Using loyalty data wisely is what counts, experts agree
At the 4th Annual Loyalty Marketing Workshop organised by Templeton College, Oxford, loyalty marketing experts agreed on several key principles and trends in customer loyalty management, among which were the fact that proper use and analysis of the data generated by loyalty programmes is critical to customer insights and business growth.
The workshop again attracted a truly international group of attendees comprising senior managers and consultants representing sectors such as finance, retail, charity, consulting and telecommunications.
Dr Richard Cuthbertson, a Research Fellow at Said Business School, Oxford, opened by explaining that the workshop aimed to offer the opportunity to explore the latest thinking in customer relationship management on a deliberately small scale, in a tutor-based forum with acknowledged experts offering practical operational experience.
Data analysis The workshop began with a presentation by Clive Humby, Chairman of Dunnhumby (which produces customer insights from the data produced by the Tesco Club Card programme in the UK, as well as for Kroger in the USA). He was clear in his message that customer data allows much more precision in decision making for a retailer. The discussion involved many new insights that had been developed by Dunnhumby in the past 12 months, and the presentation revealed a whole new chapter of Dunnhumby's experience in working with Kroger in the USA and with manufacturers globally.
The overall message was that insightful customer data analysis and segmentation allows a retailer to impact on pricing, promotions, new products, range review, new formats, service initiatives and overall marketing strategy.
The process of customer data enabling customer insight to drive customer management to grow long term customer loyalty and overall business strategy was explained, along with how it helps the development of a customer-centric focus to drive future growth.
Loyalty for all? Dr Cuthbertson then facilitated a debate entitled "Should every successful business have a loyalty programme?" His presentation highlighted the complexity of the overall process of customer loyalty and the even more complex nature of the modern consumer. The overall conclusion from this session was that loyalty data enables the continual development and communication of a relevant offer. It enables the reconstruction of the value chain from a product led to a customer led process.
Peter Wray of CM4P and Chris Hodgson (CEO for Kidstart Ltd) also facilitated a discussion on the many types and varieties of customer management and loyalty programmes around the world, providing some insights into niche schemes that operate in the diverse markets of sport, music, environment and children's education.
The conclusion from this session was that customer management principles using intelligent customer dialogue can flourish in very specific communities of interest. The session also demonstrated the potential for good ideas to travel very quickly in an interconnected world.
Russia's new coalition Michael Llewellyn of CM4P outlined in his workshop presentation the recent experience of developing and launching a large scale coalition loyalty programme (the Malina card programme) in the fast developing market of Russia. He also covered the financial issues that lie behind every customer management programme and the crucial importance understanding the fixed and variable cost drivers. His discussions covered topics including risk analysis, exit strategies, complex scenario modelling, and the importance of clearly identifying the major stakeholder interests in any large scale customer loyalty scheme.
Rewards versus recognition Kelly Hlavinka of the Colloquy Group gave a presentation covering the value of rewards versus recognition in the management of loyalty programmes and the analysis of customer loyalty information. Her experiences outlined the results of 5 value propositions in 5 test markets and the results of a 3 month tracking of customer behaviour post-test. She also reviewed the issues in identifying what is truly incremental and the challenge of constructing and maintaining true control groups.
Norman Webb from SAS EMEA outlined the group experience working with organisations such as Karstadt in Germany, Office Depot in the USA and the Octopus transit system card in Hong Kong. He outlined their approach to integrated extendable solutions through deeply analytical models.
Access Pricing Brian Woolf, the internationally renowned author and loyalty consultant, led a lively and insightful discussion entitled 'Three Ideas', exploring the way several grocery retailers have started to develop a new pricing strategy for loyal customers built around Access Pricing.
This is a technique that is being very successfully implemented at some innovative grocery retailers based in the USA and Japan to combat hard discounter pricing competition from larger and deeper resourced competitors. The key message was to use the loyalty programme to re-allocate loyalty currency and the total available marketing budget to 'lock-in' best customers and offer them access to market leading prices.
Best practices To conclude the first full day of the workshop, Jan-Pieter Lips, director of business development for LMUK (which operates the Nectar coalition loyalty programme in the UK) gave a fascinating and detailed overview of the programme mechanics, results, future developments and outstanding issues.
The sheer scale and complexity of operating successfully a large consumer loyalty programme was outlined in depth in this session with a very active Q&A session at the end of the formal presentation. He also covered the experience with recently launched B2B Nectar for Business scheme.
On the final day of the workshop the focus shifted from current best practices and strategic issues to the consideration of the impact of technologies, and the changing nature of what has been termed the "super consumer".
High-speed customers Lisa Modisette, VP of Global CRM for the telecoms support organisation, Amdocs, reviewed an environment in which customer data grows exponentially with new channels and more direct contact. Increased speed and supplier responsiveness to the changing consumer environment characterise this 21st Century Marketing.
Modisette also identified the principles of Best Practice Customer Management, including: Micro-segmentation, Personalisation, Community, and Viral Marketing, as well as the use by some suppliers of more inspirational rewards. She also highlighted the growing issues concerning the impact of technology in this environment.
Not getting personal enough Dr Jonathan Reynolds from the Said Business School presented a presentation on how consumers are changing in a world with "too much stuff out there" - but not enough of it being personalised to the individual.
He reviewed the current global trend to value and price deflation in all but a few luxury markets, and outlined generational effects and their behavioural consequences. In short, consumers are getting smarter and better informed due to the price transparency effects of the internet, and they are also seeking greater value despite the fact that they are also getting wealthier.
Reynolds also discussed recent research into the generational issues that are now facing many retailers, alongside the changing nature of the workplace. All these potentially impact on the holistic environment in which customer-centric marketing operates, and the deconstruction of the buying process.
Conclusion Finally the workshop concluded with an interactive debate based on key questions posed by the delegates at the start of the workshop, and then each was discussed in expert-led, one-to-one tutorials (this being the traditional Oxford style of imparting knowledge and depth of experience) with speakers who had first-hand experience of these challenges.
Overall, this was again an excellent workshop that reviewed and debated many of the key challenges facing brands, and addressing the problem of how to engage with and surprise and delight customers in a world of over-supply and increasing technical complexity.