Leading up to Christmas, I get the feeling that there is panic in the retail environment, with businesses chasing customers to try and squeeze the last cent out of their wallets. We all know that worldwide, retail is under significant pressure and the primary objective right now is to drive sales. But at what cost? Are retailers happy to give up margin to get a customer into the store?
In a previous blog I wrote that customers can be classed into Seagulls and Diamonds.
Diamonds are your loyal customers that have a high lifetime value to your business. Seagulls are “discount chasers” (Simon Burrow, ex Priceline loyalty, taught me this) – they come into the store, mess on the floor, mess up the shelves and disappear for always.
In an article published last week in SMH online, Chris Zapone writes that CBA and Myer have teamed up to reward CBA customers for shopping at Myer. We have to ask ourselves who is the customer loyal to in this instance – Myer or CBA? What is happening is that CBA cardholders can redeem points at Myer for shopping.
I am of the opinion that unless this is a long term strategic relationship, there can only be one winner here – the customer. No customer loyalty is being earned in this relationship.
What I am convinced brand owners and retailers should be doing is developing long term meaningful relationships with their customers and engaging them in all environments – Retail, Mobile, On-Line and Social – include them all – don’t leave any one medium out in the cold.
Ogilvy One have recently published an excellent White Paper on social CRM and I believe that unless this is included in a company’s marketing strategy and marketing mix,it will leave a gap for others to exploit.
Posted by in Uncategorized on October 16, 2012
Mobile advertising in the future cannot be ignored. As I suggested in my previous post, some research from Gartner has just been published:
“Mobile advertising should be mainstream in the next two to five years, predicts research firm Gartner in a report advising marketers to keep an eye on bar code marketing, mobile coupons and augmented reality.”
This is how the article starts.
And it goes on the expand on future trends. Location based advertising will be a focus and this is what we are promoting through our Shuuga product – www.shuuga.com
Look forward to receiving your comments.
Move into Mobile.
I recently read an article about the move by consumers into mobile search information as opposed to internet information. Today, there are reportedly over 6 billion mobile phone users worldwide. This explosion has created a focus by suppliers to tap into the ability to engage consumers in this space. What initially started out as sms messages has migrated to mms and now to apps and video onto smart phones. Another interesting statistic is how the rate of sale of mobile devices has far outstripped that of computers.
Creators of apps have been able to turn themselves into millionaires so fast, some even without even having generated any revenue like Instagram in the USA. Within weeks of going live, they sold to Facebook for a huge valuation.
What is also going to change, is the way that we receive messages and content and much of this is already happening in Apps; even advertising and responding, lead generating and sales of product. Another interesting change as disclosed by Google recently is the slow-down in the growth of advertisers using “pay per click”. Most advertisers want to pay on results that are definitive and measurable, such as referrals and actual sales.
This type of referral is encouraged by Facebook too. Another method of charging that we are comfortable with, and have had a good response on, is subscription based advertising, where large (or small) retail groups are happy to have a fixed fee per month, knowing that the number of eyeballs is increasing constantly.
Another interesting space to watch in the future is the outcome of the Mobile Wallet War! Google, Visa, PayPal and others are all vying for this space. But is there money to be made in switching transactions?
I am not sure. Watch this space.
Posted by in Uncategorized on October 13, 2012
Australia’s digital economy is worth as much as the nation’s iron ore exports, and is forecast to grow by up to $70 billion over the next four years, according to business consultants Deloitte Access Economics.
There has also been a 156% growth in mobile impressions in Australia over the past year, making it one of the fastest growing advertising platforms available to us.
With the digital revolution sweeping Australia, investment in mobile advertising is simply essential.
On the global front, mobile took stage as a category at Cannes this year for the very first time, and brands from all verticals are investing in mobile experiences.
Importantly, much of Australia’s online shopping is performed via mobile: 57% of Australian online shoppers report increasing their level of spending via mobile devices over the last 12 months, and 47% of smartphone web surfers use mobiles to find information about a product or service. In a country with 26 million mobile subscriptions – more than its population size – this isn’t surprising.
But what does mobile advertising promise for retail?
Mobile penetration means mobi-advertising will succeed
Mobile advertising is informed by a user-centred logic. It’s immediate, responds to behavioural changes in consumerism that are enabled by technology, is geo-targeted, and is tailored to individual user preferences. It’s also unquestionably more affordable than above-the-line advertising.
What’s exhilarating for retailers is that mobile marketing cultivates on-going engagement with the customer – nourishing ultimate customer loyalty.
Basically, success in the new terrain of retail is inseparable from a relationship with mobile. But, there’s cultural change that often hinders Australian business from leveraging the revenue opportunities of mobile, and it’s often founded in anxiety around measuring the impact of mobile advertising. This couldn’t be more unsubstantiated.
