The real value of a loyalty program resides in the data, not the promotions, according to Luc Garneau, VP Strategic Consulting Services, for Data Candy.

Garneau discussed that key point during a Loyalty360 webinar on Tuesday titled, “Put Your Data to Work: Using Loyalty Program Intelligence to Make Profitable Business,” which was presented by Data Candy.

Focusing on loyal customers equals retention of loyalty customers equals sales growth, Garneau told attendees.

“Build store segmentation based on price sensitivity and optimize assortment for the right SKUs for the right stores,” he said.

Identifying and massaging customer data brings some clarity, Garneau explained.

To segment customers, marketers should divide them into three segments:

  • Shopping habits (loyal, non-loyal)
  • Price sensitivity (price sensitive, mid-market, up-market)
  • Flyer usage (cherry pickers, high flyer users, low flyer users)

“Price sensitive customers are not necessarily promotion sensitive customers,” Garneau said.

Regarding assortment optimization, Garneau focused on product assortment.

“Make product rankings more robust,” he said. “Key metrics include sales performance, customer penetration, and loyal customer penetration. The products to be de-listed may not necessarily be the worst sellers. The product assortment is likely to better satisfy loyal customers.”

Garneau also focused on what he referred to as “The Price Competition Nightmare.”

Pricing options include: price increases across the store, by category, or for some products.

  • As a price decrease translates in a margin loss, it becomes much more effective to decrease prices only on products that are important to Price Sensitive Customers.

“Determine price sensitivity of each customer,” he said. “Identify the most highly penetrated price sensitive products.”

Being More Price Competitive:

  • Makes the retailer more price competitive where it counts
  • Saves on margin vs. price decrease for the whole store
  • Likely to play an important role in the retention of price sensitive customers

Flyer Optimization:

Thousands of SKUs for thousands of different customers

  • Are these products the most relevant?
  • To be featured on the front page?

Garneau cited three key metrics:

Reach (% of customers who purchase the product)

ABS: Average basket size (total basket spend excluding the product)

Uplift: Product Sales uplift vs non-promotional sales week

Using these metrics allows marketers to track more accurately and to better forecast. Flyer efficiency:

  • Makes the retailer more competitive by featuring only the right products
  • Brings intelligence to the selection of the products
  • Enables the retailer to better forecast future flyers based on historical data

“Ask the right business questions from the start,” Garneau said. “Leverage loyalty programs across departments. Customer data can be a real game-changer. Never lose sight of loyal customers. Basic data can be smart without being big.”

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