Direct Marketing Magazine May 2017

11 Regional report: Montreal ❱

15 In the Mail: Hot results for Yummi Candles ❱

22 Q&A with Environics Analytics’ new chief analytics officer ❱

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vol. 30 • No. 5 • May 2017

The Authority on Data-Driven Engagement & Operations

Disruptive technology

❱ 6 The connected experience Adapting to the post-campaign world

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Customer Centricity

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Vol. 30 | No. 5 | May 2017

Crafting customer experiences in the 21st century

EDITOR Sarah O’Connor - sarah@dmn.ca

Disruptive technology

PRESIDENT Steve Lloyd - steve@dmn.ca DESIGN / PRODUCTION Jennifer O’Neill - jennifer@dmn.ca Advertising Sales Mark Henry - mark@dmn.ca CONTRIBUTING WRITERS Linda Kirkpatrick Scott Blum Geoffrey Rotstein Jennifer Campbell Stephen Shaw Kevin Deveau Jim Green LLOYDMEDIA INC. HEAD OFFICE / SUBSCRIPTIONS / PRODUCTION:

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Montreal Checking in with direct marketing companies based in Quebec’s largest city

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Neighbourhood Mail produces hot results for Yummi Candles Feature

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The connected experience Adapting to the post-campaign world

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What personality is that billboard?

Clear Channel develops customer-centric approach to selling outside ad space

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Q&A with Danny Heuman, Environics Analytics’ new chief analytics officer

Your location says a lot about you Excellent Execution

How EQ Works is using location data to extrapolate customer profiles

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Anticipating client needs through optimization analytics May 2017

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Embracing omnichannel retail with cloud-based POS systems DMN.ca ❰

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Customer Centricity

Crafting customer experiences in the 21st century

T Linda Kirkpatrick is executive vice president, merchants & acceptance, Mastercard.

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oday consumers have more choices and access to information than ever before. Endless possibilities emphasize the level of sophistication needed to tailor customer experiences in the 21st century. The new formula for success is now measured by how well retailers can personalize, customize, digitize and socialize.

Personalization means communicating like a “friend” versus a brand, while customization is about placing the power of curation in the hands of the consumer. Digitization creates connected experiences, engaging consumers before, during and after the shopping experience. Socialization is about extending the relationship and creating a viral buzz.

Retailers must anticipate what consumers want.

Offering an item or service before the consumer asks is a sure way to increase sales. This means being innovative in order to fully understand customers’ buying habits, phobias and preferences. To develop these insights, retailers need to ensure data is at the foundation of their business decisions. By leveraging data, retailers can develop an intimate understanding of their customers’ behaviours. This allows for unique communications and offers for each individual.

An example of a company working to connect with guests innovatively at a new level is Carnival Corporation. At the 2017 Consumer Electronics Show, the company unveiled Ocean Medallion, a wearable device designed to deliver a personalized and frictionless experience. This technology is aimed at providing a connected and stress-free vacation—from eliminating the need for a room key to having your favourite drink delivered upon arriving poolside. The possibilities provide a game changing experience and a new standard for the way guests experience their vacations.

Currently, retailers focused on curating experiences within the tourism and food service industries are outperforming those within the apparel and luxury sectors. Consumers are placing more value on experiences over spending on material items. The challenge for retailers outside the hospitality industry is bringing these experiential elements into their own sectors.

Customers are craving effortlessly connected experiences. A company capitalizing on this concept is made-to-wear menswear retailer, Indochino. The Vancouver-based company approaches customized suits through an omnichannel customer experience.

In-store or online, customers are involved at each step of the creative process deciding how they want their suit to look and feel.

As technology continues to reinvent the possibilities in retail and e-commerce, customer experiences must shift accordingly. Recent payment technology has raised customer expectations, making the norm a more seamless, simple and natural experience. Business models like Uber have succeeded because they’ve removed the friction before, during and after the experience.

