Data must be milked to get to the cream

Your report on the future of loyalty card schemes, “Loyal subject”, raised some critical issues, not least of which is the fact that the plethora of cards now in circulation is in-evitably beginning to devalue individual cards’ appeal.

Even a large wallet would be seriously groaning with a tenth of the cards currently attempting to inspire brand allegiance.

But the future of card schemes is almost definitely not going to lie in consortia. Nice marketing theory – but a minefield of issues and problems in practice which will send most apparently synergistic retailers running in opposite directions.

Strategic and super-sensitive issues such as who owns the data, who will have access to it, and who will manipulate it are all big sore points waiting to be addressed. For instance, with Shell Smart, Shell put up most of the development costs and it is unlikely to give that investment away lightly.

If properly collected and analy-sed, customer data lies at the heart of a business. Retailers are perhaps understandably the most territorial and secretive breed of business people and they will not be happy to share this kind of naked truth.

Moreover, the retail world is so fast-changing that today’s darlings of the high street could easily be tomorrow’s has-beens and most marketers would see it as brand suicide to get into bed with another player, unless they could be sure of a bright acquisition- or merger-free future.

The real issue behind the future of loyalty schemes is the proper analysis of the data that the card collects, and how the results are fed into the business.

NCH’s research shows most loyalty schemes are only being milked for about 15 per cent of the kind of information they could give a retailer which could add to the bottom line. For instance, how many retailers are using customer data to influence their recruitment policies to match their sales assistants to the typical profile of their most important customers? And how many retailers are truly integrating the data into their relationship marketing programmes, using a customer’s house move to welcome them to their nearest new store with special introductory offers?

Until marketers learn how to use their existing databases better, they cannot judge whether or not current loyalty schemes are adding value to their business or pontificate on what the future of such schemes will be.

Andy Wood

Head of European marketing services

NCH Promotional Services

Corby

Northants