Keeping track of a customer’s retail journey

The electronic footprint left behind by a new generation of voucher users is allowing brands to build a clear picture of their customers and better target offers. By Morag Cuddeford-Jones.

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Everyone likes a deal. And the promise of free money is just too good to pass up. Which might explain why the voucher industry is enjoying its best ever results, up more than 15% year-on-year in the first quarter of 2011, at a time when the British Retail Consortium has reported the slowest retail growth in 16 years.

Coupled with the success of websites such as Myvouchercodes.co.uk and local daily deal resellers such as Groupon, it’s clear that the consumer has become clued-into the benefits of working the discounts market to its fullest.

But if it was just about offering a near-permanent 20% off or posting a selection of vouchers through the customer’s door once in a while, these schemes wouldn’t be nearly as successful. They are thriving because, regardless of whether they’re old-fashioned gilt-edged paper gift vouchers or an email, sophisticated targeting means vouchers deliver far more value today than Aunt Vera’s £5 book token two decades ago.

Technological advances have had a huge impact on the voucher market. From ease of use to immediacy of processing, vouchers are in no way a nice ’little something’ you find at the bottom of the junk drawer, but an integral part of many consumers’ budgeting and shopping.

The biggest growth in the voucher sector has been driven by corporate clients using them as rewards for staff, clients and suppliers. Business-to-business direct sales rose 23% in the first quarter of 2011, while online sales went up by a staggering 163%.

Experts claim this growth is down to sophisticated targeting. “The data behind the card tells employers whether they are providing the right brand incentive for the right employee. The more personal the reward the more successful it is,” says UK Gift Card and Voucher Association (UKGCVA) president Andrew Johnson.

Our online voucher offer has opened up a different market for us to play in

Liz Wood, RAC

For John Dove, business incentives manager at House of Fraser Rewards, the big issue is not how to get hold of data but how to store and manipulate it in such a way that it delivers value for the business and consumer/ “We have increasing capability to know more about shopping habits but it’s also important that the data warehousing becomes more cost effective. The trend is moving that way.”

Not all retailers, however, are jumping on to the gift card bandwagon. Rebecca Bard, senior CRM executive at high street fashion retailer New Look, explains: “Our customer store card is more effective at generating data than gift cards. Although we could overlay information from the gift cards, this wouldn’t be considered more than a data skew.” Nevertheless, New Look’s gift voucher arm is growing, thanks to key annual events such as Christmas and Mother’s Day and a significant rise in business-to-business customers.

The data available from vouchers persuaded the RAC to sign up to a Vouchercodes.co.uk scheme that offered up to £20 Marks & Spencer vouchers to new customers who bought any of its motoring products, bar the most basic assistance package, via the site.

“Our online voucher offer has opened up a different market for us to play in. We get to work with different models to see which works best for us,” explains the RAC’s online marketing manager Liz Wood. “We haven’t had a full year cycle of renewal yet for these new customers. It will be interesting to see from the data behind the campaign how this segment compares with our traditional customer base or whether we are attracting a completely new type of consumer. We will also be able to determine its effectiveness if they renew at vastly different levels to our usual customer.”

If someone reloads a gift card, we know they are buying into the brand

John Dove, House of Fraser Reward

Initial results suggest that the campaign is certainly a one-off success. It generated a 3000% uplift in sales compared with the previous month (before the campaign had started) and return on investment was calculated at 182%. The company is now looking to extend the promotion across home and car insurance.

For any voucher scheme to work well, they must be easy to redeem. Ease of use is another key element and it is here that mobile technology comes to the fore. “Mobile technology is absolutely the next thing. People would rather leave home without their wallet than forget their phone,” House of Fraser’s Dove claims. “But it is generational and it is a technology that is very familiar to a certain demographic.”

Blockbuster Video linked up with T-Mobile and Eagle Eye solutions in April 2010 to develop a mobile promotions campaign that uses ePoS technology to register mobile vouchers.

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House of Fraser uses vouchers to generate data

But it is a myth, says the UKGCVA’s Johnson, that every new platform requires the retailer to further update their point-of-sale technology. “Things such as near-field communication (NFC) are a bit of a red herring because you don’t need it to be able to accept payments. The cashier can just as easily type the mobile voucher details into the till.”

