When Apple announced its new Passbook feature with the new iPhone5 and iOS6, it was obvious that it was going to have an unprecedented impact on the way loyalty programs and mobile phones play together, especially considering the sheer scale of the Apple iPhone/iOS universe.
The One Passbook To Rule Them All: Apple has created a central repository where all of a customer’s loyalty cards, tickets, and boarding passes can reside, and make it very easy to find them, and use them at the cash registers. The Passbook is not a stored value card – and Apple has not followed Google and others on the NFC Bandwagon. This could be due to security flaws found in most NFC implementations, but also for the additional complexity of hardware that can read NFC. Basic information is available on the front of the passbook, but more information can be seen on the back by tapping the information button. Terms and Conditions can also be maintained and accessed easily.
Loyalty Cards: Your Customers can now download your own loyalty cards from a link they receive from any mode of communication (Email, Text, Social) right onto their iPhone. The layout of the card can be customized based on Apple’s specifications, including the pictures, colors, and the fields that are shown on the front and the back.
Coupons and Offers: Individual Passbook cards can also be created for Coupons and Special Offers/Gift Cards apart from Loyalty Points. The same can be downloaded from a link, and redeemed through a barcode or QR Code.
Push Notifications: Once downloaded, points and other details can be updated through push notifications enabling far greater engagement – the moment a customer gets more points, they will get a notification, and they even view updated information about their program, or get a notification when there’s an offer for them etc.
Geo-Fencing: Passbook automatically maintains a set of locations most relevant to a particular card, and it surfaces up when you cross one of those locations. This virtual location awareness is called “geo-fencing” – and is become quite popular as a way to excite customers to come into the stores with special offers when they are around. Due to the prevalence of iPhone, it is expected that Passbook could easily be the most common geo-fencing application.
Unprecedented Engagement: Most retail mobile applications see far less engagement than we would like – and Passbook will change that. It is automatically available for all iOS 6 (iPhone 3GS and above). The fact that there are an estimated 7 Million iPhone devices active in the U.S. alone will have a tremendous impact on its adoption and engagement.
The obvious implications for retailers is that, the now quintessential iPhone will evolve into a key component of their loyalty/customer engagement strategy. This strategy will be driven by ‘Social’, ‘Local’ and with the last mile delivery, over ‘Mobile’ – and the prevalence of the iPhone will mean that this will happen at a scale not seen before.
Apple Passbook integration is already available with Capillary at no additional cost.
Segmentation is not a new concept to retailers. Looking into the analytics framework which has been developed over time, segmentation was traditionally one of the easiest ways to target customers. Ever since the birth of commerce, every retailer has been segmenting his customers based on their gender, class, purchasing power etc. Analytics and segmentation were simply regarded as ‘experience’, ‘trader’s instinct’ or simply ‘gut feeling’. However, with the rapidly changing customer psyche, mere segmentation is not enough. To meet this challenge, statisticians started segregating customers into groups based on multiple dimensions or as it is formally known – micro-segmentation.
Retailers worldwide observed that the response rates for mass campaigns have consistently been very low. Due to this, they revisited the customer databases and started campaigns targeted toward micro-segmented customer pools. India is a 1.2 billion strong country with an intricate mix of cultures and taste, and with the number of options available in market today, the one-shoe-fits-all theory cannot sustain among such diversity. New expectations from customers can be met by providing an offer which is suitable to them and makes them feel special, which can be made possible using micro-segmentation.
In international markets, large retailers have already made headway using micro-segmentation. Retail major Tesco has started dividing its customer pool into 5000 micro-segments with 250,000 personalized offers to target them with. Every retailer has experienced very high returns on micro-segmented campaigns, primarily due to personalisation. It requires minimal investment when compared to other operational investments. To arrive at such high number of micro-segments, it is necessary to validate those segments while drilling down from 3 or 4 segments to 1000-fold more. This is not a one step process, in fact, it is required that it be proceeded in an experimental manner validating each level of drill down.
Marketing has always been an expensive proposition; the marketing managers are finding it very hard with each passing day to justify the cost of marketing and its impact on the business. Print, electronic, OOH – There is a massive clutter across all media which demands a bombardment to get the message through, be it ATL or BTL. On the other hand, micro-segmented campaigns allow the managers to validate each activity and garner profit from each one of them. With any plain vanilla offer, we have observed a response rate of 1.46%, which increases to 2.58% when the activities are personalized and sent to the right customers. Response rate can also go up to 25% based on the number of micro-segments, segment characteristics and design of the offers to that particular segment. Most of the time, running micro-segmented life cycle based campaigns along with loyalty rewards can increase the topline sales by 5 – 10%. Simply put, it’s all about “the right offer to the right customer at the right time”. Due to this, micro-segmentation (personalisation) can also create word of mouth as similar to ATL, but for a lot less money.
Recently, a popular F&B brand who is also a Capillary customer, adopted the next generation of customer engagement solutions for their home delivery business in India. In a complete, end-to-end approach, Capillary Technologies designed separate lifecycle journeys for the different customer type. Based on the available customer data, specific offers were then created for each micro-segment which suited the customer’s taste as well as the purchase behavior. For example, within the ‘Golden Pool Premium’ customer segment, the customers were given a ‘non-aggressive offer’ which has standard discounts and offers which are suitable to the customer’s taste or benefits (in-store promotions) and a customer which is in ‘High Value Explorer’ segment will be given an ‘aggressive offer’ with more benefits if a purchase is made.
