SAP POS LOG: Building Customer Loyalty
How Many Cards in Your Wallet ?
Go ahead, open your wallet or purse, and count the loyalty cards you are carrying around. How many do you have ?
I checked mine, and realized I only carry the ones that I feel bring me real value. An office supply company has a dividends program that I really like, and so I carry the little keytag card in my wallet. There is one for an airline points program, and one for an electronics company too. The rest got purged, and sit in a drawer.
If you are anything like me, you’ve accepted loyalty cards, given away your email address, and traded wallet space for some potential benefit. The ones that give real benefit, a higher level of service, or convenience are likely the ones you kept. Agreed ?
What drives Retail Loyalty Programs ?
One of the classic books that started retailers down the path to implement pragmatic loyalty programs was Brian P. Woolf’s Customer Specific Marketing – The New Power in Retailing published back in 1996. This new way of marketing got combined with new client-server database technology allowed retailers to gather massive amounts of POS data and start to analyze it. Woolf provided guidance, practices, and sample case studies.
A key element was measurements – getting the right data, knowing the economic and profit implications of the loyalty program, and focusing on customer experience. It’s been over a decade, but that early work was a good starting point, and its still a good read. Recently, the editors of RIS News did some deep analysis of loyalty program effectiveness, and how retailers measure their ROI. Highlights included these key takeaways:
- Retention is less expensive than Recruiting
- Different customers bring different value
- Cross channel execution is essential
You can fill out the form and download the study from Edgell Communications, publisher of RIS News. It also has a couple of interviews, including a few comments from my colleague Jon Wurfl and I. He is SAP’s multi-channel maven, and you will find interesting thoughts in Jon’s blog.
Evolution in the cards
I’ve seen several articles in the press or online over the last 2 years indicating the average person in the US and Canada has 12 loyalty cards (+/- 2). There are some neat ways of dealing with this, including keeping your card numbers in your Bumbleberry smartphone, or writing them all down in tiny print on the back of a business card like I did once – until I inadvertently gave that card away. Hopefully I’m earning double points now !
With more attention on economic realities, highlighted in RETAIL FUTURES: The Year of Living Dangerously about The Year of Living Dangerously, we are definitely seeing consumers adopt a new spirit of frugal spending. This is going to require an evolution in the loyalty card programs in order to retain these shoppers. Interesting changes are underway, with early point-of-sale based loyalty solutions being retired, and the online and catalog channels become more integrated. I think we will see much cleaner cross-channel loyalty solutions implemented in retail over the next 12 to 36 months.