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Stepping Up Customer Loyalty In A Mobile, Social World 1

Stepping Up Customer Loyalty In A Mobile, Social World

September 1, 2011

Written by Alicia Fiorletta, Associate Editor


Table of ContentsExecutive Summary................................................................................................................. 3

Beyond CRM: Top Tips To Improve Customer Loyalty......................................................... 4

Case Study: Sephora Optimizes New Technology To Enhance Online Shopping........... 5

Case Study: Moosejaw Creates Personal Relationships With Shoppers............................ 6

CRM Solutions Surpass Moosejaw’s Customer Loyalty Expectations................................. 7

Transforming One-Time Buyers Into Loyal Customers.......................................................... 8

In-Store Technologies Enhance Customer Experiences...................................................... 9

Mobility Leads To Improved Customer Service.................................................................. 10

SMS Mobile Strategies Boost Brand Awareness.................................................................. 11

Geo-Location Apps Reward Customers On The Spot....................................................... 12

Tactics To Measure Social Media Loyalty............................................................................ 13

The Future of Customer Loyalty............................................................................................ 15

Conclusion.............................................................................................................................. 17

About Retail TouchPoints...................................................................................................... 18


As shoppers devote more time to social media and mobile for

interaction, shopping and information search, retailers must adopt new

and innovative loyalty tactics that align with these new behaviors, but

continue to garner the perks of traditional loyalty programs.

Punch cards, frequent buyer memberships, online points and email

newsletters have allowed customers to stay in contact with their

favorite brands online and in-store. Now, these loyalty programs can

be promoted and maintained through mobile applications and social

media. New programs also can be deployed via text message, geo-

location app and social gaming. These tactics in particular have

contributed to the fast-paced growth of mobile marketing, according to

Nikki Baird, Managing Partner, Retail Systems Research (RSR).

“So far, online and store have been the dominant channel, but we’re

seeing huge growth in mobile,” Baird said. “According to our research,

the number of retailers offering something via the mobile channel —

whether just information or full commerce capabilities — is going to

double in the next 12 to 18 months.”

In this new era of customer loyalty, retailers are beginning to recognize

the boundless opportunities available from the implementation of tactics

and technologies that peak customer attention at home or in-store. To

that end, according to the “IBM 2010 CEO Study,” 88% of respondents

chose “getting closer to the customer” as a top priority in leveraging

online and digital technologies.

The survey also noted that

76% of CEOs view “insight

and intelligence” as key focus

areas for business growth.

Through data analytics, retail

marketers can gain a clearer

understanding of their target

consumer base, including

purchase behavior and the

channels most frequently visited. This information can help merchants

develop a strategy that will increase customer loyalty and enhance one-

to-one communication.

Many innovative leading retailers, such as Sephora and Moosejaw, are

optimizing multiple channels to extend inventory information and ignite

memorable dialogue with shoppers. By moving past age-old batch-

and-blast campaigns, these retailers have developed strategies using

mobile, web, social media and in-store to stand out in the increasingly

competitive cross-channel market.


Beyond CRM: Top Tips To Improve Customer Loyalty Due to the influx of channels consumers are using to interact with brands, retailers are struggling to determine an accurate method to measure and track customer loyalty. While many retailers implement CRM strategies to measure loyalty, Robert Passikoff, Founder and President of Brand Keys, Inc., revealed more efficient ways to determine the success of loyalty initiatives.

Passikoff provided a checklist of three open-ended questions retailers should refer to when analyzing customer loyalty efforts:

1. What actually drives loyalty in the category?;

2. What expectations do consumers hold for the drivers of loyalty and engagement?; and

3. How well does the brand meet — or even exceed — these expectations?

To that end, Passikoff noted that retailers should stop looking through a “brand lens” and start looking through a “consumer lens.” He explained: “Know how the consumer really views the category, how they’ll compare offerings, and how they actually buy. Have a measure of unconstrained-by-category expectations, and know how well your brand meets those expectations.” Retailers can then measure responses to advertising and communication tactics to track trends that engage and engender loyal customers.

