Maximizing the Benefits of a Loyalty Program

March 30, 2008 · 0 comments

It’s always baffled me why retailers put together loyalty programs and then completely drop the ball when it comes to maximizing their potential benefits. I touched on this a few weeks ago when I mentioned JCPenney’s practice of only incentivizing card holders to make return visits to the store. Why don’t they have some sort of overall loyalty program in place to gather information and target offers to customers that pay by other means as well?
There’s an interesting article in this month’s Internet Retailer called, “Do you know me?” It talks about how Petco appears to be blazing a trail when it comes to gathering customer information to best target offers for future purchases.
What’s so novel about their approach? They are among the first (if not THE first) to put together information on customer behavior in-store and customer behavior online. They are combining the customer’s on- and offline purchases, shopping patterns, and even the pages the customer looks at online, to make educated guesses about the type of items they can feature in personalized emails to that customer.
Say you went into your local Petco and bought kitten food, a kitty bed, and a feed bowl. They can figure out, “Hey, this guy has a new kitten,” and can send out email offers on other items that new kitten owners might buy (like maybe one of those cool Drinkwell fountains, an Idiots Guide to Kittens book, or basics like cat litter). If they see that you’ve been looking at cat playhouses online, they could send you a printable coupon to buy one in-store, or a discount coupon on shipping heavy items purchased online.
Why is this so novel? Doesn’t it seem like something obvious that loyalty programs should be doing? Apparently, the article says, despite the fact that 59% of respondents to some survey on the subject said they’d be more likely to purchase if they were given offers based on their prior purchases, senior management hasn’t made this a priority. Online data and offline data are kept in separate “data silos.”
It takes time and manpower to merge the data — the article says Petco spent 6 months creating a “data mart” to put it all together — but the potential payoff is huge.
What do you think? Do you like having personalized offers based on your web browsing and in-store and online purchases, or do you think it’s too intrusive? Are you willing to give up some amount of privacy in order to get good sale promotions?

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