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How Shopper Data Helped to Identify Opportunity for Major Growth
Are you utilizing your customer data to optimize your assortment? Are you getting the most of your category segments? How can you identify the categories that have the highest opportunity for growth?
A major grocer turned to LoyaltyOne for help to answer these questions and to identify high potential categories where they could further grow customer spend. The grocer recognized its shopper data could be useful in recognizing opportunities and identify relevant actions to pursue these, but didn't know how.
Download this case study to find out how LoyaltyOne used data-driven results to identify a high-growth category and increase its' sales.
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A recent discussion article on Retail Wire asked how effective increased participation in FSI and digital coupon programs have been in helping retailers drive sales. This led me to wonder why have we seen an increase in couponing activity and, most importantly, to consider the two critical factors that I believe retailers should be taking into account before increasing their digital couponing activity to maximize their sales and ROI.
It's interesting to see the amount of FSI/couponing activity increasing, even as retailers and manufacturers know that redemption rates have not been great historically. I believe the reason has a lot to do with the perspective of the retailer or manufacturer. It's certainly appealing to look at any increase in sales as a good outcome so even a low redemption rate could be interpreted as a good outcome compared to what would happen without the coupons. Another way to look at the increase in couponing is to take a cost-driven perspective: the advent of digital has dramatically reduced the cost of sending coupons to customers, so why not send more coupons?
However, I believe the best approach is to look at two other factors. First it's important to consider the customer perception that is created by couponing efforts. If coupons are still only delivering low redemption rates, then it indicates the vast majority of coupons are not sufficiently appealing to customers. There's a significant hidden cost in this low redemption rate outcome: Retailers are sending a clear message to their customers that they don't know what is important to customers, they don't care about sending their customers relevant coupons, they're not sufficiently capable to determine what is relevant to customers or some combination of all three. Retailers wouldn't send a message to their customers stating that they don't care about them so why send customers irrelevant coupons that in effect do the same thing?
Secondly, retailers and manufacturers do not have an infinite amount of marketing dollars at their disposal so it is incumbent on them to make the best possible use of every marketing dollar. Sending coupons with redemption rates of low single digits does not tell of efficient marketing spend, even if the cost of digital coupons is low. With truly personalized customer marketing campaigns we routinely see response rates of up to 80 percent, incremental sales of up to 4 percent and ROIs of up to 150 percent. These sorts of results are possible with a customer-centric approach to marketing. It's probably not the coupons themselves that are not specifically effective, it is probably the analytics (or lack thereof) that are used to design coupon campaigns that are the cause of the low redemption rates. Increased activity should only occur if the outcomes are also improving. I hope that is what is driving the increased couponing activity and not other factors.
To read the full Retail Wire discussion, please visit:
The telecommunications industry, facing some of the same challenges as other commodity sectors, is beginning to take loyalty and engagement to the next level. Here are examples from several industry leaders, including Verizon and U.S. Cellular.
Earlier in February, I had the pleasure of attending the North American conference on Maximizing Customer Loyalty and Profitability in Miami. A strong cadre of big-name telecommunications and cable operators, as well as regional and international players, made a showing, and it was the perfect setting for an open exchange of ideas.
Telecoms face many of the same competitive challenges as other commodity sectors, such as grocery and fuel: How to land more customers, keep them longer, get them to spend more and choose one company over its competition … especially when that competition undercuts pricing by 90%. These firsthand stories illustrate how several major players cleared such hurdles.
THE FRENCH CONNECTION: ORANGE
Telecom giant Orange of France operated with healthy subsidies, two-year contracts and unlimited plans. Yet by the time industry rival Free Mobile launched its “almost free” offer, Orange and its two main competitors had not only lost significant market share, their business models had been entirely disrupted.
Cyrielle Moulin, director of customer relationship management and mobile, told the harrowing story of Orange’s downfall and recovery. With the keen insight that customers wanted simplicity and value above all, Orange pursued a market segmentation strategy and crafted two simple products to target precise customer profiles and attitudes. Staying true to the notion of simple, it even unlocked customer phones to free customers from the tyranny of contracts.
In the end, Orange lost fewer customers and recovered more quickly than its rivals, and its executives are now telling that cautionary tale to North American telecoms facing disruptive headwinds.
In an email after the event, Moulin explained the two products, Open and Sosh:
“At Orange, we had successfully launched a 4P-offer (internet, fixed line and TV plus up to five mobile lines) in 2010 called ‘Open.’ The idea was very simple and seamless for the customers: one contract, one bill and one customer service for the whole package. We were the first one to launch a real 4P-offer in France. Following up with the launch we conducted surveys and customers told us how thankful they were for having made their (lives) more simple with this offer.
“When we launched Sosh, in 2011, we knew one of the key points for succeeding again laid in the high-level of simplicity we could offer to our customers. As we specifically targeted digital customers, we also knew how sensitive they were with (the) Internet and its transparency. So we (built) our offer on reliability, trust and transparency and we bet on our customers’ engagement, without any contract. And it worked!”
ENGAGING THROUGH EMPLOYEES: VERIZON AND U.S. CELLULAR
Meanwhile, things are much less dramatic at Verizon Wireless, with customer churn hovering around 1%; but the pressure to lower churn while increasing revenue for each connection is a challenge. Mariano Legaz, president of the Florida region, said customer loyalty starts with employee engagement, and the only way to harness the power of the customer is by “listening, anticipating and responding to their needs.” Customer management starts before the customer has his or her first transaction, because Verizon invests in employee development with the view that “a customer remembers something free for two days, but their memory of a differentiating customer experience lasts forever.”
Kimberly Sebastian at U.S. Cellular was also on the customer engagement bandwagon, and her multichannel turnaround story yielded a 25% reduction in churn in 12 months, with a 70% increase in customer engagement while reducing average call handle times. In launching “The Belief Project,” U.S. Cellular prioritized customer retention, referrals and purchasing over the standard call center metrics of average handle time or other efficiency measures.
To ensure that customers came first, U.S. Cellular gave employees the power to solve customer problems and equipped them with the necessary tools, flexible offers and skill coaching to make it happen. It’s impressive to see such customer-focused initiatives in a traditionally product-centered vertical like wireless.
EYING THE STAR: BIG DATA
This last presentation at the conference – which was sponsored by International Quality & Productivity Center – caused quite a stir. Surprisingly, most participants at the conference were more doubtful of their own abilities to spur a customer- or employee-driven turnaround than one that relies on Big Data. In the complex and fast-paced world of telecom, nothing is easy; it seems that information is hard to manage, but customers are even harder.
For at least a decade, the vision for telecom has been convergence, but now that it’s here, Big Data has become the next big thing. Of particular interest were the presentations from cVidya on mapping data to a household and Nominum on leveraging untapped capabilities in domain name system software to build loyalty.
Of course, Big Data is not news to retailers or other customer-facing sectors, but there is an incredible amount of data being collected from mobile devices, web activity, set-top boxes, location analysis and unstructured data.
It’s no wonder marketers have stars in their eyes.
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THE LOYALTY LEAP
In his bestselling book, LoyaltyOne President Bryan Pearson draws on more than 20 years of first-hand experience. His expertise in building emotional loyalty in the information age is demonstrated through insightful stories from the trenches of the data-gathering and marketing communications fields.