The Strategy for Not Wasting Money on Retail Technology

by Jeanne Roué-Taylor

Getting the basics right in retail means transparent pricing, understandable offers, and good service and product availability. Most retailers have these down by now and are consistent across the web or the store. But competition never lets us rest on our laurels for very long. In retail, the new battle is over the use of technology to take the game to the next level.

The Path Behind Us

Technology, however, can be a roll of the dice. The path behind us is littered with so-called game changers that never met their promises to revolutionize an industry. Companies have invested significant money in applications that took too long to roll out and recoup their costs.

No one doubts that retail requires significant investment in technology, but how does a brand choose wisely and avoid wasting precious time and money?

Strategy

Brands need a strategy flexible enough to adapt to changing market conditions and changing technologies. The best approach is to run short trials of ideas where an idea is killed quickly if it doesn’t work or is rolled out quickly if it does. Technology needs to support this by being flexible to sources of data and to have baked-in capabilities to analyze data, create a hypothesis, and then run continuous cycles of testing and learning. Technology that falls short of this capability will join history’s trash heap.

Learn how to justify spending on the right kind of retail technology in this webinar and whitepaper. Questions? Tweet @TIBCO with the hashtag #LoyaltyLab.

Analytics at the Core of Customer Engagement

By Jeanne Roué Taylor

There’s so much customer data around us, and it gets richer and faster each and every day. People are talking non-stop about Big Data and its many uses in various parts of the market. But what’s not really getting as much attention is how analytics are used to make loyalty platforms effective for meaningful customer engagement.

Powerful analytics are on the critical path to understanding customers and when to engage, something we call right-time marketing. Right-time marketing is more nuanced than real-time marketing because it takes into account the data that supports the best time for the right kind of customer interaction. It isn’t a simple action-reaction cycle that turns customers off and can even come across as creepy and opportunistic.

Analytics Done Right

Analytics, used appropriately, allow a brand to understand many aspects of customer engagement, including:

  • Social media likes, shares, and follows
  • In-store, website, and mobile interactions and their context
  • Customer service history
  • Purchase history
  • Customer preferences

By understanding this kind of data, which is often ignored or unavailable because of silo’d systems, brands understand exactly when, where, and how to interact with their customers. This changes the model for customer engagement, and makes the customer much more than a pitch and transaction.

It Takes a Platform

It takes a loyalty platform to bring together, analyze, and respond appropriately to all of the fast-moving, rich data available today. Are you ready?

Learn more at http://www.loyaltylab.com/platform.html and watch the webinar, The Power of Analytics to Drive Loyalty.

Not Your Mother’s Holiday Shopping

Last week, Michael Greenberg, Loyalty Lab’s director of global solution strategy, penned an article in DM News about the holiday season. A veritable Superbowl for loyalty marketers, the holidays are, as Michael puts it, the time to “roll up our sleeves, cross our fingers, and set our plans in motion.”

Well, the dust has settled following Thanksgiving, Black Friday, and Cyber Monday. But the madness is far from over now that the holiday season is in full swing. Titled “Not Your Mother’s Holiday Shopping,” the piece details the ways in which loyalty marketers should be reassessing their strategies in order to stay ahead of the game —  specifically by putting a major emphasis on mobile, which has become a huge force in the commerce game over the past couple of years.

And, looking back on the opening shot of 2012 holiday shopping, it’s clear that Michael’s assertions about mobile are right on track. According to IBM, mobile traffic was up 28.5%, while overall online sales were up 20.7% from 2011. Mobile accounted for 16.3% of all online sales, with a 58.6%-41.4% split between mobile phones and tablets.

Convinced, yet? While 2012 may be rolling already, Michael’s top 5 tips for bulking up your mobile marketing strategy will have you well on your way to a killer season in 2013. His main points:

1. Don’t skimp on mobile development.

2. Stand out from the noise (and from the glut of mobile apps already out there).

3. Take an offensive and defensive position — protect your best customers while successfully going after your competitors’.

4. Ask your customers for feedback.

5. Start planning for 2013, on December 26.

Read about all of these in more detail over on DM News, and get geared up for next year! Pay extra attention to how your initiatives perform this year, and to what your competitors are up to. What does your holiday game plan look like? Tell us in the comments!

