By Scott Logie, Chair of the DMA Customer Engagement Committee and MD, Insight at REaD Group
I recently had the privilege to chair the DMA’s Future of Customer Engagement event in Bristol. I lived in Bristol for nearly 10 years, loved the city and still do. It’s a vibrant, cultural hub with great art galleries, restaurants and gig venues. It also has a very active marketing community and that was evident both in terms of the 60 plus people who came along and also the wide range of speakers at the event itself.
The event was built around some research we have done as the Customer Engagement Committee. We’ve done a lot of research over the last few years and in all the studies have taken some time to focus on what the likely future trends are in terms of areas that consumers would like to use to engage with brands. Tim Bond, from the DMA research team picked out 4 key trends:
Chatbots – those virtual assistants who help you on-line. One of the key stats that Tim shared was that men were more likely to want to engage with chatbots than women (36% v 26%). As a middle-aged man, this didn’t surprise me, anything to avoid talking to real people. The sooner these are used to replace doctors, customer support teams and dental nurses the better!
Voice – generally seen as Alexa or Siri but really any voice activated device at home or on the move. The key reason given for using voice commands was convenience which makes sense. My worry here is how freedom of choice is retained as more and more decisions are left to devices to make.
Virtual Reality or Augmented Reality – using devices to bring locations or products alive. This is clearly one of the most exciting aspects to consider when looking at any future trends. Something we all (‘we’ two thirds of us) express interest in but the challenge here is how you move from something that is a gimmick to something that adds value.
Gamification – using competition, goals and targets to incentivise customers to change behaviour. As a Fitbit obsessive I really get this but haven’t linked any of my goals to a product yet. There are insurance companies, and banks as well, giving rewards to customers who can prove behaviour change – live healthy and pay less for insurance – why not!
In addition to the research we had a panel discussion around these four topics that drew out lots of areas for discussion, but for me the key point was that while tech is maybe driving some of the change we are seeing, tech alone is not the answer. This then brought us back to one of the main principles of the whole Customer Engagement campaign – to show that the brands that will win in terms of building long term loyal relationships will combine tech, data and creativity to achieve this.
The next three sessions were really testament to this. First of all, Ian Hughes from Consumer Intelligence showed how insurance companies from around the world are, right now, breaking down barriers and allowing consumers to buy insurance in ways that suit them. The main driver for this is putting the customer in control – so no more need to buy a large one-off insurance policy for your car when you only use it 3 hours a week; or using life insurance to purchase policies that can provide a real-life event for those left behind rather than just paying for the funeral. Interestingly, most of the innovation was being driven from outside of Europe and North America.
Neil Mackin from Amazon Web Services then presented on two topics. The first centred around how AI and Machine learning are impacting on lots of areas within Amazon – from distribution and warehousing to recommendation engines and next best offers. The second was what Amazon are doing to make a lot of the algorithms they develop available for use by brands, universities and just ordinary people. They are often derided as being the example of all that is bad with online retailing, killing our high street. However, the impression I was left with was one of a book retailer becoming a tech giant and using the work they do responsibly and sharing the learning.
The fun and informative final presentation was from Lovehoney, the UK’s largest on-line retailer for sex toys and lingerie. They are a real South West success story and grew out of observations made by marketers on what products were going to sell in the future and, guess what, sex sells! In addition to being probably the only presentation I have sat through where a full range of wild and unmentionable *ahem* toys were discussed repeatedly, the thrust of the session was really how well structured Lovehoney are around the customer – from staff training, product reviews, product testing, email comms and on-line interaction they showed how the customer is key to everything that they do.
In many ways that summed up for me the key takeaway from the really excellent afternoon, which is that all the tech in the world is useless unless you know the customer, know what they are like, what they want and then provide that to them in the most convenient way possible. As the world changes and what we see as traditional marketing dies away, the winners will be the brands, and the suppliers and agencies that support them, who really take that lesson to heart. Being personal is knowing the end customer, and ensuring the engagement matches their preferences using whatever technology and content that is available to do so.
By Scott Logie, Chair of the DMA Customer Engagement Committee and MD, Insight at REaD Group
The DMA recently published its findings from their research into marketer’s attitudes towards customer engagement (and how this compares to the perceptions of consumers). It has been fascinating to see where opinions differ in relation to brand’s engagement strategies and what genuinely engages consumers. A classic case of expectation vs reality.