And while new technologies that automatically store purchase history such as mobile and evouchers can deliver a wealth of insight, advanced till technology means paper transactions can also achieve similar results.

Dove points out that tills can now associate the paper voucher’s unique code with as much point-of-sale information as can be loaded onto a card. But Johnson adds: “It is possible to track much deeper behaviour if the customer registers their card online. And with mobile technology you already have a lot more information about them, including location data.”

Reloadable gift cards and evouchers certainly offer many more possibilities beyond tracking purchase history. “If someone is looking to reload a card they received as a gift or a business reward, then we know they are buying into the brand,” Dove insists.

And despite the popularity of the reloadable card across the retail sector, technological capabilities still vary. Asda has a gift card management system where the value on the card can be refreshed up to three times a day, whereas House of Fraser’s cards need an overnight fulfilment process.

However, Dove at House of Fraser points out that immediacy, though a key benefit of mobile-enabled vouchers and rewards, may ignore an important function of the card mechanic. “From my point of view, carrying a reloadable card in your wallet demonstrates loyalty and consumers aren’t just looking for immediacy but also for value,” he says.

The use of gift cards in conjunction with opt-in services on mobile or websites or overlaid with loyalty and membership card activity provides another source of data, as well as enhancing the consumer’s ongoing relationship.

UKGCVA’s Johnson concludes: “If you can analyse information, being able to tailor the offering makes the consumer feel special. The key thing is to have the right incentive for the right person.”

Q&A
brand in the spotlight

bryn

Bryn Owen
Head of marketing

Blockbuster

Marketing Week (MW) You embraced mobile vouchers quite early on, in spring 2010. How has that campaign fared?
Bryn Owen (BO) Very well. It was a limited link with T-Mobile and Eagle Eye Solutions to provide discount codes to subscribers of T-Mobile’s Night In package where they get five items for £5. The scheme has been processing 6,000 customers a week since it began.

MW What has been the key aim of this project – data or pure promotion?
BO T-Mobile owns all the data it captures through subscribers so it’s not something we can use in this case. But we have seen how you can track the customer journey through such schemes and it certainly makes promotions more accountable than they have been in the past. Return on investment on this project alone has been significant and we are looking at mobile vouchers as a key way forward.

blockbuster

MW How do you ensure you don’t lose money to a more widespread use of the vouchers than anticipated?

BO Every voucher, whether through the mobile campaign or our more widely available ecoupons from the website or email promotions, has a unique code and cannot be used more than once.

MW With mobile penetration on a relentless upward curve, do people still print off evouchers to obtain promotions?
BO Certainly, it’s still our main form of interaction. It’s a major part of our strategy to drive online and postal customers instore. We can also tailor the offering having collected historical purchasing data. It’s not something we’re pushing yet, but we can see that mobile vouchers will become more important as we divert our direct marketing to our 4.5 million customers through email and SMS.

Viewpoint

rebecca

Rebecca Bard
Senior CRM executive
New Look

Mobile vouchers are going to be a very interesting tool from a data capture point of view. However, I can’t foresee a lot of fashion brands being too quick to take it up. Gift vouchers in this sector are still a tangible good – in a way, they represent the product. So they have to be as pretty and covetable as the fashion item itself.

We also have to appeal in one item to different customers – the person buying it as a gift could be an auntie or a grandmother – and then the users may be young women or even children.

Business to business is a very fast growing part of our voucher business and we still service that largely with paper vouchers. Due to our expanding international business, paper vouchers remain important here because we don’t yet have the ePoS tills that can cope with chip and pin cards.

There is a huge opportunity to capture data using these gift cards but it’s not something we currently do, even though we are planning to look into communications based on the value held on customers cards.

Currently, the traffic is one way – we use our CRM database to contact existing customers who have signed up either online or via our customer store card. We could overlay information from the gift cards but this wouldn’t be considered more than a data skew.

There is lots of potential around gift cards and mobile and we are certainly looking into some of the opportunities as the market grows, particularly around business to business.

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