Although many retailers have built and deployed loyalty strategies around discounts and coupons, focusing on optimal customer service and an engaging experience across channels is more effective in winning true loyalty, according to RSR’s Baird.

“Retailers need to focus on customer needs and wants — and delights,” Baird noted. “The more you delight a customer, the more likely they are to come back. If you can consistently delight them, then you build loyalty. Too many retailers have defined ‘delight’ as equivalent with ‘discount,’ and I just don’t find that to be true. Yes, an unexpected or ‘bonus’ discount can be ‘delightful’ in that kind of circumstance, but so can a good employee interaction, no line at the register, or even something as simple as acknowledgement that the shopper is a great customer.”

Because a seamless buying process is vital to increase consumers’ willingness to purchase, either online or in-store, retailers can implement multiple channels and strategies to peak consumer interest throughout the browsing and buying journey. Both Sephora and Moosejaw have made great strides in this area.


Case Study: Sephora Optimizes New Technology To Enhance Online ShoppingSephora has put forth numerous efforts to drive purchases by engaging

with shoppers in-store and online. In 2007, the beauty and toiletries retailer

developed the Beauty Insider loyalty program for frequent shoppers. This

initiative allows consumers to collect loyalty points following completed

purchases. Points are redeemable for a collection of sample packs and

limited-edition products. In 2009, Sephora added another level to its loyalty

initiative — the V.I.B. (Very Important Beauty Insider) — for premium buyers.

Members of this program can receive exclusive gifts, event invitations and

early access to select products.

In addition to selling through 1,000 stores in more than 24

countries, Sephora offers a customer service call center,

catalogs and a web site featuring the full line of products

and specials. More recently, Sephora has expanded its

customer experience across multiple platforms, including

iPad, mobile, YouTube and social media.

Through the retailer’s YouTube channel and BeautyTalk

program, shoppers can learn about the latest cosmetic

products, trends and styles from makeup artists and

associates from makeup brands such as NARS. The

iPad app also features an interactive catalog of all

Sephora brands, expert makeup tips and videos. Mobile

applications feature seamless

shopping capabilities so customers

can easily browse inventory,

quickly view new arrivals, and read

product descriptions and reviews.

The apps also include an in-depth

view of past purchases, product

recommendations and reward point

balances, a shopping list feature

and store locator. Although Sephora’s applications enhance the browsing

experience, the retailer’s social efforts increase communication between

shoppers.

With nearly two million “Likes” on Facebook and more than 200,000

Twitter “Followers,” Sephora uses a variety of techniques to increase

communication with loyal shoppers and brand fans through the social

channel. While both social pages offer sales and deals, the retailer’s

Twitter page features fun makeup facts and its Facebook site contains

high-definition photos, makeup tutorials and a discussion board for fans to

ask questions and discuss their Sephora buys.

“Sephora does a great job with customer engagement via social

channels,” noted Baird. “It’s harder to get that same level of experience

on their site and even harder in their stores, though they are working

on these channels too.” By focusing on optimizing social media efforts,

Sephora has successfully increased customer interaction and created a

community among its shoppers.


Case Study: Moosejaw Creates Personal Relationships With Shoppers Moosejaw is known as a traditionally online-focused retailer in the

outdoor apparel and equipment space. With only seven brick-and-

mortar locations, the retailer has gained a quality fan base primarily

from its innovative approaches to brand engagement through multiple

channels. Moosejaw excels in initiating conversations with consumers

through their online site by implementing unique promotions, such as

the “Free Chinese Food” campaign, which promised free takeout to

customers who mailed their POS receipts to retailer headquarters. The

retailer also has consistently encouraged purchases through its rewards

program.

By becoming a member of the Moosejaw Rewards Program, shoppers

can collect points that are redeemable for free items. For example,

consumers who opt-in to the Moosejaw email newsletter for the first time

receive 397 reward points. Visitors also can enter to join the retailer’s

daily point giveaway and receive 15,000 points. In addition to boosting

overall income for Moosejaw, the rewards programs also have proven

to successfully optimize brand loyalty through compelling dialogue with

shoppers via social media on the company web site. In the “Moosejaw

Madness” section, brand fans can share personal pictures, read the

Moosejaw blog and share product reviews.

