Where are loyalty schemes going wrong?by
Despite cynicism towards them, loyalty card penetration rates are impressive. But research has revealed that most promotions received by card holders are totally irrelevant to them. So what's going wrong?
- Too few experts - Too many businesspeople believe that automated CRM systems can give them all of the answers if fed with large volumes of customer data. However, the ability to analyse and manipulate large datasets to produce meaningful and actionable insights is a sophisticated and rare skill. The most proficient analysts and database marketers tend to be those who have had experience within a third party provider. Since they are used to looking at data in many sectors and contexts, these professionals are able to conduct their interpretation in the context of a wide-ranging knowledge of consumer behaviours. This level of variety also tends to provide the best analytical brains with the greatest stimulus, making it difficult for single corporations to attract this kind of calibre into an in-house position.
- Too much irrelevant data - There are well known examples of retail loyalty schemes that cost millions to build but actually collected far too much data to be functional. Ideally the data that is truly significant for managing and encouraging customers to stay loyal and spend more should be identified right at the start but, all too often, this is not the case. Consequently, marketers are often not aware of what data is needed to identify, manage and encourage the behaviour of loyalty scheme members. Collecting too much data, and failing to understand which information is truly important, is in many instances preventing well-targeted, relevant customer communications from happening.
- Attitude of inertia - Resistance to change is undoubtedly getting in the way of marketing campaign relevancy. A certain level of inertia has appeared in the market because people are afraid to do things differently. Between 2002 and 2007 the economy was booming and poor practice, along with disappointing results, could be overlooked. Now, in the midst of a recession many of those who had not previously been using customer insight properly are panicking and simply continuing the same old poor practices, but at an accelerated rate. Customers are receiving more offers and communications, but only a third of it appears to be relevant to them.
Andy Wood is managing director at GI Insight.