As consumers become more connected, every device has the potential to be a secure commerce tool and a driver of a better consumer experience. In the 21st century, this can be the convenience of ordering online without having to search for your wallet or enter your shipping information with each order. It’s the power to pay via a digital payment service such as Masterpass, knowing your private financial information is protected.

At Mastercard, we are working to ensure everyone, everywhere has the ability to make and receive secure payments using any connected device, whether it be via your smartphone, your jewelry or through a home appliance. We understand the influence a seamless payment process has on the overall customer experience. The ability to pay without waiting for a machine or fumbling for cash makes payment a much simpler process.

The future of retail is increasingly connected customer experiences and payments are playing a bigger role. Successful business models will strike a balance between the personal, custom, digital and social aspects of creating these experiences. With technology the customer experiences we only dreamed of may soon become a reality.

May 2017

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The connected experience

Marketers have been slow to adapt to a post-campaign world where the old familiar rules of brand building are obsolete. To connect with customers today marketers must not only manage channel complexity, they must make the brand more relevant and central to their lives.

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Disruptive technology

By Stephen Shaw

I

n the late 1950s the Volkswagen Beetle was little more than a curiosity. At a time when most cars were garish symbols of consumerism, the Beetle was exactly the opposite: small, under powered, strange looking, it had failed to gain much of a foothold on this side of the Atlantic despite its popularity in Europe.

That all changed in 1960 with the launch of a national ad campaign which turned traditional automotive advertising upside down. It still ranks as perhaps the greatest ad campaign of all time.

Instead of bragging about the Beetle, the ads poked fun at its perceived deficiencies (“Lemon,” mocked one headline; “Think Small,” suggested another), before explaining how these characteristics were in fact virtues. The intent was to charm as much as inform and that approach strongly appealed to an emerging counter-culture longing to break free from the conformity of that post-war period.

Thanks to that campaign, VW sales took off and the Beetle soon became a familiar sight on the roads, riding an anti-establishment wave which swept across society in the 1960s.

The formula for success in a post-campaign, ad-free, self-serve world is making an emotional connection with customers—and then staying connected through experiences that keep the romance alive.

Meanwhile the advertising business was changed forever: ad copy stopped sounding like a showroom salesman. Instead it strived to give the brand a distinct personality—maybe not as quirky as the VW Beetle, but something people could relate to.

Today of course that campaign would be executed very differently.

In the 1960s print was the default medium. Now digital media is the preferred channel. And that fact alone invites the question: would the VW campaign have won the same level of fame in this current fragmented media environment?

One thing is sure: a different approach would be needed to have the same market impact.

We have entered a postcampaign world where people interact with each other through social sharing, indifferent to most forms of advertising. Ad

campaigns rarely become a topic of discussion anymore (except at Super Bowl time). Which is why the concept of a campaign has become obsolete. The word itself should be retired. Even so many marketers today still view their top challenge as developing innovative campaigns that garner attention.

The real lesson marketers should draw from that ground-breaking VW campaign is that to truly connect with customers, a brand must mirror their beliefs.

Formula for success When VW first landed here from Germany in 1949 it was very much a startup brand (it sold just two cars that year). But a startup brand today would never dream of throwing money at a large advertising campaign (a mistake that drove many firstgeneration dotcom companies

out of business). Instead they methodically build a fan base through word of mouth. A celebrated example is the Dollar Shave Club, acquired last year

by Gillette for the generous sum of one billion dollars. This was a five-year-old company which bought razors from South Korea and sold them directly to men at a fraction of the retail cost. Beyond a recurring revenue stream, what did Dollar Shave Club offer that Unilever wanted so badly? A loyal tribe of three million online buyers. Plus, a whimsical brand made popular through social media and comedic videos posted on YouTube. The witty content (like Bathroom Minutes magazine) kept members engaged. The brand offered its subscribers more than transaction ease and convenience: it served as a brotherhood for frugal shavers.

The new marketing model transcends commerce by delivering continuous value at every stage of the customer lifecycle.

