How to build a CRM strategy that can measurably deliver customer loyalty

| February 19, 2020 | By

How to build a CRM strategy that can measurably deliver customer loyalty

 

 

 

 

 

 

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“Customer Relationship Management (CRM) is the determining factor in a retailer’s battle to outperform their competitors.”

This seemingly profound statement is nothing particularly new in the world of retail.

Look as far back to 1995 when the Tesco Clubcard was first introduced to UK consumers. 

This simple, but pioneering card-based scheme, where members built up loyalty points and exchanged them for discounts and rewards, would come to define how retailers looked to retain customers over the next 20+ years.

Tesco Clubcard CRM StrategyBut what Tesco really got right, and where many other retailers went on to fail, was to look beyond the loyalty element of its Clubcard.

Tim Mason, who became marketing director in the same year Tesco Clubcard launched, said: “You were hoping there was some loyalty effect, but what you wanted to do was open a direct marketing channel to consumers, get more data and run the business better.”Terry Hunt, another key launch figure (then head of Tesco’s marketing agency, Evans Hunt Scott), saw early on how powerful Tesco Clubcard would become for the business: “It was the first time a mass retailer could talk to individual customers on a personal level.Hunt added: “Products were flying off the shelves, response rates were almost too high. They were 40%, sometimes 60% – it was crazy.”

As a result, within less than a year, two things had occurred:

Clubcard members were spending 28% more at Tesco, and the supermarket chain overtook Sainsbury’s to become Britain’s largest food retailer.

What should a retailer’s CRM deliver in 2020?

Fast forward to 2020 and virtually every retailer worth their salt has launched some version of the Tesco Clubcard.

Unsurprising then that 90 per cent of UK adults say they are a member of a loyalty scheme (source: YouGov).

Customer Loyalty Cards CRM StrategyAt the same time, we can safely say the way we shop has evolved considerably since 1995, causing the retail industry, including Tesco, to face up to some sizable challenges in recent years.

Ecommerce and the rise of the likes of Amazon, ASOS, Netflix and Ocado, have been major drivers around changing consumer expectations, within online as well as physical stores. 

Regardless of channel, personalised, convenient and fast experiences are now considered the most valuable differentiators for shoppers –  above loyalty schemes and price (source: PwC).

As a result, 65% of UK consumers see customer experience as a crucial factor in their decision making (PwC), while 89% say they will switch to a competitor following a poor customer experience (source: Oracle).

A retailer’s CRM strategy must now balance between delivering a superior, personalised and consistent experience to customers, whilst remaining an effective marketing communications channel that can utilise customer data to better run their business:The Ideal Retail CRM Strategy

How can a retailer build the ideal CRM strategy?

1. Deliver a consistent experience 

UK consumers spent a record £25bn via their smartphones in 2019, both in-store and online – a 66% increase compared to 2018, according to data from uSwitch. 

More pertinently, within five years £1.1 trillion of offline sales will be influenced by mobile-led technology, according to Forrester.

Mobile is already responsible for increased product research and sales for both online and physical retail, according to a report from data and analytics firm App Annie.

As an example, Nike’s digital business is said to have grown by 42% in Q3 2019 due to its innovative mobile-led experiences.

With 95% of the UK’s 16 to 24-year-olds now using smartphones to run their daily lives (source: Ofcom), mobile evidently needs to sit at the centre of a retailer’s CRM strategy.

How a retailer can turn our smartphones into their shop window

2. Gather customer data that reveals the most about customers

Due to their added features, three quarters of UK adults believe that paying via mobile wallets is more convenient than contactless cards (source: PaySafe). 

With mobile at the centre of a CRM strategy, a retailer has the opportunity to extract full SKU basket data from a point-of-sale every time a customer uses mobile to pay at the checkout (both on or offline).

SKU basket data reveals who each of your customers are, as well as exactly when, where and what they buy. 

This is the data that reveals a 360 degree view of customer spending behaviour and preferences in real time, and why so many EPOS providers in the UK partner with Yoyo (we’re one of the only companies worldwide that can access this granular level of data from a retailer’s checkout).

How retailers can identify what their customers want

3. Create personalised & rewarding customer experiences, based on shopping preferences

Above all, a retail CMO’s goal is to sell more, more often. The more you know about your customers’ shopping habits, the better you can shape your marcomms strategy. 

