Unleashing the True Power of the Customer

Every retailer seems to ‘do loyalty’ these days, but few organizations fully explore and unleash the power of their customers. From the local car wash offering the sixth wash free, to a coffee shop offering a free pastry with the 10th purchase, thousands of retailers believe they’re providing loyalty programs that offer incentives to customers that retain, grow, and win their loyalty.

These programs are often operated on a very basic level, with no exchange of information other than a card that’s stamped with each purchase. Such programs do little or nothing for customer loyalty, but do have a serious negative impact on profitability. The truth is, many of these purchases would have been made anyway, and the programs merely discount a purchase that would have been made at full price.

Yet many retailers have a weapon that, if used properly, can provide a clear advantage over the competition and can totally transform their business. Many have loyalty programs that include data exchange—the main building block for true customer centricity.

This means they know lots about their customers’ personal information and shopping habits, which should, in turn, allow them to forge stronger one-to-one relationships by use the core disciplines of customer-centric retailing—be it through more localized in-store merchandising, or through regular, personalized communications that reward, delight, and incentivize customers.  

Ultimately, customer loyalty is engendered by delighting customers every day with superior service, product offering, value, and ease of interaction. Within U.S. grocery retailing, Kroger has been leading the way with customer centricity, data analytics, and CRM for quite some time now. But this can be replicated by others through expertly mining, refining, and defining relevant data sets to develop world-leading customer strategy and interaction.

In essence, this is a form of data democratization that can lead to significant benefits to retailer and shopper alike. It’s important to note that this form of data exchange can only work where strict privacy protocols are adhered to and shoppers understand exactly what information they are providing and what it’s being used for. A well-established set of principles should always be applied in these cases, namely transparency, added value, control and trust (TACT). Retailers that visibly apply these TACT principles can be sure of continuing customer trust.

Ease of interaction is where I believe most retailers have opportunities to forge new paths. In today’s world of increasing digital footprints, customers leave an ever-growing trail of behavior across many facets of their lives, whether shopping in-store, browsing online, using their smartphone, or consuming media.

All of these things can be brought together to fantastic effect. For example, if you have enough data points on a customer you can not only understand what kind of products they like to buy, but also how they like to pay for them, what channels of communication they’re most likely to respond to, what kind of offers they interact with, and what media types appeal to them.

Enter the mobile wallet. Smartphones are increasingly influencing shopping behaviors. Cyber Monday last year saw retail sales via mobiles and tablets approach $400 million in America, according to Juniper Research 2014. A 2013 study from Columbia Business School found that over a fifth of today’s consumers in the U.S., Canada, and the U.K. use mobile devices in stores to assist their shopping experience. And industry expectations are that the value of mobile transactions in North America will reach $37 billion in 2013, up 53% from $24 billion in 2012, says Gartner.

What better environment to grow this than in a traditional brick-and-mortar retailer? These organizations typically have high levels of trust from their customer base. If they can harness that trust and build momentum among key customer segments and influencers, they’re in a position to bring today’s technology to bear in offering a shopping experience that not only is more relevant to an individual, but also allows the retailer and customer to interact in real time with highly targeted offers. This can be delivered in an easy-to-use communication and payment vehicle—the mobile phone.

Taking this further, retail organizations across non-competing verticals could form alliances that offer incentives to customers, in return for information sharing. Think about the customer who buys a DVD or Blu-ray in a particular retail outlet. Wouldn’t it be beneficial for the customer if their local movie theater knew of their film preferences to provide special offers or alerts for upcoming movies of interest? This could become a closed loop—when that movie is available on DVD/Blu-ray, further incentives could be offered on having watched the movie at the theater, by providing discounts for a subsequent DVD/Blu-ray purchase.

Ultimately, bringing together related but seemingly disparate data sets is becoming increasingly possible, and the technology exists to mine and refine it successfully to mutual benefit. As the economy recovers and retail sales grow, the sheer volume of customers in the U.S. combined with more knowledge on how they like to interact with organizations, pay for services, and be communicated with, offers American retailers a fantastic opportunity to lead the world and change the face of retail forever—by putting customers truly at the heart of their business.

David Buckingham is president of U.S. Region Intelligent Shopper Solutions, Aimia

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