Loyalty Programs in Retail (Part-III)
Written by Angshu on 8:28 AM
Loyal Customers - Dream of Retailers (Part-III)
Data Carrier
[Only For Tech-savvy People!]
Using encoding the required information is stored in loyalty cards. Encoding is mainly dependent upon the data carrier that is used in the cards. Find below a comparative study of different data carriers –
| Data Carrier | Memory Capacity | Specialties | ||||||
| Bar code
| Approx. 4-12- chars, numeric or alphanumeric | Fix code, different type of codes are in use, e.g. EAN8, EAN13, 2of5 (numeric) or Code39 (alphanumeric) | ||||||
| Magnetic stripes
| 3 leads available
| Read-/write memory, standardized by ISO Currently the best priced solution on re-writeable media But can be forged | ||||||
| Chip
| 256-8192 chars (alphanumeric) | Read-/write memory (EEPROM) Two types – contact and without contact RFID technology depends on chips with radio frequency identification |
(Source: www.smartloyalty.de)
Database Retailing: Bridging Loyalty Cards and Marketing |
‘What’ is Database Retailing? |
| Database is a method of storing information in a systematic, methodical, easily accessible way. Database retailing is about collecting and storing customer information is a database and using that for analyzing customer shopping behavior. |
‘How’ to implement Database Retailing? |
| To build the customer database you need to collect the customer data. For that customers can be asked to fill up a form with necessary information. It can be done at the checkout lane by providing customers with the form and a pen. Customers will be more interested if there is some lucky draw associated with this process. Customers filling up the forms can be given a coupon and some exciting prizes can the awarded to the lucky winner. Now these data can be uploaded in a computer database and can be used in future.
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‘Why’ Database Retailing? |
| · The 80-20 Rule: In most of the cases for retail customers the famous 80-20 rule applies. It states that only 20 percent of the customers leads to 80 percent of the total revenue. · The top 20: By using the information stored in the database the retailers can know who their best customers are. Then tailored promotions can be designed for them to serve them better. · Don’t Ignore: In many cases the next 30-40 percent customers are ignored. Using database retailing these customers also can be identified. Then tailor made promotions for them can increase their buying volume. · Every challenge is an opportunity: Using data-base retailing, a firm could also determine which customers are shopping less. They can be asked for the reason. Many times customers do not buy if they do not get proper attention or appreciation. Those customers can be analyzed to find out the reason why they are buying less by meeting them personally. Then if those problems are resolved then they will also buy more. Those customers should never be considered ‘lost cause’. In reality they can become the best ones if they are listened and attended properly.
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Bringing it all together!
Knowledge is power and power leads to profit. So, information about the customer and their shopping pattern is very crucial in deciding business plans. Loyalty programs and cards can play a big role here. Survey results have shown that customers do not bother sharing personal information with the retailer if they get special benefits. While signing up for a loyalty program or loyalty card – customers can be asked to fill up a form with their personal information. Later, loyalty cards can be used to track customer shopping behavior. If there is a customer database in the background storing all those information then it becomes very easy to analyze customer behavior and streamline the business plans accordingly.
The Road Ahead…
Change is the only constant. So, business policy has to change keeping pace with evolving technology and changing customer needs.
Keeping that in mind and considering emerging technologies following points can be considered very important in future loyalty systems –
· Internet retail business is the most interesting and growing part of retail industry. People increasingly prefer to shop from the comfort of home. So, loyalty programs also need to be promoted through internet. Offers for various promotions, sweepstakes etc can be promoted via company website. In-store kiosks and digital signage can also be considered as the medium to promote loyalty programs.
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· Feel-good-factor and non-monetary benefits are becoming the priority of customers with changing times. So, affinity type of loyalty programs can play very crucial role in future.
· Though loyalty cards provide lots of benefits to both retailers and consumers, the inconvenience of carrying too many cards seems to be a major impediment in this regards. Modern consumers, loaded with numerous credit and debit cards, will surely put a second thought before getting another card! The concept of one card for all purpose can be a solution to this – but its future is still nebulous. Biometrics can be another option to lessen the burden of cards.
· RFID enabled loyalty cards can provide the ease of contact less processing. If you have a RFID enabled Loyalty Card in your pocket loaded with your personal information - RFID sensors can find out everything about you when you walk past a reader device. The radio waves can go right through your wallet & through your trousers and the information on the card's chip can be accessed by the RFID-sensor of the retail shop. Imagine how valuable it would be for businesses to determine who is worth serving and who should be ignored!
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1 comments: Responses to “ Loyalty Programs in Retail (Part-III) ”
By Maverick's Musings on July 20, 2009 at 10:38 AM
Nice post for beginners...I liked the initial bit where u introduced technology behind loyalty cards..would expect u to elaborate in ur future post..