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VOL. 34 • NO. 3 • MARCH 2021

THE AUTHORITY FOR THE DATA-DRIVEN BUSINESS

An Interview with Shawn Stewart

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PHOTOS COURTESY CANADIAN TIRE CORPORATION

RETAIL REIMAGINED


// 3 ON THE COVER Vol. 34 | No. 3 | March 2021 PRESIDENT Publisher & Editor-in-Chief Steve Lloyd - steve@dmn.ca DESIGN / PRODUCTION Jennifer O’Neill - jennifer@dmn.ca ADVERTISING SALES Steve Lloyd - steve@dmn.ca

PHOTOS COURTESY CANADIAN TIRE CORPORATION

INTERVIEW

CONTRIBUTING WRITERS Tom Beakbane Steve Falk Christopher Daniels Deanna Ransom Bob Dowd Stephen Shaw

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Retail Reimagined An Interview with Shawn Stewart, Senior Vice President, Customer and Triangle, Canadian Tire Corporation

LLOYDMEDIA INC. HEAD OFFICE / SUBSCRIPTIONS / PRODUCTION:

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SALES

RESEARCH

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Nine Ways Account-Based Marketing Builds Deeper Relationships with Customers

CUSTOMER EXPERIENCE ❯❯8

Using Customer Feedback to Beat the Competition

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Five Trends Shaping the Future of Global Payments

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Putting on the Ritz in Digital Customer Experience MARCH 2021

COURTESY TOM BEAKBANE

MY VIEW

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Part 1.

The Unravelling of My World DMN.CA ❰


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SALES

Nine Ways Account-Based Marketing Builds Deeper Relationships with Customers BY DEANNA RANSOM

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hen customers feel heard, they begin to trust, refer a company to colleagues, friends and family, and spend more money. One-to-one customer relationships can build lifelong loyalty, but unfortunately, many of these campaigns are doomed to fail when companies do not adequately prepare. One of the most valuable ways to target and relate to customers is by implementing account-based marketing (ABM). ABM is a strategy involving the use of marketing and sales to build personalized customer relationships. ABM makes one-to-one relationships more efficient by targeting only the customers most likely to buy. By utilizing this “zero-waste” strategy, companies won’t use up valuable time or resources on mere possibilities. It’s also grounded in personalized messaging, which is essential for building brand loyalty. That’s why ABM is the integral foundation on which to build a one-to-one strategy. Here’s what marketers are saying: ❯❯ 87 percent say ABM outperforms other marketing ventures ❯❯ 80 percent say it increases customer lifetime ❯❯ 86 percent say it improves win rates ❯❯ 76 percent say it brings higher ROI Additionally, their 20 percent opportunity rate gives companies a significant leg-up on competitors. Creating deeper customer relationships that will bring higher ROI, loyalty, and efficiency—but first, companies need ABM. How to build customer relationships with ABM A one-to-one strategy combined with inbound marketing will result in the most rewarding partnership. Begin with inbound marketing to ❱ DMN.CA

acquire a broad target market, use ABM to select specific customers within that market, and then adjust the products and services to meet the targets’ needs. Without each of the following steps, an ABM strategy will not lead to valuable customer relationships. 1. Define ABM Goals The first action in any campaign is to define goals related to an ABM strategy. Some goals might include: ❯❯ Higher revenue ❯❯ Higher value from existing customers ❯❯ More engagement ❯❯ New target market segment ❯❯ Successful launch of a new product or service To successfully measure goals, attach KPIs to each one. With goals in mind throughout the entire campaign, mold every action thereafter to achieve the returns you want. 2. Specify and Prioritize Target Market After identifying a target market from an inbound strategy, narrow the focus with ABM. Make a list of individual customers that fit the broad or “average” target market. Then select the customers that provide the most value to the organization. Those people are new “accounts” to go after—the people most worth the marketing investment. 3. Build a Tech Stack ABM is built on data analysis. For any ABM campaign, tools for identifying accounts, tracking data, and measuring relationships are a must. Companies should get started with these: ❯❯ Data technology: Identify broad types of accounts ❯❯ Predictive software: Select and prioritize accounts ❯❯ CRM platforms: Create, manage,

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and track customer relationships Marketing automation and email platforms: Reach out to current customers Targeted advertising tools: Home in on the desired audience

4. Align Sales and Marketing When sales and marketing don’t align, a company often will not achieve its ABM goals. While sales refers to activities that facilitate a sale, marketing refers to actions that create interest in business. Sales understands the audience but needs brand awareness; marketing can bring brand awareness but needs to understand the audience. To merge the expertise of both, encourage sales and marketing teams to collaborate on account plans. 5. Talk to Customers One-to-one ABM campaigns are built on discovering customer needs. While there are many ways to do this, Jodi Harris said it best: “The best way to figure out what buyers really need is to talk to them directly.” Survey them and conduct A/B tests. Most importantly, remember to respond to the needs of a handful of high-value customers—they will appreciate the attention. 6. Adjust Business to Customer Needs With every customer conversation, you’ll learn how to best serve the customer’s organizational needs and the customer’s trust in the brand will grow as. With each new piece of knowledge gained, use it to improve and personalize the product, service, or the business. 7. Create Personalized, High-value Content Combining inbound marketing with ABM is powerful. On its own, quality content generates three times more leads than paid advertising and costs 62 percent less, making it worth the investment.

