This article is for the Professionals
Sign up to Inside Retail Professional now for only $5+GST for your first three months.
That's an 85% discount plus you’ll get FREE access to all Masterclasses during Retail Week. 5 retail industry leaders like you’ve never seen them before.Already a professional? Log in
Fresh from winning the Loyalty Program Experience Award at the inaugural Retail Customer Excellence Awards for its Friends For Life loyalty program, pet supplies retailer, Petbarn, relies heavily on its loyalty program, which has become an integral cog in driving sales growth.
As the Petbarn business has become increasingly integrated, its Friends For Life loyalty program has been extended across its eco system, from retail stores through to grooming services, pet insurance, veterinary clinics and hospitals. Group chief marketing officer, David Hutchinson, dubs Petbarn’s loyalty program as, “the glue that binds everything together”.
The intertwining of Friends For Life, which customers can use at both Petbarn and sister company, Greencross Vets, across the business has culminated in 81 per cent of retail store transactions and over 50 per cent of all Greencross Vets transactions going through the loyalty scheme. Hutchinson said this effectively means that 87 per cent of all retail purchases come from Friends For Life loyalty members.
“Customer’s aren’t truly loyal – they’re loyal to their last transaction,” said Hutchinson. “But you want to put in a scheme which encourages the customers to spend more frequently – and more with you at the expense of your competitors at the end of the day. So a loyalty scheme has to tick those boxes in terms of actually being attractive, engaging and rewarding.”
While customers may not be inherently loyal, retailers can spark loyal behaviour through their ability to offer truly attractive incentives. Violet Lazarevic, senior research consultant, department of marketing, ACRS, said Petbarn’s loyalty program success is in part due to the linking of loyalty benefits to a secondary service – the Greencross Vet clinics.
“When you expand the scope of the loyalty behaviours like that, people are more likely to see more value out of it,” Lazarevic told Inside Retail Weekly.
Personalising loyalty benefits for individual customers is a theme that resonates with Sacha Laing, COO, Country Road Group.
“Loyalty programs today, and in the future, must do more than simply reward members through promotions and offers,” he explained. “They must foster a personalised relationship between the brand and the member, providing unique experiences, tailored communications, priority services and occasionally, like any good relationship, surprising and delighting with a gift or special personalised reward – just because.
“All four of our brands at Country Road Group – Country Road, Mimco, Trenery and Witchery – have strong loyalty programs. And in recent years we have invested in our CRM capability to enable us to deliver a more tailored and relevant loyalty experience for our members.”
Reaching for ROI
The million-dollar question that remains for retailers pondering the validity of their loyalty program, of course, is: is it offering any tangible return on investment? Based on the findings of the Capgemini Loyalty Report, published in late 2015, most retailers in Australia struggle to define the true ROI they are getting from their loyalty programs
Lazarevic questions whether loyalty programs are worth the investment retailers are committing to them.
“If the premise is ‘we want more customers’, probably not,” she said. “But if the premise is ‘we want data about customers’, then yes, I think they can achieve what they want them to.”
Lazarevic said loyalty programs can enhance understanding of cross-channel consumer behaviour, by the tracking of customer data through loyalty schemes.
“While measuring the ROI of our loyalty programs is, of course, a core business fundamental, the true benefit of our loyalty program can’t just be measured in dollars and cents,” explained Laing. “The ambition of our loyalty programs ultimately is to have a member who is so engaged with our brands they become advocates. And it’s that advocacy amplified through social media platforms that is truly priceless.”
Aligning loyalty programs and value proposition has culminated in today’s consumer counting loyalty and experience, along with the traditional price-quality equation, into their considerations when evaluating where to buy.
“For retailers like Country Road Group, this means we carefully consider our loyalty program as a key strategic pillar along with great, fashionable product that exceeds customers expectations on value as well as a loyalty program, and an instore or online experience that rewards customers loyalty over time,” said Laing.
The devil is in the data
Moving beyond transactional points-based systems and capitalising on the data gained from loyalty schemes is driving customer engagement at Petbarn. Providing content-led information outside of promotional offers has yielded loyalty program, success for the pet retailer.
“Our data is showing us that where we give more relevant content to the customer, their engagement with our organisation is significantly higher,” said Hutchinson. “We are very committed to creating world-class content for our customers; they are a highly engaged customer. People that have pets, dig their pets, and really want to consume content. And if we can play a role in that and do that well, I think we can win as an organisation.”
Having access to customer data through loyalty schemes has enabled Petbarn to tailor offerings towards the different demographics buying from the pet retailer.
“We can see what they’ve spent, how much they’ve spent and what products they’ve bought, so that really allows us to understand the different types of customers, the different segmentation and get really valuable insights. We can use that to and improve the customer proposition.”
Hutchinson sees loyalty as the price you pay to get the big data on customers, which then allows more targeted personalisation.
“Given that we’ve got 1.2 plus million members of Friends For Life, we have to do this in an automated way using technology to increasingly personalise down to the individual level through dynamic, email dynamic content and integrate that across multiple marketing channels.”
Laing echoed this sentiment with Country Road looking to harness loyalty program data to yield tailored experiences for customers. “We have been able to obtain valuable data insights to enhance our customer experience through improved product ranges and service, both in stores and online, as well as tailoring our promotions and offers to make them more meaningful, timely and relevant to our members needs,” said Laing.
Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.