From the consumer side, we have been conducting surveys since 2016 to discover how they feel about the attempts of brands to engage them, encourage them to purchase and entice them to come back!
The research reveals that marketers may be mistakenly over-valuing certain channels for engagement, such as social media, and overlooking more conventional channels that customers prefer. Additionally, while offers and price are still important, too much focus is placed on them when there are even more effective methods for gaining customer loyalty and attention.
Email and social media dominate customer engagement: 68% of marketers use email for customer engagement and 62% use social. Only 30% use post and only 17% use messenger apps.
As a prime example – supermarkets are beginning to discuss reducing the variety and selection of products available on shelves, and we are approaching a stage where technology might soon be making these decisions! However, consumers explicitly highlight ‘choice’ as being integral to their custom.
On the other hand, brands seem to be focusing their efforts on concepts such as portraying a ‘cool’ image and supporting personal development…which consumers aren’t overly fussed about. Unsurprisingly what customers are really looking for is functionality, whether that be for the product or the service being provided.
We also asked marketers which brands they believe have winning customer engagement strategies. Who came out on top? You guessed it – the omnipresent, inescapable Amazon! Nevertheless, brands seem to be underestimating the effect that the brand has had on consumers and the level of expectation it has created.
The Amazon effect is more pronounced than expected: 10% of marketers chose Amazon as the most engaging brand of the last 12 months, but the ecommerce company was selected by 14% of consumers. M&S, John Lewis and Sainsbury’s (all 4%) also fared well among consumers.
When considering acquisition and retention campaigns we addressed the key differences between them and how consumers and marketers might consider them to be successful. Once again, marketing communications seem to be mainly focused on brand awareness, whereas customers really want more and clearer information.
Engage your customers well and they will be loyal. However, those returning customers will then want to be rewarded, and this research has flagged that there are still a surprising number of brands ignoring loyalty programmes and the opportunity for additional engagement they provide.
Loyalty programmes are not universally offered: Just 49% of organisations currently offer loyalty programmes, despite 70% of marketers feeling customers enjoy and value rewards offered by such schemes. Again, consumers want more than points and discounts to feel they truly valued.
All in all, the survey provides some great insights into the current state of customer engagement and the challenges brands face to close this gap between their perception of what their customers want and what they actually want. While there is nothing wrong with making eye-catching communications, brands must not lose sight of the bigger picture and should asses their efforts today and strive for greater engagement tomorrow!
DMA members can read the full report here
By Scott Logie, MD, Insight at REaD Group
For most of us in the UK, we think that Black Friday was invented by Amazon but that’s not actually true. Police in Philadelphia first used the term “Black Friday” in the 1950s when large crowds of tourists and shoppers came to the city the day after Thanksgiving, creating chaos, traffic problems and looting opportunities.
The term soon grew throughout the U.S. and today it commonly marks the start of the Christmas season, where shops compete to offer the best deals.
The concept was first brought over to the UK in 2010 when Amazon promoted a range of discounts and deals to consumers – and we were hooked! Then in 2013, Asda held its own Black Friday sale which turned into mayhem, making national headlines as customers physically fought for flat-screen televisions. Since then the sales have grown year on year, although much of the shopping is now done online and is more of a weekend than a day, and has extended to almost every retailer and across different sectors.
In our house, the phrase “let’s see what we can get on Black Friday” delays any thoughts on Christmas shopping for at least a short period of time.
From a Customer Engagement perspective, I always find Black Friday a bit disappointing and this year was no exception. Every year I hope to see more personal engagement, more creativity and more relevance. In the year of GDPR when brands’ email lists have been decimated (using the literal meaning here) I had hoped that this would be the time to use smaller lists to build bigger relationships. I asked around a few friends and everyone felt the same; not very much of the messaging sent out felt that it was personal.
In general, the emails were all pretty much the same: We have a Black Friday sale, we have some offers and some might be interesting to you. For example, this one from Jones Bootmakers, someone I have bought from in the past has no products I have browsed, no styles I might like, in fact not even something that shows I’m a man (no jokes please). They do get time to make sure I know that it is only selected lines though!
Not surprisingly (maybe) Amazon got it right. They actually targeted based on what I’d bought, and the email body contained books I had browsed but not purchased. Even if the image was a bit generic (I promise I have never thought to buy a Call The Midwife book).
Am I missing something, surely the customers that retailers have now are the people who said they wanted to still be contacted? And surely, they are also the people who have either bought, browsed or given an indication of interest in certain products? This generates really useful data and that data should then be getting used in these sorts of communications.
This is it, the biggest sale day of the year and yet we send generic emails with generic content. As a data marketer I feel disappointed not just in the brands but also in my industry. After all this time we are still failing to get the basics of personalisation right most of the time. Is this down to lack of data being made available? Or is it a lack of imagination in using it? Either way we must do better.
So, a target is set: For next year’s Black Friday to get at least one email in my inbox, personalised to me, from a brand that I work with, who are using data well. See you then!
By Scott Logie, MD, Insight at REaD Group
The generally accepted wisdom is that the costs associated with repeat business are, for the most part, significantly lower than acquiring new business. Research suggests that 70% of companies say it’s cheaper to retain a customer than acquire one, while others have suggested that the cost of acquiring a new customer can be as much as seven (or is it four, five, six or 10?) times more expensive. None of this is new or shocking information and whatever the multiple, it has been shown to be true over many years and across many companies.
So why then do many brands continue to charge existing customers more for their products than they charge new customers? Research from Which? and shared by the BBC suggests that on average existing customers pay £70 more than new customers for Home Insurance. In addition, for combined insurance, the average premium paid for a policy 20 or more years old was £396 per year, compared with the £195 new customers paid.
I have recently had two experiences of this. First, when renewing car insurance for my wife and myself – we got quotes from our existing provider that had increased substantially from last year. We checked on a friendly meerkat site and saw we could move and save a lot of money. One call to the provider and they moved the price close enough for us to agree to stay.
We then had to renew the pet insurance on our large cat and dog collection. After many years of simply renewing we looked around and found better cover for a lower price from a very well-known provider. Half the cost in fact. We called again, and this time were offered only 20% reduction on the quote. They seemed genuinely shocked that we declined.
From experience, and this is not a defence by any means, merely an attempt to understand, there are a number of reasons this can happen. For example, the cost to acquire a new customer, along with lower rates to attract this new business, often means that the cost has to increase in year 2 to make some profit. Or maybe internal models show that these customers are loss making due to claims, so they force the second-year costs up to cover the claims made by the cohort they belong to. Or maybe the companies just think we are a bit lazy (after all around 70% of people still don’t move their insurance after year 1) and that we won’t notice.
No matter how we cut this, there is a problem. All of these approaches are company centric, not customer centric. As many brands and sectors have realised, focussing on existing customers can be very valuable.
Digitally native businesses, for example, value not only their customers but the data they have on those customers. Similarly, large retailers have invested heavily in loyalty schemes, in Sainsbury’s case literally in buying Nectar. This demonstrates investment in existing customers. They are not ignoring the acquisition of new customers but know that there is a balance to be struck.
That’s not to say that every customer is valuable, or indeed that every customer should be retained. Maybe my current car and pet insurers simply decided I was not worth keeping and tried to price me out of their brand but, in all honesty, given how they folded like a linen suit on the underground this July, I doubt that to be true. I think it’s more likely the case that those companies still have an “acquire at any cost” mentality that means the existing customer gets less attention.
It’s great to see that Which? are taking up the fight and that the regulators are going to look at this but surely the economics suggest that this needs to be looked at and rectified by the brands themselves. After all, it’s four, five, six, seven or ten times cheaper to retain a customer than acquire a new one.
by Scott Logie, MD, Insight at REaD Group
Many years ago, in the last millennium in fact, I worked in a large UK Bank. One of the projects we undertook was to segment our customer base. We started by breaking it down into lifestages, clustered each lifestage and then grouped them together. We then overlaid a lot of data including attitudes, lifestyle and detailed customer research by segment. This segmentation was then responsible for helping create the underlying marketing strategy. And one that worked amazingly well, we were getting up to 25% response rate on some of our outbound direct mail campaigns.
This wasn’t my first segmentation project although it was probably the biggest I’d tackled at that point. Since then I have been involved in many many more and frankly, I love them. Not just from a data point of view – they are pretty fun though – but also because they always throw up some exciting, interesting and useful segments for our clients.
Over the years, I’ve got pretty pissed off hearing about the death of segmentation. Because we can track the behaviour of every individual on-line, and have the technology to create bespoke plans for each of them, there is now no need to segment.
The truth is that when you have millions of customers, and prospects, to engage with, you can’t make every decision based on a detailed and personalised plan for every individual. So segmentation is actually still really useful and for me is the bridge between mass marketing and the nirvana of one-to-one marketing.
And segmentation exists in endless varieties. From the micro-segmentation of traffic arriving at websites, to the attitudinal or behavioural segmentation of a brand’s customers, to the socio-economic segmentation of voters, to the geo-demographic segmentation of media consumers, there is segmentation at work everywhere, and with increasing sophistication.
Segmentation is quite straight forward to do and powerful when used correctly. While each of us are our own person, in many ways we still act like a lot of other people. We actually do exhibit common patterns of behaviours and attitudes, and it is useful for brands to acknowledge and act on those patterns.
However, there are some important considerations when looking to create a segmentation.
First, be clear about the usage that a given segmentation approach is intended to address. All segmentations answer some questions but no segmentation answers all questions. Maybe you want to retain your most valuable segments then the segmentation needs to be lead by value. Maybe you want to understand where there is market potential, then the segmentation needs to address an overall market. Or maybe you need to understand the demographics and behaviours of your customers to drive content and creative, then the segmentation needs to be demographics led. It might sound obvious but a lot of segmentations are done without thinking about how they will be used.
Secondly, think about the data. A lot of the time I feel that data is chucked at a segmentation. I’ve been guilty of this myself, just throw all the data in and see what happens. Over time, I’ve learned that this is dangerous. Notwithstanding all the statto needs to normalise, scale and deal with data anomalies there are other important things to consider. The most important of these I believe is to split the data into what is going to be useful to create the segments and what is better being used to describe the segments – this is not always the same data.
Finally, this is not a data project. Segmentation is a customer project. I know it starts with the data but it should end with creative ways to engage customers and prospects and, sadly, that is never going to happen if the project sits in a data team (sorry geeks). So it is really important to engage the whole team early, get them to understand what is being done and why and that this project will fly if they get involved and give it some life. Some of the best projects I’ve been involved in are the ones where creative marketers owned the segmentation.
So the next time someone tells you that segmentation is dead, tell them you don’t think so. In fact, not only is it not dead but it is alive and well and thriving for brands that want to build bespoke campaigns for their customers. Tell them you are proud to be one of the people who sits in the segment called “believers”.
“Rumours of my death have been greatly exaggerated.“ – Direct Mail
Direct mail is alive and well! Far from being an outdated medium – when combined with latest technology, creatively and thoughtfully put together, personalised and targeted, Direct Mail is and will remain, a relevant and highly effective channel well into the future.
And by entrenching Legitimate Interest as a legal basis for Direct Marketing (in Article 47), GDPR creates a unique opportunity for marketers who have phased out or never used Direct Mail to embrace this versatile, tactile and creative channel.
Read on to find out why Direct Mail should be a permanent fixture in your marketing mix!
1. Direct Mail…Is opened AND read
According to an InfoTrends study 66% of direct mail is opened. Great start! If opened, 82% of direct mail is read for a minute or more. Impressive!
Not only that, the same study confirmed that of the 56% of consumers who stated that they responded to direct mail went online or visited a physical shop.
Those are some remarkable stats and conversion rates (unless we’re missing something) unheard of for any digital channels.
This is the really exciting bit…research confirmed that 62% of consumers who responded to direct mail within three months, made a purchase.
A well targeted, well-designed piece of direct mail can resonate with recipients in a way an email cannot. Something tangible and physically engaging can be a novel, tactile and enjoyable change from words on a screen.
Collaborative research by Millward Brown and Centre for Experimental and Consumer Psychology at Bangor University found that tangible materials leave a deeper footprint in the brain.
3. Direct Mail CAN be done using Legitimate Interest as the legal basis under GDPR
The prevailing legislation, GDPR, states in Recital 47 that processing of personal data for direct marketing purposes may be regarded as carried out for a legitimate interest
Latest guidance from the ICO highlights that all the legal bases for processing data under GDPR have equal weighting and the first line in the guidance on consent states: The GDPR sets a high standard for consent. But you often won’t need consent. If consent is difficult, look for a different lawful basis!
You won’t always need consent e.g. for postal marketing.
What’s more, if you don’t need consent (under PECR) you can rely on legitimate interests for marketing activities if you can show how you use people’s data is proportionate, has a minimal privacy impact, and people would not be surprised or likely to object.
4. Direct Mail increases ROI
According to Brand Science review. Campaigns including mail had 12% bigger ROI than those without mail!
5. Direct Mail makes consumers feel valued
The Value of Mail in Uncertain Times study found that 70% of consumers indicated that mail makes them feel valued. That’s an impressive stat – and all the more so for engendering feelings of being valued (an elusive goal for many brands).
And Direct Mail still resonates with every age group according to findings from a study by InfoTrends and Prinova.
In support of addressed and personalised mail, InfoTrends found that over 84% of respondents reported that personalisation made them more likely to open a direct mail piece.
*Sources: The Value of Mail in Uncertain Times, August 2017
6. Direct Mail creates a better impression of the company
“Tangible material leaves a deeper footprint on the brain”.
And scientists have proved it! The Centre for Experimental Consumer Psychology at Bangor University recently conducted an experiment using an MRI while presenting participants with both digital and physical advertisements. The results showed that printed materials not only make a deeper impression but are also perceived as more genuine!
Research presented in The Private Life of Mail: Mail in the home, heart and head confirmed that Direct Mail is more likely to grab the recipient’s attention.
Sources: Millward Brown, “Using Neuroscience to Understand the Role of Direct Mail,” 2009,
The Private Life of Mail: Mail in the home, heart and head
7. Direct Mail has longevity!
27% of all mail is still “live” after the twenty eight days*
Contrary to the transient nature of email and other digital channels – direct mail can be retained for weeks (or even months) and is more likely to be shared or interacted with by more than one person in the household.
And in his paper, Print vs. Digital: Another Emotional Win for Paper, Roger Dooley proved that while digital ads were processed more quickly, paper ads engaged viewers for more time and, a week later, subjects showed greater emotional response and memory for physical media ads. Physical ads also caused more activity in brain areas associated with value and desire.
*Source: JICMAIL Q2&Q3, Kantar TNS
8. Direct Mail is more believable
Research by Market Reach has revealed that 87% of consumers consider mail communications to be more believable*
In the age of fake news, malware and phishing, it may be that a growing unease and lack of trust with digital channels is fuelling an increased consumer desire for the tangibility and trustworthiness of mail.
*Source: The Value of Mail in Uncertain Times
9. Direct Mail is liked by Millennials!
It’s true, the born to be digital generation like and engage with direct mail!
The “Millennial” generation (i.e. born between 1982 and 2000) is now the largest living generation in the world. While many generalisations about these “digital natives” abound, that they do not like or engage with printed material is not true. Gallop research found that 95% of 18-to-29-year-olds have a positive response to receiving personal cards and letters.
A study by InfoTrends and Prinova – which surveyed a group of 18-66 year olds and their mail habits – also showed that 63% of Millennials who responded to a direct mail piece within a three month period actually made a purchase.
10. Direct Mail is good enough for Amazon!
Yes really! Amazon’s latest new (old) idea is….Toy catalogues!
According to Bloomberg News, Amazon’s first catalogues will be published in the US before Christmas and will be posted to millions of US households and also handed out at Whole Foods Market shops (bought by Amazon last year). There is also the possibility of a roll out in the UK to fill the gap left by the demise of Toys R Us.
This surprising move into print for the archetypal online retailer is further proof that print as a marketing channel is alive and kicking.
So, its clear that when executed well, Direct mail is an incredibly effective channel for response rates and engagement.
So what are you waiting for? Get in touch to talk to us about your next Direct Mail campaign.
At REaD Group we have been helping businesses of all shapes and sizes get great results from Direct Mail for more years than we care to remember. And with the advent of GDPR our services have become even more important and relevant to our clients (from optimising data selections and data quality to campaign reporting and analysis). We’re a safe pair of hands.
By Scott Logie, MD, Insight at REaD Group
At our recent GDPR briefing, a mere 3 days before May 25th, we asked those attending to sum up their final thoughts and feelings on the new regulation in 1 to 4 words. Needless to say, we received quite a range of responses! Many were whole-heartedly optimistic – ‘About Time Too!’, ‘An Opportunity’ while another begrudgingly conceded that it was a ‘necessary evil’. And one (we certainly hope they were being tongue in cheek!) simply labelled it ‘a pain in the a**e!’ – GDPR has been labelled as the 4 letter word.
‘Necessary’ seems like a very appropriate word. GDPR’s predecessor (the Data Protection Act) was introduced in 1988 – long before much of the technology involved in today’s marketing practices had been developed and before the amount of contactable data available exploded! Analogue legislation for a digital world.
There is no doubt that the last two years plus spent preparing for GDPR have been a challenging period for many. Particularly smaller companies who have more limited resources to ensure that they meet all of the new regulation’s requirements (of which there are quite a few).
Don’t give up!
Those who find themselves still just short of readiness, now that we are on the other side of the deadline, should not fall into utter despair just yet. To quote some sage advice from Hannah Crowther of renowned law firm, Bristows LLP – as long as you can clearly evidence that you are working towards adhering to the new Regulation (but haven’t quite crossed every ‘t’ and dotted every ‘i’), it is extremely unlikely that the ICO will come a-knocking. Information Commissioner, Elizabeth Denham, has been quite clear that they would rather use the carrot than the stick!
However, those who consider themselves to be ‘GDPR ready’ should not be taking their foot off the pedal – far from it! As a regulation, GDPR demands ongoing compliance which is no small task. Undoubtedly, once you have the proper systems and procedures in place and they have been adopted into company culture, this task should only become easier.
A ‘New Challenge’
While some are concerned that GDPR signals an end to marketing practice as we know it, this is hardly a bad thing! ‘Inbox bombing’ has become widespread practice over the last few years, to the extent that consumers have definitely become desensitised to email offers.
Marketing will not cease to exist now that GDPR is law, it will simply require some refinement and a change in approach – as well as a renewed focus on the consumer. There will certainly be a substantial dip in terms of contactable individuals initially, as companies determine which legal bases they intend to process data under.
Nevertheless, by using data intelligently to understand your customer base and utilising techniques such as segmentation and modelling, marketers will be able to offer consumers more personalised communications that they are actually interested in receiving. A ‘new challenge’ as one attendee aptly described it.
What is more, GDPR champions openness and transparency – consumers that are being contacted should now actually EXPECT to receive these communications.
Another word to crop up was simply the word ‘consent’. Truth be told this has been the main concern for the majority of marketers since GDPR was first incepted – and the media furore has hardly helped matters. However, in the FIRST statement of the ICO’s recent consent guidance it clearly says:
“The GDPR sets a high standard for consent. But you often won’t need consent. If consent is difficult, look for a different lawful basis.”
Don’t forget that there are five other legal bases for processing data, and in many instances consent may not be the right one to use. When it comes to honing your marketing strategy under the new legislation, it seems as though Legitimate Interest is in many cases the most obvious and appropriate for contacting prospective customers.
Mail has been found to be a much more trustworthy and tangible form of communication for consumers – and much more likely to yield a positive response. Furthermore it is a channel that has a much greater scope for creativity, as opposed to email which can be limiting, presenting an opportunity to create some truly engaging campaigns.
While our word collection was a fun exercise aimed at providing some levity before the big deadline, it was reassuring to see that so many people seem to appreciate GDPR as an opportunity and a change for the better. Regardless of people’s opinions towards GDPR, the fact remains that it is now LAW – no ifs, ands or buts!
See the full list of people’s GDPR words in the video below:
By Scott Logie, MD, Insight at REaD Group
It’s been a turbulent few months for the UK retail sector – Debenhams and House of Fraser both recently announced multi-million pound losses. On the other hand, Tesco revealed a rise in their annual profits to £1.3bn and Sainsbury’s and Asda announced a ground-breaking merger to make a super-supermarket.
The level of competition between retailers is reaching fever-pitch. Amazon’s seemingly never ending reach, the growth of online brands such as ASOS and boohoo, and the general rise of the discount retailer have disrupted a sector that has been slow to respond. It is therefore vital for retailers to demonstrate their value to consumers and develop robust strategies to capture and retain customer attention and loyalty. A strategy that has proven highly effective in both the past and the present? Loyalty schemes.
Is the loyalty scheme on its way out?
While some have criticised loyalty schemes in recent years, they remain a powerful way of connecting and engaging with customers. In our recent Retail Trend Report we found that there is an intrinsic link between how long a loyalty scheme has been running and the level of customer loyalty. The research found that Tesco lead the way in supermarket retailers when it came to customer loyalty – the Tesco Clubcard was the first scheme to be launched (in 1995). Consequently, retailers with less mature loyalty schemes have lower levels of trust – Morrisons was ranked 10th for customer loyalty and only launched its scheme in 2014.
Some critics have insisted that the loyalty scheme is dying out, however, Tesco’s announcement earlier this year that they were going to downgrade their Clubcard programme was met with widespread backlash from customers. The demand is still there it would seem. Loyalty schemes offer a tangible value and benefits to the consumer, and many budget and plan accordingly to make the most of them. They may not necessarily attract new customers but certainly encourage more frequent purchases and customer retention. Loyalty schemes have become expected as part of the offering by consumers – gaining points rather than just lower prices.
