Customer loyalty the answer to retail blues?

This article is brought to you by Retail Technology Review: Customer loyalty the answer to retail blues?.

Until recently loyalty programmes have been beyond the reach of smaller retailers - too costly or difficult to manage. Ian Royall, managing director of Futura, argues that putting the customer at the heart of your business shouldnt be viewed as a luxury item, but a foundation of your company.  Ian looks at ways of building customer loyalty and discusses the actions you can take and the technology that puts loyalty card systems within your reach.
 
Despite spring theres gloom on the high street and some retailers are in a self-fulfilling prophesy of doom, accepting lower footfall and declining sales as a matter of course.  Instead of investing to increase efficiency or taking advantage of cheap property leases and renegotiating rents, they are panicking and letting others be creative. Now is the time to stay focused.
 
Being distinctive while consumers are so price conscious
More than anything retailers need to become distinctive.  By seeking a better understanding of why people really buy from them, retailers can get closer to their market and be pro-active. By surveying real customers, following mentions on Facebook and Twitter and quizzing non-customers on what they really want and whats missing, they can gain a strong sense of why people are choosing their products.  Coupled with knowing exactly what sells well, they can choose strategies more likely to succeed.
 
As well as making their customers feel good by creating regular offers, they can link to associated businesses and offer reciprocal discounts; hold preview evenings for new ranges; and give discounts or free gifts to encourage recommendations.  
 
Frosts, a successful garden centre business, show just what can be achieved. They have used Futura to run a successful gardening club for the past 12 years offering members a 10% discount all day Thursdays and Saturdays.  After buying the membership pack, members receive a card and a selection of discount vouchers.  These, when scanned, show the sales assistant theyre a Gardening Club member, and the system automatically applies the discount.
 
20% of total sales
Last year Frosts re-branded their Gardening Club, advertised it more heavily in store and turned the welcome pack into a gift package with new collateral. As exporting the addresses from the Futura customer database is simple, they send direct mail letters and emails to each member telling them of offers, talks and events.  This attention to detail has seen an 80% increase in membership and members sales now account for 20% of total sales.  The maintenance and running of the loyalty Club however costs less than 0.1% of annual sales to run. Staying close to customers shows just what can be achieved.
 
Frosts example is a good one but for many retailers a loyalty card scheme will offer greater flexibility - and encourage shoppers to spend with you, not next door, with points earned as they spend. Until now integrated systems havent been an affordable option for mid to smaller retailers.
 
Affordable loyalty card system
In 2009 we decided to develop a loyalty card solution to help our customers analyse their customer data to build loyalty. Working with Autonomy, the womenswear clothing retailer that offers affordable formal and occasional wear, we piloted a scheme which added thousands of customers in the first six months and these are now responsible for 8% of sales.
 
Customer buying patterns
Autonomy looked at customer buying patterns and decided which promotions and incentives would best reward their loyal customer base.  As the integrated loyalty system required no extra procedures or equipment at the till, it was easy to install.  Because it captures all customer transactional information and contact details, the team were quickly able to set up email marketing campaigns.  
 
New collections and offers such as free accessories were introduced with a monthly statement and vouchers to be redeemed at any of the 22 stores.  The Futura system automatically applied standard or promotional points for each transaction to calculate the amount of vouchers sent to each customer.

ROI within 5 months
A recent end of season loyalty promotion focusing on coats generated an extra 10% of sales in this category showing the management the real benefits of sales analysis and precise tailoring of customer promotions.  Whats more, the loyalty scheme paid for itself within the five months.
Given its current success, Autonomy are now considering developing a platinum card for super spenders as well as looking at entering the social media arena to heighten awareness of special offers and the benefits of customer loyalty accounts.
We believe all retailers, whatever their size, should be able to interrogate their customer database, segment customers by age bands and other relevant criteria, examine what they are buying and target promotions and offers accordingly. And with email communication and digital marketing, cost is no longer the issue. With accessible technology any retailer should be able to put the customer at the heart of their business - staying focussed is what matters.
 
Futuras new loyalty card system is available for around 5,000 and more information can be found on www.futurauk.com