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High-quality content has: A clear goal, topic, and strategy A powerful headline and hook Keyword optimization Consistent frequency

Beginning with the customer in mind, create personalized content. Every blog, sales page, webinar, or newsletter should be highly relevant and valuable to the customer, creating a more positive experience and greater loyalty. 8. Use Personalized Emails Email is still a powerful tool. Email generates 40 times more customers than social media, and ROI is an astounding 4,400 percent. The key to that ROI is writing emails that customers will want to open. To leave an impression and make the connection, personalize the email to customer. Try the following: ❯❯ Create powerful subject lines ❯❯ Greet the customer by name ❯❯ Close with a name ❯❯ Include relevant and appealing offers ❯❯ Be timely—don’t spam! ❯❯ Use images ❯❯ Offer tips for how to use company products 9. Measure Results Revisit ABM goals: were revenue goals reached? How much did engagement increase? What is the conversion rate? Did the program accurately interpret customer needs, and were you able to meet them? If goals weren’t met, re-evaluate strategy. Solid customer relationships are built with ABM. Show your customers their value with a personalized approach. With these nine steps in mind, you’ll be well on your way to forging deep partnerships and building a successful ABM strategy. DEANNA RANSOM is the head of global marketing

and marketing services for Televerde. MARCH 2021


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CUSTOMER EXPERIENCE

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Putting on the

Ritz

in Digital Customer Experience

❱ DMN.CA

MARCH 2021


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CUSTOMER EXPERIENCE

BY STEVE FALK

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our driver pulls up to a beautifully lit, elegant entryway. The car door is opened by the doorman. It’s drizzling, so he opens an umbrella and leads you to the door motioning for his colleagues to gather your bags. Once inside a glowing lobby, you get smiles from the staff around you with hands outstretched guiding you to the reception desk. They offer to assist with your coat and bags. You are whisked up to your room. A welcome note and a small tray of treats awaits, “sniff, are those cookies still warm?”; the phone rings, and the voice on the line offers complimentary drinks, to be delivered along with anything else you might require. Your first impression could be compared to arriving home after school as a kid. Your mother asks about your day, a snack awaits and you are safe and at-home. And that is no accident. Studies informed the hotel industry that the comfort of a mother’s home is what, in the end, many guests desire. Staying at a great hotel is an amazing experience. They’ve had centuries to finesse their business model. The Ritz Carlton brand is synonymous with this idea of greatness. Its recent success (pandemic era notwithstanding) can be largely attributed to the datadriven guidance of Horst Shulze, their former COO and best selling author of the book Excellence Wins: A No-Nonsense Guide to Becoming the Best in a World of Compromise. The order of the day is loyalty and trust Have you had an amazing eCommerce experience lately? Is there an equivalent to the smell of warm cookies in any eCommerce or digital engagement? Who is the “Ritz Carlton” of the digital experience business? Here’s what I’m thinking. That relationships created by eCommerce transactions these days are a huge compromise and for various reasons marketers are going to have to wrestle with how to become the best in the near future. Leaders who are growing their online business must define their brand not just by making it available online, next day, same day, curbside, no charge shipping, as that’s already a given. Once everything is online, which is fast approaching, the order of the day will be loyalty and trust, in order to secure returning customers. Otherwise, your customers are just a tap, click, or swipe away from your competitor’s screen. Up to this point, the industry’s focus has been acquiring visitors and shoppers. Unlike great hotels, less attention is paid to lifetime value and retention. In my view, it’s partly due to the way investors value eCommerce business growth in this new sector. They invest in expansion of market share, user by user, assigning a value to each new customer, giving a small nod to the problem of “churn”, which is a cold way of classifying non-loyal, uninterested customers. MARCH 2021

Churn just happens. Investors just pour more money into acquisition to solve the business model. Since it can cost hundreds of dollars to acquire a new customer, what is a brand willing to spend to retain them and build loyalty? It probably should be more. Maybe a digital brand has to throw their customers a warm cookie more often instead of just leaving one in their browser? Direct mail can send from online triggers What can be learned from the hospitality industry? I’m not sure eCommerce experiences are often imagined as hospitable, with a few exceptions. Human chatbot experiences can add a personal touch, a good supporting call centre certainly improves the trust, and unboxing impressions are elevated with beautiful wrapping and hand written notes. Even well trained and personable curbside and courier staff can help to elevate the experience. Printed mail, arriving in-hand and in-home, is even in the mix as triggered direct mail can send messages within hours of online triggers, and consistently improves outcomes. Our order of kitchen spices arrived recently, and with it an aromatic experience. A personalized handwritten note and the smell of those spices as we opened the package left a remarkable and lasting impression. As a digital marketer or service provider, the more often that you provide an actual physical, sensory, in-person and in-hand experience, the longer your impact will last. I don’t have to remind you that if you show that you care, and respect the customer relationship then you will build that customer loyalty. Doing that through cold digital tactics alone, by email or SMS or banner ads, or social media, will only give a shadow of the impression of your more physical and “real” gestures. Digital experiences can be boosted and their performance amplified if they are accompanied by other physical channels. Ignore them and you’ll leave money on the table. The marketer who uses them in concert will build a trusting and loyal customer base. Horst Shulze says there are three kinds of customers. Only one is your loyal customer. The others are the “unhappy customers” that will be “terrorists against your company” on social media, and the “satisfied customers” who will simply go next door for their next purchase on a whim. But “loyal customers” are willing to pay more, increase their business with you and recommend you because they know you care for them. In that case, we all want more loyal customers. STEVE FALK is President of Prime Data. He is busy helping digital marketers

exploit personalized and physical tactics which support, amplify and improve their outcomes. ** A Master Class on customer service with Horst Shulze is presented at the Growth Institute https://www.scaleupu.com/horst-schulze-excellence-wins

