Driving retail loyalty with real-time interactions

WM Circle Logo

By: Wise Marketer Staff |

Posted on July 21, 2011

Driving retail loyalty with real-time interactions

The trajectory of retail evolution has climbed far and high in terms of lifecycle maturity, and especially in the developed retail economies of the world today, according to a white paper published recently by ITC Infotech India.

It seems so long ago that retailers knew their loyal neighbourhood customers on a one-to-one basis, engaged them in conversations that held personalised meaning, and were able to enrich shopping experiences by providing information and offers that were relevant and valuable to their loyal customers, while they were in the store, shopping.

From those early days of personalised shopping, the two-sided coin of business and technological advancements have spun and told its tale, and while on the one side, time's progress has seen aggressive business growth and the birth of such mega-scale, technically cutting-edge retailers as the $350B+ Wal-Mart, on the other side, it has increasingly witnessed the shopping experience becoming an impersonalised chore and customer loyalty becoming an elusive 'theoretical' concept.

The Lowest Common Denominator characteristic of any and every Loyalty programme in the world, even beyond the retail domain, is that the business wants to identify its most valuable customers, and reward them for their on-going business.

Such rewards need to be calculated, cumulated and offered with every transaction the customer makes, naturally, and a simple mechanism for doing so is through Points, which a customer can accrue and redeem, based on various purchase related rules.

This, therefore, is the basic transactional core of every Loyalty programme, and best-in-class off-the-shelf CRM/Loyalty products such as Oracle-Siebel, or custom built applications of various kinds, all provide the technology enabler layer for automating this fundamental function based on various rules logic and workflows.

While there cannot be a Loyalty management system without this functionality, just a rule-based Points management engine hardly creates any remarkable business value, even if there be certainly transactional level interests in seeing how technology can help make such management simpler, user-friendly, flexible, more multi-channel-enabled.

As soon as this basic engine is fired, retail transactions start cumulating across various Loyalty members and transactional data starts rapidly building up. While management of such rapidly amassing data is a technical job, what a retailer does with this increasing pile of consumer-centric data is left up to the retailer himself. The innovative retailer can definitely add a lot more business value by leveraging this data intelligently, taking thus his Loyalty programme to a value-level that is superior vis-à-vis what he can do merely through Points and POS transaction management.

The analysis of such data can potentially reveal deep insights about the retailer's unique customer portfolio, and about each customer segment's unique drivers and behavioural characteristics. Based on such insights, a retailer can tailor its merchandise range on offer, the promotions it runs, and the Loyalty rewards it offers. In the process, and based on the acuity of such data analysis, the retailer can take a first - but very significant - step toward understanding its customers and starting to do things that create meaningful and relevant value for such customers - the first step as well toward earning the Loyalty of its patrons.

To what extent is a retailer successful in this endeavour will very significantly be determined by two key factors:

  1. How rich is the customer-wise data that the retailer is able to capture?  
  2. How insightfully is the retailer able to segregate and analyse this data for the purpose of creating clear attitudinal or behavioural segments of customers?

That said, insightful customer segmentation and understanding of the unique needs of each segment of customers is only a story well began. The natural closure corollary of this story is in driving meaningful interactions with such customers and starting mutually rewarding customer dialogs, on basis of such understanding. From the technical domain viewpoint, this is the area of multi-channel campaign management, as also multi-channel service management (e.g. call centre, web, in-store, and so on).

Like a retailer does with loyalty data, so it is with the area of customer interaction, the real value of campaigns and promotion management lies in the business vision and innovative business ideas with which a retailer leverages whatever technical campaign management tool he possesses.

The combination of analytic insights from cleverly segmented data and meaningful value-oriented customer communications through multiple channels using such insights can be an immensely powerful one-two for any retailer, and can create sustainable competitive advantages in the market.

A good example of the power of this final level is the UK retailer, Tesco, which uses its Club Card database's richness to the hilt, and reportedly has identified over 5,000 'needs segments' within its customer database, and drives over 250,000 different combinations of coupon-based promotional campaigns every quarter, with a finely tuned promotion mix going to each customer according to their shopping history and customer segment characteristics.

While this last level represents the leading edge of current breed of loyalty programmes, there is already a next frontier visible. And this next horizon is directly correlated to the typical limitation of the current state of interactions described above: however well designed, however well targeted, most of such interactions with the customer happen offline, through emails, posts, mobile offers, catalogues, or the website. Very little of such interactions happen in real-time, at the moments of truth, when the customer is in the retail store, when the impact and relevance of such interactions can be the maximum. This, therefore, is the next frontier: improving and enriching a Loyalty cardholding customer's shopping experience, when the customer is inside the store, by carrying on a non-intrusive, opt-in, meaningful, personalised and relevant dialog with him in real-time to create win-win value for both the cardholder and the business.

The full white paper, entitled 'Driving Retail Loyalty Through Real-Time Customer Interactions At The Points Of Truth', has been made available for free download from ICT Infotech's website - click here (no registration needed).

More Info: