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IKEA to boost effectiveness of its global IKEA Family loyalty programme

Despite admitting it runs a relatively unsophisticated loyalty programme, IKEA has many millions of loyal members who enjoy the benefits of its IKEA Family members’ programme, and this is likely to grow as the company is now focusing on improving the way it operates the scheme. By Glynn Davis

GENERAL MERCHANDISE

IKEA to boost effectiveness of its global IKEA Family loyalty programme

Despite admitting it runs a relatively unsophisticated loyalty programme, IKEA has many millions of loyal members who enjoy the benefits of its IKEA Family members’ programme, and this is likely to grow as the company is now focusing on improving the way it operates the scheme. By Glynn Davis

Ahead of presenting at the 3rd Retail Bulletin Customer Loyalty Conference 2012 in London on June 13th, Magnus Holst, global communications manager for IKEA Family at home furnishings giant IKEA, describes how such a programme works within this massive global business.

In contrast to many retailers, which he says have good customer management capabilities, Holst suggests IKEA is “a mass production- and mass communication driven company that does not have in its genes the consideration of individual customers or segmenting them or even being able of listening to them”.

“I’d say IKEA Family is quite unsophisticated, in general. It’s been hard to scope-down customer management that’s possible across 130,000 global employees. It needs to be basic and workable,” says Holst, adding that the likes of Tesco have the advantage of its customers visiting its stores every week compared with maybe three or four times per year for IKEA.

He acknowledges that IKEA could give members of its IKEA Family club “a bit more of IKEA and make the interaction richer” but despite this Holst says many of its 52 million members are very loyal customers who like the programme.

The majority, probably two-thirds according to Holst, join because of the better prices they can enjoy on certain products. On a global level he says IKEA Family members can buy the 100 IKEA Family-specific products (that are not core home furnishings and include travel goods such as bags and products for a safer life at home).

And at the country level there will also typically be at least 20 products in the IKEA stores that will be available to members at discounted prices. In addition, offers are also made available from third-parties such as utility providers.

Although plans are afoot for adapting IKEA Family Holst says “we are not going to change it radically”. One change will involve ensuring that the benefits from third-party providers are more in-line with “what life at home is about” and that IKEA adhere to its philosophy on sustainability and responsible manufacturing.

There is also the intention to change the visual identity of IKEA Family from orange to the corporate mix of yellow and blue. “All countries should present more of a unified front. At the moment the [IKEA Family] benefits are described differently in each country and we want to change this, but without them all sounding too generic,” he explains.

However, the biggest shift will involve the analysis of the data that the IKEA Family cards create when they are swiped at the till. “We need to get more efficient with our communications and target offers at specific groups. A campaign should be filtered for certain people and there should also be communications that are triggered by the actions of people,” says Holst.

He cites the example of a member buying a wardrobe, who could then be targeted with complementary products, or an online shopper visiting wardrobes on the IKEA website, who could then be sent a wardrobe-creation planner.

“It’s a big shift for us and needs to be done at a reasonable level of sophistication. We should react with automated processes that help customers buy. We just need to identify the biggest initial wins,” he suggests.   

To develop such capabilities Holst says each country will need to have partners – who could be CRM agencies or operational database suppliers that have good skills in database analysis and operation.

By increasing the effectiveness of the communications that are delivered to IKEA Family members, as well as improving the richness of some of the benefits on offer, Holst says the company is hopeful that it will see an increase in the number of active customers within its millions of members around the world.

“Fifty per cent have not swiped their cards in the past year – although some might still have been shopping in IKEA –and we need to develop routines to attract them back. Maybe we need to identify them beyond the cards – which most likely would be via mobile phones,” he suggests.

The event is sponsored by the Logic Group. To register and view the full programme, click here.

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