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Disruptive technology

Being “bigger” and “best” is no longer enough: those claims win satisfaction, not affection.

Another example of a start-up brand profiting from word of mouth is the mattress maker Casper, which has enjoyed hockeystick growth by transforming the bed buying process in a staid industry crying out for disruption.

Instead of enduring multiple store visits to test different mattresses, customers are offered a directdelivery 100-day free trial period accompanied by an Amazon-like guarantee. Early buyers were so infatuated with the accordion-style “unboxing” of the form-fitting bed that they began to post videos of the experience online which helped make Casper an overnight sensation.

Casper views itself as more than simply a mattress-maker offering an exceptionally comfortable

product; it is in the vanguard of a growing lifestyle movement popularizing the health benefits of proper sleep. “We actually consider ourselves more of a sleep company,” says the CEO. That personal connection with customers may help to insulate it from expected counterattacks by its much larger storefront competitors (Tempur Sealy is already fighting back with its own knock-off version of the no-risk direct-delivery model).

The formula for success in a postcampaign, ad-free, self-serve world is making an emotional connection with customers—and then staying connected through experiences that keep the romance alive.

Certain brands do that naturally— think LEGO, SoulCycle, Patagonia,

Marketers must reprogram themselves to serve customers in the full context of their connected lives. ❱ DMN.ca

Red Bull, UnderArmour, Etsy—all of which have a relatable identity.

Their customers are more than simply fans or followers—they are active participants in the brand, contributing to the conversation through their network of social connections.

Flipping the switch from an ad-centric messaging model to one based on relationshipbuilding requires a complete mind shift. To create more rewarding brand experiences—distinctive experiences customers want to talk about and share—marketers must lead with empathy. Sharing the worldview of customers can elevate a brand to a higher plane of trust and win over an army of enthusiasts. As Jorgen Vig Knudstorp, cochairman of the LEGO Brand Group, says, “If you can make your brand a value—a part of their identity—you have a really powerful competitive advantage.”

Vive la révolution Just about every CMO today realizes that marketing in the Age of the Customer is about delivering a great brand experience.

Unfortunately, most have their feet locked in cement. Often, they oversee hidebound product marketing cultures frozen in time. For marketing fundamentalists unwilling to give up brand messaging, the notion of “customerfirst thinking” is more about perception than reformation— merely a tagline that sticks a “smiley face” on the brand. Bolder thinkers, willing to battle the status quo, face a booby-trapped obstacle course: stove piped systems, IT intransigence, departmental siloes, operational handcuffs, growth fixation, executive myopia, cultural apathy, the list goes on. It is easy to see why a well-meaning CMO might concede defeat even before starting down the path of transformation, knowing what lies ahead.

However, there is no turning back to the glory years of the “Mad Men” era when ad campaigns ruled the air waves, soaking up most of the marketing budget.

That playbook has been smashed to pieces by the always-on expectations of customers; by the growing hegemony of the big platform services (like Amazon, Netflix, Snapchat, Instagram and Facebook); by online marketplaces which are disrupting and even displacing conventional supply chains (Uber, Airbnb); and by the feverish pace of technological change (consider the surge of interest in chatboxes, voice-based search and virtual assistants).

Being “bigger” and “best” is no longer enough: those claims win satisfaction, not affection.

According to a recent consumer study, most people could care less if three-quarters of the brands they use disappeared forever. That is a severe indictment of the entire marketing business as it exists today.

Marketers are strangers in a strange land, uncertain which direction to head. With no familiar landmarks in sight, any “shiny object” can seem like a good way to go, no matter what the odds of success. Forrester Research argues that in the face of this turmoil marketing must take the lead in envisioning a more enlightened future: “CMOs must reimagine how their customers are exposed to and experience their brand across all touchpoints. They must lead the charge across their organization to create a connected experience that will delight customers wherever they interact with the brand.”

