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LOYALTY MARKETING DONE RIGHT the Best Labor-To-Customer Ratio

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LOYALTY MARKETING DONE RIGHT the Best Labor-To-Customer Ratio VOLUME 2 | NUMBER 1 | SPRING 2007 A PUBLICATION OF FUJITSU TRANSACTION SOLUTIONS INC. WHAT ABOUT THE CUSTOMER YOU NEVER SEE? Applying call center metrics to the brick-and-mortar retailer By Jonathan Amsler It’s no secret that call center customer man- agement has become quite a science, as tools and analysis for queue management and aban- donment rates are increasingly sophisticated. One thing is clear: call centers have an advan- tage over brick-and-mortar retailers because management can easily tie wait time to cus- tomer service, track lost customers and analyze labor dollars against the lost virtual customer. It makes one wonder … do brick-and-mor- tar retailers care about the customer in their stores the same way call centers do? Most retailers have a limited view of the customer that has walked through their door. Many rely on transaction data to determine the number of customers, how quickly they are served, and LOYALTY MARKETING DONE RIGHT the best labor-to-customer ratio. Unfortunately, By Peter Wolf this method does not capture the customer you Acquiring new customers is an expen- over their predecessors, with advanced tech- never see – the customer who didn’t buy. sive and difficult process; therefore, it nologies that enable greater understanding WHO IS THIS CUSTOMER? is imperative that retailers focus on retain- of their customers’ purchase behaviors and Of course it is impossible to answer that ing existing customers and rewarding cus- one-to-one targeted marketing. question specifically, but you can be sure that tomer loyalty. Unfortunately, many companies haven’t he or she probably entered your store with the Retailers have long recognized the value evolved their programs much beyond those intent to buy. It is likely that he or she even got of enhancing customer loyalty by offering available 60 years ago. Even companies that so far as to choose the item and moved to the them rewards based on their purchases. are considered industry leaders often issue Gold Bond Stamps, launched in 1938, was “loyalty” cards that simply offer the same “What About,” continued page 5 the first large-scale loyalty program, which discount structure to all members in the quickly became highly successful among program. Whether customers spend $10 a INSIDE THIS ISSUE grocers. It later expanded to other retail seg- month or $1,000 a month, they receive the ments including gas stations, dry cleaners same discounted price at checkout. What is EXCEEDING YOUR CUSTOMERS’ EXPECTATIONS and movie theaters. often positioned as a loyalty program is The basic premise of the Gold Bond merely a standard discount program that IT’S TIME: GROCERS NEED TO REVOLUTIONIZE WITH TECHNOLOGY Stamp program is still the foundation for reduces retailers’ gross margins. PERVASIVE RETAILING TRENDS most loyalty marketing programs today – With advanced technology to track pur- keep customers loyal to a particular product chases by customer, retailers are often col- CREATING CUSTOMER INFLUENCE, NOT INTRUSION or merchant by offering an incentive that lecting mountains of data that could encourages them to keep coming back - and provide valuable insight into purchase spending more money. However, retailers in trends, customer segmentation and market the 21st century have a distinct advantage basket dynamics. However, research has “Loyalty,” continued page 5 EXCEEDING YOUR CUSTOMERS’ EXPECTATIONS By Sunita Gupta In today’s dynamic world, customers are extremely knowledge- ware, or connectivity – or all three – are slow or inefficient, the entire able, which translates into more demanding shoppers. Retailers have shopping experience can end on a dissatisfying note for the customer. to work harder and smarter to offer expected levels of service, and As our POS Benchmarking Survey has indicated for the last few offering this is critical to a retailer’s success at creating that differenti- years, there is renewed interest in the upgrade or replacement of POS ated shopping experience. To understand how top retailers are differ- systems. Many retailers have realized that their older POS applications entiating themselves from the competition, especially at the have reached the maximum capacity of their hardware, plus high store-level, LakeWest Group recently conducted our 8th Annual POS maintenance costs and functionality constraints can lead to unsatis- Benchmarking Survey of the Hot 100 Retailers (detailed findings and fied customers. analysis available at www.lakewest.com). Because much of the software functionality that customers expect While multi-channel retailing is one of the key drivers many retail- cannot be run efficiently on old hardware, and retailers are finding ers are utilizing to thrive, it also serves to refocus on the store. The that some systems are becoming more expensive to maintain as they store is where customers can touch items they may have viewed in a get older, we see the