Issue 6

2015

Putting customers at the heart of your business

Why invest in a customer engagement programme?

In focus:Data driven loyalty launch delivers incremental profit to high street fashion retailer

ContentsIntroduction from Lindsey 1

Data driven loyalty launch delivers incremental profit to high street fashion retailer 2

Long live loyalty! How customer engagement programmes can stay relevant to the always on customer 2

Why invest in a customer engagement programme? 3-4

Putting the customer at the heart of your business 3-4

Customer engagement advice from the experts 5

I’m thinking...we can help 5-6

Beyond the data to holistic customer intelligence 6

Hi,

When we hear the term “loyalty”, there is a tendency to think about card based loyalty schemes that generate significant transactional customer data, which are then used as a powerful tool that marketing & CRM teams use to drive positive customer behaviours and keep customers coming back, spending more and more often.

Whilst the insight from such databases is powerful and allows us to understand customers once they have become engaged with a brand, it’s also essential to use other complementary data in conjunction with this to help contextualise the behaviours and bring in the “human” element to the numbers. Considering the needs and the expectations of the consumers helps to understand them as people, and brings clarity to their engagement levels and also what messages will resonate with them. Let’s face it - we are all busy and you only give attention to something that is relevant, and adds value to your everyday life.

And so this is why we continue to see broader areas of an organisation getting more and more interested in “consuming” the customer insights. How the customer faces a brand across touch-points is an area that we are really beginning to explore through customer panels and surveys as well as social listening data. What trends are influencing them? What are their motivations for choosing your brand? How are your products and/or services being received?

Combining the socio-demographic data, customer panels output, research and social listening together with the engagement models from customer or loyalty databases, you get a true and accurate picture of what your prospects and customers really look like.

If you are fortunate to have a loyalty programme with a broad reach (some of our partners are able to track 80% of their sales to a known customer) then combining with the above can give you greater possibilities and can go on to influence every aspect of your business, which we discuss further on pages 3-4. This is where the insight begins to add real value.

From understanding the customer landscape and trends right through to learning about direct customer interactions and engagement with your brand - loyalty is a 360 degree journey which ultimately starts and ends with customer insight.

In short, insight should enable you to create a strategy which will answer the question: given what you now know about your customers, what next action can drive future value and long-term loyalty, and how do I make it relevant to them in the world in which they live? Don’t forget the human context!

Thanks for reading!

General Manager

Lindsey Ulanowsky

1.

Long live loyalty! How customer engagement programmes can stay relevant to the always on customer

IN FOCUS

Data driven loyalty launch delivers incremental profit to high street fashion retailerIkano Insight works in partnership with a global high street retailer with over 400 stores across the UK. The retailer identified a need to deepen understanding of their customers in order to drive business performance – from merchandising decisions, to ROI optimised marketing campaigns.

A 15 year-old store card loyalty product was already in place, but this only delivered insight on a small proportion of the customer base that had a requirement for credit.

So, how did we do it?

The Objective Ikano Insight needed to deliver both a prestigious loyalty scheme with a large customer reach, and a strategy for the seamless migration of an existing base of loyal store card customers. The programme needed to deliver clearly measurable results, both for each individual campaign and the programme as a whole.

The Approach A launch strategy was developed, including a trial and a full communication plan for existing customers. Following the successful trial, Ikano Insight provided a full management programme including database management, technical platform, marketing strategy, data segmentation & campaign deployment:

• Dynamic view of their customer base: our sophisticated value and engagement model allows the retailer to understand spend behaviours, identify the most profitable segments, and respond to changes.

• Campaign analysis: detailed analysis of campaign performance allowed accurate decision-making about the targeting & relevancy of offers, timings and customer communication channel preferences.

• Location targeting: using distance analysis & GIS mapping techniques,

we analysed customer spend behaviours by store based on real customer travel times; which enabled the retailer to improve targeting of local offers.

• Predictive behaviour modelling: an advanced predictive model enabled the retailer to target customers whose behaviour changed from their standard shopping pattern, to target and retain its most valuable at-risk customers.

The Result The scheme is now over 4 years old and we continuously manage, shape and refine the scheme, driving value for over 2 million loyalty card holders and maximising return for the retailer, who has achieved their objective of extending customer reach.

They now make commercial decisions based on insight, driven by a deep understanding of their customers.

A recent report by Capgemini Consulting* who studied 160 loyalty programmes across the world found that “Nearly 90% of consumers have a negative sentiment toward customer loyalty programmes, often citing that they do not take the digital developments of 2015 into account.”**

Why, when loyalty programmes clearly bring rewards to customers, are they being viewed so negatively? Let’s look a little more closely at the reasons behind this, and what brands can do to turn these stats around:

44% say that they lack reward relevance, flexibility and value Customers want personalisation. Not only this, they expect it. The future is about offering customers a choice - would they prefer to exchange their points for discount vouchers, free gifts, or

experiences, for example? At the heart of personalisation is data collection, but to do this successfully you need to communicate the benefits to your customers.