As society adjusts to a more connected world – powered by conversational interfaces, universal connectivity of smart devices, open collaborative communities, AI-driven interactions and much more—marketers must shout from the corporate rooftop: “Vive la revolution!” They can turn the page on history by adopting a more humanistic marketing model which finally drives a stake into the heart of the old one.

To make that leap, marketers must figure out how to make the brand more relevant and central to the lives of customers.

As a starting point, they need May 2017

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Disruptive technology to understand the values, principles and aspirations of the customers they choose to serve and then craft their story around that belief system. In doing so, they will have a clearer idea of how to make customers feel “I can’t imagine life without you.”

Resisting incrementalism Creating a connected experience involves much more than easy navigation of touchpoints or consistent interactions across all communication channels. It should lead to: ❯❯ More informed conversations: People live their lives through their screens, sharing their experiences with everyone they know, no matter how trivial or mundane.

Companies need to think creatively about how they join that conversation. There is only one way to break through the content glut that passes for conversation today: personalizing the communication stream so that it simulates as much as possible a real dialogue between friends, where ideas and opinions are freely discussed, while remembering and building upon past exchanges of information. ❯❯ More rewarding relationships: Today a brand must make it as easy and rewarding as possible for people to continue buying—and to welcome and facilitate frank feedback about their experience. As customers interact across multiple channels, the two-way flow of communications should be governed by tiered permission

A campaign mindset must give way to relationship-building programs that earn the trust of customers over time.

levels which control the level of intimacy; by explicit preferences that guide the creation and delivery of content; and by knowledge of shared beliefs and values which form the bedrock of an ongoing relationship.

Just adding more channels to the marketing mix will not get customers to lower the conversational drawbridge.

In fact, it might force them to dig a bigger moat.

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More valuable interactions: Companies must serve customers in real-time—not days later, but seconds later, when they most need the help they’re seeking. Knowing the full context of a question at a moment in time—factoring in the intent, location and urgency of the request—should trigger a personalized notification, subject to consent. That consent is far more likely to be granted if the brand is a go-to authority within a specific subject area.

For most businesses, the magnitude of complexity required to design and orchestrate a connected experience is daunting.

The way marketers are organized, think, plan and act must be

completely revamped. The walls that separate marketing, sales and service must be torn down. Annual planning models, with their inflexible budgets and top-down goal setting, must be streamlined.

More flexible workflow design must be adopted to promote collaboration. And certainly, a business will never gain alignment if people are not encouraged and incentivized to think differently.

The test of character for the leaders of a business is not the decision to march down the path of transformation: it is having the courage to resist incrementalism.

A cautious one-step-at-a-time pace will only put a business further behind. Agility must be weaved into the operating philosophy and decision style. And that means DMN.ca ❰

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Disruptive technology

The new planning model focuses on creating meaningful conversations with customers about what matters most to them.

The goal is not simply to stay connected: it is to be viewed as indispensable, where the relationship transcends commerce. speeding up the metabolism of marketing: abandoning lengthy campaign-development cycles in favor of more adaptive methods, with the flexibility to act immediately on opportunities that surface through trend-spotting.

Shock and awe There are many competing schools of thought on what that new model should look like. While everyone acknowledges that the marketing funnel has been flipped, with customers in control of what they see and hear, no one is quite sure what to do about it. “Go social—go mobile—go local” has become an oft-heard refrain. But that simplistic answer fails to address the crux of the problem. Just adding more channels to the marketing mix will not get customers to lower the ❱ DMN.ca

conversational drawbridge. In fact, it just might force them to dig a bigger moat.

What goes on today could still be characterized as “shock and awe” campaigning. By using marketing automation in combination with programmatic media buying, marketers can devise highly complex multi-channel demand generation campaigns, with many different reinforcing loops, driving target audiences toward a promotional snare. None of that interaction planning does much to engender more human connections with people. Which is why marketers need to stop thinking about campaigning and make it in the interest of customers to have a real conversation.