To fortify social media efforts,

which are a vital component

of Moosejaw’s customer

loyalty program, the retailer

composed a team dedicated

to tracking and interacting on

Facebook. Social media staff

developed a consistent strategy

around posting status updates

and pictures, and answering

questions or complaints. The retailer’s Twitter and SMS initiatives provide

strong yet entertaining calls-to-action to engage shoppers, including quiz

questions that are redeemable for free merchandise and coupons.

The more a retailer offers innovative ways to communicate with

consumers via web and social media, the more consumers will grow

attached to a brand, according to Jerry Lewis, VP of Technology for

Moosejaw.

“You have to find ways to interact with your customer where you are

not selling them something,” Lewis said. “How vital this is to your success

totally depends on your industry, brand strength, and social ‘relevance.’

By relevance, I mean how much people would care about your

company and products in a social setting where they will talk about it.”


CRM Solutions Surpass Moosejaw’s Customer Loyalty ExpectationsCurrently, Moosejaw is working to advance its customer service options

by employing a live chat solution so retail personnel can immediately

answer shopper questions and diffuse any inventory or shipping issues.

“The keys to customer loyalty in the omni-channel age are outstanding

product quality, great customer service, and consistent style and flavor

of communication across all channels,” noted Lewis. “This particularly

drives home the authenticity of your message and brand.”

To further the success of its loyalty projects, Moosejaw is implementing

a new CRM system in correlation with a deeper integration of its email

service provider. According to Lewis, this new project will increase

efficiencies in the retailer’s email response process based on shopper

interests and communication history. The new CRM system also will allow

marketing personnel to track campaign successes.

“Customers hate getting spammed, but they love our emails, so most of

them read them all and laugh,” Lewis said. “You can go too far though,

so we want to be sure we’re as able to listen to our customers, as we are

able to talk to them.”


Transforming One-Time Buyers Into Loyal CustomersDue to consumers’ growing interest in mobile and social media

applications, retailers are opting to implement tactics within those

channels to increase one-to-one communication, drive engagement

and increase purchases online and in-store. Retailers such as Sephora

and Moosejaw have developed marketing strategies designed to

optimize customer loyalty via iPad, smartphone and networking web

sites including Facebook and Twitter.

“We are going to continue to be fascinated with technology and new

business models, whether it’s Groupon or a type of new start-up that

comes along,” said Rick Ferguson, VP of Knowledge Development for

Groupe Aeroplan, Inc. “We are also going to be fascinated by geo-

location and check-in technology, as well as using mobile devices to

pay the bill.”

To formulate an efficient cross-channel strategy that increases direct

dialogue with shoppers, retailers must first understand the new definition

of “customer-centric,” according to Jeff Nicholson, VP of Product

Marketing, Customer Analytics and Interaction at Pitney Bowes Business

Insight. Nicholson recently shared his views in a webinar titled Customer-

Centric Marketing: Making the Move from Campaigns to Cross-Channel

Dialogue. In the new age of customer loyalty, “customer-centric”

marketing focuses on communicating with consumers in the channels

and during the times that work best for them, he noted. “Customer-

centric marketing is when you are actually able to execute at the

individual level.”

Currently, retailers can leverage a number of strategies to enhance the

shopping experience and in turn, transform one-time buyers into loyal

customers.


In-Store Technologies Enhance Customer ExperiencesThe buzz surrounding Apple’s iPad has increased retailer implementation

of tablet technology to enhance the in-store experience. With an

average cost of $500 per tablet, the platform facilitates the opportunity

for store associates and managers to provide shoppers with in-depth

information and a high-resolution, 360-degree view of inventory.

By deploying cloud platforms accessible via tablets, retailers can process

payments and purchases, and also receive CRM information such as

shopping history and browsing behavior in real time. Retailers also can

utilize iPad-embedded, self-service kiosks to run videos, advertisements

and brand messages.