33% say that there is a lack of a seamless multi-channel experience Currently, only 9% of companies offer reward redemption across channels. Making redemption available across channels is vital - customers shouldn’t just have to go into store to benefit, and brands need to provide consistency whether in-store, online or on a mobile device.

Whilst 97% of companies reward for purchases, only 25% reward for engagement Customers no longer just interact with your brand when they make a purchase and loyalty programmes should

reflect this. Social media interactions, gamification, app downloads and check-ins are all areas which can and should be rewarded. With the right tools and know-how, you can link these channels to your CRM to reward engagement.

In summary, programmes need to adapt and move with the times in order to stay relevant and engaging. Done right across the industry, that 90% of negative sentiment should eventually turn to a positive.

For more tips and insights, download our white papers on personalisation, technology & social media at ikanoinsight.com/media-room

*All statistics taken from Capgemini Consulting: Fixing the Cracks: Reinventing Loyalty Programs for the Digital Age

**Source: Consultancy.UK

2.www.ikanoinsight.com @ikanoinsight

When you think of it like that, why wouldn’t you need a loyalty and customer engagement strategy?

It takes 12-20 customers to replace the value of a loyal one

There are countless benefits to investing in a loyalty and engagement programme; notably to keep your customers coming back. Research states that loyal customers spend 13%

The customer landscape is changing; and as a result it is becoming increasingly difficult to keep your customers loyal and engaged with your brand. There’s increasing competition coming from angles you wouldn’t expect; with more and more brands diversifying into new services and products. As their options increase, customers are becoming very savvy, with higher demands and expectations.

Why invest in a customer engagement

programme?

3.

more during each transaction; and shop more often, with 20% more transactions from members of a loyalty programme (Source: Forrester Research).

Loyal customers who truly love your brand can become your Superfans. Word of Mouth is one of the most powerful marketing tools, and not only will your Superfans recommend you to their friends and families, but they will also harness the power of social media to spread your message at no cost to you.

Imagine being able to recognise and understand 80% of your customers and the impact this could have on all areas of your business?

Some of our partners’ loyalty programmes have up to an 80% penetration rate! Imagine what you could do by understanding such a huge proportion of your customer base? This could influence every area of your business from customer service to merchandising and finance.

Loyal customers spend 13% more during each transaction.

(Source: Forrester Research)

46% of customers admit to spending more due to a loyalty

programme.

(Source: Total Research Corp & Custom Marketing Corp)

46%

It takes 12-20 customers to replace the value of a

loyal one

It is six to seven times more expensive to acquire a new customer than to

keep a current one.

(Source: Bain & Company analysis)

6-7

4.www.ikanoinsight.com @ikanoinsight

“In high performing organisations, everything starts and ends with the customer.” Ken Blanchard, Leading at a Higher Level

When you look at all of the silos within modern business, still very much doing their own things and not working together to the benefit of the end customer, it looks like we could still be making significant gains by remembering this.

KPIs are usually geared in order for silos to meet their targets. Operations are designed to meet the needs of functional silos more than the customer, management are usually the ones making decisions around processes, when it’s the people on the front line who are closer to the customer.

We even have silos within the marketing budget. Does this sound familiar? ‘The digital team are responsible for that;’ ‘that falls under the CRM team;’ or ‘that comes out of the above-the-line budget.’ Can you believe we still hear these comments daily from ‘marketers’? The thing is people do the job they were employed to do: Head of Digital, Head of CRM, Loyalty Manager etc. The conflict lies with their objectives, which are not the customers.

We have all experienced dealings with a business being hard work and have eventually left the experience potentially feeling tired, emotional or even angry. When we then interact with a business that made our experience with them pain free, straightforward and possibly even pleasurable, isn’t it highly likely that you’d keep coming back for more?

Businesses need to recognise this and make the relevant investment into delivering the best customer experience. Invest in teams that focus on optimising the customers’ journey, interactions and experience across all of the different touch-points.

You need a new way of marketing; one that engages your customers on their terms.

The cost of loyalty

Customer loyalty and engagement should be viewed as an investment, not a cost. We have found for some partners that for every £1 invested they get £6 return - does this seem a lot to invest given the amount of data you will now be able to collect to start driving the desired behaviours of stretching spend, increasing spend frequency & consistency, and retaining your customers?

Loyalty and engagement programmes are an enabler to deliver increased data collection, providing measurable results that determine for every £1 invested what the ROI is going to be. What’s important is to give customers a value exchange – you receive their data to better inform your business decisions, and they receive rewards/benefits in return. This results in satisfied, long term customers who refer others to the brand they love. Not only this, but they will stay longer, buy more and more often – meaning increased profits for your business.

Some of our partners’ loyalty programmes have up to an

80% penetration rate!

