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Retailers ‘missing a trick’ with loyalty schemes


Many retailers are not making the most of their loyalty schemes and are therefore failing to understand enough about their customers’ shopping habits, it has been claimed.

In a sluggish retail environment “knowledge is power” and businesses operating in the industry need to learn more about those shopping with them to stay competitive and save money on expensive marketing campaigns, according to Cindy Etsell, Head of Retail at tech solutions firm SAS.

“Retailers are absolutely missing a trick when it comes to loyalty - many retailers have customer loyalty programmes, but many do nothing with the data they hold,” she explained to Retail Gazette.

“If you apply true analytics to your data, you can learn an awful lot about your customers: what they spend, when, on what device, through which channels, and what they respond to in terms of marketing messages.”

She cited Tesco’s Clubcard scheme as an example of a successful loyalty programme, but warned other retailers that it is increasingly vital to understand shopper habits and personalise their messages to consumers. The Nectar loyalty scheme is also popular across the UK, and helps retailers in this regard.

The summer months have seen a high percentage of retailers reducing prices and undertaking a high level of promotional activity in order to attract shoppers into stores, as consumers in the UK show an increasing unwillingness to part with their cash due to economic pressures.

It is argued, however, that retailers that have a better understanding of their customers’ buying patterns may be in a better position to move away from money-off deals and instead provide a more personalised service.

New technology is emerging on a regular basis, such as mobile-proximity marketing, which sends shoppers information about certain products to their smartphones when they are in a nearby location.

Meanwhile, various face-recognition systems are also currently under development, with the aim of helping retailers identify customers as they walk into stores so they can target them with relevant advertising during their visit.

All of these trends highlight how technology is being used in retail to offer shoppers a more personalised experience, and Etsell is a strong advocate of this method.

“The key is differentiation,” she commented.

“Segmentation of your customer base and understanding basket size, preference and assortment is crucial to success – many high street retailers carry the same merchandise and address a specific audience so it’s important to know which customers interact most with them and how they like to do it.

“Knowing which customers spend the most with you is invaluable, as you may have customers who buy, return or spend a lot of time browsing but never make a purchase.

“There are other types of mobile technology that can help hugely, such as enabling cashless payments, or offer digital signage to help sell or promote merchandise.”

Scott Storey, Managing Director of retail management software & systems provider CTS Retail, believes that the current heavy focus by retailers on promotional activity is necessary but unsustainable, and advises firms to give more consideration to long-term strategies.

He suggests that a lack of investment in processes, resources and technology now could be harmful to a business in the future.

“The next few months are going to be tougher than predicted due to recent events and so it is understandable that retailers will want to focus on restoring confidence and luring customers back into store,” he argued.

“The reality however, is that if retailers do not focus on their medium to long-term strategies to deliver a seamless, consistent, customer experience across all channels, they will inevitably find themselves losing market share and ultimately, we will end up with even more closed stores on our high street.”

Published on Thursday 01 September by Editorial Assistant

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