Dears,
For both retailers it's an exciting time for customer loyalty programs. Accelerating advances in technology are leading to a rapid expansion of customer data, a trend that will continue to grow and transform how companies and customers interact with each other over the next five years. While many retailers introduce loyalty programs with the belief that they will make customers more loyal, successful companies are using customer data to create insights and develop strategies on how to understand and treat their best customers.Retailers have been collecting and tracking customer purchasing patterns for years with varying degrees of success. Data can inform products customers buy together, starting with the now famous beer and diaper story from the early 1990s, in which the customers of a U.S. grocer that purchased a certain brand of beer also displayed a preference for a certain brand of diaper. These insights have traditionally educated in-store merchandising and product placement, as well as cross promotions. Powered by recent advances in data storage and computing, customer loyalty took another step forward by allowing retailers to effectively understand the conditional probability of production associations over time, such as the percentage of customers who will purchase a television today and return in the next month to purchase a home theater system. Two main trends in technology are transforming the customer loyalty space once again, by dramatically increasing the accessibility of customer data.
· First, social networking is adding volumes of attitudinal data that complements behavioral transactional data. Retailers now understand customer preferences toward brands, as well as upcoming life events that indicate a potential product need or upcoming purchase.
· Second, the rise of mobile applications and convergence of applications supporting traditional talk and text, Internet, location-based services and virtual wallets store customer loyalty and financial information. Social networking Facebook surpassed Google as the most visited Internet site earlier this year and is now ranked as the third largest "country" in the world behind India and China with a population in excess of 500 million people. Opt-in services are already available on Facebook and other social networking sites, allowing customers to tell retailers what they are interested in, their preferences and attitudes, helping to refine communications and localize product assortment. FourSquare is leading the convergence of social media and customer loyalty through the use of social games. Users compete with friends and others to check in at their favorite places, where the person who checks in the most becomes the mayor of that location, whether it be a restaurant or brick-and-mortar department store. Foursquare has recently announced FourScore, a service that shares customer behavior insights with businesses. The rise of mobile technologyConsumers can use their mobile devices to stay connected with social networks; they can also use their phones to interact directly with retailers. Users with a camera phone equipped with an application can now read QR codes and receive offers directly to their phones. QR codes and open standard 2-D barcodes are appearing in more advertising campaigns daily. RFID has existed in Asia and Canada for a while to support credit payments. More retailers are installing readers across the United States, now including every taxi cab in New York City. RFID allows for faster checkouts and conversion from cash to credit, helping to reduce a retailer's cash handling costs along with the promise of higher basket sizes and increased security for customers who can pay without surrendering their credit card to the associate and swiping a mag stripe. Enabling RFID technology on mobile phones is considered the next improvement to QR codes. Low cost "smart" signage embedded with passive RFID tags will allow consumers to tap the signage with their phone, identifying themselves, and receive relevant offers instantly on their mobile device. Mobile devices will also have a virtual wallet to store offers, loyalty cards and credit cards for payment. In fact, Juniper Research estimates that more than 25 percent of phones will be RFID enabled by 2013. What can we expect in Future?According to the research in this field, location-based advertising will reach $1.8 billion by 2015, that number supported by advances in the technology enabling retailers and marketers to target those consumers. Wi-Fi is also becoming standard on mobile devices, bringing location-based services on an even more granular level. Through the use of Wi-Fi beacons within stores, retailers will be able triangulate a customer's location within a store and target offers based on that information. For example, retailers present a relevant offer via the customer's mobile device, for a specific cereal in the breakfast food aisle, or a certain brand of jeans in a department store. The addition of location-based services will further deepen these insights. Retailers will soon know that 10 percent of customers who shop at a certain grocer also stop at a specific fast food restaurant during the same trip. This could change how retailers across different verticals collaborate and promote. The advent of new technology and accumulation of more data comes with valid privacy concerns. Google reported that is was "mistakenly collecting samples of payload data from open Wi-Fi networks" as far back as 2006. Retailers will need to be ever vigilant in safeguarding additional information about behaviors and preferences, data generated by the direct relationship they hold with their customers through mobile technology and social networking. Retailers have had the opportunity to understand their customers based on what they buy. Expanding over the next five years, the challenge for retailers will be how to organize and make sense of new location-based behavioral data as well as social networking based attitudinal and preference data. Meanwhile, mobile devices will become a truly interactive channel to talk to customers and reduce dependence on traditional communications.
Retail Companies will win or lose based on their ability to leverage these trends to know and treat their customers even better than anyone else.