Changing consumer landscapes
It has gotten to the stage where many consumers are experiencing ‘’offer fatigue’’; being bombarded with endless 2-for-1-deals, flash sales and coupons to the point where they become desensitised to all of it. Comparable prices are no longer the differentiator, consumers expect retailers to offer them deals that are suited to their individual shopping habits.
With discounting so rife, consumers are no longer prepared to buy full price products unless they absolutely have to, which has meant that supermarkets like Co-op have suffered for a number of years now. In order to break the cycle, retailers must renew their focus on their customer loyalty propositions to make it worth customers investing their time and money in selecting their chosen retailer’s products. But how exactly?
The Digital Shift
Facilitating an easier process for customers to access their rewards is one way of tackling this challenge. Customers are increasingly using contactless technology and phones to make payments, and the prospect of carrying a wallet bulging with loyalty cards is becoming an increasingly unattractive one. It is high time that retailers shift their loyalty card schemes to digital platforms.
Tesco recently set an example by launching a contactless version of their Clubcard last year, followed by a Tesco Clubcard app. Customers who are presented with wads of paper coupons after swiping a loyalty card are, more often than not, unlikely to retain these for a future purchase.
Personalisation is key
Saving money is no longer the only priority for customers – they have come to recognise the value of personalisation and appreciate receiving deals that have been intelligently tailored to their shopping habits. Retailers therefore need to make sure that they are segmenting their customer data and analysing it to ensure that they are building and engendering trust and anticipating customers’ needs.
Building customer trust is a gradual process and not an overnight fix; this makes loyalty schemes more significant than ever before. Retailers must ensure that they are clearly explaining the benefits of a data-value exchange to their customers and remaining as transparent and open as possible.
Brands must demonstrate through these retail loyalty schemes that customers that consent to share their data stand to be rewarded for their loyalty and custom. And for those brands with long standing schemes already in place – now is not the time to abandon them! They’re a key means of understanding customer habits and maintaining valuable patrons.
The recent implementation of GDPR has provided a welcome impetus for brands to take this initiative. All things considered, by introducing loyalty schemes and using segmentation to enrich customer understanding, brands should soon enjoy better communication with an increasing number of data-savvy consumers.
By Scott Logie, MD, Insight at REaD Group
The robots are coming! Well, not quite, but the ever growing trend for implementing AI and automated systems to aid in our everyday lives seems to be showing no signs of slowing.
Recent research conducted by advisor company, Gartner, suggests that by the year 2020 a quarter of all customer service and support will incorporate chatbots or a similar form of virtual customer assistant technology. This seems like an astonishing figure, and one that has both positive and negative connotations.
The last decade has seen a huge jump in the proportion of people engaging on digital channels, and it is therefore hardly surprising that companies are investing more and more in these virtual customer assistants. Purely from a resource point of view such a transition makes a lot of sense; artificial intelligence (at least at this stage!) doesn’t ask for a pay cheque.
There is also a distinct advantage to the consumer – these automated systems are capable of functioning 24/7, without the need for sleep or coffee breaks. Furthermore, the prospect of a future free from hours spent on hold listening to Justin Bieber might not be the worst thing in the world.
However, when it comes to customer service, can human contact ever truly be replaced or replicated? According to research we conducted last year, 62% of consumers rated high quality customer service as the largest factor influencing brand trust and loyalty in the retail sector (Retail Trend Report 2017: New World, New Consumer).
While these virtual customer assistants are undeniably becoming more sophisticated all the time, it is the warmth of human interaction that creates this customer engagement. Some of these systems are capable of detecting frustration and anger in a customer’s voice and will transfer the call to a person in a call centre at a certain point. I find shouting down the phone helps. But by and large there is no doubt that they are still worlds away from being able to react and alter their response or attitude based on things like sarcasm and emotion.
There also comes a stage when we have to ask – where does this end? Do we eventually reach a point where human contact has been phased out entirely and we find ourselves reliant on machine to machine relationships? Say, for example, my bank bot detects that I’m overdrawn and applies for an overdraft on my behalf, and this instigates another chatbot which then decides whether to grant me said overdraft. The possibilities are dizzying, and somewhat terrifying – just one short leap to Skynet!
