Dear retailers, it’s time to let your customers start paying with data.
How do your customers usually pay you? With money?
Did you know that large retailers such as Amazon and Hema increasingly make their customers pay with their data, instead of with money?
As Ex-Microsoft CEO Roger Halbheer once said “if something is free, you are the product”.
Why is it that companies go to so much effort to collect data from their customers, instead of focusing on generating extra sales? This blog will attempt to answer that question, and a few others.
How well do you know your customers?
The more you know about a customer, the better you can coordinate your offers and marketing. A shot for an open target? Sure! But basically this ensures that you turn one-time customers into loyal customers because you can increasingly predict what their needs are.
What the corona crisis has taught us is how crucial customer data is, as part of a coordinated marketing strategy. Customer data is essential to be able to communicate well with your target group and also to create loyal customers. Fortunately, as consumers fully embrace digitization, this is becoming easier.
Not only do consumers not find it annoying, but they often rather enjoy receiving personalised offers. In exchange for their data, they get more convenience and nice extras.
Easier said than done
In theory, it all makes perfect sense. Collecting data means that the consumer is better understood and your marketing messages can be even more relevant.
However, in practice things don’t always run so smoothly. One example of this is the huge investment required for storing data, then you have to link it to your loyalty program - and possibly even develop your own smartphone app.
Which can then lead to other problems - will your customers actively use your loyalty program? If not, no data will be collected and your customer insights will be lacking, A great example of this is Amazon Prime. Amazon these days is more of a tech company than a retail company.
With Amazon Prime, consumers will have access to more and more benefits, provided they continue to share more data with Amazon. This starts with free deliveries, but continues to the exclusive deals and discounts on products relevant to you. What happens in the background is that they can build a complete customer profile, and then reach their customers as personally and effectively as possible.
This ensures that customers continue to participate in the program, because it is personal and relevant.
So, what's your cream cake?
To provide you another example, HEMA the Dutch variety store also tackles this very cleverly. With a very simple, but effective promotion they are able to get millions of Dutch customers to enjoy a free cream cake every year on their birthday.
Two very interesting things happen here. First, a loyalty program participant must trade in their birthday data for the cake. Secondly, as figures show, the consumer doesn’t just go to the store for that one cream cake.
On average, the birthday boy (or girl) buys 2.5 extra cream cakes. In fact, of customers who take advantage of this offer, 60 percent of customers also buy pastries, 8 percent buy fashion items and 7 percent buy party items.
So, is the goal for HEMA to make their customers happy? Sure! Although the real goal is to create an increasingly complete customer profile.
And this is a simple way to tempt people to share more data. A nice present. And then the birthday girl (or boy) usually buys other products, because they are already in the store, so what is your cream cake? What is the relevance that you add as a retailer, for which consumers are willing to pay generously? Not only with money, but with their data.
Enormous wallets are out of the question
The Dutch love to save. On average, a consumer has 11 different customer loyalty cards. However, not every retailer is given space in the consumer's wallet. Research shows that customers have the loyalty cards in their wallets from the shops they visit often, the rest ends up in the proverbial waste basket.
Yet I see that many retailers are still competing to earn that place in the consumer's wallet. This fragmentation makes it more difficult to achieve success with your program and therefore also to understand consumers.
How do you solve this? By making joining your loyalty program as easy as possible. Remove the barriers to participate and to continue to participate. The easier this becomes, the sooner the consumer will remain active and you will build up a lot of data about your consumer.
To illustrate the collaboration between Piggy & Adyen.
To make it as easy as possible for the consumer, Piggy has developed a partnership with Adyen that allows customers to collect points everytime they use their bank card. Everything to ensure that participation is and remains as high as possible.
As of 2021, I still firmly believe in loyalty programs. Only with data as the new gold will consumers also have high expectations when they start paying with it.
It's essential to run a super program and easy to make for your customers. Only in this way will you really get to know your customers and really bind them to you. The crucial element is coming up with your own "cream cake".
A good, attractive promotion, for as much data as possible. After all, in today’s world data is a form of currency.