DMN.CA ❰


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RESEARCH

Using Customer Feedback to Beat the Competition BY CHRISTOPHER DANIELS

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hether the business is in manufacturing, telecommunications, or software, business success relies on customer delight. When end-users are satisfied with goods or services and the support they get as part of the client experience, customers will come back again and again. Just as important, companies can use customer feedback to beat the competition and boost the bottom line. Happy customers are loyal. Recurring customers save companies money on new lead generation. Customers can also operate as a cost-efficient source of new leads, serving as inadvertent brand ambassadors if they share ❱ DMN.CA

rave reviews with others in their network. Gathering and analyzing customer feedback to ensure end-users are content is critical to business success. Positive comments can reaffirm a company is succeeding, while negative comments can help companies identify points in need of improvement. This data can improve overall offerings, giving companies a competitive edge. Here’s how companies can make the most of it. Your No. 1 Weapon: Customer Feedback Knowledge is power, and this is especially true when it comes to

meeting customers’ unique needs. With detailed feedback from realworld clientele, companies can: ❯❯ Monitor ongoing customer satisfaction levels. ❯❯ Get insights into customers’ unique needs. ❯❯ Improve product or service offerings. ❯❯ Show customers care and avoid alienating them. All of this can add up to greater customer satisfaction, to more easily win over new customers— possibly even taking them from the competition. Companies can also nurture loyalty among existing clients, as satisfied consumers won’t be tempted to

look to competitors for products or services. Four Ways Customer Feedback Can Help Beat the Competition Here’s how companies can use customer feedback to enhance a competitive advantage in the modern business landscape. 1. Understand Customers’ Needs to Best Meet Them Keeping clients happy means understanding their wants and needs. This requires detailed and specific data. Leaders don’t simply want to know whether a customer is satisfied or not. They want to know what did and didn’t stand out in the customer journey. MARCH 2021


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RESEARCH For example, consumers might be perfectly content with a product but are turned off by a negative customer service experience. Important customer success metrics could include waiting time to have an issue resolved, or versatility of support methods (e.g., live chat, email, telephone, etc.). Many businesses are quick to assume that dissatisfied consumers mean a problem with the product or service. The issue may be a much easier fix, like tweaking an ad campaign or updating a chat bot. It’s essential to understand customers’ needs better than the competition. 2. Gain Customer Insights into Employee Performance for Superior Service Customer feedback is also valuable in gaining information about employees, especially those on the front lines who deal directly with clients. For example, when offering in-house telephone support, companies should ensure that workers are dealing with callers

courteously and professionally. A simple training and feedback loop for customer-facing teams can significantly impact business success. In the case of a call center, the process might involve recording calls, reviewing positives and negatives, and using data to inform coaching and future training. With this added step towards accountability, companies can improve overall customer service experience. Many consumers will switch to a different provider after a bad service experience, so this is critical to use customer feedback to beat the competition. 3. Gather Competitive Intelligence to Assess Advantage Companies shouldn’t just look at customer feedback—also consider the feedback consumers are leaving competitors. Scour the internet for reviews in public forums to see how products and services compare to those of the competition. Further, companies should make sure they’re meeting the benchmark set forth by others in the same

field. For example, it might seem reasonable for 80 percent of clients to be satisfied, but what if the industry standard is 95 percent? There is room for improvement in this example. Reading competitor reviews can also help identify their weaknesses. Leverage this information to pinpoint opportunities to win clients. If clients complain about a rival’s lack of telephone support, highlight this as a value-added proposition if it can be provided with confidence. 4. Avoid Reputational Damage and Losing Clients to the Competition Not all customer feedback is positive. That’s normal. If a customer isn’t happy with a company, be it the product or the consumer experience, find out why. There is opportunity for improvement while avoiding similar scenarios with future consumers. Additionally, targeting negative customer feedback allows companies to fix the situation.

Let’s say a person purchases a product, discovers it’s defective, and then writes a scathing complaint. There is an opportunity to remediate the issue. If they are satisfied with the response, they likely will continue to the business relationship. It’s about turning a negative into a win. Elevating the consumer experience is becoming even more critical in the wake of the COVID19 pandemic. The most successful companies in the crisis were those that were able to identify and adapt to consumer behaviors, needs, and experiences. That kind of flexibility requires granular, real-world data—which is where customer feedback comes into play. CHRISTOPHER DANIELS is the Chief Revenue Officer for Televerde, an integrated sales and marketing technology organization based in Phoenix, Arizona. Seven of Televerde’s 10 engagement centers are staffed by incarcerated women, representing 70 percent of the company’s 600+ global workforce.

Foundation Magazine is the Canadian bi-monthly publication and media channel which reaches more than 25,000 individual executives in Canada who represent the full charity and foundation sector and the major donor community, as well as the spectrum of companies which support, supply to, and advise all aspects of the not-for-profit industry.

