How to win the loyalty war

How to win the loyalty war

If you believe the experts, brand loyalty is decreasing because of increased competition from the internet. What's more, businesses are also losing the power to dictate the communications agenda as media channels and audiences fragment.

In fact, every New Zealand retailer is under threat from global mega brands such as eBay and Amazon, according to Eagle Technology retail sector account manager Doug Cockroft – because these mega brands have unlimited lines, lower prices and even free shipping.

The only way local businesses can defend their market, he says, "is by offering a superior customer experience through personalised marketing, in-store service and post-purchase service."

So how can small- to medium-size retailers create a truly great customer experience and earn precious loyalty which doesn't cost an arm and a leg?

For Mark McGeachen at Advance Retail Technologies, the initial decision comes down to 'Retail 101'. Fundamentally, he says loyalty depends on your retail proposition and the customer experience you deliver. "What is it that you're offering customers and do you offer it well enough for people to want to come back to you?"

Boost New Media CEO Nathan Donaldson says that knowing your customer is among the top five things that retailers need to embrace in order to benefit from their CRM system and gain loyalty. First and foremost, he says the CRM needs to link customers in the physical world to those in the virtual world. "Knowing what a customer buys across channels opens up many opportunities."

Secondly, Nathan says your CRM should know when a customer interacts with your brand on and off line – and not just when they buy something. What would be the impact for your business if you could reach out to all the people who visited a store yesterday but didn't buy? Or the people that have visited more than once a week but haven't made a purchase this month?

Thirdly, are your customers recommending you online? How do they talk about your brand online? Having a view into their social connections can help produce better targeted communication and offers. Fourth, be relevant! Know your customer online and in the physical store. Build loyalty by making offers that make sense for them based on where they are and their history with you. Offer exclusive early access to your best customers. Your CRM needs to support identifying your best customers and their needs.

Last but not least, Nathan says loyalty programs should be used to drive connection between stores and online. Incentivise staff to ensure that customers are identified at POS. Reward customers with real value. Ask for permission to communicate and respect a customer’s right to opt out of communication. "I think that there's a lot that can be done without spending a great deal of money. Simply getting email addresses at POS enables you to connect a person’s spending in store with their spending in your online store."

For Stu Lees at Ramsys Retail Management it's about "connecting the dots" between the online and offline retail worlds, and while many retailers have put that issue in the too-hard basket he says it's "not as hard as a lot of them think". In addition to having a good CRM system at the core of the business, Stu says there should be an e-commerce platform which integrates the online and in-store activities and associated data.

"That's true omni-channel," says Stu. It might cost $20,000 or more depending on the level of integration and sophistication, but he says the value of putting that data side-by-side could be immense to a lot of retailers.

POS software systems like Counter Intelligence and the associated e-Retailer web store offered by Kudos Solutions have built-in loyalty systems - and there's also a reporting module called the The Interrogator which can analyse data on any aspect of the business. The information's there and the ability to select it is there says Kudos managing director Bruce Hutchings. "It comes back to the retailer having the time and wherewithal to use that information."

Which is why a new insight-based loyalty and rewards solution called 'Collect' might just be the ticket for small retailers. In collaboration with the cloud-based POS software provider, Vend, Collect leverages off POS data to create a highly personalised, relevant and real-time loyalty programme that costs from $150 to $200 a month, and that includes Vend POS plus Collect.

"It's all available through the cloud on a subscription basis, so you don't need to buy truckloads of hardware and upfront software and development costs" says co-founder & chief collector at Collect, Brent Spicer. By identifying customers at the point of sale, he says that retailers can unlock rewards and treats and provide the kind of instant gratification that "time poor" consumers are looking for.

"It's a significantly better customer experience and people are more willing to join up because they don't have to carry cards or download an app."

Collect subscribers have a dashboard which Brent says provides "incredibly deep data" about customer behaviour – like the size of spend, time and frequency of visit and the products purchased – which can then be used to create very specific targeted offers and marketing campaigns direct to the customer. If you want to be more competitive in the retail space, Stu at Ramsys says e-commerce systems should send emails from store managers to customers who've signed up in their stores.

"That makes it very personal and it's going to increase readership and it's going to increase action. I categorically guarantee it."

"Dynamic marketing" is also critical for Stu. Rather than mass marketing emails to 500,000 people, individuals should be targeted with personalised, timely and relevant offers - like a well-known pet shop chain that follows up purchases such as flea treatment with a discounted offer of premium pet food for the family dog.

"It's about knowing who your customers are with as much information as possible and communicating with them." Given the rapid adoption of mobile and online shopping, Doug says the retailer who engages best with this new mode of shopping "will earn a greater share of customer wallet than their competitors."

And it goes without saying that there needs to be a seamless path to purchase in the ever-growing omni-channel era. But whether consumers connect by email or smartphone should be up to them, says Brent. "The power and the choice has to be in the hands of the consumer."

Either way, he says it's essential to be able to get to your customer "at the right place at the right time" because they're getting bombarded with so much stuff. To that end ABnote has recently launched a Digital Card - which can take the form of a loyalty card, gift card or voucher - that can be stored on a mobile phone using a digital wallet. The cards contain a 2D barcode as a unique identifier which can then be scanned to retrieve rewards.

"The beauty of it is that it's always in your phone" says ABnote Australasia Marketing Co-ordinator Isin Husnu. What's more, using GPS technology, digital cards can be triggered by location and time so that a retailer could send an appropriate discount offer or push notification. All of which leads to the other crucial piece in the loyalty puzzle - the use of location or proximity-based marketing technology such as beacons.

According to Nathan at Boost New Media beacons are a "huge opportunity" for retailers and if the focus is simply on the cost of implementing these technologies, they will never move forward. "They should instead be asking what is the cost of not moving?" he says.

Not surprisingly, Collect and Vend are now incorporating beacons into their offering by teaming up with Swarm Mobile to effectively track a customer’s retail journey. The beacon will recognise those who have the Collect app on their smart phone and could, for instance, identify where people spent the most time in-store and allow retailers to target offers accordingly.

By integrating the POS, loyalty and proximity technology Brent says "a very small retailer can afford to do this sort of thing now." However it's not so much the beacon that's important but the app it's connecting with, says Mark at Advance Retail Technologies. He says the beacon "is an incredibly dumb device", and while it has a role to play at a simple level of engagement, the real challenge concerns the quality of the app that consumers install on their smartphones.

Given that many apps are uninstalled within a few months, Mark says "it's got to be compelling enough that people want to keep it installed and keep using it."

Likewise with the use of social media. In his experience, Mark says retailers who try to monetise support on Facebook have discovered response rates have been very low because most people don't want to spend any money.

Which comes back to the basic proposition that if the shopping experience isn't something that makes people want to come back, "it doesn't matter what channel you stick over the top, you've still got the same problem" says Mark.

This article first appeared in New Zealand Retail magazine.