The hardest part of conversing with strangers is finding something in common to talk

about. To sustain a conversation past that first greeting, you must find the common ground: a subject that interests the other person as much as you. Instead of starting out with what a brand wants to say about itself, the strategic planning process should begin with what the customer needs to know. A customer journey map paints that picture: describing the goals, intentions, feelings and pain points as a customer progresses from one stage of the buying cycle to another. Once a purchase is made, a lifecycle map shows how the brand can support the full relationship arc, from onboarding to regular engagement to energizing the fan base.

Instead of pushing out pointin-time campaign offers under the guise of branded content, marketers should construct a

medley of relationship-building programs designed to move customers along the loyalty continuum. The goal is not simply to stay connected: it is to be viewed as indispensable, where the relationship transcends commerce.

The effort to cultivate that relationship—to learn what matters to customers, create continuous value, talk about the things that matter, earn goodwill—is an investment in the longevity of the brand. One that is far more likely to pay off than pumping up the ad volume when no one is listening any more.

The old marketing model is broken—that much is certain.

What ultimately replaces it may still be up for debate. But what is not debatable is that customers will only truly be interested in making a continuous connection with a brand if they can identify with it.

Stephen Shaw is the chief strategy officer of Kenna, a marketing solutions provider specializing in customer experience management. He can be reached via email at sshaw@kenna.ca.

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Regional Report

Montreal

Checking in with direct marketing companies based in Quebec’s largest city

True relationship marketing starts with adept cultural fluency

“Every single time you transact or interact with your customers you have an opportunity to consolidate the relationship or destroy it totally.”

Mark Morin, owner of Strategies Marketing Direct.

It is obvious that Mark Morin, owner of Strategies Marketing Direct, is excited about the evolution of the direct marketing industry. He cites cognitive technology and marketing automation as the most revolutionary technologies at play and notes that they are opening doors for breakthroughs in customer centricity, including a vastly expanded understanding of the customer journey and true relationship marketing.

“People are starting to understand, yes, getting someone to place an order is great but that’s only the start of the relationship,” notes Morin. “How do we move it forward?

What do we need to put in place? And marketing automation allows you to do that, technology allows you to do that very effectively. I think that is really cool.”

Beyond the classic definition of direct marketing, getting the right offer to the right person at the right time in order to drive a sale, today Morin believes that May 2017

sequence is only the beginning of a mutually beneficial relationship.

“The sale is not the end goal,” says Morin. “The relationship is the goal.

Instead of focusing on that one transaction you’re focusing on the customer’s lifetime value.

“I find that marketers don’t think enough about the fact that every single time you transact or interact with your customers you have an opportunity to consolidate the relationship or destroy it totally.

“Every time you send an email for something that’s not relevant to the customer because you just want to do ‘batch and blast’ because it’s simple, then you are depreciating the value of your brand in the eyes of your customers. You’ve just said, ‘you know what, I don’t really care if you want this or not. I’m gonna stick it your mailbox and hope that you’ll buy because all we want is your money, not your loyalty, and we don’t really care who you are.’”

The level of sophistication required for post-campaign thinking is naturally multiplied in the context of bilingual campaigns, which Morin says applies to almost everything Strategies Marketing Direct does. “You want to be idiomatic, you want to use expressions that people will

understand and that will trigger emotion as opposed to just communicating the ideas effectively,” says Morin. “That’s really important. You have to have that sensibility to understand how the wording and even the imagery can change from one market to another. There are significant differences between the Quebecois and the rest of Canada or the United States or the world, as you can appreciate. Just as there’s a difference between Toronto versus Vancouver. There are regional differences as well as cultural differences—TV shows, movies, music. You want to draw on that cultural environment in order to build that resonance in your message. It’s hard to do.”

When asked if he believes marketers who grew up in Montreal have an inherent advantage when it comes to effectively addressing multiple cultures, Morin answers in the affirmative: “I think that because we live in a culture where there are two languages—of course French is dominant but the reality of the English language is very present—we do understand that there are differences. A lot of our culture focuses on the French language and its beauty and how it’s different and unique. We’re brought up understanding that reality. For us, it’s obvious that you would need to go that extra mile to create a powerful message in French.