Measuring mobile advertising – ROI is not a guessing game
Mobile advertising has a very measurable relationship with the bottom line. Cutting-edge, user-friendly analytics give insight into real-time, granular reports of advertising-and customer- interaction. Essentially, you have a unique understanding of where your money is going and how your advertising is being consumed. It’s golden data – priceless for all stakeholders.
An mobile phone app like Shuuga has impressive analytics. Its location-based marketing application offers the key benefit of immediate evaluation of how effective a campaign has been and for every logged event, it tracks coordinates with a time-and-date stamp.
Each time a user views an advert, shares content via SMS, email, Facebook or Twitter, clicks a buy-now button, adds a store, retailer or category to their favourites list, the data is logged on a server, allowing the retailer to build powerful user-profiles, generate intelligent commute routes and movement heat-maps. Shuuga is one example of innovative work in the mobile marketing space, and there’s only more creative brilliance to come.
Marrying mobile advertising and retail for better business
Mobile advertising’s potential to stimulate retail opens exciting branding possibilities. This is grounded in the ability to measure ROI and continually refine digital strategy in response to real-time reports. Mobile is re-imagining Australian retail and success belongs to those who welcome its ability to build better business. The era of mobile advertising has arrived.
Neil Joseph is the CEO of the Endless Rewards Group, a supplier of loyalty solutions and customer relationship management (CRM) platforms for retailers.
Published in B&T – 9 October 2012
Mobile Loyalty – what does this mean?
I read an article this morning that made me smile and reconnect with an old friend of mine. He now lives in the USA and I am in Australia. Over a cup of coffee in Johannesburg five years ago we discussed the future of loyalty, and he showed me a mobile voucher platform he had developed and wanted to bring to market.
Fast forward to now, and we can see what Groupon, Living Social and other deal sites have done to the traditional retail market – customers EXPECT a discount and a better price now. They have the information at their fingertips and can surf the net standing in a store and they KNOW what the price should be.
The article I read http://www.thewisemarketer.com/news/read.asp?lc=s15376bx3668zh is from The Wise Marketer, a great source of marketing news and trends. In this article, the research found that “nearly 75% of consumers said that they would switch brands if they were offered real-time mobile promotions delivered to their smartphones while standing in the isle”.
So if this is what consumers are prepared to do while shopping, imagine what research they would be prepared to do before they go shopping?
We are excited about a new geo-location product, called Shuuga, we will be launching in April 2012. It is a location-based advertising and deal notification platform for mobile smartphones.
Shuuga is a cost effective, self-help, easy-to-use solution for Retailers and is FREE for mobile users www.shuuga.com .
It will be suitable for both bricks & mortar as well as online Retailers, as it is an efficient, affordable and dynamic location-based mobile marketing solution ideal for merchants of all industries. The best feature of this this facility is that there is no demand for retailers to discount their prices – that is the biggest let-down for merchants created by deal sites.
For the consumer, from within the Shuuga app or simply scanning a QR code presented in-store, mobile users are able to add favorite stores and/or retail categories to their Shuuga app and get instant notifications when new products, deals, freebies, coupons or other news is released.
This app will be available to both Android and Iphone 4 (and up) users and should be a great way for customers to share deals via social media and traditional messages.
well priced and interesting…and be at their fingertips.
Posted by in Uncategorized on February 23, 2012
We are proud to to announce that last week, in Singapore, we launched an exciting partnership.
OgilvyOne and Endless Rewards have formed a partnership that will provide a fresh approach to loyalty to enable businesses to engage their customers across multiple channels. Businesses across retail, hotels, hospitality and other sectors see the benefits of building loyalty amongst their customers every day.
Together OgilvyOne and Endless Rewards will deliver strategic expertise, creativity, software solutions and analytics as part of an end-to-end approach that can reduce the cost of programme deployment and management as well as simplify data and IT systems.
“We saw the exceptional results Endless Rewards had achieved for KFC in South Africa and wanted to bring that offering to Asia Pacific. We believed there was a strong business case to partner with Endless Rewards to use our expertise and offer creative loyalty solutions with a strong technology platform provider,” said Jerry Smith, President, OgilvyOne Asia Pacific.
With the explosion of social media, daily deals sites like Groupon, and global online shopping, owning the customer has become a major challenge facing most businesses today and the questions of “loyalty” & global consumerism” have become key.
