CRM and loyalty must converge... personally
During the recent Customer Relationship Management Conference (CRMC) in the US, the word 'personalisation' seemed to be on everyone's lips, according to this report by Joe Easley, director of global product strategy for Kobie Marketing.
The big question was how brands can enhance the all-important customer experience by giving customers what they want and need, and through their preferred channels? This is a question that brands must asking themselves every day if they want to acquire, engage and retain valuable customers, particularly when you consider the following statistics:
- Loyalty programmes grew by more than 25% during the past two years;
- More than 2.65 billion people joined a loyalty programme during 2012;
- Even so, actual customer engagement dropped by 4.3% between 2010 and 2012.
That third number may seem alarming but it's even more worrying for brands. Over five years, a yearly 2.2% reduction adds up to a nearly 10% overall slide in engagement. This makes it all too evident that retailers need to step up their customer engagement strategies, and the best way to do that is by combining the data they collect through their CRM systems and loyalty programmes to gather more accurate and actionable insights about their customers' preferences.
And that's only one type of convergence that retailers must master; there's also channel convergence. In today's linked, synced and wired culture, retailers with loyalty programmes need to be implementing an enterprise-level omnichannel loyalty strategy to drive, track, measure and reward incremental behaviour throughout customer experience. This means they need to reach their customers seamlessly across all available channels, rewarding them where appropriate.
Personalising loyalty Rather than eliciting genuine loyalty from customers, failing to personalise offers can drive them away. Imagine that a long standing member of your fashion chain's loyalty programme - we'll call her Lucy - arrives in one of your stores, armed with her smartphone and ready to shop.
The digital infrastructure that runs your loyalty programme detects the presence of a member in the store and sends a coupon to Lucy's device. Unfortunately, it's a coupon for a blouse from designer Max Azria, whose pieces she dislikes and has never purchased. Lucy prefers fashions designed by Tory Burch and buys them frequently at your store.
Annoyed, Lucy deletes the coupon and leaves the store without making a purchase. At the same time, she shares the customer-engagement faux pas with her fellow fashionistas on Facebook and starts thinking about patronizing your competitors more often. Clearly, it would have been a much better tactic to personalise her shopping experience by offering her a reward that aligns with her preferences. It's very likely that, as a Tory Burch fan, Lucy would have redeemed the coupon had it been for a blouse from that designer.
Perfect example Take a brief look at one US-based company that really understands personalisation. One of Kobie's specialty retail clients, BJ's Restaurant and Brewhouse, was one of the presenting brands at CRMC. BJ's knows how to reward members of its Premier Rewards programme in an omnichannel fashion. When its customers walk in the door, they can check in on their mobile devices or at the reception stand, where an integrated table management system pulls up individual programme member profiles. Armed with information provided by the member, the restaurant host/hostess and server know in advance if a particular customer has a food allergy or what foods or beverages they haven't tried but are likely to enjoy based on past orders. Details like these let customers know BJ's is paying attention to their preferences, making it more likely they will reward the restaurant with their repeat business.
Now let's go back to the retail loyalty programme scenario with shopper Lucy and the un-personalised mobile coupon she received. Despite retailers' efforts to wean customers off discounts, or 'coupon addiction', discounting will remain central to many loyalty programmes: consumers are expected to redeem at least 10 billion mobile coupons by the end of 2013 - and that's only in the US. The key is to take a couponing-fits-all strategy, but informed by CRM and loyalty programme data so that individual customers get coupons for products that actually add value to their lives and which they are likely to buy - like a Tory Burch blouse, in Lucy's case.
Collecting customers' personal data at the right time within the appropriate loyalty context is obviously essential to personalising offers, even though consumers fret about their data being misused:
- A recent study found that 90% of consumers around the globe say they worry about their data being hacked and used to steal their money.
- But another study found that 85% of consumers know brands need to track their data in order to provide personalised offers, and 50% said they don't mind trusted brands using their information in order to provide personalised shopping experiences.
Responsibly gleaning customer insights through omnichannel engagement - a seamless and enjoyable customer experience across all channels - is critical. Retailers who use customer data correctly stand the best chance of earning shoppers' trust and enduring loyalty.
Digital personalisation If personalisation across digital channels is critical now, it will only become more so in the coming years. Consider this: one keynote speaker at CRMC described an experiment wherein an 18 month-old child was given an iPad and quickly learned how to tap and pinch screens, and so on. The child was then given a traditional magazine. The child began trying to manipulate the pages just like an iPad screen, but couldn't figure out how a paper magazine 'works'!
The earliest members of Generation Z are now reaching their teen years and they're likely to be far more focused on digital channels than any prior generation. Like the baby in the above anecdote, tomorrow's consumer will be totally digitally inclined, which means that offline channels won't mean very much to them; at most they might be supplemental material.
"From what I saw and heard at CRMC, it's clear that retailers need to begin merging their CRM and loyalty data, and using that data to personalise their offerings across all channels," concluded Easley. "Those that do will be the best positioned to keep the loyal customers they have now - and to acquire and retain new and more satisfied customers far into the future."
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