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Lloydmedia also publishes DM Magazine, Total Finance magazine, Payments Business magazine, and Canadian Equipment Finance magazine magazine. MARCH 2021

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INTERVIEW

PHOTOS COURTESY CANADIAN TIRE CORPORATION

Retail Reimagined An Interview with Shawn Stewart, Senior Vice President, Customer and Triangle, Canadian Tire Corporation

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STEPHEN SHAW is the Chief Strategy Officer of Kenna, a marketing solutions provider specializing in delivering a more unified customer experience. Stephen can be reached via e-mail at sshaw@kenna.ca

❱ DMN.CA

raditional retailers learned a harsh lesson over this past year. Slow to make the transition to omnichannel commerce, they had misread the slow gradual rise in yearly online spending as a sign of shopper disinterest. Until the pandemic hit. The abrupt surge in online shopping left many retailers scrambling to respond. As foot traffic dropped off sharply due to restrictions on in-person shopping, they were forced to close stores. Unable to make up the difference in eCommerce sales, many retailers were pushed to the brink of insolvency. This financial carnage may have been the tipping point for the reinvention of retail. The industry has finally woken up to the fact that shopping habits have radically changed. And as product manufacturers open up their own digital storefronts, the era of retail hegemony may finally be over. Retailers will need to evolve beyond their historical role as the primary distribution channel of merchandise. In Canada one retailer has stood out above all others in transforming its business model — the century-old Canadian Tire. In the past the company has fended off incursions by U.S. giants like Walmart and Target eager to muscle in on its turf. The company’s resiliency is partly explained by its geographical footprint — most Canadians live within a 15-minute drive of a store —

Shawn Stewart, Senior Vice President, Customer and Triangle, Canadian Tire Corporation.

but also by its dealer network which gives the company a strong tie to each local community. In 2019 Canadian Tire was recognized as Canada’s most admired brand in Leger’s annual consumer survey. It rightfully owns the honorific “Canada’s Store”, a far cry from the days when it was mocked as “Crappy Tire”. This past year, despite all of the havoc caused by the pandemic, Canadian Tire increased comparable yearover-year store sales by 11 percent across its banners. Ecommerce sales more than doubled, an impressive feat considering the company actually backed away from online selling at one point, until it came to its senses seven years ago and began to invest heavily in its digital and eCommerce capabilities. A big part of the company’s recent success is attributable to its embrace of digital-first marketing, thanks to its 10-million-member Triangle Rewards program. Launched in 2018, Triangle Rewards is the MARCH 2021


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INTERVIEW digital version of the famously popular Canadian Tire Money, once looked upon affectionately as Canada’s second national currency. The Canadian Tire Corporation (CTC) Executive in charge of loyalty and insights is Shawn Stewart who took over the role six years ago. Amongst his many accomplishments has been the stewardship of the Triangle program and the creation of an AI-driven recommendation engine which powers seven million weekly personalized offers. Stephen Shaw: Your CTC stores did amazingly well this past year in spite of the pandemic. What explains the lift in sales? Shawn Stewart: Customers came to us as a one-stop shop. The thing with the Canadian Tire brand is you can always find things you never knew you needed. But we've really developed our presence in the essentials as well. The strength of our dealers really helped because they were very easily able to launch curbside pickup and new capabilities that we didn't have before COVID. And, in talking to customers throughout the pandemic, what we heard, loud and clear, was the strength of our brand, the love for our brand, and the appreciation for all the safety measures we were taking. Our e-commerce site was overloaded with volume, but we quickly got that right. And we actually acquired new customers, especially young adults, who joined the Triangle program for the first time during this period. We really focused from a merchandising standpoint on what we call "boredom busters." So, people with kids, spending a lot of time in their backyards, buying barbecues, patios, toys. All those core categories were right in our sweet spot. And the number of bikes we sold was just out of this world. Shaw: Were there merchandise categories that declined in sales? Stewart: The automotive business. People were staying at home and not driving as much. Although on the flipside, we have a segment that we call the “Auto Enthusiast” and they loaded up because they had time on their MARCH 2021

hands. They were tinkering around with their vehicles. So, a lot of DIY categories in that segment were up. Shaw: Were there supply chain issues? Take bikes, for example. Did you suddenly find yourself having a tough time restocking? Stewart: In that specific case, our SportChek business was closed, so we had a bunch of available bike inventory. And we’ve always had great relationships with our vendor base, so that put us in a good position to be the number one supplier in all the top-selling categories. Shaw: What permanent shifts in spending habits are you likely to see coming out of this pandemic? Stewart: We've mapped our categories of business to what we call internally “jobs and joys”. These are the everyday things that make up people’s life in Canada. And we talk to customers. We understand their sentiment, their confidence in the economy, their job security, their opinion around saving versus spending. And those are good indicators. But customers don’t always know what they’re going to do. And so, we’ve mapped out various scenarios. If demand continues the way it’s going, we’ve got a plan. If it tails off, we’ve got a plan. But we found our customer base is quite resilient. And we’re in a lot of essential categories, right? Shaw: We’ve seen massive consumer adoption of eCommerce this past year that caught everyone by surprise. How does that factor into those scenarios? Stewart: We’ve definitely leaped forward a couple of years in eCommerce growth. But overall, we still feel our strength is the local store — the ability for shoppers to get what they want immediately. There’s real attachment to the brand. We're not just another retailer in customers’ eyes. They want to support Canadian brands. Many grew up with us. We’ve also got the unique ability through the Triangle data to understand the channel shift — and not just what people are buying, but what they’re searching for. A huge focus for us is using the

Triangle Rewards grew from the well-known Canadian Tire money system

online channel to support in-store conversion because we can track the customer across channels and store banners. So, now’s the time for us to engage our customers. Another thing we’re focused on is bringing customers into our “owned audiences”. How do we get them signed up for our mobile app, for email channels?