According to the Forrester Research study titled Why Tablet Commerce

May Trump Mobile Commerce, the average retailer currently is investing

approximately $14,000 in tablet commerce tools. Although the study

revealed that currently only 30% of retailers plan to provide tablets

for store associates to help sell merchandise, the platform and mPOS

systems will soon become a vital tool in the retail store arsenal, asserted

Larry Freed, President and CEO of ForeSee Results.

“Tablets and mPOS will be essential for incorporating the best features

of Internet technology into the in-store environment,” Freed said. “They

will also be critical for allowing associates to be more mobile, less tied

to registers, more able to focus on the customer shopping experience

wherever it is happening in the store.”


Mobility Leads To Improved Customer ServiceForrester’s survey results also showed that improving customer service

was a top objective for retailers, with 65% of respondents citing it as a

main reason for implementing enterprise mobility. To that end, Nikki Baird,

Managing Partner, Retail Systems Research (RSR), explained that retailers

should formulate an optimal in-store experience rather than focus on

deploying a mobile payment system.

“I don’t see tablets primarily targeted as mobile POS,” Baird said. “I see

them more as assisted selling, ways for employees to use technology

to help customers in ways that customers may not be able to help

themselves, or at least in ways that streamline the process. Everyone

wants to be like Apple and take the transaction in the aisle, but what

they really want is for an employee to help a customer make a decision

and then capture the sale before the customer changes her mind.”

According to Aberdeen Group’s On-Premises Mobile Retail: Empowering

Deeper Customer Engagement, 38% of retail respondents are in the

process of employing mobile or tablet-based technology. However,

Ferguson noted that it is easy for retailers to overwhelm consumers by

rolling out too many new in-store technologies at one time. “It’s all really

exciting stuff,” he said, “but it can easily become overkill and end up

being a lot of noise, which I think is a danger. Imagine walking into the

retail store and you’re immediately assaulted with all of these visual

displays. While it’s a very powerful, potential tool, I think it has to be used

judiciously and it has to be very closely aligned with the brand and an

opt-in, so consumers can perceive it as valuable.”


SMS Mobile Strategies Boost Brand AwarenessWhile enterprise mobility presents a prime opportunity to increase sales

and upsells in-store, other mobile and social tactics will increase brand

awareness and word-of-mouth. Mobile in particular provides retailers with

an efficient gateway to consumers directly through their smartphones

and also into their digital inboxes.

The mobile conversation has become more prominent during 2011,

with the adoption rate of smartphones growing at an astounding

pace. Currently, more than 91% of U.S. consumers are active wireless

subscribers, according to the 2010 CTIA Semi-Annual Wireless

Industry Survey. Research also has revealed that as mobile adoption

has continued to proliferate, so has the number of text messages

exchanged. The International Telecommunications Union revealed

that the total number of text messages sent globally from 2007 to 2010

skyrocketed from an estimated 1.8 trillion to nearly 6.1 trillion.

The widespread interaction with SMS (Short Message Service) has

prompted leading retailers such as Target, Macy’s and Victoria’s Secret

to deploy text message campaigns designed to build up their opt-in list

and develop relationships with shoppers. This marketing tactic allows

retailers to effectively reach shoppers by sending them special offers

such as news items, sale alerts and coupons directly to the channel they

utilize daily to interact with family and friends.

Mobile applications also allow

retailers to institute a seamless

browsing and buying process.

However, to increase downloads

and overall use, retailers must

create a focused and engaging

app experience, Freed advised.

“Customers are already getting

wary of having too many apps,

and where they might like a dozen

retailers on Facebook or follow

a dozen retailers on Twitter, they

aren’t likely to download a dozen

apps for retailers that sell similar products,” Freed said. “The retailers that

have good apps and are meeting customer needs are going to have an

advantage in terms of mobile phone ‘real estate.’” Mobile applications

also can encourage shoppers to make purchases in-store by sending out

marketing messages, and allowing customers to research product prices

and information at home and in the aisle, he explained.


