The decision by Bundeskartellamt, Germany’s competition authority, to rule against Facebook’s plans to merge user data from Messenger, WhatsApp and Instagram is hugely significant and perhaps the first step towards the separation of data from the digital monopolies.
Consumers have never had it so easy. In today’s retail environment, they are spoilt for choice – not just with the vast array of products available, but where and when they can buy them.
Whether it is online, offline, or a mixture of both, shoppers have more information, more advice and more offers to pick from than ever before. This also makes them more discerning, more demanding and more savvy.
The key to success lies in personalisation. Retailers need to know who their customers are, what they like, and which offers or promotions are likely to drive them back in store.
Many retailers try to attract customers through loyalty schemes, offering personalised rewards for shoppers who shop with them frequently. There’s a loyalty card or app for almost everything.
These schemes help retailers understand more about their customers in order to deliver personalised offers, but not all shoppers are signed up to these programmes, even if they are loyal or frequent shoppers. And often, even if they are signed up, they don’t necessarily remember to swipe their cards or apps every time they shop.
You also need to consider that customers tend to exercise restraint in the face of so many schemes being offered. In ‘The Great Loyalty Reset Report’ from Merkle | 500friends revealed that most consumers concentrate their membership in up to five loyalty programs.
- 80% belong to five or fewer programs.
- 41% claim to be active in all of them.
Also consider that while loyalty programmes are popular, not all retailers offer them or ever intend to. The UK provides a useful snapshot. Looking at the grocery market, only 65% of UK adults are part of a loyalty scheme. This means there is untapped potential in the sizeable minority of the millions of shoppers who don’t belong to a loyalty scheme in this market.
In other sectors, the proportion of customers who aren’t members of these programmes is much larger − pharmacies (63%), retailers, physical stores and online (70%) and restaurants and coffee shops (75%).
Importantly, brands don’t necessarily need a loyalty scheme to understand their customers. But, how can retailers take advantage of this opportunity? How can they deliver personalised, targeted offers to all customers, not just the shoppers they can identify?
Data driven conversion
Data is essential for understanding customers. Retailers use it to analyse customer spend, frequency and purchasing habits. Used in connection with loyalty schemes, retailers can create an emotional connection with a customer that can keep them loyal for decades, or even a lifetime.
But for retailers without a scheme, or for those unidentified customers that are not members, real-time data still has a critical role to play. Particularly at the point of sale.
Despite the boom in online retail over the last 20 years, most of us still prefer bricks to clicks when shopping. More than eight in ten (84%) retail transactions still take place in-store. When a customer is at the till, regardless of whether they have a loyalty card or app, the point of sale presents the ideal time to engage with them and reward them with personalised offers and incentivise them to keep coming back in to store.
But retailers can only do this if they have the right technology in place.
Personalisation in real-time execution
Let’s take an example in fashion retail. A shopper who isn’t a member of a loyalty scheme and therefore cannot be identified, pays for their shopping (a men’s polo shirt) at the checkout. Or, for the sake of argument, this particular retailer doesn’t have a loyalty scheme yet still wants to track and reward customers.
The real-time data from the transaction has immense value if it can be gathered and analysed within milliseconds. With the right technology in place, key data attributes can be used to create an anonymised “shopper token” for this particular shopper. An offer relevant to this initial purchase (such as a discount voucher giving 20% off chino trousers to go with the polo shirt) can be printed at the end of the purchase and handed to the customer. Importantly, this offer can then be tracked.
When the same customer returns to the store and redeems this offer as part of a follow-on purchase, the new transaction data can be recorded, analysed and added to the “shopper token” to enrich what the retailer already knows about this particular customer. Again, in real-time, as the customer’s receipt is printed, a new offer can be generated and handed to them. This could be a promotion on a product that is complementary to their previous purchase (money off a dry cleaning service for example), or a “stretch spend” offer, encouraging them to return to the store in exchange for a discount, or simply an offer that’s relevant to what they’ve purchased that day, much like a “other customers also bought” recommendation online.
At every transaction, more data is gathered, enabling the retailer to understand the customer’s preferences, shopping frequency and average number of items in their basket at the checkout, without ever knowing who the shopper actually is.
Speed is essential. No customer wants to be kept waiting unnecessarily. As a result, the software needs to react quickly and process the data in real-time to return the right offer immediately at the end of the purchase.
The ultimate aim of these targeted offers is to take a customer on a journey of incentive-based purchases and in so doing, increase their loyalty to the retailer’s brand. If a retailer has a loyalty scheme in place, it is a sophisticated approach to driving adoption.
Shoppers are more likely to join the scheme if they are shown the value of receiving personalised offers and promotions, based on their needs, or indeed come back in to store if they feel it’s worth their while.
The key to engaging all customers
Real-time data is key. Engaging customers, giving them incentives like personalised offers and value-adds, and building their loyalty can be achieved, regardless of whether or not they belong to a loyalty scheme. It’s just a question of having the right software in place at the point of sale to ensure this real-time data is captured, analysed and used in the right way.
The ultimate goal? Engaging all customers. The benefits? For brands and customers, immeasurable.
Andy Watts is a highly experienced commercial and general manager with over 25 years’ experience in the IT Software industry. He is currently VP for sales and marketing at point-of-sale vendors, Ecrebo.
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