A novel way to drive loyalty

Hint: Focus on creating products that somebody would actually buy

“The demand has been so strong for our new launch products, there’s no question we could’ve sold more,” said Kurt McNeil, General Motors’ vice president of sales operations. According to GM, its retail sales are up more than one per cent and GM retail share is up 0.6 percentage points, the largest retail share increase of any full-line automaker. Their all-new Chevy Malibu continues to gain share in a very competitive segment, with retail share doubling to more than 10 per cent year to date.

Stuart Lewis, president & CEO at Canadian marketing communications agency Clever Samurai, believes the reason that GM is fairing so well is because “The company is making products people want at the price they want them. Data informs marketers on actions they can take in the context of their customer acquisition or loyalty strategies. But if you make a product somebody really wants, customer loyalty will generally take care of itself.”

In an increasingly more complex marketing landscape, marketers are faced with how best to use the data available to inform their loyalty strategies. Does data drive the strategy or does data drive the nuances within the strategy? Or, is it perhaps a blend of both?

Nicholas Bianchi is VP, sales & loyalty marketing at SPC Card. SPC is Canada’s leading student loyalty program and includes countless brands like American Eagle, Boston Pizza and Forever 21 as part of its offering. Bianchi says, “Any discussion of data must begin and end with your customer. The core word in customer is custom. Exemplary retail loyalty strives to use data to achieve a unique experience for each and every customer. Only when this customization is achieved does marketing data truly prove its value to loyalty.”

Lewis agrees with Bianchi’s notion of customization, especially when it comes to the fickle millennial customer. “Restaurants understand that Millennials are the only current source of growth in the foodservice industry. Brands like McDonald’s have responded to menu customization with their Create Your Taste burger offering and many others are providing menu flexibility. The overall concept is simple, perhaps tough to execute, but they do everything they can to give customers what they want at the price they want it.”

The notion of customization and giving the customer exactly what they want all comes at a cost. And that’s where the financial decisions around margin, quality and marketing investment need deep consideration. Eugene Duynstee is a veteran of such challenges having been the CFO at both Loblaws and Holt Renfrew. Today, Duynstee guides large-scale North American retailers through his consultancy practice KPM Enterprises.

“The saying is you can’t manage what you don’t measure. So, the use of financial data allows for the setting of the value equation by matching the brand’s quality and cost. This provides for the right product or service. The use of marketing data allows for the most effective means to communicate the message to the customer, creating awareness and promoting the brand promise. Repeatedly delivering on the promise drives loyalty,” says Duynstee.

Simplifying loyalty strategies is an important consideration for Duynstee’s clients and he counsels them on streamlining the use of information to gain better clarity. “If you don’t know what you are looking for then data review becomes an overwhelming task. Strategy provides a hypothesis and assumptions and these should lead the data analysis. This order narrows what answers you are seeking and gives you a focused review of the data. Decide on what you are looking for and then seek the information to support or disprove your premise,” adds Duynstee.

Bianchi agrees with Duynstee, ”What people often forget is that big data is not the new oil, it is rather the new crude. Marketing data is only useful after it has been refined. Smart analytics allow loyalty marketers to improve the way they build intimacy with their customers, reward them in a targeted way and recognize them for their faithful patronage. But the top factors that drive retail loyalty are product value and customer service. Period.”

According to Stuart Lewis, top marketing agencies in Canada support their clients with either a strategy-lead value proposition or one that is data-lead. “Complexity has created a new wealth of opportunities for agencies to bill clients for all kinds of things; some of which don’t really add value to the clients’ business. Smart clients are looking for big ideas, a challenge to their status quo and for good return on their investment. Getting lost in the data weeds provides both agencies and clients a comfort zone, but this needs to be effectively balanced with proactivity around strategy that links back to a meaningful customer value proposition.”

A 2015 report from Accenture states that the potential revenue available due to changes in consumer spending and switching among brands and providers is $1.6 trillion, a 29 per cent increase from 2010. Accenture also confirms that only 28 per cent of consumers are loyal to their providers and brands. Lewis believes that “Brand defection is a huge opportunity for our clients. And it won’t be data that makes these customers switch. It will be providing a product or service that these defectors just can’t wait to embrace. We’re seeing that in both the B2B and B2C space.”

You’d think that Eugene Duynstee being a former big brand CFO would be a data fiend. And he is, sort of—but within the focused confines of the strategy. “Loyalty is driven by the brand meeting its promise. Consequently, you need to execute the right product or service, at the right place and at the right time. In order to drive loyalty, one of our clients has promised its products as being of the highest health standard and free of many harmful ingredients. They have charged their vendors to supply the company with products that meet that standard. It’s the right set of products and the right pricing, for their market.”

Duynstee adds, “Loyalty is a journey and needs to evolve. Start with the goal in mind and engage actions that improve your current state. Continue to seek feedback and analyze data to modify your actions and move you forward to target.”

This article originally appeared in the July 2016 issue of Direct Marketing.