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The Changing Face of Airline Loyalty

Having spent this week talking about Virgin America and their stellar Elevate program, we want to step back a little and take a look at the airline loyalty space at large. What we’ve noticed across the board: considering this has been an industry that has seen its fair share of turbulence over the past few years (record-high fuel costs, plunging budgets, a constant stream of bankruptcies), maintaining customer loyalty may be a challenge, but it’s a necessity to survive and to thrive.
virgin america

Loyalty programs provide airlines with an area of influence they can control. American Airlines pioneered this concept, and set the stage for loyalty programs in the late 1980s. These early programs focused around simplistic flyer rewards by tracking miles and rewarding frequent flyers with upgrades and free flights. The success was immediate and evident, and before long, airlines like Delta and United had jumped on the loyalty bandwagon.

Over the last 30 years, the loyalty landscape has evolved into multi-tier programs with rewards stretching far beyond upgrades and free flights. Attracting and retaining members is no longer a formulaic one-size fits all program: airlines must get creative to stay in the game. 

This summer, approximately 140,000,000 Americans have travel plans, with 22% using rewards from loyalty programs to finance those trips. According to an American Express finding, active loyalty participants have increased by 25% since 2011. This increase has contributed to an already competitive market, forcing airlines to discover new ways to innovate, paving a path for younger airlines like JetBlue and Virgin America to drive the industry toward new loyalty standards.

These newer players are disrupting the loyalty space with innovative airline loyalty programs giving older, more established programs like American Airlines’ AAdvantage a run for their money. The key difference with programs like JetBlue’s TrueBlue and Virgin’s Elevate is that they offer additional perks aside from the standard free checked baggage or priority boarding.

We discussed the building blocks of the Elevate program earlier this week, including a no blackout date policy, and the new Red-Silver-Gold tier system. But there are plenty of other highlights worth mentioning. Virgin’s offerings include chic lounges in select locations, enhanced social rewards, and to top it off, the “ultimate round-trip flight award”. The Elevate member who earns the most elite qualifying points between August 8, 2012 and August 7, 2013 will earn a sub-orbital space flight on Virgin Galactic. With the largest frequent flyer population of 1.8 million it is clear Virgin is doing loyalty right. It is unique perks like this that add a competitive edge to airlines willing to step outside of the traditional loyalty box.

The Aberdeen Group addressed this very issue in a recent report. They found that loyalty programs that incorporate mobile technology, engage consumers with social media, and implement a centralized cross-channel loyalty platform are more successful. When incorporating innovative ideas to these basic building blocks, customers are more likely to stick around and take advantage of such well-rounded offerings.

Fresh innovation drives industry forward. A steady stream of creative, technology driven advancements are increasingly important as consumers become more accustomed to loyalty perks and expectant of convenience and technological innovation. It takes robust, cutting-edge loyalty programs to shake things up and provide a unique experience worth returning for time and time again.

Read more about our work with Virgin America and the success of Elevate in our Customer Success Story, here. And keep up on all of the great things Virgin America is doing by following @virginamerica, @richardbranson, and @loyaltylab.

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Enabling Technologies for Customer Retention, Engagement and Conversion.

According to the Aberdeen report Customer Loyalty 2012: Enabling Technologies for Customer Engagement, Conversion, and Retention, the top strategic action identified by omni-channel Leaders (top 30% of performers*) is expanding their use of digital channels to deliver targeted and personalized offers to their customers for greater customer retention, engagement and conversion. The two main channels identified by Leaders are mobile and social. For 2012:

  • 75% of Leaders are using or planning to use digital channels to deliver targeted and personalized offers.
  • Leaders are devoting a full quarter (25%) of their marketing budget to mobile and social initiatives.
  • Followers* are devoting 15% of their marketing budget to mobile and social initiatives.

The use of emerging channels (mobile, social) for customer engagement should be balanced by tried and true loyalty technology components (analytics, rewards), ideally in an integrated, omni-channel loyalty platform. Many retailers are still outsourcing the various components, which introduces complications of integrating data streams and technology. A centralized loyalty platform eliminates these risks by combining consumer insights, offer creation, offer redemption, and performance metrics reporting.

