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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:
“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.
“Determine price sensitivity of each customer,” he said. “Identify the most highly penetrated price sensitive products.”
Being More Price Competitive:
Thousands of SKUs for thousands of different customers
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:
“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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