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Product assortment is a key factor
Product assortment is a key factor

Use your data to boost loyalty and sales

Retailers in search of ways to boost loyalty and encourage repeat shopping need only look to their existing data for answers. Effective customer loyalty strategies can lead to extra sales. BRYAN PEARSON reports.

According to a 2015 study from loyalty and customer engagement firm Colloquy, the average US household enrols in 29 loyalty programs but participates in just 12 of these.

Perhaps this is because there are too many loyalty programs or perhaps consumers perceive that the rewards aren’t worth all the extra effort.

Whichever the reason, it’s hard for retailers to build loyalty if their customers aren’t even interested in their loyalty programs. The time has come for a loyalty revamp. Here are five expert secrets that can be used to drive loyalty and bump up business.

Let customers drive

When it comes to developing or revamping a loyalty program, retailers shouldn’t overlook their most valuable information resource – their customers.

Chip Bell, senior partner of customer-experience consultancy the Chip Bell Group, says retailers rarely ask their customers what motivates their loyalty because they assume they already know.

“Customers are constantly changing; today’s fad is tomorrow’s antique,” Bell says. “Start a loyalty program by asking customers [what they would like to see in loyalty programs]. Look at the theme of frequent customer complaints as a path to the opposite end of the spectrum; it can reveal what matters most.”

Start personalising

Once the foundation of a good loyalty program is poured, it’s time to use the data but knowing how to put it to good use is one of the challenges of loyalty marketing.

"More than nine in ten baby boomers (93 per cent) feel overlooked and inadequately rewarded, according to ICLP research"

Retailers have a wealth of data on their shoppers but they often don’t know how to interpret it. This makes implementing a targeted rewards program difficult.

According to Debjyoti Paul, assistant vice president of digital business at Mindtree, an IT-services consultancy based in India and New Jersey, “The first step is to clean up the loyalty data to uniquely identify each shopper and form a basic profile [for each customer] that is trustworthy.” Once this is done, profiles can be expanded with personalised data. As a customer profile swells with information, retailers can then customise offers to match unique preferences.

Take a breath on breadth

Product assortment is a large factor in luring shoppers back in store. Inventory is often derived from loyalty insights but striking the balance between too much and too little is arduous. Total-store optimisation helps retailers assess the necessary breadth and depth of various categories.

“Consider the yoghurt category,” explains Graeme McVie, vice president of business development at retail analytics firm Precima.

“How many flavours of yoghurt are required versus how many sizes versus how many brands? Now contrast this with the spices category where breadth is required but not depth – there are lots of different spices but not many types of oregano, for example.”

This strategy enables retailers to align the depth and breadth of each category with the needs of shoppers. Then they can ensure the correct amount of shelf space is allocated to each category.

Cutting product can cut profits

Inventory is directly linked to loyalty and retailers should be careful before deleting slow products. Advanced analytics and loyalty data can unearth hidden value in items that may be slow sellers, according to McVie. “Retailers often rank and yank when evaluating their assortment; that is, they rank all items in their category by sales and de-list the bottom performers,” McVie continues.

Instead, he believes retailers should consider an item’s true value and customer importance when making decisions. An item’s true value is calculated by taking the total sales and subtracting the sales of any substitute items, which are items that shoppers would buy if the original item was no longer available. Then add to this figure the sales of other items purchased solely because they complement the original item.

This true value shows retailers that the removal of an item can cause flow-on losses. When stores fail to offer alternatives, customers are likely to take their entire baskets to another retailer.

Don’t forget the boomers

Retailers are right to target Millennials, particularly through mobile communications; however, if those retailers fail to offer the same opportunities to Baby Boomers, they could miss significant opportunities. More than nine in ten boomers (93 per cent) feel overlooked and inadequately rewarded, according to ICLP research. Consequently, they are less loyal.

These five loyalty tips may not be secrets, but they do offer insights into how to generate loyalty. Retailers looking to boost their return visits should use some of the above.

Bryan Pearson

Bryan Pearson is president and CEO of LoyaltyOne, and has more than 20 years' experience in developing customer relationship. Visit:

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