Achieving new dimensions to information gathering
A wealth of valuable and useful data is captured with every swipe of a loyalty card
Loyalty programs are a veritable gold mine for retailers in more ways than one. Not only do they offer a means to generate repeat business and draw in new customers, the wealth of data than can be captured with every loyalty card swipe has become a priceless asset for future success.
When Indigo launched its plum rewards in April 2011 as an addition to the irewards program, membership swelled from one million to over seven million.
That groundswell of data has been a driver in helping the company understand customer buying patterns and develop targeted communications, says Sumit Oberai, chief information officer and executive vice- president, digital for Indigo Books & Music Inc. in Toronto.
“Ten years ago we were a lot more constrained in terms of how could manage all the transactions,” he says. “Now we have the ability to use it more effectively.”
He says when he came on board seven years ago, conversations were around storage and off- loading data. “Now storage is cheap and data viewed as more valuable. We never talk about getting rid of data. Where customer data is concerned we want to have as much as we can for as long as we can.”
The number crunching coming out of the loyalty program today is staggering, Oberai adds. “If you think of a matrix of six million members and three million [ product codes], that shows how complex it all is to make recommendations and target communications based on personal preferences.”
“When we built plum rewards and the capabilities behind it, we also worked on building a system on the back end that would allow management of all that information,” says Jennifer Hale, vice president of loyalty and customer intelligence at Indigo. “It’s still evolving today, as we test and learn what works.”
Focusing on data and infrastructure continues to be a priority for Indigo, she adds. “It’s so much more than offering points or discounts. It’s about what kind of experience can you have. Since we launched plum, the graph looks like a hockey stick in terms of the opportunities. It all translates into better business. Right now, we’re at the beginning of some great things.”
With 10 million active members, Shoppers Drug Mart’s Optimum program is another data generator of mammoth proportions. Jim Noteboom, senior vicepresident, business analytics and financial services, says the scale achieved through Optimum has added a completely new dimension in terms of gathering information. “As we know our customers better and better over time, we can tie more complementary events and offerings to Optimum members.”
The ability to apply more sophisticated analytics is a must in a world where personalization is integral to staying competitive. “Everything we do has to be relevant for customers,” Noteboom says. “Clearly, analytics to support decision- making has been elevated over the last five years. We now have the tools to achieve a much more sophisticated [ customer relationship management] approach and go deeper into offering options.”
He says there are some limitations in how data is organized to achieve that personal touch. “It might sound easy, but tracking a history of every personal transaction over a certain period of time and matching that up to customer profiles is a big exercise with huge capacity requirements. You have to have the foundation before you can start to do anything.”
The Optimum program is a critical component, since it not only allows them to move beyond simply collecting aggregate data on transactions, it increases instore spending. According to David Harrington, vice- president, business analytics and Optimum, the average basket for an Optimum member is 50% higher than a non- Optimum one.
“The data from the Optimum program helps us understand what’s important, why it’s important and what they don’t like,” he says “When it’s a non- Optimum person, we don’t have the opportunity to see how their tastes and preferences have changed. Being able to provide a context for what we see in the sales data is critical.”
While the investment is large and the analytics work substantial, he says retailers can’t afford to ignore the big data picture. “From our perspective you don’t have a choice. Our job is to ensure we are keeping up and ahead of everyone else. I think we’re only at the beginning of an evolution. There’s still a lot more that can be done.”