What is true customer loyalty? And how can you achieve it without compromising data privacy? According to Peter Hedberg, a senior customer relationship manager with SAS, true customer loyalty programs put the customer at the center of the relationship and use data in ways that are designed to please - not panic - the customer.
Explicit permissions and clear customer benefits are both essential to getting this "new deal handshake" right. Keep reading to learn more from Hedberg in this short interview.
How do stores and chains work to create customer loyalty?
Peter Hedberg: Loyalty cards and loyalty programs have existed for many years in the retail trade. Discounts, benefits, special offers, stickers and much else have been tried, but with mixed or no success. In practice, the stores have found it difficult to develop and strengthen customer loyalty, and this probably because we as customers are so price-conscious. However, most chains also work on introducing more channels and utilizing the increasing amount of information about the individual customer.
The industry talks about omni-channel, which means taking a unified approach towards the individual customer, regardless of whether this is face-to-face at the store, in the web shop, via phone or via mail.
Many talk about Omni-Channel and 1:1 but very few actually do it. This area both holds great potential and considerable challenges.’
How is it possible to strengthen and build “true” customer loyalty using data?
Hedberg: I can easily think of a whole lot. If the store has access to my preferences, then it can inform me of attractive deals within a given category. The chain can store and update a basic shopping list for me. The store can also make my purchase experience easier and faster because the item can be set aside, or because it knows my history, behavior and preferences. The store may also register both my and my wife’s purchasing behavior – and alert me if I am about to purchase four liters of milk, when my wife did so yesterday. Via my smart-phone, the chain also knows where I am – and alert me of attractive deals in nearby stores.
How do the stores gain permission to use the customers’ data?
Hedberg: In my opinion, permission is key to being able to provide these benefits. When it comes to the issue of data and protection of privacy, many companies hesitate. I can easily imagine, however, that the first major grocery chain, which openly and honestly makes an agreement with its customers will gain a significant lead and the “first mover advantages.”
They should ask customers if they can use the customer data to create benefits for the customer – and for themselves. They should make the “new deal” handshake of the retail trade with their customers. Why not just be honest about it?
How can the retail trade do this in practice?
Hedberg: It will be a huge strategic step, and the chain must be certain that it can deliver real and unique data-driven benefits and services to the customers. The chain needs to ask for explicit permission to use the data – and within each area where the chain gains permission to use data list the customer benefits which this will trigger.
The customer is then able to select and deselect and thus see the consequences of giving access or not. Personally, I appreciate the honesty and the customer benefits delivered. And I prefer that then the chain is honest, rather than working with my data secretly and trying to manipulate me into certain actions or behavior. Once we have seen the advantages and realized that this approach does not pose a threat, then we quickly adapt to it – that’s human nature.”
What is new in this approach?
Hedberg: What is truly new is to look at the individual customer and the individual customer’s preferences and data – and here we talk about all relevant data. If I give the chain permission to use my data, then it can see what I purchase, when I come to the store, and when I am near the store. They will maybe also know about my family, my dog, my car, etc. And if this wide data access triggers great benefits, then it is easy to imagine that the chain is allowed to learn even more things about me.
It is the individualization, which all these data initiate. Using an in-depth, data-based loyalty engine, the chain can work with much more specialized target groups and adapt to many different groups of customers with various needs and preferences simultaneously. Consumers need to know that the more the retailer knows about you as a person and your doings, the more benefits and services the store can offer you. But it all comes down to balancing transparency, trust and benefits, and the retailer has to have 110 percent control over data and privacy.
To get more in-depth information about customer loyalty, be sure to visit the Customer Analytics blog.