The element of surprise

I know winter has arrived - it has finally changed from warm rain to cold rain – and in the last few weeks we’ve had a good drenching. 

This brought the inevitable wet floor underfoot and to my amusement there was a sign in my office saying “Wet Floor”. 

Apart from the fact that I’m obviously easily amused, the reason this entertained me was because the sign is there almost every day, and this was the first time I've actually seen the floor wet.

The problem is, the more the sign is used, or any communication for that matter - especially where it shouldn’t be used – the more people tune out of it and begin to ignore it. 

It fails to get cut through.

Whether the communication is for health and safety or customer loyalty it should have the same purpose - to change behaviour.

• If your predominant form of loyalty communication is a points statement, showing points earned, redeemed and a closing balance
• If your statement is sent every month or every quarter
• If your statement is sent with un-targeted inserts or statement messages

Guess what – it’s going to fail to get cut through.

You need to shake thinks up a little and surprise people.

ASDA - Loyalty rejecters?

ASDA CEO Andy Bond reportedly said just a few weeks ago

"You can't buy loyalty with plastic points"

Going on to say about Tesco Clubcard “They're based on conditional selling and only reward people that spend the most. At ASDA we reward customers with the lowest-possible prices everyday. That's why more people than ever are choosing to shop at ASDA.”

On the first point he’s dead right, you can’t buy loyalty – plastic points or otherwise – you have to earn it.

On the second point I think he’s dead wrong and here’s why.

“Conditional Selling” – Unlike many US style grocery programmes which do actually have conditional selling - giving one price for card holders and one for none card holders - there is no tiering in the Clubcard model.  Everyone is equally rewarded and your reward is simply based on overall spend; assuming of course you join the programme

Obviously you have to spend enough to reach a minimum threshold for reward, but for a normal loyal customer this is not difficult.  In fact it is less about rewarding high spending customers and more about rewarding loyal customers – those who shop with you regularly.

“Lowest Possible Prices” – To fight on price you really have to be the cheapest.  I decided to try out ASDA by doing a monthly shop on ASDA online for exactly the same products (substituting where required) as my normal shop at Tesco.  At the end of it there was a few pence in it so hardly worth jumping up and down about – and I get Clubcard points at Tesco.

Maybe I’m not a typical ASDA customers and I’m also not a Tesco sycophant.  However I do believe that for a retailer like ASDA, understanding your customers is key – and interestingly so do ASDA to a point.

Reportedly gathering information from a pool of 18,000 shoppers that will be used to influence which products it sells and to drive the business around common themes that emerge – they are doing their level best to gain an understanding of their customers.

Whilst this may provide insight akin to what Tesco gets from Clubcard data, it will not allow for a feedback loop which would enable them to go back to individual customers to recognise, reward and influence. 

So are ASDA loyalty rejecters?

Well lowest prices do not reward or recognise customer loyalty – I get that price if it’s the first time I’ve shopped there or the 51st time.  What they will do however is maintain customer loyalty for that segment of customers who are price/promotionally sensitive – but only for as long as you have the best price.

However ASDA do have another trick up their sleeve and that’s transparency.  Andy states “My ambition for Asda is to actively involve customers in every aspect of the business, to lift the lid on how we do things, and enable our customers to help make decisions that have an impact on what we sell and how we sell it.”

It’s obviously early days for this initiative and whilst I’ve banged the drum for a while about it being less about the transaction and more about the interaction it remains to be seen how many customers will actually want to “lift the lid”.

Ultimately a good loyalty programme will allow you to have a two way dialogue with a customer about topics which are relevant and create a win-win for the customer and the retailer – in this respect ASDA are making positive moves with a non-points based mechanic.

Far from being loyalty rejecters I think ASDA are doing their best to embrace loyalty and to generate genuine customer engagement – the jury however is still out on how and whether this will actually work.

One man’s baggy pants is another man’s well fitted trousers

This is the wisdom of Homer Simpson shown in the episode “Homie the Clown” where Homer Simpson decides to join clown school. On trying on his clown outfit the following exchange takes place:-

Krusty: OK, we'll start off with the baggy -- wha? [sees Homer] Those are supposed to be baggy pants. Baggy!

Homer: Ooh. I've never had a pair of pants that fit this well in my life.

Ok, so this is just an excuse to put some Homer Simpson into my blog, however it does raise an interesting question. When we try to second guess how people will use our products and services we don’t always get what we planned.

Microsoft recently started taking action against people who have modified their consoles with this resulting in kicking them off Xbox live or rendering some of their modifications useless.

Apple similarly plays a cat and mouse game with people who jail break their iPhones, essentially freeing themselves from both the Appstore and their cellular network.

Whilst both Apple and Microsoft would claim their activity is to prevent piracy and the creation of security holes – something which has some merit given the recent worm virus issues on jail broken iPhones in the Netherlands – it does also smack of an overly controlling corporate trying to dictate how people use their hardware.

This isn’t just limited to hardware manufactures. Customers are increasing promiscuous, choosing how to use brands as part of an overall portfolio. Loyalty has never been about getting 100% share of wallet, but all retailers or FMCG companies are looking for customers to “shop the shop” or fill their needs from across the range.

Whilst it makes sense to highlight other services or departments that a customer doesn’t yet utilise, this needs to be done sympathetically -a customer may not trust you for that type of purchase or may not consider it relevant.

I’ve been working with a retailer who provides two related services which are offered in different ways. It was interesting to see the research around the audiences using these services which suggested that they were completely different and there was little or no cross-over.

Looking in from the outside you may assume there was an opportunity for cross-sell between these services but when you understand the customers, what they do and when they do it you can see that there is little opportunity.

This also applies to the recognition and rewarding of customers.

Ideally your loyalty programme should align with profitability – rewarding customers for profitable behaviours and essentially “nudging” them in the direction you want. However this can backfire if you don’t understand how customers are working with your brand.

When reviewing an airline Frequent Flyer programme it was interesting to see that some of their most profitable customers weren’t being recognised in any way by their loyalty programme.

The problem?

The programme was tuned to recognise long haul business class customers, not short haul economy. However some of these short haul customers were essentially commuting by plane – racking up more flights and hence profitability than their top tier customers – but not miles, the standard measure used for recognition.

When considering how to retain and grow customers we need to ensure that we don’t assume how customers want to interact with us or what they want to buy from us.

Instead we need to take the time to understand different customer segments and ensure products and services are aligned to these customers in the context to which they utilise them.

Just because you sell baggy pants doesn’t mean you can’t market to a segment who like how they fit.