Geo-Location Apps Reward Customers On The SpotBy becoming active in geo-location services such as foursquare, retailers

can reward customers that check in with coupons and free goods.

This strategy encourages new shoppers to become loyal, long-term

customers. However, Freed advised that retailers should beware of

“bought loyalty,” which may create a new purchase, but not cultivate a

brand advocate.

“As soon as someone else offers a better price, that customer will

switch,” Freed said. “If you have to buy their loyalty, they aren’t really

loyal. The best measure of loyalty is their likelihood to choose you as their

first choice when looking for a certain product or merchandise. It is their

allegiance to choose you first, regardless of location, sales, or anything

else.”

Despite the potential of mobile-based loyalty initiatives, a large

percentage of retailers have not deployed mobile campaigns,

according to research by Hipcricket. While 37% of Hipcricket survey

respondents said they would be interested in participating in a mobile

customer loyalty program from a brand they trust, approximately 83%

of U.S. consumers say they have not been the recipients of mobile

marketing campaigns from their favorite brands.


Tactics To Measure Social Media Loyalty

While retailers may be slow on the uptick with mobile campaigns

many more are working to develop a social media strategy. Increased

adoption of social media sites has been attributed to the promise of

instant communication and the ability for consumers to share their

thoughts, news, photos and videos to a forum of friends and family. For

retailers, customer recommendations and reviews are primary channel

attributes that can make or break reputations. To that end, it is vital that

retailers understand what customers are saying about them through

public channels like Twitter and Facebook, and track behaviors intently,

according to Baird.

“Even if you don’t plan to do much with it, you should provide a place

for customers to engage with you so that at least you can be a party

to the conversation,” Baird said. “You can ‘hear’ what customers are

saying, instead of finding out about it the hard way — in sales or in

customer satisfaction surveys.”

According to industry research, there are a number of tactics retailers

currently are utilizing to measure customer loyalty via social media, such

as:

• 74% of surveyed companies are implementing some form of Social

Media Monitoring (SMM) (Web Liquid, Marketers and Social Media

Monitoring Survey 2011 for May/June 2011);

• 78% of retailers measure number of Facebook fans, while 61%

measure the amount of Twitter followers (the e-tailing Group, 10th

Annual Merchants Survey);

• 53% of respondents track click-throughs from social media sites to

e-Commerce pages (the e-tailing Group, 10th Annual Merchants

Survey); and

• 47% calculate average sales accumulated from social networks

(the e-tailing Group, 10th Annual Merchants Survey).

While some retailers rely on the knowledge that customers “Follow”

or “Like” them, these actions don’t necessary equal engagement,

according to Freed. “Creating a presence on Facebook or Twitter,

getting a following, even engaging with customers on those sites doesn’t

mean you are creating loyalty,” he said. “Many of those consumers are

discount seekers who are following you and a dozen other retailers to

get the best deal. That is a far cry from true loyalty.”


Top tactics to ignite social media conversations include asking questions,

encouraging feedback, posting pictures/videos, and conducting

one-day contests specifically for loyal customers. However, message

frequency can hinder social media efforts. The ExactTarget study titled

Subscribers, Fans and Followers: The Social Break-Up showed that 44%

of Facebook users “Unliked” a brand because they posted updates too

frequently, while 38% said content became too repetitive.

Once a retailer determines its social media niche, marketing teams can

observe how company efforts affect ROI, according to Freed. “What

we have seen can be of value to retailers is when they are able to link

social media activity, interactions, or engagement to their bottom line,”

he said. “This is possible using a pretty simple formula if you have a strong

methodology in place to measure the customer experience. What kinds

of social interactions are driving customers to your sites, and did they

buy? Then you can determine the actual impact in terms of dollars of a

social media experience, instead of having to rely on just counting.”

While tracking social media communication among brand fans is

important, sales will always be a top indicator of campaign success.


The Future of Customer Loyalty As digital discovery and interaction increase exponentially during

2011, solution providers are formulating new mobile-based loyalty card

programs that are easy to use and don’t require use of a physical wallet.