Shaw: Like everyone else, I go to Canadian Tire for certain things. Once I was looking for a power washer and I used your mobile app to find the nearest location that carried the item I was looking for. It guided me right to the nearest location. Then I walked into this massive store and now I’ve got to figure out where to find it. So, is DMN.CA ❰


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INTERVIEW there still a gap connecting the experience end-to-end? Stewart: There’s definitely room for improvement. I actually think we have a best-in-class wayfinding feature called “Fast Find” in our Canadian Tire mobile app that many customers probably don’t realize we have. It’ll tell you if the product you want is in-stock and in which aisle to find it for each different store. Shaw: With your mastery of certain merchandise categories, there must be an opportunity to make the instore experience more engaging than simply finding and buying a product. Stewart: No, absolutely. There’s a lot of decision support we could be doing in the pre-purchase and post-purchase shopping stages: how to use your barbecue, how to set up your patio, how to enjoy the products you buy from us. We have a lot of great content. We just need to offer it up in a targeted, relevant way to enhance shopper knowledge and confidence. Shaw: You’ve got 10 million members of your Triangle program. Amazon has Prime, of course, but not the store footprint you do. Could Canadian Tire soon rival Amazon in retail commerce here in Canada? Stewart: Yeah. But we want to play our own game. Certainly, the data we have is just incredible. Like I joke with the team, Stats Can should be calling us every month to know what’s going on. We know Canadians. If you know exactly what you want, Amazon’s fantastic. You search a SKU [stock keeping unit] and get what you want. We’re not going to compete the same way. We think our local differentiation, the strength of our store network, and the interaction with customers across channels is key. And we saw it more than ever during COVID. Customers wanted immediacy. And so we saw them coming in droves to the store. Amazon’s formidable. No question. But we’ve got to play our own game. Shaw: Who do you view as your main competition these days? Stewart: Well, it depends on the ❱ DMN.CA

Digital apps allow for more sophisticated data collection

line of business. Canadian Tire has a broad set of competitors. SportChek and Mark’s would be different. We’ve got a bank, too. On the credit side we’re fighting for top-of-wallet status. I guess you could say it’s just about everyone. Shaw: That makes sense. The “everything store” has everybody as competition. Now, you’ve been quoted as saying that if you offer a killer digital experience, you may not need a loyalty program to understand your customers. As the guy running the loyalty program, what did you mean by that exactly? Stewart: If you look at the traditional definition of a retail loyalty program, its highly reward driven based on purchase frequency. You issue and redeem currency. “Canadian Tire Money” is an important part of our brand heritage, but the program’s got to offer much more than that. We’ve got great profile information on our customers — so it’s how we use that data. And it may not be in the form of loyalty rewards. Maybe its targeted discounts, or exclusive access to products. There are many different ways to create value for members that go beyond just having a loyalty currency. Shaw: Most loyalty programs are promotional programs in disguise. Figures I’ve read suggest that fewer than half of loyalty members say it makes them more loyal to the brand. Should loyalty programs become a gateway to a more meaningful experience? Stewart: Here we’ve stopped calling Triangle a loyalty program.

We call it a “customer platform”. And I think words are important because when people think of loyalty programs, they think of the redeemable currency. As I was just saying, the power of Triangle doesn’t need to be Canadian Tire money. I think Canadians love it. And we've seen, as we launched Triangle, the halo effect on our other brands, like SportChek and Mark’s. Many customers didn’t realize they were part of the same family of companies. We should be thinking of what can we do in-store? What can do from an e-com perspective? What might we do with partners? So, a value prop that goes beyond traditional rewards is hugely important for us. Shaw: With so much customer profile and purchase data, how do you even think about segmenting a base as large as yours? What kind of segmentation model do you use? Stewart: We look at two different types of segments. One is a valuebased segmentation: current and lifetime value. We model potential value on a five-year time horizon. And all of this is done at a CTC level, across our banners and assets. And the other is simply behavioral: what are people buying, their needs states, and the intersection between them. You run the models and you can get a hundred segments. We landed on thirty-seven. Shaw: Thirty-seven? Not 35, or 40, but 37. Stewart: Yeah. It’s been incredibly useful for grounding the business in the customer. The 37 segments ladder up to

macro segments. Our key target is a segment we call “the active family” who have young kids at home. They really over performed during the COVID period. So, we’ve started using segmentation to understand where our growth is coming from. How do we actually move customers across brands? For example, SportChek attracts a younger customer, and we want to grow that segment within the Canadian Tire brand. We know the entry point for them is often the camping business, so then we can build programs around that insight. It’s really powerful to understand the conversion paths that customers are taking. Shaw: Do you find it hard translating customer strategy into insights merchandisers can relate to? Stewart: Yeah, it’s a process. Since Triangle launched, we’ve made a lot of progress. On thing that’s helped is empowering the merchants to access the data on their own, using internal BI tools. So, as they’re reviewing their annual plans, they’ve got the data. And then the second is proving the business value. So, actually creating some use cases, such as “Let's use customer data to improve the pet business.” So, very mindfully bringing together cross-functional teams to pilot a program and then measuring the value. And that’s gone a long way as well. Shaw: Part of your personal background was working at Air Miles for several years. What learning did you gain that was transferable to your current mandate? Stewart: The power of the network effect. Being able to see customers going from one sponsor to another. That has very much influenced our approach here. The advantage we have is the ability to use data in an unfettered way. And then just the power of the customer data. Finding a better mix between the mass and targeted channels — the ability to prove not just that targeted marketing works, but it’s scalable. Shaw: Being able to cluster members by their affinities and interests, and then catering to those preferences, MARCH 2021


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INTERVIEW must represent a massive opportunity. Stewart: It is a massive opportunity. Particularly what we’ve seen in the pandemic. Home exercise, bicycling, the new hobbies that people took up. I think it’s perfect for our brand.

I can tell you that marketing and IT were never copartners in anything. How does AI fit into the picture? Stewart: We issue seven million one-to-one offers every week to customers and that’s completely machine learning driven. But it’s early days. So, for example, from a supply chain perspective, we’re thinking about overlaying highvalue customer data to say, “This SKU is paramount to your best customer.”