For both retailers it's an exciting time for customer loyalty programs. Accelerating advances in technology are leading to a rapid expansion of customer data, a trend that will continue to grow and transform how companies and customers interact with each other over the next five years. While many retailers introduce loyalty programs with the belief that they will make customers more loyal, successful companies are using customer data to create insights and develop strategies on how to understand and treat their best customers.Retailers have been collecting and tracking customer purchasing patterns for years with varying degrees of success. Data can inform products customers buy together, starting with the now famous beer and diaper story from the early 1990s, in which the customers of a U.S. grocer that purchased a certain brand of beer also displayed a preference for a certain brand of diaper. These insights have traditionally educated in-store merchandising and product placement, as well as cross promotions. Powered by recent advances in data storage and computing, customer loyalty took another step forward by allowing retailers to effectively understand the conditional probability of production associations over time, such as the percentage of customers who will purchase a television today and return in the next month to purchase a home theater system. Two main trends in technology are transforming the customer loyalty space once again, by dramatically increasing the accessibility of customer data.
· First, social networking is adding volumes of attitudinal data that complements behavioral transactional data. Retailers now understand customer preferences toward brands, as well as upcoming life events that indicate a potential product need or upcoming purchase.
· Second, the rise of mobile applications and convergence of applications supporting traditional talk and text, Internet, location-based services and virtual wallets store customer loyalty and financial information. Social networking Facebook surpassed Google as the most visited Internet site earlier this year and is now ranked as the third largest "country" in the world behind India and China with a population in excess of 500 million people. Opt-in services are already available on Facebook and other social networking sites, allowing customers to tell retailers what they are interested in, their preferences and attitudes, helping to refine communications and localize product assortment. FourSquare is leading the convergence of social media and customer loyalty through the use of social games. Users compete with friends and others to check in at their favorite places, where the person who checks in the most becomes the mayor of that location, whether it be a restaurant or brick-and-mortar department store. Foursquare has recently announced FourScore, a service that shares customer behavior insights with businesses. The rise of mobile technologyConsumers can use their mobile devices to stay connected with social networks; they can also use their phones to interact directly with retailers. Users with a camera phone equipped with an application can now read QR codes and receive offers directly to their phones. QR codes and open standard 2-D barcodes are appearing in more advertising campaigns daily. RFID has existed in Asia and Canada for a while to support credit payments. More retailers are installing readers across the United States, now including every taxi cab in New York City. RFID allows for faster checkouts and conversion from cash to credit, helping to reduce a retailer's cash handling costs along with the promise of higher basket sizes and increased security for customers who can pay without surrendering their credit card to the associate and swiping a mag stripe. Enabling RFID technology on mobile phones is considered the next improvement to QR codes. Low cost "smart" signage embedded with passive RFID tags will allow consumers to tap the signage with their phone, identifying themselves, and receive relevant offers instantly on their mobile device. Mobile devices will also have a virtual wallet to store offers, loyalty cards and credit cards for payment. In fact, Juniper Research estimates that more than 25 percent of phones will be RFID enabled by 2013. What can we expect in Future?According to the research in this field, location-based advertising will reach $1.8 billion by 2015, that number supported by advances in the technology enabling retailers and marketers to target those consumers. Wi-Fi is also becoming standard on mobile devices, bringing location-based services on an even more granular level. Through the use of Wi-Fi beacons within stores, retailers will be able triangulate a customer's location within a store and target offers based on that information. For example, retailers present a relevant offer via the customer's mobile device, for a specific cereal in the breakfast food aisle, or a certain brand of jeans in a department store. The addition of location-based services will further deepen these insights. Retailers will soon know that 10 percent of customers who shop at a certain grocer also stop at a specific fast food restaurant during the same trip. This could change how retailers across different verticals collaborate and promote. The advent of new technology and accumulation of more data comes with valid privacy concerns. Google reported that is was "mistakenly collecting samples of payload data from open Wi-Fi networks" as far back as 2006. Retailers will need to be ever vigilant in safeguarding additional information about behaviors and preferences, data generated by the direct relationship they hold with their customers through mobile technology and social networking. Retailers have had the opportunity to understand their customers based on what they buy. Expanding over the next five years, the challenge for retailers will be how to organize and make sense of new location-based behavioral data as well as social networking based attitudinal and preference data. Meanwhile, mobile devices will become a truly interactive channel to talk to customers and reduce dependence on traditional communications.
Retail Companies will win or lose based on their ability to leverage these trends to know and treat their customers even better than anyone else.
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