Leading the team are:
Front: Lucy McCabe, Head Strategy, Ogilvy Asia Pacific: Patrick Pitcher, Chairman Endless Rewards, Jerry Smith, Regional President, Ogilvy Asia Pacific
Back from Endless Rewards: Chris Joseph, CEO Asia Pacific, Sean Smith, CEO OnitMedia, Neil Joseph, Worldwide CEO, Georgina Halabi, Client Relationship Director, Asia Pacific
We at Endless Rewards are delighted that Patrick Pitcher has agreed to join our group. With Patrick’s wealth of international experience in the advertising and CRM world, we are confident he will add huge value to our clients and their marketing strategies.
This article appeared in the press in Singapore and in 2 weeks time we will be meeting there to announce the launch of another exciting development – watch this space.
Starbucks sales up by 8% – Reloadable Pre-Paid Cards
Quite often when I am in discussions with prospective (or exiting clients) I hear the statement “loyalty is dead” or “loyalty does not work anymore because everyone is doing it” or “customers are deal chasers and are looking for discounts – so we have to comply”.
The biggest mistake, you as a retailer can make, is start discounting your brand, because as soon as you start, you begin a downward spiral that is very difficult to get out of. What loyalty and CRM programs allow you to do is to begin an engaging relationship with your customer so that you can try and secure that customer for a much longer period of time than a single discounted transaction.
In a recent meeting I held with an executive of one of the largest media groups around the world, I heard firsthand the intense disappointment in the business model of the discount deal sites. A few months ago, I posted a blog on this, and it seems as if the desire to implement some type of loyalty component to this product is starting to gain traction.
What this tells me is that a loyalty system in even its simplest format is important in a business. It may not have to have each and every component of a traditional CRM and loyalty program of cards, technology, database mining etc etc.
Reloadable PrePaid Cards
Even the simple implementation of a Reloadable Card Payment system has changed the way many of Starbuck’s customers view the business, and have responded accordingly. In the attached article, ER Starbucks article Jan 18th 2012 customers have loaded $2.2 bn onto their cards – what a win for Starbucks – customers have effectively prepaid for coffee, and Starbucks earns the interest. And customers are spending more!
We have for a number of years encouraged our clients to implement such re-loadable (gift) cards (which are reloadable and migrate to become loyalty cards). Those that have implemented them have seen amazing results, and I can encourage you to investigate doing the same. Repeat business for gift card recipients is over 30% and they spend 2.5 times the value of the funds on the card!
I look forward to receiving your opinion on this.
Gift cards scrutinized – Inside Retail, Issue 1890 – 16 Dec 2011
This article, by Emilia Terzon appeared in the Inside Retail newsletter in December.
The terms on which retailers sell, promote and exchange gift cards in Australia could change following a nationwide investigation into “whether consumer detriment is caused by [their] purchase and use”. The Commonwealth Consumer Affairs Advisory Council (CCAAC) issues paper released last week says the current Australian system has become flawed as retailers increasingly compete to offer “more attractive branded gift card products”.
Expiry dates are under particular scrutiny due to great discrepancies in length between retailers, with industry suggestions that all cards should be extended to a shelf life of four years.
Neil Joseph, CEO of Endless Rewards, which creates cards for names like Ribs & Rumps, Oshkosh, and Rodney Clark, disagrees with the CCAAC that expiry dates are causing confusion to customers.
“None of our clients have complained about this. They support the product as it drives incremental business, and they use gift cards as rewards for customers and staff,” he says.
“I am not aware of any major concerns in the local industry.”
A regional retail manager for an Australian high end fashion boutique chain told Inside Retail she had no significant problems with gift cards expiring or not being able to be redeemed.
“We like to be helpful with our customers, so if their gift vouchers expire we usually organise extensions for them. We don’t sell large amounts of them though, it’s more a service as such,” she says.
The bulk of the market currently offers a two year expiry period, this being the gold standard for Coles, Myer, JB Hi-Fi and David Jones, with a few giving an infinite date on exchange, as seen with Bunnings.
Terry Smart, CEO of JB Hi-Fi, says the entertainment retailer has no issues with its gift card policy, but that “we would not object to a consistent mandatory expiry time frame across all cards” – even if that means terms of four years.
He says JB Hi-Fi has a low level of complaints from customers due to its individual stores being “empowered with the discretion to reissue new cards in most circumstances where customers have been disadvantaged due to expiry or discovery after being lost”.
Estimates from the financial year ending June 2010 place the gift card industry’s worth at $1.5 billion. Some statistics claim around 25 per cent of vouchers as not redeemed each year, however, JB Hi-Fi says its rate is much lower at between one and two per cent.
The CCAAC report says overall the sector is still in its infancy, but “there are signs of an emerging secondary market for gift cards in Australia”.
Sites like CardLimbo.com.au have been at the forefront of this latter sector, with the e-commerce onseller allowing consumers to buy and sell unwanted vouchers, often at a discounted price to the card’s face value.