Capillary then clustered the customers based on their behavioral indicator such as preferred day and time for ordering – weekday or weekend, lunch or dinner, customer spend etc. and use these to trigger the campaigns. This enabled the F&B client to reach out to the customer when they are most receptive to these offers and therefore increase the acceptability of the offer. For example, using micro-segmentation, Capillary identifies that a particular family of 4 members, often calls on Saturday afternoons to order the food. Using this information, the system can identify the right offer and send an SMS to them on Friday evening or Saturday e.g. Dear Mary, Enjoy your Saturday afternoon with your “favorite food”. Your voucher code is ASD313. Call at xxxxxxxx to place your order now. Within days of the launch, we witnessed a phenomenal increase in the hit-rate across all micro-segments. Customers also found these campaigns accurately relevant and thus responded to each campaign favourably.
Though micro-segmentation is a powerful tool, it also relies on some factors to produce the best results. Ideally, the volume of customer data should be huge. Large data allows the customers to be micro-segmented in a much deeper level, thus increasing the level of accuracy. The diversity of the customer pool also plays a crucial role, varied cultures and characteristics define the different segments much better. The right time to micro-segment is when the market is saturated or retailer is losing to the competitors. These are clear indicators that the customer is asking for a “differentiation” and the campaign response rates are not favorable, thus creating the need to micro-segment and reassess the marketing activities.
It will also help the retailer to identify the right offer from the pool of offers and personalize them as per customer needs. Moreover, it increases the customer retention with a visible rise in the repeat business. Micro-segmentation, when done correctly, can increase the brand loyalty manifolds, within a short period of time, truly bringing the retailer to the next stage of retail evolution – The Personalisation Era.
One of the most ubiquitous quote in the retail world is ‘Customer is King’. But when the consumers have a long line of retailers as suitors, it is only natural that it will require a lot more than vanilla marketing to win them over. And just like everything in our lives, the loyalty program has to evolve to make more sense to today’s consumers.
For most consumers, the world has become faster, with more choices, multiple channels competing for their attention as well as thousands of personal conversations brands have with them. In this environment, being able to break the clutter and create a connect at the right time is critical – and what better time to start that conversation than when the customer is in the store, on the mobile phone – a medium they carry with them at all times – and engage with them in real-time.
Instant Gratification is the Cornerstone of Real Time Engagement
Perform a simple experiment: ask ten people around you if they remember the number of points they have in their favourite loyalty program. Our research shows that eight of the ten people will be unable to recall this. Most loyalty programs communicate with the customer when they have gone back home, and by then the interaction is not on the top of their minds. The right time to talk to the customer is when they are in the store – when you get most of their attention.
If a customer buys a top and a retailer is able to suggest matching skirts, probably top it up with a small offer, the likelihood of that being picked up is the highest. For one, the retailer is able to cross-sell and monetise the current visit of the customer, and at the same time, this discount offer is better for the retailer’s margins since it could be much lower than what is required to make the customer drive and come to the store.
Recently, a UK based department chain, launched a real-time engagement campaign with Capillary. Within three days of campaign, the average spend per customer increased by 36%. The campaign was designed to engage the customers in-store through SMS while making a purchase with relevant offers based on their current and previous transactions. By the end of the campaign, the stores witnessed an average of 141% increase in top-line numbers.
Delight Your Customers with Experiential Rewards
Being able to provide the customer with the best product or service is not enough today, the experience counts as well, and every small little thing you can do in this regard has an impact as it’s these small things that consumers remember, building deeper relationship and loyalty. If a customer just finishes a long shopping trip, and the retailer is able to delight them with a foot massage available in the spa next door, the retailer has definitely won them over.
This is relationship marketing at its best – and by using technology intelligently for the right communication at the right time, retailers are able to today realize what used to be an unmanageable item on the wishlist. The customer is enveloped in the shopping experience, and additional rewards or communication is very personalised and directed. This is also sharply in contrast to the countless, irrelevant messages people get when they are at work, or busy elsewhere and the messages become more a source of nuisance than information or engagement.
Connect Better with Younger Audience
Recently, Starwood Hotels & Resorts launched a campaign to reward members of its ‘Starwood Preferred Guest’ loyalists by offering free points and free-night awards for those who check in to properties worldwide via the local social network, Foursquare. They may form a small segment of their customer base, but they are extremely valuable with substantial lifetime value.
In other cases, retailers are able to surface social network activity in their vicinity to their store staff helping them react better to valuable customers, giving them the right suggestions, and up-selling based on their likes and dislikes – all this happening magically in real-time by the power of the mobile phone and the internet connection.
Empower Your Store Staff
Most retailers ask me why is in-store communication and visual merchandising not enough – the answer is threefold:
Firstly, in today’s fast paced world, decisions need to be taken quickly which means lead time for staff training & communication and collateral printing is very low – instant mobile communication gives a simple way to perform interruptions and iterate quickly. This is especially true in very busy stores, where the cashiers hardly have time to breathe let alone trying to indulge in a discussion.
Secondly, in most cases, taking away the decision making power on deciding the gratification also mitigates fraud scenarios. The brand is able to communicate with and give offers to the customer directly and the rewards can not be kept aside by the cashier without the customer’s information. This also gives the customers a consistent experience across different touch points and stores, thereby leading to higher loyalty.
All this has to happen in real-time. We are quickly moving into a phase of intelligent cash tills, which not just enable transactions but also give suggestions, recommendations and help to cashiers to make the customer’s experience more meaningful.
However, employing the right technology tools for real-time engagement is very important – used well, it can greatly enhance the customer’s experience while if there are problems, the customer experience degrades very rapidly leading to loss of faith and brand loyalty.
Instant is now a necessity, not a USP
With more and more brands embracing instant customer engagement, it’s important not to leave this tool out of your arsenal while designing your customer experience. With the rapid change in consumer lifestyle, the ubiquity of mobiles phones and always-on broadband connectivity, real-time engagement is not just possible today, but is fast becoming the medium of choice for retailers.