Retailers Use Analytics to Freshen Up Customer Loyalty Programs

by   |   February 25, 2013 7:47 pm   |   0 Comments

Attracting new customers is much more expensive than retaining them. Those really in love with brands are apt to become vocal advocates, and devoted customers are spenders.

Yet, customer loyalty is becoming harder to win. The Web is making it easier than ever to compare deals and experiences, and lower prices and negative chatter can make an otherwise faithful customer stray. Also, many loyalty programs aren’t satisfying customers: A 2012 study from the analytics firm ClickFox found that 63 percent of consumers surveyed do not believe companies are doing enough to reward their loyalty.

But analyzing customer data—like the kind gained through loyalty programs themselves or social media activity—can help improve the loyalty proposition by generating insights that organizations can use to build engagement with customers.

“Companies can benefit from advanced analytical techniques to design more relevant and meaningful communications, products, services, rewards, and experiences,” loyalty expert Bryan Pearson writes in The Loyalty Leap: Turning Customer Information into Customer Intimacy. “These are the anchors of customer loyalty, and when done right, they drive financial performance.”

Data collected through the revamped loyalty program of Jersey Mike’s Subs, for example, is enabling the sandwich chain to communicate with members in new ways. Last April the company went digital with its loyalty program. It replaced a simple punch card with the option of a plastic membership card with a barcode or a near field communication (NFC) sticker that can be tapped at a register’s reader.

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Participants still earn points for a free sub when they purchase sandwiches, but the new program reduces fraud—employees could be generous with those punches for friends—and provides a new mechanism for data collection.

About 950,000 people have signed up for the program, there have been about 57,000 downloads of the program’s mobile iPhone and Android apps, and about 870,000 members have opted to receive text messages. Now the chain can send texts like those promoting “double points Tuesday” at the store where the member joined the program.

CMO Rich Hope says he envisions additional marketing opportunities after Jersey Mike’s collects more data about members who have not chosen to be anonymous and integrates the information into its point-of-sale system. He anticipates being able to greet a patron by name at the register, for instance, and to send an offer via text, email or the app to entice lunch diners to visit for dinner.

“I think the net result is you’re able to reward loyal customers . . . but we’ll also be able to serve offers that are more in line with what our customers may want or what we may think they might want to try,” Hope says. “So that data really allows you to not just give a blanket offer to lots of people, but rather specific offers within specific groups based on their purchasing activity and their number of visits to the store.”

Nissan, meanwhile, is finding other ways to use big data to impact loyalty. The Japanese carmaker has added digital and social data over the last three-to-five years to enhance its vast transactional database—one filled with data from millions of visits for parts and service that customers made to thousands of dealers across North America.

“The ability to put that data together with what [individual customers] may be doing online from a Web analytics prospective and what they’re talking about in social media creates a pretty nice picture and a good source to work from once you reveal that enhanced view of the consumer,” says Mark Deep, managing partner of CRM and loyalty at The Marketing Store, North America. The agency counts Nissan among its clients.

Armed with that visibility, The Marketing Store can use predictive analytics to understand how best to engage with Nissan customers, exploring “what’s the right message to send to the right person through which channel and when’s the time to do that,” Deep says.

The agency can determine when to send customers an offer about servicing their brakes, based on details about their car, for instance. “Customers are more loyal to us since we anticipate their needs and deliver an exceptional service experience,” Deep says.

Nissan has collected lots of data for years, about customers and their vehicles, but social media data is allowing companies that have traditionally operated in thinner data environments, like consumer packaged goods, to build loyalty programs and interact directly with customers, Deep says.

Jersey Mike’s is bulking up its own data environment with its new loyalty effort and can provide more insight to its 600 locations, most of which are owned by franchisees. Now the company knows it’s averaging more than 1,500 loyalty members per store, which is one of many findings punch cards couldn’t have accurately revealed.  “This has probably been one of the best embraced programs by the franchise community for Jersey Mike’s ever,” Hope adds.

Mindy Charski (email: mindy@mindycharski.com) is a Dallas-based freelance writer. Follow her on Twitter @mindycharski.

Home page photo of Jersey Mike’s sandwich by Flickr user cogdogblog.







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