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How retailers are working with - and against - technology to attract and retain customers [Pioneer Press, St. Paul, Minn. :: ](Saint Paul Pioneer Press (MN) Via Acquire Media NewsEdge) Aug. 30--We see it all the time at the store and online: the ever-expanding programs that have taken coupon clipping into a new era. Target has "Cartwheel," its smartphone app that lets you scan items as you put them in your basket to comparison shop for savings. Walmart has "Savings Catcher," which lets you compare your end receipt against a database of competitors' specials. The difference, the amount you overpaid, is refunded on a gift card -- redeemable on your next trip to Walmart. And that's part of the point -- to get you to come back to the store. Amazon.com, meanwhile, has Amazon Prime, a multi-layered program that combines volume discounts with free-shipping, media downloads and streaming video ala Netflix. We all know loyalty marketing from frequent flier programs, hotels and credit card rewards offers. But as technology in the form of online shopping increasingly threatens the traditional retailing model, retailers are countering with technology in an ever-changing battle to control customer behavior. Marshall Stanton is senior vice president, head of customer loyalty for Aimia, a Canadian company that took over the former Twin Cities-based Carlson Marketing operations in 2009. Carlson Marketing was a 1968 spin-off of the Carlson Cos., a Minnetonka company traditionally associated with travel and hospitality. Stanton, who came over from Experian earlier this year, heads the customer loyalty operations from Plymouth. "Carlson Marketing was historically a full-service agency, advertising and marketing," Stanton said. "And some of the real gems of the business at the time of the acquisition were the extensive loyalty programs that they were operating. So there were a number of assets and a number of wonderful company-customer relationships within Carlson." Aimia, meanwhile, is much larger, with 4,300 employees, offices in 20 markets worldwide and annual revenue of around $2.4 billion. It's traded on the Toronto Stock Exchange. In a recent interview, Stanton discussed the ins-and-outs of loyalty marketing and what retailers have to do to take advantage of it. Describe what we mean by "loyalty marketing?" "Predominately there are two types of loyalty programs, one where companies are going directly to an end consumer versus working with other businesses. So if you think about Target's reward program or Best Buy's reward program, that's direct-to-consumer, versus an automotive program that may work with a dealer network. "There's a broad spectrum of reasons why companies embark in and invest in a loyalty program. No. 1 there's this notion of customer engagement. They want to have better relationships with their consumers. And that can mean a variety of different things. Really the goal is to help retain the customer so that they don't go to a competitor, and to improve the profitability and the revenue of that customer. So most programs of today are targeted at driving up both of those aspects." So the goal is to retain customers and get them to spend more money, correct? "Those tend to be the over-arching drivers of loyalty, yes. There are other motivating factors, as well, like staving off competition; to improve data collection or even for customer acquisition. Some programs are targeting those areas as well." How does this work? "Target is a good example of a company that has multiple programs that target different buyers within their population. Obviously they're a massive retailer that has a quite interesting cross-section of shoppers; some people are obviously quite cost-conscious, so saving money is a driver for them, and you have a program like Cartwheel, their app, where you can do digital coupon clipping. "And it's very clear to the end consumer what they're getting from that transaction. They're getting savings. As of the last time I looked at the program, they had saved their Cartwheel customers $96 million to $97 million." But isn't there a disconnect between saving the customer money and at the same time getting the customer to spend more? "In the Cartwheel example, it would be made up through increasing the basket, as the customer is shopping and buying some of those unexpected purchases along the way. It also helps retain customers from going to a place like Walmart, for example, which has a similar program. And obviously to get the customer to come to the store, because in addition to Target competing with the likes of Walmart, obviously they're competing with the likes of Amazon." So if Target, Walmart, Amazon and everybody else has similar programs to pull us away from their competition, what's the deciding factor? Why would we choose one over another? "This is where the art and the science of loyalty starts to come into play. There certainly is the execution of the program. And as much as we may say they are similar, the Amazon Prime program is very different than the program offered by Target or by Walmart; you don't need to scan a receipt for example, you just get the instant savings; the program has all kinds of other features. "Amazon is quite a pioneer in some of these spaces and it's interesting how they've paired off different offerings that other companies may not have at their disposal. "With respect to Target or Walmart, I think this is where the art comes into play, on how well a given program is executed, how well the application itself is built, what message are they sending to their consumer and quite frankly how well they are having the consumer interface with their brand. And it's become experiential on some level between those two brands in particular." What are the main challenges now to traditional retailers like Target for retaining customers? "No. 1 there's obviously the elephant in the room, which is data breach/data security. Obviously data sensitivity and privacy are top of mind for consumers everywhere, and certainly for retailers as well, having been in possession of this data. So first and foremost, I would say that building the trust with the end consumer is going to be paramount. "Typically customers are happy to provide information and data to these retailers in exchange for something, whether it's points or it's a surprise-and-delight kind of experience, or it's discounts or what have you, it's going to be quite paramount for the companies to be leading with a trust statement as to how they are going to protect their end customer's data. "Secondly, I think that you really need to focus on connecting the experiential dots for the customer. So what do I mean by that? It's really being able to go where the end customer is, and interact with them, in that moment, providing them with the right kind of interaction with the brand, that is appropriate for that moment or that channel, and to use the data that they have on their customers to enable that interaction." ___ (c)2014 the Pioneer Press (St. Paul, Minn.) Visit the Pioneer Press (St. Paul, Minn.) at www.twincities.com Distributed by MCT Information Services |