Archive for the 'CRM' Category

Stagnant growth of loyalty programs

RetailWire panelists discussed some new data suggesting that loyalty programs’ growth is slowing at several retailers. Here’s my take on why this may be happening:

Loyalty involves establishing an emotional connection between the retailer and the customer, in order to move that shopper from a state of satisfaction to commitment. But far too often, retailers’ loyalty programs consist of little beyond price incentives. Extra discounts for cardholders may drive more frequency of visit but also encourage bottom-feeding when “loyalists” can apply one sale offer on top of another.

Among many other uses of data science, retailers can do a much better job using predictive technology to tell their best customers about new products of interest — not just when those products are available at the lowest possible margin to the store.

Who is the “chief customer experience” officer, anyway?

There have been a couple of recent RetailWire panel discussions on the topic of retail organization charts. One of the hot issues is the buzz around the title of “Chief Customer Experience Officer.” What, exactly, does this mean? Which operating area does this person run — merchandising? marketing? stores? Isn’t the company CEO in fact the chief “experience” ¬†officer if the goal is to get the entire organization aligned with this concept? In any event, here are some more of my thoughts on the issue:

The place to start is a clear definition of “customer experience.” Is it the type of “high-touch” service expected in a luxury or near-luxury retailer like Nordstrom? Is it the smooth integration of the in-store and e-commerce process into an “omnichannel” vision? Is it the overall branding message of the retailer? And — let’s not forget — the merchandise content is the most visible sign of any retailer’s “customer experience.”

So the entire idea of “customer experience” is a hot buzzword right now (like “omnichannel”) without a clear definition of its meaning. If a retailer can make up its mind about what the concept stands for within its four walls, then it makes the most sense to assign primary responsibility to the C-level executive with the budgeting authority to make it happen.

Loyalty programs: Is time worth more than money?

Recently the RetailWire panel ¬†had a chance to discuss new thoughts about loyalty programs. The article under discussion focused on the value of the consumer’s time, but several of the examples were not specific. The common theme — and a growing issue in rethinking loyalty programs — is how to change the formula from just being price-focused. Here’s my comment:

The examples mentioned in the article are not always about time-saving, but they are consistently good examples of how to delight the customer by exceeding expectations. Some of the benefits are convenience-based, others are based on the idea that frequent customers merit special recognition.

But the common theme is that these are not pricing-based ideas. Many retailers and service providers mistake deeper discounts for true loyalty programs, but price incentives only encourage the customer looking for deals to shop around and cherry-pick. It’s time for more merchants to follow the lead of service providers in rethinking the very meaning of their loyalty offers.

Do loyalty programs work for Gen Y shoppers?

There has been plenty of discussion recently on RetailWire about the nature of store loyalty programs. Most panelists agree with me that most of these incentives really don’t accomplish their aim. The question at hand: Can these types of programs work any better for the Millennial consumer?

As panelists have discussed recently, most stores’ loyalty programs are really discounts by another name. These kinds of incentives will be important to Gen Y shoppers, who outnumber Boomers but do not have nearly the same level of spending power. However, it’s well documented that Gen Y shoppers will also respond to marketers that understand their interest in technology and the emotional connection of community. (“Peer marketing” might be a good way to describe it.) Finally, customized rather than mass media are essential to reaching this target most effectively.

Starbucks takes its loyalty program to the grocery shelf

From today’s RetailWire: A panel discussion about Starbucks’ new initiative to allow its loyalty-card customers to earn points when they purchase the brand at grocery stores, not just in its own locations. I think it’s another great idea that other retailers and brand managers can learn from:

Starbucks has always been at the leading edge of brand management, starting with the original concept of coffee as a premium drink (not a commodity) in an atmosphere conducive to socialization. Their loyalty program (unlike so many others) is not all about offering a discount at point of sale, but more focused on repeat visits by consumers committed to their product. Extending the reach of the program into grocery outlets — where their brand has plenty of competition for shelf space — is a powerful message to other marketers.

Barriers to omnichannel retail are mostly in your mind

RetailWire panelists commented recently on “top ten myths” pertaining to the success or failure of multi-channel retail. I zeroed in on the following:

Myth number 9 (“Online retailing cannibalizes sales from other channels”) is probably the most harmful to retailers’ development of true omnichannel strategies. As long as your retail business builds an artificial wall between your bricks-and-mortar business and your e-commerce business, you will not maximize either one. Macy’s and many other high-profile retailers have figured this out: They are enjoying synergies that are driving traffic to stores and websites as well as making their inventory more productive.

The loyalty debate continues

In a recent RetailWire discussion about food retailers, the panel debated whether newly developed mobile apps are good substitutes for traditional “loyalty card” programs. I applaud the technology but not necessarily the end result:

A mobile app that serves as a substitute for scanning a loyalty card (or entering one’s phone number at the checkout lane) is a convenience but not a game-changer. And, as the panel discussed last week, offering discounts through new technology is not really a driver of loyalty anyway.

It would be interesting to see a food retailer really prepared to think outside the box of convenience: For example, how about entering your grocery list from the store website or mobile app, scanning your barcode upon arriving at the store and finding your order ready for pickup? This would take work to execute in a cost-effective way but might help redefine loyalty.