Yet there have been suggestions – notably via the tabloid current affairs program Today Tonight – that sites like this are adding to consumer confusion, with expiry dates on cards sold by secondary traders varying greatly.
Russell Zimmerman, executive director of the Australian Retailers Association (ARA), says confusion over expiry dates is sometimes the result of “a communication breakdown between the giver and the receiver of the gift card”.
“Gift cards are often bought by someone to give to someone else as a present… It is important that the giver of the gift card clearly communicates the terms and conditions of the gift card to the receiver.”
According to an ARA consumer survey, during Christmas 2011 73 per cent of consumers are planning to give either gift vouchers or money as presents.
“Four or five years is an unreasonable amount of time for the expiry of a gift card, as the outstanding gift card is seen as a debt or liability on the business unless it is redeemed within a reasonable period of time,” says Zimmerman.
Endless Rewards’ Joseph agrees with these sentiments, saying that an expiry of no more than 24 months is more realistic.
“What I would recommend is that retailers and sellers of gift cards online are encouraged to become members of a recognised industry body such as ADMA, which will give purchasers confidence in the supplier,” he says.
The issues paper is also seeking response on the restriction of low value use (where cards cannot be used to purchase items below a certain value), bank fees and charges, limitations with affiliated merchants, and store policy on receiving change.
Terms and conditions in the event of insolvency are being scrutinised, as seen with the collapse of RedGroup and the subsequent consumer outrage when affiliated gift cards were unable to be redeemed.
In that example one of its acquirers, SupaNews, attempted to honour defunct gift cards by offering 25 per cent off to voucher holders on purchases up to $1000.
Posted by in Rewards Programs on January 4, 2012
THE BIGGEST MISTAKE that CEO’s and CFO’s make when asking marketing teams to justify investing in marketing strategies is to get them to provide the executive team with a Return On Investment calculation.
But is ROI a good measure for making the decision to implement a Rewards and Loyalty Program?
“Of course it is” will be the response from the CFO of the company, because he/she erroneously believes that implementing a Rewards Program is a CAPITAL outlay, and any ongoing costs should be budgeted for separately as these are regarded as Additional Expenses implemented to drive incremental revenue.
How wrong can they be?
This is one of THE biggest mistakes one can make – trying to justify an investment in a marketing strategy. I made such a big mistake once when I presented a Rewards Program proposal to a prospective client. One of the requirements was to present a ROI and to ensure that I included ALL of the costs.
Now the costs can initially amount to quite a high number, and these include:
v L License Fees
v Set Up Fees
v Card Production
v POS marketing material
v Perhaps new equipment or integration into existing POS systems
And the biggest cost of all? The 5% or 10% “Discount” to the customer – “How can we afford that?” they ask.
The biggest disadvantage I had was that I did not have access to the company’s management accounts – they would not advise me what their advertising and marketing budget was, how much of it was allocated to direct marketing (if any) and what direct response communication they had conducted before. And if so, what were the results.
Even though the ROI was very positive, when I presented all of the above costs to them, my proposal was not considered. (This was 18 months ago, and I am not aware if they have actually implemented a program at all).
NOT a new cost – Redirection of Marketing Spend
Loyalty and Rewards Programs are a REDIRECTION of Marketing Spend. It is NOT a new expense that needs to be fitted into the budget – the budget MUST be massaged and part of the advertising and marketing budget should be channeled into ENGAGING with customers. The real benefit of a well directed and managed CRM program can be measured by:
- The increase in Frequency of customers
- The increase in basket size
- The increase in Total Spend by each individual customer.
Then as the program becomes more sophisticated, more encouragement can be made to get customers to buy higher margin products, which makes the program more profitable.
Of the above “expenses” the single biggest perceived cost is the 5% reward. However, before a gross 5% of total turnover is budgeted for, a realistic forecast has to be made on what proportion of the customer base will take up the offer. Included in this calculation should be the following factors:
- I. What percentage of the customers will realistically take up the Rewards program and the offers? On average, this should amount to between 5% and 25% of the total customer base
- II. Of these, between 40% and 60% will be active
- III. Of these active customers, only 50% will redeem their rewards on a regular basis.
Assume the total known client base is 100,000 customers and the average spend per customer is $200 per annum, then annual revenue will be $20m. If you calculate the maximum variables in the above numbers, about 7,500 customers will redeem their 5% rewards of $75,000. If the average cost of sales of the products sold is e.g. 30%, then the cost of the rewards redeemed is only $22,500. This as a function of $200m!
This is ONLY 0.1% of turnover! But look at the positive atmosphere it has created, as well as the Incremental revenue it has generated! Once this incremental revenue has been calculated, the ROI will be exponential
I won’t make this mistake again!