Shaw: Do you have point on reimagining all of this? Stewart: Our team is accountable for everything customer related. But we need to amplify the retail value proposition. And so, we work closely with the banner heads. And it’s exciting. I think everyone recognizes that we do need to go beyond selling products. Shaw: How do you actually measure loyalty? Obviously, in part, behaviorally. But what about attitudinally? Emotionally? What are your composite loyalty measures? Stewart: We’re very good at tracking customer sentiment. We use net promoter score across all of our channels and endpoints. We track loyalty by segment. So, for example, we track a driver called “Cares About Canadians”, and that metric was off the charts during COVID, with the actions our dealers took, with our relief fund1. And then I would say more traditional financial metrics: lifetime value, repeat visit, retention rates, the number of active customers, how much each customer is spending. We’ve also got a panel of 180,000 Canadians that we lean on. I think it may be the largest proprietary retail panel in the world. And we leaned on that heavily during COVID. We also do these events called “coffee talks” where we’ll get 10 to 12 customers in a room for just a casual conversation that really helps to know how customers are thinking, and to develop empathy with the customer. Shaw: You are collecting a lot of data. You must have created a “golden record”2 by now. Stewart: We’ve done a great job of building that central view. We tagged the web so that if someone writes a review, someone logs into the website, someone uses the mobile app three times a month, we know all of that. So yeah, it’s a powerful tool, MARCH 2021

Shaw: You talked earlier about looking across the full span of the customer relationship with multiple banners and brands. Has that changed the way strategic planning is done? Stewart: We think about managing a “portfolio of customers”, and a “portfolio of banners”. For example, if the “active family” is our priority segment, we need to map their needs to the “jobs and joys” we talked about. And we do white space exercises to identify gaps in the experience where maybe we need to extend assortments, for example. I think we’re actually in a much better position this year, particularly with Greg and Susan’s [O’Brien]4 leadership, because it encourages horizontal rather than vertical thinking. Canadian Tire’s Triangle Rewards program is geared towards managing its portfolio of customers and banners.

particularly understanding the impact of our digital activity on in-store behaviour. It’s been really enlightening to understand how the online channel helps in-store conversion. Shaw: How do take all of the data analytics you do and convert it into business language that other stakeholders, like merchandisers, can understand? Stewart: I’ll give you a great example. We launched a customer analytics tool — a BI platform that allows businesspeople to drill down to the category level, using the customer data. There was an end user at Mark’s who used this tool to develop an incredible, insightful view of their business. And we were not involved. So allowing people to just swim around in the data — not put too many controls around it. Just

allowing the learning to happen. And Greg [Hicks]3, on our latest earnings call, was talking about the segments. And so, people hear that. They’re curious and want to learn about it. We’re providing the tools to allow them to do that. We’re in the background. Our team is doing all the plumbing and automation. Shaw: Do you own the technology budget, or do you still have to work with IT to ensure that you have that right infrastructure in place? Stewart: It’s evolved. Three years ago, we would not have had data engineers on our team. And today we do. It’s become more of a symbiotic team working together. So, we don't get into budget debates. Shaw: Boy, over my long career,

Shaw: Is there a need to find new talent, new skillsets, fresh thinking in order to accelerate your transformation? Stewart: Yeah. It’s a great question. And I’ll go back to what I said is this horizontal thinking approach. So, if I’m a merchant, or in marketing, I need to understand the customer journey, using the data we have. So, the ability to analyze and synthesize information is important. For a merchant, it might not be all about adding new product lines or brands. For a marketer, it may not be all about getting an offer in front of a customer. So, yeah, the use of information — being able to empathize with the customer — there’s no question: it’s all changed. 1. The COVID-19 Response Fund donated $5 million to support relief and response efforts. 2. A “golden record” is the most accurate and complete version of a master data record. 3. Greg Hicks is the President and CEO at Canadian Tire Corporation 4. Susan O’Brien is the Chief Brand & Customer Officer

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TRANSACTIONAL DATA

Five Trends Shaping the Future of Global Payments BY BOB DOWD

I

t is no surprise that the global payments industry accelerated substantially in 2020. As the pandemic birthed arguably one of the biggest digital revolutions to date, more and more businesses are realizing the importance of having a global payments partner. Multiple factors have been the stimulus driving half a decade’s change in just a few months. Acceleration of digital adoption, preference for real-time payments, investment in AI and automation, and M&A’s have been the leading factors that pushed the industry to transform. However, the most prominent change can be attributed to developing customer preferences for speed and ease of use at competitive rates. In addition, stronger demand for data security enhancement and fraud prevention by customers increased the momentum of innovation which forced new players to enter the market. Advances in technology such as SWIFT GPI, DLT and others have also been the key drivers in the rapid growth of the industry. Our research shows that the payments industry’s total addressable market is $3.6 Trillion USD in core markets, with $245 Billion addressed by specialist players. The market has grown at 8 percent p.a. driven by specialists taking share from banks which gradually experienced decline due to COVID-19. However, the industry is expected to bounce back and return to pre-COVID rates between 2021 and 2025, which means that the next five years will be crucial for players in the global payments space. In order to secure their market share, specialist players will have to garner deeper understanding of market volatility and performance, MARCH 2021

primary customer preferences and the strategies they can implement to remain competitive. The top five trends we predict that will influence the growth of the global payments industry in the coming years are as follows:

1

Evolving customer needs will set the benchmark The provision for fast, seamless, and trackable payments will become table stakes rather than a differentiator for payments providers. For example, moneycorp online offers its customers the ability to not only make payments online in multiple currencies, but also store payment and recipient details, manage exchange rates, and track transactions all in one place. The function of making payments will become part of a broader value proposition, linked through API technology to other elements of business such as their ERP, CRM, and Accounting systems. Customers will become more sophisticated in cash flow and risk management which will in turn impact how they manage their finances and choose their payments partner.

