interests of the customer first then this digital embrace of loyalty cards will reap success. There is an argument for getting the basics right ahead of delivering new technical solutions, as it is astonishing how many retailers do not have connected visibility of inventory across both online and in-store.”

 

EB: Will loyalty card schemes ever become obsolete?

AF: Loyalty schemes won’t ever become obsolete, even if the physical loyalty card already has.

For these schemes to remain relevant, they have to be readily available in a mobile application format which can be installed with ease on IoT devices. This format will allow retailers to be informed about when and what the customer is browsing online, so they know that now might be the right time to send that offer or additional piece of information to ensure the conversion of that sale.

These mobile applications will enhance the original intention of loyalty schemes; the increased opportunity for more frequent visits from the customers, and a higher sales conversion rate.

 

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