Leading Loyalty Technology Components
Leading Loyalty Technology Components

For retailers that are re-thinking, re-launching, or just entering the cross-channel loyalty space, the following are some of Aberdeen’s recommendations for loyalty program success:

  • Implement a centralized cross-channel customer loyalty platform for easy access to all loyalty related data. Retailers who do so report a 20% increase in customer retention rates (compared to 8% for all others).
  • Ensure uniform data collection guidelines across channels for developing targeted loyalty offers based on customer information and affinities.

Use customer analytics for micro-segmentation of loyalty members for multi-tiered loyalty campaigns. Leaders are twice as likely to use analytics applications and reporting tools to track loyalty program redemption rates.

  • Incorporate mobile technology into loyalty programs to reach consumers on the go with targeted, personalized offers. Thirty-six percent (36%) of Leaders, compared to 9% of Followers, have a mobile loyalty platform of some form.
  • Use social media tools to engage customers in a two-way dialogue, and allow sharing of loyalty offers for greater customer retention. These tools include social networks, blogs, product recommendations, user generated content, and microblogging.
  • Take advantage of customers’ desire for immediate gratification by delivering real-time rewards and utilizing location-based messaging. The real-time connectivity between brand and consumer is one of the top sources of ROI from social media marketing / loyalty.

To learn more about how leading organizations are using social media, customer analytics, mobile loyalty, real time rewards and location-based messaging to improve customer retention, frequency, and re-activation, Download the full report, Customer Loyalty 2012: Enabling Technologies for Customer Engagement, Conversion, and Retention.

*Aberdeen used three key performance criteria to distinguish Leaders (top 30% of performers) from Followers in the January 2012 Omni-Channel report: 1) Current Customer Satisfaction (CSAT), 2) Current on-time order delivery and 3) Year-over-year increase in revenue.

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The Pillars of Customer Engagement – Analytics: A Pragmatic Approach

by David Rosen - Strategy, Analytics and Consumer Insights

In the world of customer engagement, analytics are paramount. But how? It’s important to pay close attention to preparation, reporting and methods for continuous improvement of your loyalty programs.

First, you need to understand:

  1. How does your engagement map to the data? What data is being captured to track brand interactions?
  2. What is the link (correlation and causation) between engagement and customer value? Once you have the data, what does it actually mean?
  3. Build internal alignment around what matters and what the organization will prioritize.

Optimize your dashboard. Keep these best practices in mind:

  1. The right metrics aligned to business success – against what outcomes are you reporting?
  2. Take a longitudinal viewpoint. Understand those measures over time, not just a snapshot.
  3. Don’t just measure, measure against explicit goals.
  4. Plan to address gaps and if you are meeting your goals, stretch further.

Finally, make sure you have a methodology for continuous improvement of customer engagement and how you measure it:

  1. Your testing approach – It can be simple or complex depending on the internal skills and expertise of your organization. It could be as simple as one subject line versus another subject line, or a 16 variable test across multiple customer segments. Always think about what test you can run, and be rigorous about it.
  2. The rigor of execution – Again, if you say you’ll do it, do it, and do it regularly.
  3. Adapt based on success or failure. Once you’ve learned something, change your approach if needed.
  4. Evangelize in order to build company-wide knowledge – be a learning organization


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Loyalty Program Gives Nationwide Pharmacy a Makeover to the Tune of a 10-15% Increase in Sales

by

PharmacaThe U.S. market for health and wellness products is growing at a rapid pace and is expected to reach $170 billion by the end of 2012. Companies competing in this space will strive to boost consumer spend at each visit by providing a one-stop store for all their needs – pharmacy services, OTC medicines, homeopathic, beauty, and personal care products. To maximize customer spend while also promoting repeat shopping, companies in this space desperately need to have loyalty programs that cover all their touch points with the customer.

When Pharmaca, a pharmacy that looks to revolutionize the way we shop for health and wellness products, embarked on a loyalty initiative, one of the company’s goals was to reinforce its branding as a go-to wellness destination to drive higher engagement between pharmacy and retail.  They sought to encourage customers to fill both their conventional prescriptions needs and their need for alternative products in one location.