2

Enhancing technology to drive commoditization and reduced prices Our research suggests that half of businesses have their FX provider’s system integrated into their ERP software. This is a clear indication that technology is adapting to meet increasing customer needs as the majority businesses prefer payments providers whose technology fits seamlessly into their existing business model. Real time payments (RTP) are also gaining popularity and are becoming commercially viable in a number of regions. As per the

latest FIS report, 54 countries now have active real-time payments programs, up from 40 in 2018 and nearly four times as many as in 2014. Long term technology is likely to shift to alternative rails such as Distributed Ledger Technology. Payments providers will need to be able to function across alternative rails to ensure costs are optimized and service demands fulfilled. Increased efficiency will continue to drive down prices and enable reduction in service costs.

payments landscape will flourish. However, the political challenges of doing so globally will make the ability of a global payments provider to offer their services in multiple geographic locations extremely important. We are witnessing common standards of this being implemented in pockets due to the complexities of international standards and regulations. However, we are seeing a rapid uptick in cooperation between international businesses and regulators alike.

3

5

Intensifying competition for every element of the value chain The ecosystem addressing cash flow management has proliferated in recent years. Today, fullservice players have a competitive advantage as they provide SMEs a ‘one-stop shop’ for all their business needs. B2B disrupters are successfully carving out a new niche for themselves using an end-to-end value chain model that satisfies the customer’s need for customized solutions. Increasing competition from fintech players is also making a significant impact on the industry as few global payments providers are now opting to onboard third-party payments solution providers as their partners, thereby further enhancing their value proposition. The payment gateway market was valued at USD 17.2 billion in 2019, and is expected to reach USD 42.9 billion by 2025. Convergence will be at the core of the transformation of the payments landscape, through 2021 and beyond.

4

Increasing cooperation between jurisdictions Customer demands for an interconnected international

Differentiators will become commonplace Specialist players will maintain a significant hedge in the short term as they will continue to serve the underserved segments, such as SMEs, a faster, cheaper and secure payments platform. However, eventually this will become the norm and other sources of differentiation will be needed like niche corridors, industry specific integration, and liquidity management to set your services apart from the rest. In a nutshell, the key strategic areas of focus for optimizing the value of business for all payments providers would be a combination of three vital elements - owning the customer relationship with specific client segments (e.g. SME’s), focusing on efficiency to drive down costs and constantly innovating to drive differentiation around products and services. To create a new generation of payments providers, studying emerging trends is the most important innovation task. Those that cling to old ways will be left behind. BOB DOWD is Chief Executive Officer of moneycorp Americas

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MY VIEW

The Unravelling of My World: Part 1 CONTINUED FROM page 18

and the latest marketing research papers in the University of Toronto and York University libraries equally unhelpful. Nothing I read was relevant to my goal of making marketing communications more scientific. I needed to come at the task from another angle. When I studied neurophysiology at university, scientists had been making progress in deciphering how brains work. Twenty years on, I presumed there would be new discoveries, so I looked at all recently published books about the human brain. I enjoyed reading Steven Pinker’s How the Mind Works (1997) and other similar books, but these left me perplexed. In trying to explain how the mind works, he wrote: “Thinking is computation, I claim, but that does not mean that the computer is a good metaphor for the mind. The mind is a set of modules, but the modules are not encapsulated boxes or circumscribed swatches on the surface of the brain.” This is a literary conundrum rather than a scientific explanation. If thinking is computation, which is what a computer does, but the mind is not like a computer, then what is the mind really like? Pinker muses about another conundrum: “Once we have isolated the computational and neurological correlates of access-consciousness, there is nothing left to explain. It’s just irrational to insist that sentience remains unexplained after all the manifestations of sentience have been accounted for, just because the computations don’t have anything sentient in them.” From this viewpoint, there is nothing left to explain, except that it is impossible to nail down what sentience means or how consciousness evolved. Intuition can't be counted on After reading several books that describe the brain as a modular computation device, I retreated to university libraries to read papers on brain neurochemistry in the hope of figuring out the ❱ DMN.CA

Tom Beakbane’s new book expands our understanding of marketing and how the human mind connect.

conundrums. The papers by frontline researchers described remarkable advances that in their own right made sense, but the brain-chemistry discoveries were strangely disconnected from what Pinker and other authors had to say about widely accepted explanations of human behaviour. However, I discovered tantalizing insights in books by John McCrone and Michael Gazzaniga, who describe how our conscious mind could not be relied upon to report our motivations accurately. It was clear that the way we think we think is not how we think. The implication is that a manager’s intuition about human motivations cannot be relied upon. Books by Joseph LeDoux and Antonio Damasio led me to the conclusion that emotions and reasoning — at the level of neurochemicals — are indistinguishable. Rather than being able to understand what all this research was saying, I became progressively more confused. What had begun as a three-month project became an obsession. I spent days, evenings and weekends looking into what frontline researchers were reporting. I learned fascinating details about how the visceral nervous system was more complicated than the spinal cord, but also that this aspect of the nervous system had not been studied much. The gap between what was in the textbooks, what I was reading in the scientific journals and what would be helpful in running my business widened.