The question of trust and customer experience is not one to be overlooked lightly. The majority of consumers taking part in Gartner’s survey said that they find it difficult to trust VA’s to assist them with more complex tasks, such as handling their banking, insurance or utility issues (29%, 16% and 35% respectively). Therefore, brands will need to demonstrate to customers that they will still receive the same high levels of customer service once these technologies have been incorporated.
Perhaps if this predicted future comes to pass a balance will need to be struck between convenience and functionality. A system whereby technology and human work in tandem may be considered as an initial compromise – HAVA’s (Human Assisted Virtual Assistants). The idea being that when a VA is faced with a situation it cannot handle or a question it cannot answer, a human agent will then take over the conversation. The growing development of machine learning will also theoretically mean that VA’s are able to learn from these instances and adapt to resolve these situations themselves in future.
Essentially, it will remain to be seen how effective these VA’s are in maintaining the high levels of customer service that consumers have come to expect. Advancements in technology such as natural language-processing and machine learning are perhaps bridging the gap between the soulless and robotic automated systems that we’ve come to know, but can they ever truly hope to encourage the same level of engagement and replace human interaction? The next few years will certainly be interesting, but brands must be sure to put customer experience first, or risk dealing with the consequences.
By Scott Logie, MD, Insight at REaD Group
Working as I do in the data marketing sector, I am probably more sensitive to how my data is being used than most. As an industry we very proudly boast about how marketing used to be mass market and big creative idea led but it has evolved over the last 20 years to being content and data led. Indeed, we wear GDPR as a badge of honour that the use of personal data is now so high profile that new laws are needed to ensure that it is not misused or abused.
Also being from the industry I see, and also share, lots of case studies of how data is being used to create personal content, drive individual level communications or build real-time offers based on clicks, views and likes. But in reality, how much of this is smoke and mirrors? How much do consumers feel that they are receiving highly relevant communications and offers? How close are we really getting to one-to-one marketing?
There is a slide in a deck that I use a lot that states that the benefits to brands of getting the right balance on personalisation are very powerful with return on investment 30% higher for companies who use data and analytics to personalise their marketing and customer engagement (source: SAS and Forrester Research).
So there is a compelling business case yet, as a consumer, how often am I impressed by the marketing communications that I get? Honestly, not very often at all. What I get through the post is generally identical for me and my wife, often from the same company on the same day. My inbox is jam packed full of emails which are clearly sent out to everyone on a database but, hey, sometimes they have my name on them so it’s personalised, right? And on-line I’m pretty sure I see the same ads all the time and when I browse youtube or watch All4 I see the same ads as everyone else does.
We are creating a promise to build engaging, tailored, personalised content based on real-time data but we are not living up to that promise.
Other research I have seen has shown that only 25% of companies reckon their marketing could be described as personalised with around a third of marketing using some form of segmentation. Segmentation feels like a dirty word these days. It is often derided by many people. Why would you use segmentation when you can get to real personalised content by analysing clicks and likes? Why use a broad brush approach that classifies people into a number of groups when everyone can feel like an individual?
My response would be this – at least a segmentation can help to bridge the gap between mass marketing and one-to-one engagement. Call it practice. If we can tailor content, emails, adverts to a few segments then over time that can become automated and refined to get towards the personalisation utopia.
In many cases it isn’t even as if the segmentation doesn’t exist. I see a lot of instances, sadly, of segmentation work being done but the next step of tailoring comms and starting to move towards a more personalised customer experience just never happens. As a data analyst this makes me very sad indeed. Maybe we are not being forceful enough in showing the value of implementation, of helping achieve that 30% uplift in ROI.
The longest journey starts with a single step. My feeling is that many organisations are fearful of taking that first step. There is a lot of procrastination – it will take a lot of effort, it should be perfect when we go live, let’s test and see what level of difference it makes. Status Quo is the easy outcome, things are not too bad just now so let’s leave them as they are.
However, by not even trying to make a change we are letting the data down, we are wasting investment, we are letting the hard work by the analysts in creating the segmentation go to waste as well as the marketers who instigated the work.
But much much more importantly, we are letting our end customers down. The next time a decision is made, or more likely, not made, to defer the implementation of a more personalised approach think about this: Would my customers be impressed by the current emails I send them? Or the mail they get through the post from me? Or the ads they see on-line? Would they feel it was delivered just to them because I know them so well? If not then what’s the risk of taking that first step?
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