trend for upgrading hardware to continue for the catalog, or where they pick up orders they placed online. Or, it TOP POS PRIORITIES can be where the customer first sees and touches the product and Increased customer speed through the checkout then goes home and orders it online. Capture additional customer and sales information The store experience is a critical Improved information flow part of the customer’s overall satis- faction with the retailer, especially Improved management of store labor at the checkout. This is often the Hardware replacement last major touch point for the cus- tomer in the store and slow pro- More accurate store inventory management cessing or lack of functionality can Improved data security easily color the overall shopping experience. Thus, more than two- Seamless multi-channel integration thirds of this year’s survey respon- Implementation of a loyalty program dents indicate that increased customer speed through the check- Decreased total cost of ownership out is their top priority for the next Provide kiosk availability at store two years. It is interesting to note that pro- Implementation of an open system cessing customers through the 0% 10% 20% 30% 40% 50% 60% 70% checkout faster has remained the number one priority for retailers throughout the life of the POS Benchmarking Survey - nearly ten next few years. As customers continue to become more demanding, years. So what are retailers doing to increase customer speed through retailers must ensure that their POS system is not slowing down the the checkout? We found that the Hot 100 Retailers are focusing on the checkout process and allowing the competition to gain an advantage. enhancement and upgrade of software and hardware to offer more The next few years look interesting when reviewing new technolo- functionality to both sales associates and customers at the checkout. gies, especially those that expedite the checkout process for customers in the store. We expect to see big changes at the checkout with more TECHNOLOGY AS A TOOL than one-third of the retailers indicating they will be implementing Technology adds value to the checkout experience if it is used kiosks (employee-facing and customer-facing), mobile sales devices effectively and with the right mix of business processes and training for lane-busting, and signature capture devices in the next two years. to support it. As we look at POS systems, these are often the last major Editor’s Note: Sunita Gupta is executive vice president at touch points for the customer in the store and if the software, hard- LakeWest Group. – 2 – PERVASIVE RETAILING IT’S TIME: GROCERS NEED TO TRENDS REVOLUTIONIZE WITH TECHNOLOGY U.S. CONSUMERS ARE READY FOR MOBILE To say that the competitive marketplace for gro- tion display” that allows the cashier to speed MARKETING cery retailers is challenging would be a bit of an through the checkout process while giving the cus- Although 79 percent of understatement. Pressure from global mega-marts tomer the chance to respond to promotions, tender consumers find the idea of and high-end boutique chains is squeezing grocer needs or advertising suggestions. These new POS mobile ads annoying, Forrester market share from both sides. The ability to com- software platforms can drive 10-15 seconds out of Research says early efforts at pete solely on low price has all but been taken each transaction (saving more than $1.5 million in away. While grocers continue to have a competitive labor costs for every $1 billion in sales), while mobile marketing have revealed edge when it comes to brand value, locations and increasing branding and loyalty marketing with a consumer willingness to consumer loyalty, these alone will not be enough to each and every customer through the check-stand. engage in campaigns that de- fight off the ever-increasing competitive threats. liver valuable content. Thirty- Merchants in other retail segments have seen DEMAND-DRIVEN LABOR five percent of U.S. households well-placed bets on advanced store technology in- MANAGEMENT that own a mobile phone cur- vestments that can have a material effect on com- The increased availability of store/SKU-level rently use text messaging and petitive differentiation and the overall shopping sales data has enabled much more detailed fore- 11 percent access the mobile experience. On the other hand, it’s no secret that casting and demand planning. This demand Internet, thus creating a viable grocers have been much slower than other retail insight can now be integrated with labor and task audience for mobile marketing. segments at investing in new systems. For example, management systems to help match store associate To combat preconditioned many grocery point-of-sale systems are more than staffing to the forecasted customer traffic. skepticism, marketers must 15 years old and limit the kinds of merchandise and Managing staffing levels to the variability pro- develop mobile marketing that consumer marketing programs that help drive big- duced by different promotions at different times of offers value, not interruptions.
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