Reward Technology takes a new approach to customer acquisition and retention through loyalty programmes by changing the time, place and way retailers provide their shoppers with special offers and rewards, Dennis Daniel reports
Paul Sheedy, founder and CEO of Reward Technology, a UK-based loyalty solutions provider, has an interesting proposition to offer retailers looking for loyalty solutions to attract and retain customers. He begins by drawing ttention to a simple fact. Customers use their loyalty cards when they pay their shopping bill at the till (POS terminal) in a store to accumulate points. That’s when the retailer first identifies and connects with them. He can then access consumer data on their cards that shows their wants and preferences and target them with promotional vouchers or coupons based on this data to entice them back to his store.
Sheedy feels this will more than likely turn out to be a wasted opportunity because customers are not too likely to go back to the store to redeem these offers. So the very purpose of a retailer using such coupon-based rewards in the hope of gaining long term customer loyalty for his store or brand is defeated. The better approach, Sheedy says, is to offer the right rewards to the right customer at the right time. That statement sums up his concept of what a loyalty programme is all about. He urges retailers to look at their loyalty programmes keeping their core objectives in mind, engage with their customers on a seamless digital platform through targeted rewards at a place where the reward is most relevant and at a time that is most convenient for the customer. The long-term vision is to move towards cardless loyalty.
Targeting customers at the start of their journey
What is the right time? According to Sheedy it’s when customers enter a store or mall to begin their shopping journey.
Engaging them by targeting promotional offers at this point is more likely to influence their subsequent shopping behaviour and add to their shopping basket. The loyalty focus shifts to ‘finding customers at the start of their journey rather than at the end’.
Sheedy’s company has patented the technology to do just this in the form of a unique customer loyalty card that incorporates RFID technology and a communication system with an antenna and receiver set up in the store/mall. Here’s how it works. A customer enters the store/mall with her loyalty card and phone. The card triggers a signal to the communication system. The customer is identified and her customer ID is matched to the most relevant targeted rewards and offers based on her customer profile. The rewards data is automatically transmitted to her phone. She can redeem the reward at the till (POS terminal) by scanning her loyalty card. The transactional and redemption data is then fed back to refine future targeted offers.
Matching customer profiles with rewards
What is the right reward to the right customer? Retailers use sophisticated analytics to decipher the customer data they collect so they can match customer profiles with rewards. That data covers diverse aspects of customer shopping behaviour, including their dwell time in stores, frequency of purchase, basket size, brand loyalty, propensity to respond to promotional messages, price sensitivity, and so on. The exercise can be complex and frustrating, Sheedy points out.
“In fact, the idea for Reward Technology grew out of this frustration in analysing loyalty card transactional data globally,” he says.
Sheedy claims his company understands the customer so the data the loyalty card collects is unique. In addition to the aspects listed above, it also covers where the customer shops, where she browses, when she shops (day and time) and the type of stores she prefers. For example, the time spent in the shop and the size of the shopping basket would differ from a housewife to a working mother. This additional information helps in defining the customer profile better and refining the offers made to her.
Paper-less, mobile-based digital platform
Of course, there were other problems that challenged Reward Technology, such as the dependence of retailers on paper-based loyalty programmes and coupon-led campaigns to engage with customers. “Running paper-based loyalty programmes is a long and inefficient process that poses several administrative and logistical challenges for retailers, apart from not being environmentally friendly,” says Sheedy, reiterating the need to migrate to a paper-less digital platform.
“Another cause of dissatisfaction was the low number of core customers using mobile apps and technologies to their full potential in current mobile-based loyalty programmes,” he adds. Sheedy elaborates with an example of mobile-based loyalty programmes in grocery retailing. “The core customer base in grocery retail comprises families wherein middle-aged individuals shop with large basket sizes. If we analyse how many grocery retail customers worldwide have the motivation to download a mobile app and use it every time they shop, we find their number rarely crosses 3%. This figure will, undoubtedly, increase with time, but in a cutthroat business like retail, business owners cannot afford to wait long for results on some technology they invest in today,” he explains.
“Reward Technology enables the retailer to communicate with any mobile phone platform without the need for special apps, bluetooth or geolocation, and customers don’t even need to have a smartphone. Apart from the flexibility in ending targeted messages to feature phones and smartphones, the customer can choose how she would like to receive messages, either via email, SMS, apps or social media such as Facebook,” says Sheedy.
Targeted messages on the digital highway
He does not think targeted messaging will lead to spamming. The company’s business model is built on sending the right message to the right person at the right time at a cost per message that would vary with the type of retail business and customer profile.
“We do not want a customer to walk into a mall and receive a hundred offers. It should also not mean that if a customer walks into 10 stores in a mall, she will get 10 different offers. The number of messages should not exceed two or three uring a single visit. The relevance of the messages should depend on the customer’s age, sex and previous browsing and shopping histories and preferences,” says Sheedy.
He envisages his company’s loyalty solution as a digital highway with mulitple lanes that allows customers to decide what they want to receive and how they want to receive it. He believes Reward Technology builds the bridge to help customers switch between lanes according to their preference as technological advancements and innovations in mobile communications impact and change their shopping behaviour.
“Retailers find it reassuring to have a roadmap that gives them the flexibility to engage with their customers irrespective of their adopting new channels and technologies. We want to help them plan for five to seven years ahead without limiting themselves to one kind of technology or communication channel. That’s why we don’t dictate that customer engagement should happen on a particular channel, be it brick-and-mortar stores, websites, email, SMS, mobile apps or social media,” says Sheedy.
A one-card solution for malls owners and tenants
Reward Technology is expanding outside the UK with its first joint venture partnership with UAE-based Emirates Facilities Management to launch Reward Technology MENA. The company is targeting mall developers in the Middle
East to take the lead and partner with their tenants to adopt a common platform to target and reward customers.
“In the Middle East, malls dominate the retail industry. Our programme can offer exceptional returns if mall owners collaborate with retailers to understand and reward their customers on a common platform,” says Sheedy.
He paints different scenarios to explain how the business model would work in a mall:
A customer walks into several stores in a mall but does not buy from any of them. In this case, the customer’s browsing pattern can be useful for retailers in the mall.
A customer shops at the lowest prices at a discount store but browses products in a luxury store. He will be of no interest to the luxury retailer.
A customer shops at a price slightly lower that in a luxury store. That’s just a small step away for the luxury retailer to acquire a new customer. In this case, the luxury retailer can send a targeted reward to entice that particular customer.
“Retailers can work with mall owners to target customers with relevant messages based on their shopping history and preferences. Accordingly, they can target a customer when she walks into a mall or when she walks into a store. If data is aggregated on a common platform and shared among the mall’s retail partners, all parties can gain insights into the shopping behaviour of their customers, their category-wise spending, and their percentage spend in different retail stores. This, in turn, can help the mall management create benchmarks and evaluate the mall’s performance,” says