The Future of Loyalty Schemes – Part 2

This is Part 2 of this article. See Part 1 here.

The biggest objection we come across when building these campaigns is that the business has not got time to hand craft offers for every single consumer.

And this is valid.

It would not be a good use of business owners’ time to create thousands of offers all dependent on complicated combinations & permutations of data. Instead, the smart marketeers segment their data to create a few general behaviour profiles, for which they can formulate specific offers.

To start with, create a small number of profiles, into which the majority of customers will naturally fall, and then prepare offers that would appeal to someone in each of those groups.

As more and more data is collected, these profiles can be further segmented, ultimately leaving a group of ultra-specific profiles that exhibit, more or less, common choices & behaviour within that profiling group.

So how can a business increase profits using these systems?

There are a few options:
1. Attract more customers at a traditionally quiet time of the day, week or year.
2. Try to sell more to the buyer on their next visit (like a dessert, or wine – this works well if it’s related to what they are buying now)
3. Try to get the customer to bring more people along who will buy more
4. Use it to learn more about behaviour or test theories.

It is this last one that is so useful, yet often overlooked in favour of a quick profit boost. It is often well worth ‘paying for’ new information about that customer’s buying pattern by losing profit, or giving away product.

For example, a discount could be offered on a certain type of food (like a high margin Pasta dish, to use the Pizza Express example) to the whole customer base, to discover which profile groups react, and which don’t. By tracking the bill amount and comparing to an average visit, the CRM manager can also determine the extra profit (or loss) that visit has made.

By running these kinds of experiments regularly, the CRM manager can determine which offers trigger certain behaviours. Naturally, combing this with corporate strategy can help build more and more specific offers, all of which can influence buying decisions.

So what might the future hold for smart CRM-led marketing strategists?

Well, imagine a world where Tesco send customers a ‘We’re missing you’ card if they miss a regular shop*? Where Pizza Express predicts your next business meeting & sends you time sensitive vouchers that help shore up their quietest lunch periods? How would you respond if your next Starbucks purchase was accompanied by a voucher to try a new variety of the drink you most often buy?

The more you know about your customer, the more you can sell to him/her. (As Eugene Schwartz once said, “You cannot create desire – you can only channel it”.)

In its simplest terms, the art of good business is finding out what the customer wants, and then, giving it to them.

And if it’s exactly what they want, they’ll almost always pay a premium.

*Tesco.com does this already with it’s grocery delivery service!

This is Part 2 of this article. See Part 1 here.

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