Loyalty and engagement programmes provide you with valuable customer data which can be turned into actionable insight. You can track engagement as well as spending patterns and behaviours, allowing you to refine and target your marketing efforts, or identifying when a customer is about to leave you and taking action to retain them; as well as identifying where improvements are needed, either to your products or service.

Putting the customer at the heart of your business

Loyal customers spend 13% more during each transaction.

(Source: Forrester Research)

13%

For more information on the benefits of loyalty and customer engagement, download our “Convincing your CEO to invest in a loyalty programme” white paper at ikanoinsight.com/media-room

Customer engagement advice from the experts

A) I am regularly faced with this opinion when visiting businesses. But, think about the powerful statistics demonstrated on pages 3-4. Here are my tips for building a business case:

1) Ensure that your business case

is supported by examples and

case studies of brands who

have successfully implemented

programmes.

Q. I want to build a business case for a loyalty programme but I know there are sceptics in my organisation who will dismiss the idea of rewarding customers who may spend anyway. How do I convince them?

’m thinking… we can help

In each edition of Engage we invite readers to ask us a question about customer engagement, loyalty, CRM, data marketing etc.

Barry - Business Line Manager -

Partners, Sales & Marketing

On the agenda: • Loyalty - a business wide strategy• Making the complex simple: data

driven actionable insight & CRM

26th November 2015 10:00am-2:00pmDMA House, London W1W 8SS

FREE SEMINAR: Driving profit and ROIthrough customer loyalty and engagement

Join us to hear practical examples of how best to use insight, CRM and loyalty to really engage your existing customers and deliver omni-channel, measurable & profitable ROI.

• Predictive modelling interactive demo• The future of customer engagement

and loyalty marketing

Book your FREE place now at ikanoinsight.com/seminars

Beyond the data to holistic customer intelligence

2) The beauty of loyalty is that it’s

all data driven, so show them

the numbers: KPIs, ROI and

objectives and goals. Outline

how you will meet these and

by when.

3) Work with all departments

beforehand to talk them

through your plan and identify

any objections before you

present your business case.

Getting everyone involved

from the onset shows that

you have support across

the business. If there are still

sceptics, suggest running a

test or pilot programme before

rolling out fully.

Understanding your customers’ transactional behaviour provides great insight into their current and anticipated value, but what about understanding their needs and motivations on a more personal level? Or knowing what’s on the horizon that could have significant implications for your brand?

Our holistic approach towards customer intelligence for our partners enables them to develop customer centric strategies across the business. Two examples of this approach are:

Establishing customer panels - engaged customers who give regular input to research projects

Ikano Insight are experienced in establishing, managing and driving maximum value from customer panels, and how to avoid the common pitfalls!

Implementing panels means you can quickly and efficiently listen to your customers’ perspectives on key business questions. This can influence brand

positioning, new product development, and operations strategy.

Layering additional data sources can deliver enhanced customer personas based on needs, motivations and attitudes. Panels are also a cost effective way to conduct on-going research rather than commissioning separate projects.

However, a panel must be well-managed to remain effective – establishing a clear contact strategy, setting expectations with members and ensuring you feed back on action taken is critical to success.

Horizon tracking - understanding disruptive consumer trends

Knowing what your organisation might face in the future means you can evolve in line with changing consumer needs, demands and expectations.

To do this Ikano Insight uses Future Foundation’s nVision trend tool;

demonstrating examples of how trends are influencing behaviour and how organisations are responding.

Ikano Insight understands which trends are relevant and how they can be weaved into your business strategy. We also access a global network of trendspotters - local contacts who can answer specific questions on how a trend is manifesting itself differently around the world.

Challenging your organisation to think creatively in order to adapt to changing customer behaviours is something we’re passionate about, and we deliver workshops to drive out the best thinking from your business and provide key focus areas.

For more information get in touch via ikanoinsight.com/contact-us

6.

4) Use customer research to

support your case – if your

customers are showing a clear

desire for a programme, why

not give them one?

5) Finally, remember that to

achieve real value and ROI

of a programme you need to

put the customer at the heart

of everything – communicate

on their terms, and ensure that

there is a value exchange.Do you want to ask a question? Tweet us or email your question to barry.smith@ikano.net @ikanoinsight

www.ikanoinsight.com @ikanoinsight

Ikano Insight is awesome with data, but even better at relationships.And that, ultimately, is what turns customer loyalty into a business’s success

No matter what stage you are at with your customer engagement we have the intelligent, intuitive insight to help you achieve ROI and drive incremental revenue:

Do you want to build a new loyalty or customer engagement programme?

Do you want to improve an existing one?

Or do you simply want to turn customer data into actionable insight?

For more information please contact: Barry Smith Business Line Manager - Partners, Sales & Marketing barry.smith@ikano.net

07551 671 825 0115 850 3644

www.ikanoinsight.com @ikanoinsight