Wednesday, June 1, 2011

No Card, No Benefit, No Data. In Retail Loyalty Programs, Who Is Served By This Policy?

A puzzling practice has come up a few times in recent conversations with consumers about retailer loyalty programs.  We know that consumers join loyalty programs for the presumed upside of discounts, sales, rebates, etc., all from their membership in a particular program.  From the marketer’s perspective, what’s the purpose of a loyalty program?  In the old days it may have been as simple as the increased spending by a consumer due to the presumed upside of collector promotions, discounts, sales, etc.  But, in today’s data driven world, getting the consumer to enroll in the program is first and foremost about segmentation and targeting; demographics, how often a consumer shops, how they shop, how much they spend, what they buy and when, shopping frequency, etc. With this information, the marketer can tailor it’s messaging to the consumer either at a kiosk, the point of sale (i.e. receipt/checkout coupons) or via email, txt messaging, a website, an app, or the old reliable direct mail piece and of course some combination of the above. 

Regardless of the method of communication, the engagement or campaign is targeted based on the demographic and behavioral data collected during shopping.  Both parties win because of the presumed value of their participation.

This is why I am so puzzled by retailers that have programs where they go out of their way to get in their own way of collecting the very data they can otherwise be so adept at leveraging with their customers.  Two examples are retailers that insist you carry your loyalty card with you at all times or they won’t let you participate for the visit and retailers where they will put in the default customer code so you can take advantage of the specials, losing the ability to track you for the visit.  Neither approach makes much sense.

For the marketer, it’s not about the specials – that’s for the consumer; it’s about the data, the data, the data, oh and the data.  If a consumer doesn’t have their card, take their phone number and unlock the riches of their data.  Of course if a customer is not signed up in a program it’s a completely different story.  But if they are in the program and will provide an agreed upon identifier, just do it.  The marketer stands to lose far more in the above two examples than the consumer gains if they were to give a false id (ie: someone else’s number).   

Forget the card only attitude, and while the consumer appreciates the benefits of the default customer code, it is a lost opportunity not to get that link to the data.  Retailers (after the marketing starts), must keep your eye on the prize… 

In a future post I’ll talk about another consumer annoyance, that of message relevance – one of the expected yet squandered benefits for both parties in the loyalty program relationship.


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