According to Juniper Research, consumers worldwide will spend nearly

$6 billion on mobile coupons. As a result, conversation surrounding

mobile commerce and Near Field Communication (NFC) technology is

growing in the retail industry.

Motorola ventured into mobile rewards in 2010, with the launch of

its Mobile Loyalty Solution at the National Retail Federation (NRF)

convention in New York. The program was designed to enable retailers

to send offers and incentives to customers directly through their mobile

phones. While the initiative allowed customers to discard retailer

membership cards and paper coupons, it also allowed companies to

efficiently target customers based on shopping behavior.

Similar applications are quickly coming to fruition, including the Key Ring

app, which won first place in the Mobile Commerce and Best Online Pick

category at the 2011 Wireless Association CTIA Emerging Technology

Awards; and Clovr media, a provider of card linked offers (CLOs),

designed to bridge the gab between credit/debit card loyalty and

digital advertising. Punchd is another app on retailers’ radar. Although

the app is in beta testing at press time, and is currently only accepting

invitation requests to join, Google acquired the company July 2011 as

part of Google Wallet. The app allows customers to scan a QR code

in-store to receive virtual punches. Once the digital card is filled out,

shoppers receive a free item.

Another trend brewing in the digital loyalty market is gamification.

Gamification allows retailers to use game elements for non-game

applications to bring new life to a brand, company or product, and

to increase consumer interaction. With applications like FarmVille,

PioneerVille, Words With Friends and Mafia Wars grabbing attention

of social media users, gamification has become a new hot topic of

discussion for retailers hoping to increase customer loyalty.


According to Loyalty 360’s 11 Key Customer Loyalty Trends for 2011,

social gaming has taken hold of the digital world, “with AllFacebook.

com reporting that there are now 200 million people playing games on

Facebook every month, and 24 games have more than 10 million users

per month.” The company also noted that, “traditional incentive-based

marketing does not drive the level of consumer participation that can be

achieved via gaming — and it’s this sought-after participation that builds

lasting relationships, engagement, brand affinity, and brand loyalty.”

In the next year, Baird predicts that retailers will begin to spotlight

localized social media, such as individual store locations creating their

own Facebook pages, to create a stronger sense of community. “More

exposure of the inner parts of the enterprise through social media

channels, like merchandisers tweeting about products that will hit the

shelves in the next few weeks,” she said. “I also anticipate that retailers

will start segmenting their social customers more, maybe even creating

special events or interactions that are designed for their most prolific

tweeters or their most influential customers on Facebook.”


ConclusionAs new applications continue to come to the forefront, retailers can

implement effective and efficient ways to track customer loyalty initiatives

and monitor their successes.

Retailers just entering the mobile and social arena can take cues from

their peers and competitors that have optimized the loyalty space through

mobile, social and in-store technologies and in turn, have increased

customer interaction and overall brand awareness.

While focusing on developing meaningful relationships with shoppers in-

store is key, successful retailers also are optimizing and measuring cross-channel strategies to enhance the way shoppers experience brands

online and in-store.

“It’s a matter of deciding where you are going to do the most good, where you want to apply your resources and what type of partner you

want to work with,” Ferguson advised. “Then you can extract data from customer behavior and use it to really change the way consumers

experience the retail environment. That really has a powerful impact and, when done correctly, is a powerful differentiator that allows you

to create an experience that your competition cannot match because do not understand your customers the way you do.”


About Retail TouchPointsRetail TouchPoints is an online publishing network for retail executives, with content

focused on optimizing the customer experience across all channels. Tapping into

the power of the Web 2.0 environment, the Retail TouchPoints network is made up

of a weekly e-newsletter, category-specific blogs, twice-monthly Special Reports,

Web seminars, benchmark research, virtual events, and a content-rich Web site at

www.retailtouchpoints.com.

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Stepping Up Customer Loyalty In A Mobile, Social Worldc3318102.r2.cf0.rackcdn.com/Customer_Loyalty_Report_2011.pdf · Stepping Up Customer Loyalty In A Mobile, ... of Moosejaw’s