Featured Insight

How next-generation capabilities are delivering winning results in the world of personalization

Today’s customers are dissatisfied with the relevance of communications, while retailers are still struggling to show demonstrably improved campaign performance. Is Big Data to blame? Sure, the increased information flow can improve marketing ROI, but it also presents the rather significant challenge of how to build the capabilities to make sense of all that data.

Fortunately, with the power of emerging technologies, neither customers nor marketers have to feel helplessly resigned to the current situation. Today, better analytical approaches and improved technologies are easing the strategic journey toward true one-to-one personalization, helping marketers move past obstacles and seize opportunities for generating sustainable growth and earning customer loyalty.

Download this whitepaper to learn more about an approach that’s more profitable than traditional campaign-based marketing. 

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If ever there were a masked opportunity in loyalty marketing, I’d call it Halloween.

Retailers have been quite clever in scaring up additional sales of candies, costumes and decorations, but few appear to be taking advantage of the role their loyalty programs can play in generating additional sales and follow-up purchases. An informal online search yielded few such promotions, and other than an occasional coupon for candy, I’ve not personally seen anything.

That can be a billion-dollar miss. Americans are projected to spend $7.4 billion on Halloween items this year, according to the National Retail Federation (NRF). More than half expect to spend more on Halloween than they do on Mother’s Day or Father’s Day, according to the 2014 Halloween Happenings Survey by Alliance Data Retail Services. Twenty-two percent of those surveyed expect to spend more this year than in 2013.

Americans are projected to spend $7.4 billion on Halloween items this year, according to the National Retail Federation (NRF)

That shakes out to about $105 in spending on average per household, according to the survey. A rewards program can help goose that number up and generate future holiday sales, by capturing specific purchase data that help merchants understand what motivates their customers.

Merchants and marketers should ask themselves: Have we considered the link between heavy Halloween “users” and other holiday events like Christmas? Can we analyze customer purchases this year and then use that data to promote earlier activity next year? Or, simply, what relevant communications can we use to engage customers and enable them to understand the next big theme for Halloween?

Here are a few ways loyalty marketing can do the trick to improve sales in 2014 and 2015:

Use Halloween to promote Christmas: Post-Halloween sales can be used to promote pre-holiday purchases. Merchants could do this by offering reward program members double points or discounts on Christmas decorations when they purchase Halloween candy, costumes and other items off the clearance shelf.

Hold candy contests: Retail chains can pursue partnerships with candy manufacturers and host Halloween contests tied to their loyalty programs. If the shopper purchases the bag of candy with the special code, he or she receives a prize, like a $100 shopping trip or $50 in manufacturer coupons. Chances are the winning shopper will end up spending more.

Generate costume ideas early: 62 percent of adults will buy Halloween costumes for themselves this year, according to the Alliance Data research. A reward program can record those purchases and the merchant can send those same customers costume ideas early in September 2015, with a discount as enticement.

Put a howl in Halloween: Halloween is not just for kids and adults. American consumers plan to spend $350 million on costumes for their dogs, cats and other pets, according to the NRF. Merchants can offer reward program members discounts on costumes with pet food purchases or hold social media contests during which the pet costume that gets the most votes wins access to a special in-store event.

There are many additional ways loyalty marketers can help merchants better engage their Halloween customers. With reliable rewards program data they can produce treats that are – unlike that box of raisins – always relevant to the recipient.

For many marketers today, the key challenge in collecting customer information is figuring out how to best use it. In the near future, that challenge may change to putting a dollar sign on the data.

Consumer data and similar intangible assets could be worth more than $8 trillion, according to a recent Wall Street Journal story, citing Leonard Nakamura, an economist at the Federal Reserve Bank of Philadelphia. “That’s roughly equivalent to the gross domestic product of Germany, France and Italy combined.”

When those insights start making money, regulators pay attention. The Kroger Co., for example, is estimated to sell $100 million worth of data to suppliers such as Procter & Gamble Co. and Nestlé, according to the report. Sure enough, in September, members of the Financial Accounting Standards Board were advised to research intangible assets again; the third time since 2002.

It is no longer up for debate that customer data is becoming a more valued and tangible asset, as is evidenced in FASB’s repeated review into how to record these elements in financial records. Regulatory agencies are already pointedly asking companies to share their accounting methods regarding reward points and similar currencies. The Securities and Exchange Commission, for example, in the spring asked CVS/pharmacy to explain how it accounts for its outstanding loyalty currency, as it was not detailed in its quarterly report.

(CVS responded that while its ExtraCare expenses are charged to its cost of revenue, it does not believe the liability of its program offerings are material due to their short-term duration.)

When it comes to general data, however, those quantifications get murky. Consider that the value of today’s assets may change markedly in six months as consumer behaviors change, for instance. Further, the cost of time spent collecting and analyzing data would offset that value.

Despite these variables, there are some general guidelines marketers can follow to better prepare for regulatory guidelines when they come, and to understand the value of their data:

• Consider a CDO: Roughly 100 large organizations employ a chief data officer, according to research firm Gartner. Companies that manage large amounts of data will likely be better off in a year if they appoint someone now to manage information use. They also should ensure the position is well integrated with the executive team so everyone knows his or her role.

• Be perseverant: As earlier stated, data is fluid. Today’s best customer may be gone tomorrow, or replaced by another with completely different purchase preferences and behaviors. If a company is serious about tracking the value of its data assets, it needs to do so diligently and flexibly. This requires a regular auditing schedule and accountability. Companies that involve all logical teams in the process will likely fare better in this exercise.

• Reach out: Accounting strength comes in numbers. Merchants that lack the resources to invest in a suite of in-house data analysts have the opportunity to benefit from third-party consultants. Fortunately, several organizations specialize in loyalty marketing and data analysis, including ours.

• Keep future value in mind: Concentrate on efforts to capture only the data the organization needs, recognizing in the process that the data not only is a valuable asset now, but in the future the acquisition, management and maintenance of that data asset may have beneficial accounting implications.

The customer experiences that data insights make possible can be, to quote MasterCard, priceless, but the value it brings to companies is not. Accounting standards are likely just a matter of time, and smart organizations will be ready.

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