TIBCO Loyalty Lab enabled Pharmaca’s loyalty program to see impressive results, a whopping 50 percent increase in the number of customers’ cross-shopping retail and pharmacy, and a 10 to 15 percent increase in per-member spending since the program launched.

Read more, and watch this presentation by Pharmaca.

Photo Rights: spotreporting

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How Do Manufacturers Use Retail Loyalty Programs to Achieve Their Goals?

By David Rosen | Strategy, Analytics and Consumer Insights

The hybrid distribution strategy for consumer brands is extremely common. 80-90% of total sales might be sold on a wholesale basis through traditional retail channels, while 10-20% might be sold direct to the consumer. These direct to consumer channels are increasingly important to retailers and CPGs. They want the channels to be successful without threatening their retail channels. These brands have some very important dilemmas to address:

  1. Providing deals to their direct-to-consumer customers, who are competitive to their largest customers – the retailers.
  2. Recognizing rewarding purchases of the exact same product when is bought through the retail channels vs. direct. The consumer’s expectation sometimes is that their purchase reward should be recognized regardless of where they bought the product.
  3. Bringing it all together – how can the direct to consumer program work to drive business success to the retail channels?

In this challenging environment, here are some keys to success:

  1. Communicate openly with your retailers.
  2. Use loyalty programs as a mechanism for rewarding people with things other than price discounts which undercut the channel.
  3. Allow people to identify their principal shopping retailer and using the loyalty program to enhance the loyalty experience at that selected retailer. If someone is a Kroger shopper and not a Safeway shopper, give them rewards, discounts and benefits related to their shopping at Kroger. If they are a Safeway shopper, funnel them back there.

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Combatting Brand Bashing with Social Media Loyalty

By Matt Howland | Vice President

It’s a common fear in social media – dissatisfied customers taking over social media conversations to bash the brand. The fear is real, but whether you are in charge of your social media or not, negative comments going to occur. That’s what makes social interesting – your company doesn’t totally control it. Everyone knows no one is perfect. Brands are not perfect, and things are going to happen. There will be delayed shipping, there will be faulty products. It’s a fact of life and people know this.

The most open and engaging brands usually have the least amount of brand bashing via social, and the reason is because they create more brand advocates. A well-tended social media community attracts people who stand up for it – cultivating these advocates is the best way to combat bashing.

If you are open and honest about your products in a manner that provides benefit on both sides via social media loyalty, people will be more likely to defend you. If a bad experience happens, address it publicly. Social media is a great forum for this. It’s really another customer service channel – it builds trust through engagement so people can actually believe in your brand.

Brand bashing doesn’t have to be a fear. You can make the best of negative experiences by addressing them head on via social media and building transparency. People traditionally see a transparent brand as a good brand. And more engaging you can be, the better.

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Precision Marketing

By David Rosen | Strategy, Analytics and Consumer Insights

Once marketers have information about their customers, they need to market to them in a far more relevant way. Previously, CPGs and consumer brands were able to target very much en masse. They were able to target the TV shows consumers watched or the magazines they read, but were never able to tie a different communication or offer to different customers based on what they knew about them.

Now we can use data about the products people purchased, the promotions they entered, the social media channels they engaged in, the mobile apps they downloaded, the comments they shared with friends, the voice of their sentiment, etc. in precision marketing efforts to increase retention and loyalty.

CPGs need to build the capability to differentiate their communications based on these elements, and rapidly! Campaigns can’t be turned around in two weeks. They need to be turned around in a day or two – even an hour or two. Responses to campaigns on a segment by segment basis need to be interpreted in a matter of hours so they next wave can be adapted based on the success or non-success of that response. Marketers have to take on a much more scientific approach to marketing because richness of data continues to grow at an exponential level.

When marketers develop campaigns, they have to proactively think about the tests they will be running. And if they’re not thinking about learning as much as they’re thinking about the outcome, they’ll fall behind in the future success of their campaigns. Rising above the noise requires experimentation, and the best excuse for a good experiment is the campaign you are running now.

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