Has the internet changed the nature of the way shopping occurs in stores these days? more
The concept of session metrics is well known in ecommerce. For example Amazon.com does the analysis of the click-stream behavior of its customers so it knows what pages on the site you visited, what products you looked at even if you did not buy, and how long you spent on their site. It then customizes the site for each individual based on the click-stream analysis or session metrics of other.
Loyalty programs have been around since end of 19th century, and they were mass-marketed by companies like Betty Crocker and S&H green stamps in 1950s, 60s and 70s. But, in short, loyalty programs really haven’t changed in the past century. In fact, the last thing most customers want is another loyalty card.
But what if you were to give them something completely different – something that really broke the mold? Would they go for it?
Look at a relatively new entrant like Amex Blue. When it came out in the 1999-2000 timeframe, it was cool and appealed to the hip crowd. It was also the first quantum leap in a very static financial services industry at the time.
But I think it missed the mark because it was focused on the payment feature rather than on collecting true customer intelligence. Don’t get me wrong – the payment feature was nice but it didn’t provide a lasting competitive advantage. Once everyone else got on board it devalued the cool factor and became just another card.
But what if it had been capable of capturing a true 360-degree view of a customer? What if it had been able to track online and offline purchases with a portal to give the card owner and select retailers who opt into this platform a peek of what makes the individual customer tick?
Loyalty programs today need to move to the next level. They need to be based on truly getting to know the customer in a variety of environments and creating real relationships based on mutual trust and security. Then they need to segment customers into appropriate affinity groups, not just age ranges, thereby creating appropriate loyalty groups for each customer.
If you read the Fair Isaac Group article on Loyalty, it discusses the top five reasons for retailers’ dissatisfaction with loyalty programs. Conventional wisdom in loyalty programs says that price is the strongest lever to retain retail customers. Wrong. This increases sales only temporarily with no long-term effect on loyalty.
Promotions don’t increase lifetime value – they never have and never will. They may briefly increase sales, but they do nothing in terms of providing lasting value. Lasting value can only be had the hard way: by aggregating customer touch points and interactions, analyzing them, and then acting upon them to provide exceptional customer service.
