CRM, loyalty and attempts at preserving margins

eShopability: what Internet users expect!

Brian Woolf, President of the Retail Strategy Center, who had already written "Customer Specific Marketing" just published "Loyalty Marketing, The second act"

Sleeping data

Part of the book is dedicated to the fact that companies do not use customer data as much as they could, with the following leitmotiv: there is no point in collecting customer data if nobody is able to use it.

That's stating the obvious but it also turns out to be the case within many companies, says Brian Woolf…

According to Mr Woolf, loyalty programs are like good theater: everything goes well at first but then you have to apply the right marketing tools if you want to keep the seats filled.

And yet, Brian Woolf thinks that loyalty discounts and points are not the best way to customise visitors but that it has more to do with the ability to exploit customer data.

If a company does not do that, it will only manage to retain its customers through its prices, with an inevitable margin deterioration and a differentiation from its online competitors that will get weaker and weaker.

Lasting solutions are then to be found in its customers' behavioural analysis in order to keep on improving online customer experience: improved interfaces, improved payment processes…

Discount or points?

According to Brian Woolf, it is better to use loyalty cards than points.

Indeed, suppose that 80% of your customers have a loyalty card, it means that 20% of your sales will go through at full margin, which as a result improves the company's global margin.

But if you systematically offer points or other similar incentives, it is bound to put a strain on your sales.

Loyalty programs

Brian Woolf also thinks that these loyalty programs based on a minimum of purchases over a given period with a 10% discount on any article that is sold on you site, for instance, usually proves more efficient to really customise your visitors.

Let's specify, just as Don Pepper does when he mentions Brian Woolf, that the author of "Loyalty marketing, the second act" is mostly involved in loyalty programs related to the food industry and that these strategies might not always apply to some other sectors.

Nevertheless, his book still has the merit of enhancing the fact that marketing resources, usually collected at great cost, remain sitting in a database, as there is no top-management able to exploit it correctly.

It seems that the limits of CRM are also human, a thought that should be compared to the inability shown by many companies to use the data contained in their intranets in the best possible way, as they lack efficient tools of behavioural analysis or internal knowledge… and yet a great deal of money is often spent to set up these intranets.

How to deal with increasingly unfaithful users?

But all the good intentions contained in Brian Woolf's book are now faced with new unfaithful phenomena generated by the Internet.

Internet users who are only on the look-out for discounts or good deals do not feel grateful towards the e-tailer who gave them the discount, hoping to customise them in the process.

Even more serious, we witnessed some fraud to coupons, as the latter were not protected by any coding system and as a result, the same coupon could be used repeatedly.

The best-known case concerns buy.com that offered a $50 coupon that was only meant for some of its customers. But some of these customers used the same coupon repeatedly, using different email addresses…

And all this was done without any feeling of guilt, of course…

All this to say that it has now become a highly complex business to customise Internet users.

Source : Don Peppers 1to1

Without wishing to offend any e-tailer, we have all noticed that it often proves extremely complicated to fill shopping carts in some online supermarkets: not only does the mouse need to be moved with utmost dexterity but this exercise also requires an extreme concentration.

After web sites usability notions, the time has now come to talk about "eShopability" :

eShopability = usability rules + eMarketing to convert lookers into buyers and keep them.

What people need to understand is that, as Internet users become more experienced online, thus gaining the status of online shoppers, they also become more particular about the quality of the sites they visit.

E-tailers who want to become successful today need to offer not only an interface with perfect usability but also a stock managed in real time, a consistent fulfilment, a wide range of products, a distribution that is both on and offline (if possible) and finally the possibility for consumers to track the progress of their order online.

Being able to follow their order online is a first step that might reassure consumers, as they will know that their order has been sent and can be "tracked" within a process.

Web sites must now be able to attribute a number to each order in order to help customers to log in and visualise the exact stage of their order in real time.

The on/offline union, leitmotiv that I have been repeating over and over ever since eMarket newsletter was launched in 1998, has become a real necessity if you want to be successful online. If you can only be found online, you then need to enter into partnership with offline brands.

Indeed, according to Forrester Research, within the population of users who shop online, we have:

- 46% of users research products online to buy them…offline.

- 27% of users get information offline and purchase…online.

- 17% of users get information and buy indiscriminately online and offline.

But the on/offline synergy must also allow users to send back a faulty product that was purchased online to one of its offline shops (or partners).

This synergy must also offer an even wider product selection.

Many Internet users are often disappointed when they only find on the web site a small proportion of the complete lines of products that can be found in the offline shops.

And finally, do we really need to remind you that the most efficient fulfilment will never replace the intrinsic quality of the sites themselves, their user-friendliness, their human touch…

Source : eCommerce Times