In the 1950s, stores gave customers redeemable Green Stamps based on how much they
bought. It was a crude precursor to today's loyalty programs. In addition to the old stalwart
frequent flier programs, now it seems as if every retailer wants customers to sign up for
their loyalty programs. If your keychain bristles like a porcupine with dozens of plastic fobs,
you're not alone. In 2000, Americans held 973 million loyalty program memberships. Today,
according to Colloquy's 2007 Loyalty Census that number is 1.3 billion -- or about a dozen
for every household.
To customers, there's not much to loyalty programs; on the surface they appear to be a
simple piece of plastic and a "Here's how much you saved" line at the bottom of a receipt.
But experts at the W. P. Carey School of Business say that for companies, the programs can
be phenomenally more complex and important than taking a trifling percentage off a
customer's bill.
Building loyalty with technology
The name -- loyalty programs -- belies the larger purpose behind them. While it's true that
companies want their customers to be loyal -- to always shop in their store or fly on their
airline -- there is now much more riding on these implementations. Companies don't just
want you to come back and shop again (although they hope you do); instead they also want
to know what you buy, when you buy it, why you buy it and what else you want to buy.
Companies want you to come back tomorrow, but they want to upsell you on the artisan
baguette versus the plain white bread, and while you're at it, they'd also like you to pick up
the olive tapenade and the imported brie. Not only will you like them, but their margins are
Your purchase is stored in a database which records everything you buy and have previously
bought. With the resultant mountains of data that accrue over time, a company can bring
data mining and analytics to bear to isolate trends and patterns. That data may be applied
at a macro level where a store will, for example, see that people buying upscale bread also
like fine cheeses and may, thus, conveniently place the two next to each other. On a micro
level, stores send coupons to individuals for specific products based on their own personal
shopping history.
In addition, tracking sales per individual lets a company see who's profitable and who isn't.
Casino loyalty programs look for high-spending customers who are good losers; not
surprisingly, more effort is put into attracting and retaining them versus gamblers who know
when to hold and when to fold.
On top of all of this in-store data, companies can now easily overlay outside information,
says Goul. This may be personal data that correlates your shopping with your credit report
or it may be broader data. Companies may correlate your soup-buying or ice-cream-eating
habits with the weather. In essence, companies now have a ton of data at their disposal.
Tx:wtn
No comments:
Post a Comment