Applying customer-centric insights for sustainable competitive advantage
The retail industry is growing ever more intense and diverse. Traditional retailers must now compete with alternative formats, such as ultra-low-cost retailers like Aldi; and with specialists, like Whole Foods and Trader Joe’s. Amazon now ships groceries and is opening more distribution centers closer to main population centers. Add dollar stores and big-box players to the mix, and the marketplace of just a decade or two ago seems cast in the amber of mom-and-pop grocers with their wooden placard signs.
In this whitepaper, we reveal why early efforts to shift towards shopper-centricity have been unsuccessful, and present solutions for how these challenges can be overcome. The key questions explored answered include:
• How do you implement a systematic and comprehensive approach to understanding individual shopper needs at detailed levels in an always-on, dynamic manner? and
• How do you incorporate insights into daily decisions to build toward a shopper-centric approach that provides sustainable competitive advantage without risking shorter-term objectives?
To access our recommendations for implementing a shopper-centric approach, download the full whitepaper.
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My dollar may be worth just 70 cents in Europe, but my loyalty rewards, and lessons, run in the multiples.
I’ve had the opportunity recently to travel Europe as a guest of the company BrandLoyalty, a Netherlands-based firm in which my company, LoyaltyOne, is acquiring a major stake. BrandLoyalty operates some of the largest grocery loyalty programs in Europe and Asia. Since it was founded in 1995, BrandLoyalty has created hundreds of individual reward plans.
During our eight-country tour of BrandLoyalty’s operations, I’ve noticed a few key differences between American and European programs. Some I was aware of, but some took me by surprise, and I think my domestic neighbors could benefit from knowing and borrowing from them.
So before I jump on the next high-speed train, I am sharing what I think are the four major differences between U.S. and European loyalty programs:
Coalitions: Think of coalitions as loyalty leagues that are not tied to a credit card. The model, which is popular in many countries outside the United States, allows consumers to accumulate thousands of points on purchases from scores of different participating merchants and then redeem them with any of those partners. The best part: Coalitions are currency neutral, meaning the consumer does not have to use a credit card to earn the points. He or she has the option to use cash, personal check or debit card.
The Members: European shoppers tend to visit stores more frequently than their U.S. counterparts, hitting bakeries, cheese shops and butchers almost daily. This translates to more opportunities for data gathering and customer understanding among merchants. One thing has not changed over the Atlantic, however: Europeans are as price conscious as Americans. As a result, European merchants watch prices in places where consumers are in less of a hurry, such as the hypermarchés.
Multi-motivators: Many European merchants offer more than one loyalty oriented program, layering their own proprietary rewards schemes or coalition program with time-limited promotions to earn merchandise – what are often called “collect-and-saves.” BrandLoyalty, for example, will implement one or a series of tailor-made programs for an individual merchant client, while also managing “Instant Loyalty Promotions” that give customers immediate, collectible rewards based on their spending.
Penetration: Outside of the United Kingdom, which is one of the most sophisticated loyalty markets in the world, Europe is still a relative newbie to loyalty program marketing. However, it is a fast learner. Estimates are that roughly 80 percent of European shoppers belong to at least one loyalty program. In the United States, with 2.65 billion loyalty memberships and a population of 314 million, the ratio is much higher. This spells out significant upside potential for loyalty in the continent.
There are many other small differences between loyalty programs in Europe and the United States. In Europe, for example, many of the cards have tiny chips, not magnetic strips. But regardless of how it is executed or pronounced – in Russian it’s верноподданическо – the word loyalty means the same thing everywhere: It is an emotional connection built on trust.
When I was younger and imagining where my career would take me, the role of Chief Sustainability Officer (CSO) did not yet exist in business circles. There were many roles focused on environmental protection but these were largely externally focused on preservation of our resources like trees, minerals and animals. And they did not offer a seat at the board room table – in fact quite the opposite.
The first CSO was appointed to a publicly-traded U.S. company in 2004; since then, CSOs have increased in number and are now integral members of the C-suite. Today, according to the global sustainability practice at Boston Consulting Group, most Fortune 500 companies have hired Chief Sustainability Officers, usually at a C-suite level.
What does this role entail?
- First of all, the CSO must be a change agent to drive business processes toward a more sustainable future. There is a requirement to focus on internal efficiency – often driving cost savings or financial benefits for the company. At LoyaltyOne – a leader in the design and implementation of coalition loyalty programs, customer analytics and loyalty services for Fortune 1000 clients around the world – we implemented 800 solar panels with a government incentive that is driving a 100% return on the project investment. Sometimes intangible benefits occur as well — our programs drive employee engagement which is a key strategy for us in the war for talent.
- Sustainability must be embraced as a cultural change program to encourage all business stakeholders to align with these new values and the CSO must be seen as the leader of this program. Sustainability needs to be integrated into daily business decisions by the people making these decisions and an alignment to strategy is critical. Leading this change for an organization means that you need to be selling and influencing throughout the entire lifecycle of the business.
- Finally, to drive real success, the CSO must be focused on implementing the right cultural change to create a positive image for the brand. Consumers are increasingly voting with their dollars based on their perception of a particular brand’s promise. CSO’s must ensure that they are addressing the correct elements of change to support, protect and enhance the image of the brand.
What skill sets do you need for this job? I began my career in technology and developed project management and customer interaction skills. Later, I added a finance designation and learned about the levers in business for cost and profit. I moved to the consulting industry and learned influence skills and customer service. I didn’t realize at the time that I was developing such a deep basket of skills that would prepare me so well for this role leading change across a large organization. The CSO must be the consummate change agent. The skills that drove change through enterprise systems in recent decades are the same skills that can be utilized for success in this area.
How is this role evolving? Over 50% of the S&P Fortune 500 now formally report on their sustainability efforts and the CSO is the executive responsible for the production of this information often without the sophisticated tools utilized in other departments (like Finance). In most cases, the focus of the role has shifted from creating change – shepherding projects that drive quick wins to sustaining change - continuing to inspire teams to embrace sustainability while examining the increasingly harder task of justifying projects that will drive incremental benefit. These projects are harder to justify because the easy quick wins are done, which leaves projects with tougher business cases or bigger investments.
What is in store for CSO’s in the future? As extreme weather events have an increasing impact on the financials of big organizations (our Calgary office closed for a week earlier this year due to flooding) and as more corporations spread their success globally into regions where the North American infrastructure that supports sustainability (like recycling programs) are in their infancy, there will be a need for the CSO to make their voice heard to an even greater degree to protect the image of corporations and to implement the right mechanisms for even greater change.
As LoyaltyOne’s Chief Sustainability Officer & VP of Workplace Services, Debbie oversees all aspects of corporate responsibility and real estate. With her focus on both sustainable operations and fostering community engagement, LoyaltyOne has not only been recognized as a global leader in loyalty marketing, but also as a leader on corporate citizenship issues and sustainable real estate strategies.
As seen in the the Boston College Center for Corporate Citizenship website.
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THE LOYALTY LEAP
In his bestselling book, LoyaltyOne President Bryan Pearson draws on more than 20 years of first-hand experience. His expertise in building emotional loyalty in the information age is demonstrated through insightful stories from the trenches of the data-gathering and marketing communications fields.