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Special Report: Increasingly rich data creates valuable insights to drive customer loyalty

The ability to collect rich data from myriad channels as well as from external sources and then use this to generate customer insights is driving the ability of retailers to engender greater loyalty from their regular shoppers. By Glynn Davis

GENERAL MERCHANDISE

Special Report: Increasingly rich data creates valuable insights to drive customer loyalty

Although John Lewis launched its myWaitrose loyalty programme two years ago, as a simple way to say thank-you to its customers through benefits made available to all cardholders, the ability to tap into customer data has led to it becoming a much more advanced communications tool.

Tailoring communications
Speaking at the recent British Retail Consortium (BRC) Customer Insight 2014 conference in London Paul de Laat, group customer insight manager at John Lewis, told delegates that the company now uses many sources of data to “deepen its customer understanding”, which has resulted in every myWaitrose communication with its customers now being tailored and personalised.

“We’ll give them rewards that they like, but also things that they are not buying and maybe should be,” he says, revealing that even though the programme does not involve awarding loyalty points it has managed to attract 3.7 million members who account for 65% of total Waitrose sales.

Such has been its success that in October the ‘my John Lewis’ loyalty programme was launched and is presently in acquisition mode. Although both are plastic card-based schemes de Laat acknowledges that it is likely that when a critical mass of cardholders has been reached then an app will be the most relevant platform.

“Leveraging the customer data and integrating it into an app on a smart-phone to communicate to customers when they walk through the door is the direction that we’re going in,” he says.

Mobile for maximising loyalty
Alex Chruszcz, head of insight & pricing at Asda, agrees that mobile is where the action is – and that Asda runs an app. He says the company is investigating how such devices change the way people are shopping with the supermarket.

“Marketing is excited about sending fancy offers to customers but the really disruptive piece is how we take advantage of knowing exactly where the customers are and if we can maybe change prices by 10%. This is when it makes a big difference,” he suggests.

This is when customer loyalty can be linked to the total shopper journey, which has the mobile device centre stage. But for Chruszcz there is a risk that retailers can get carried away with the data they are collecting and the potential of it whereby they over-complicate things for the customer: “Big data is associated with marketing so as a commercial organisation you can be seduced by building models around what the data can provide.”

Keep it simple
Ruth Spencer, director of digital & loyalty at Boots UK, is well aware of this situation arising with its Advantage loyalty scheme: “As we get more data it could be more tempting to use this to try to get the customer to do something that they wouldn’t naturally do. We need to balance simplicity and complexity.”

Communications to its cardholders has to be simple even if the analytical work done behind the scenes is very complex. And it has invariably become more complicated in recent years, with Spencer suggesting “we need to support more complex customer journeys” across various channels. “The days of thinking you can control the order of the shopping journey are gone.”

This channel explosion has contributed to ever more diverse sources of customer insight being made possible. The data from the Boots loyalty scheme combined with the 20,000-customer surveys it conducts each week and its panel of 60,000 people provides it with a “massive opportunity” to create a single view of its customers that can then be interrogated.

Such a single customer view database has been created by Debenhams and sits within its insight team. When combined with data from its panel of 14,000 customers then great visibility can be provided on the company’s customer base, which helps drive personal communications and increase loyalty.

Managing expectations
Caroline Pollard, customer strategy & insight analyst at Debenhams, says: “You can see what the customers spend – online and in-store – and which stores they visit. It gives a 360 degree view.” But she warns that there can be too high a level of expectations placed on this single customer view database: “People in the business believe it will give them the answers to everything so we have to rein back this thinking.”

But it clearly has major advantages in providing insight to engender customer loyalty – provided “everybody in the company understands the data”. Pollard is quick to point out that success with its insight and loyalty should not just be measurable in increased hard sales.

“It’s not all about driving extra sales. It’s about understanding the customer through the softer side of things, which are tougher to measure,” she says.

The Retail Bulletin’s 5th Customer Loyalty Conference 2014 will discuss how to develop a high impact strategy that allows retailers to monetise customer retention strategies, generate insight and provide personalisation in all channels.Click here to register.

The Retail Bulletin’s 5th Customer Loyalty Conference 10 June 2014 will discuss how to develop a high impact strategy that allows retailers to monetise customer retention strategies, generate insight and provide personalisation in all channels.Click here to register.

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