However, more than half of consumers (51%) say they need to see a clear benefit exchange for their data (source: DMA). 

When PwC asked consumers what attributes were most important to their in-store experience, they found nine simple, familiar, and rather unsurprising demands:How to build a CRM strategy that can measurably deliver customer loyaltyTranslating these fast, convenient and personalised demands into tangible experiences for both in-store and online customers, a retailer’s CRM strategy should be able to deliver the following:

What should a retailer’s CRM deliver in 2020?

4. Deliver targeted marcom campaigns, based on dynamically segmented shopping behaviours

Before the advent of online shopping, attempts to personalise the way retailers engaged with their customers traditionally relied on broad, siloed segments.

Attributes like gender, location, income, and occupation were valuable at the time, but only provided a one-time snapshot, revealing limited understanding of how customers actually behaved in the marketplace.

Look to ecommerce-only merchants and we now see a more successful model. The likes of Amazon and Netflix have the data at their fingertips to deliver hyper-targeted marketing and recommendations based on how their customers behave and engage with their brands in real time.

However, this has not been the case for physical and multi-channel merchants. No surprise then that only a third of companies say they have found customer segmentation impactful (source: Forrester).

However, if a CRM strategy includes the ability to identify when, where and what each customer buys (whether on or offline), retailers can identify exactly where they are in the customer journey and determine how best they should be engaged:Deliver targeted marcom campaigns, based on dynamically segmented shopping behavioursTo ensure marcomms is hyper-targeted, Yoyo’s payment-enabled CRM platform, Engage, enables a retail CMO to combine multiple behaviour segments with where a shopper is in the customer journey:

5. Measure campaign impact / ROI

You may now have a variety of purchase data metrics at your disposal to target individual behaviours and preferences,, but like oil, this data is only useful once it’s been refined into something tangible.

This is why a retailer’s CRM strategy also needs to reveal the performance of their behaviour-led marcomms campaigns.

Yoyo’s payments-powered CRM platform, Engage, provides retail CMOs with a clear view of how each campaign performs by comparing a variety of real-time revenue, visit and trigger metrics:

What Yoyo reveals about your marcomm campaigns:

Reach
The total number of customers exposed to your campaign, whether in-app, push notification, email, etc

Triggers
The number of times your campaign was activated.

Unique Customers 
The total number of individual customers who triggered your campaign.

Conversion Rate
The percentage of customers who were exposed to and triggered your campaign.

New Customers
Compares the number of new customers before and during your campaign.

Visits
Compares the total number of transactions (customer visits) before and during your campaign.

Customer Spend
Compares the total amount that customers, who took part in your campaign, spent before and during your campaign.

Customer Spending Behaviour
Assesses whether your campaign has had a positive or negative effect on your customers’ average spend.

Total Spend
The total amount spent by customers on campaign-qualifying transactions.

Revenue
Compares basket revenues that met campaign conditions before and during the campaign.

What’s more, when a retail CMO can link individual customer feedback to the campaigns they trigger, satisfaction can be tracked over time that will help deliver an improved customer experience:

6. Find out if customers are spending more, more often

Armed with granular customer purchase behaviour and the ability to track campaign impact, a retail CMO is now in a position to accurately measure Customer Lifetime Value (CLV) – the crucial metric that predicts the long-term health of a retailer, rather than its short-term earnings. 

Through Yoyo’s payment-enabled CRM platform, Engage, this metric enables a retail CMO to find the answer to four crucial questions:

Find out if customers are spending more, more oftenWith these questions answered, a retail CMO can strategically go after their most valuable and engaged customers, target customers viewed as at risk of falling away, or both!

How to calculate Customer Lifetime Value

Conclusion

Like the Tesco Clubcard, a retailer’s CRM strategy needs to deliver so much more than a singular loyalty mechanism. 

With customer footfall becoming more and more nimble, retail CMOs will need to have a CRM strategy in place that does four things:

  1. Deliver a superior, personalised and consistent experience 
  2. Extract and utilise customer data that can help better run their business
  3. Drive customer behaviours that will maximise business ROI
  4. Measure loyalty and increase revenue

It sounds like a big ask, but with the right technology, it can be done – just look at what some of Yoyo’s retail partners have been able to achieve:Segmentation Powered by Yoyo


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