Dan Brassington, CEO and co-founder of ERN, looks at customer loyalty and big data.
In today’s austere times, banks and merchants need to do the seemingly impossible and achieve more from less. They need to more intelligently serve and appeal to their customers and this has been underlined by the plight of iconic high street retailers such as Jessops, HMV and Blockbuster.
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Ultimately the futures don’t lie in cost cutting or a quick injection of capital – it’s dependent on the ability to attract and retain customers by creating the kind of deals they want.
Long term customer loyalty is the Nirvana. While there are many existing schemes in place, they’re mostly based on a combination of paper coupons or a mass, ‘one size fits all’ email campaign.
In doing so the loop with their customers is immediately severed – coupons can’t be linked back to an individual which means there is no track record of who actually redeemed them, where and when, essential information for informing future targeting of offers.
By contrast, recent research has highlighted how retailer-branded credit card programs can significantly increase the number of satisfied and loyal customers.
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By GlobalDataFor banks and card issuers involved with partnerships and loyalty schemes with merchants, the benefits are obvious – increased use elevates them to the top of consumers’ wallets. However the majority of these programs are reliant on the merchant bearing the full cost of the discounted offer, Merchant Funded Rewards – with the inevitable squeezing of margins.
It’s here that ‘big data’ comes into play to rebalance the equation and allow merchants to fund these schemes.
By deeply analysing each customer’s card purchasing history banks, issuers and merchants can better understand their purchasing behaviour – the what, where, when and how of their shopping habits. Armed with this information, they can construct relevant and engaging programs based on the data contained within their transactional history.
All parties can then make the link with the kind of additional items a customer is likely to be interested in, then distribute a timely, personalised digital coupon to them – ideally drawing on geo-locational and time-specific data – to make contact when they near a specific store.
Up until now this has been a pipe dream as neither side had the IT systems capable of storing and processing this data and presenting it in an easy-to-analyse form.
There’s little point in building customer profiles if they can’t effectively link to that individual. The solution lies in the ubiquitous smart phone – of which there are 36 million in use in the UK.
The future of digital marketing is – as far as the consumer is concerned, at least – based on the smart phone. They’re omnipresent, used for researching products and prices and as a method of payment.
Hence targeting a customer’s smart phone, pushing offers based on transactional history at the appropriate time – for example, when they’re within 500 yards of an outlet or about to undertake their weekly shop – is far more effective.
If brands can crack the concept of using them as an m-coupon and redemption platform too, they’ll be in a great position to promote long-term loyalty among their existing customer base – and win over new customers in the process.
It’s not that the likes of HMV, Blockbusters and Jessop’s don’t understand customer needs. It’s that they didn’t have a way of targeting individual customers with regard to what they had bought in the past, in order to offer them loyalty offers or discounts on future purchases.
This process needn’t be costly – what are required are strategic partnerships with financial services companies and technology providers.
2013 will be the year that forward-thinking merchants will be able to get the digital edge on their competitors – but it’s the strategy, rather than the amount of resources at their disposal, which will count.