The literature on psychology was particularly puzzling. Dozens of jargon-filled journals with statistical gurgitations reported results of hundreds of student surveys, but the research approaches didn’t fit with the techniques used by the marketing research professionals I had worked with; they also ran counter to the observations of ethologists, who study the behaviour of animals in their natural habitat. Alternative explanations are valid That prompted me to study the history of psychology. I read several books by Kurt Danziger, including Naming the Mind: How Psychology Found Its Language (1997). This book describes how the categorizations used in psychology are not objective, a realization that first came to him when he moved to Indonesia as a professor of psychology. There, exposed to academics whose psychology was grounded in concepts of the mind from Eastern cultures, he realized that alternative explanations of the mind were just as valid and, in their own way, as scientific as the psychological explanations he had been taught in the West. Categories such as behaviour, stimulus and response are cultural. Danziger wrote, “Contrary to common belief, these categories do not occupy some rarefied place above culture but are embedded in a particularly professional sub-culture.” It is hard for us to see, but the language we use to categorize mental events is not the same as the mental event itself. “The

entire investigative enterprise is so immersed in language that it is simply taken for granted and its role becomes invisible.” Marketing professionals are particularly attuned to the peculiarities of different cultures. It goes without saying that the tone and terminology needed to address an audience of cardiologists versus an audience of lip gloss purchasers is completely different. The brief booklet on Total Quality Communications that I had planned to write for my agency was turning into something much longer. I was uncovering ideas that would be useful for every business manager. Three months stretched into two years. The more I read, the more bewildered I became. It was like noticing a piece of lint on an old woollen sweater. When I tried to pick the lint off, I found it was securely attached to the sweater; so when I pulled, out came a length of wool and another question. Why are marketing textbooks so unhelpful? That led to another length of wool and another question. Why are there so many graduates publishing psychology papers that have zero utility to managers of organizations? I pulled at more lint and found this led to ideas in brain science that led to mysteries of sentience and consciousness. This led to me yanking on the wool leading to culture and linguistics. End of part 1. TOM BEAKBANE is president of Beakbane: Brand Strategies and Communications, a company that has delivered over 20,000 projects to Fortune 500 clients since 1986. He resurrected the concept of consilience after attempting to account for the gap between textbook theories of human behaviour and his experiences creating marketing communications. He closed the gap by tapping into his passion for understanding developments at the frontiers of science. Beakbane earned an honours degree in biochemistry and neurophysiology from Durham University in England. He lives near Toronto, Canada with his wife. They have two daughters. MARCH 2021


// 17

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// 18

MY VIEW

Part 1

The Unravelling of My World

BY TOM BEAKBANE

I

n 1998 I wanted to write a manual for my marketing communications company; it would be called Total Quality Communications. At the time I thought it would take about three months and its purpose was practical. I saw how manufacturing companies were using a number of management approaches, including Kaizen, Lean and Six Sigma, to improve product quality, reduce waste and operate more efficiently. As the owner of a marketing agency I figured that we should implement something similar. The field of marketing communications was changing rapidly, with TV advertising no longer working like magic and digital technologies advancing on multiple fronts. We needed to get ahead of the online revolution and make sure the communications we produced for our clients achieved their objectives as reliably as possible. In every case the approach to quality management begins with defining and quantifying precisely what is meant by “quality.” If you are a steel bolt manufacturer, you need to specify the dimensions and the tensile strength. Once the machine operators know how quality is defined, they can monitor their own performance without the need for management or the quality control department to check their work. As I had a degree in neurophysiology and biochemistry I hoped to spell out some general science-like principles about human perception

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Tom Beakbane A Three-Part Series based on Tom Beakbane’s new book.

that my staff could use to evaluate their work. By that time I had also had the privilege of working with some of the world’s leading packaged-goods companies and their advertising practitioners in London, New York and Toronto. I thought that if I bundled what I had learned together with scientific principles, my agency would be more successful. I decided to start by taking a quick look in the most up-to-date marketing textbooks to harvest their best ideas. But nothing, literally nothing I found had any relevance to what my team was doing day to day. Every entrepreneur knows there’s no substitute for practical experience; nonetheless, I found a puzzling, large gap between textbook theory

and the kind of information that is useful for business people. The books written by advertising and marketing practitioners, of which there are many, do not overlap with traditional marketing theory. It is the same with leadership. Lack of formal marketing credentials never bothered me Academic accounts of leadership theory are nothing like the skills needed to lead a group of people, nor are they like the approaches described in the biographies of great leaders. The gap between business theory and practice has been particularly apparent to me because, by North American standards, my route into a marketing communications career was unusual. I was never taught business in an academic institution. When I joined the marketing department of United Biscuits in London, I was no different from the other three

recruits who were graduates from Oxford and Cambridge universities with degrees in the equally un-business disciplines of geography, chemistry and politics. My lack of formal marketing credentials never bothered me, because even before I graduated I had a string of marketing wins, which included promoting a photo-customization business; successfully launching the Durham University Industrial Society; and being awarded honorary life membership of the students’ union for running a student health food store, increasing its sales by 35 percent and working with staff so that it made a profit for the first time in its history. Although I had never been taught business and marketing theory, if I ever came across anything I didn’t understand I’d read books and journals until, at the very least, I’d get a measure of my ignorance. Plus, I enjoyed reading about science and technology. While preparing to write the marketing manual, I found marketing textbooks unhelpful, CONTINUED ON page 16 MARCH 2021

PHOTOS COURTESY TOM BEAKBANE

Or…how I started on a journey to close the gap between textbook theories and my experience in business. The process of changing my way of thinking took time and was unsettling.


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