Whereas, for many of our clients located outside of Quebec it’s an afterthought.”

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Regional Report

From coast to coast, happy employees lead to happy customers “Right now we are the fastest growing company in Canada; we have 5,000 employees across 13 centres coast to coast,” says John Dinardo, president of Nordia Inc., from the road as he zooms to make a staff presentation at one of the company’s centres.

Nordia operates two francophone call centers in Rouyn-Noranda and Saguenay, five bilingual centres in Laval, Sherbrooke, Quebec City, Montreal and Moncton, as well as six anglophone centres in Nanaimo, Kitchener, Lindsay, Orilla, Peterborough and Saint John. Dinardo notes that Moncton is currently the largest centre, through the company’s corporate headquarters are located just north of Montreal, in Laval.

“Because we operate centres with large amounts of people we need to diversify geographically to be able to be able to hire that many people,” notes Dinardo. He says that Montreal’s main advantages in terms of being home to a call centre are threefold—location, language and public transportation. “What we’re looking for in the Montreal area is, being in an urban centre, you have access to a lot more public transit which gives you a lot more openness in terms of applicants.

Attracting people is key for us.

More attraction gives us a better selection process because we have more choices. Montreal is a market where you can get English only, you can get French only and you can get bilingual, which makes a big difference in our decision-making process.”

Dinardo believes that the principles of good customer service are equally applicable in both official languages, but that customers do appreciate being served by agents from their own region.

“I think the expectations of a customer are fairly similar [in French or English] but what we’re noticing is if the customer is answered by a rep who is in his or her province or region, the customer will open up a lot more

John Dinardo, president of Nordia Inc. and there will be a satisfaction on the customer’s side, knowing that they are speaking to somebody from Quebec if they are from Quebec,” says Dinardo. “What we do is we ask the rep to say who he is and from where. So, for example, if you’re calling and you’ve selected French and you’re answered in Saguenay, the person will answer, ‘Hi, my name is John and I’m proud to serve you from Saguenay.’ I think that’s where the big difference is.”

Beyond personalization, Dinardo believes that happy employees are the company’s greatest differentiator. “We focus a lot on employee satisfaction,” he says. “We have two key metrics that we focus on to be different than the industry—in order to be successful, to provide good customer service for our customers, there are two things we strive for.

First of all is attrition, we have the best employee retention in the marketplace, and [second is] employee satisfaction. We survey our employees and basically ask one question: would you recommend Nordia to your friends and family as a place to work? For three years in a row over 80% have said yes.

“The only way to deliver good customer service for our customers is to maintain low attrition and high employee satisfaction. That’s our business model—we offer good wages, opportunity, state-ofthe-art facilities and a really nice working environment with decent square footage per person. We’re really focused on that and that’s what makes us different in the marketplace and that’s really why we’re growing so fast.”

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Regional Report

Montreal Fundraising across Canada and around the world from Montreal

“You want to give the client what they think is right.”

Howard Golberg, president of Pinnacle Direct.

Howard Golberg, president of Pinnacle Direct, has been at the helm of his pioneering direct marketing company for over 30 years. “We certainly have to think smarter and more strategically,” observes Golberg. “When I started doing direct mail fundraising, we could send out a letter that said “hi, we exist” and money poured in.”

Primarily focused on direct response fundraising for not-forprofit clients, Pinnacle Direct is unique in that about half of its clients are international (primarily the U.S. and UK), with the other half comprised of Quebec-based businesses.

“We’re very proud of one thing— that we were the first Canadian agency to go to the United States,” says Golberg. “Not only have they got a market that’s 10 times May 2017

the size, they have a market that is essentially 25 times the size—Americans are much more generous than anybody else on the face of the earth. Whereas our total giving is in the eight, nine billion dollar range, the Americans give over $300 billion—that’s $1,000 for every man, woman and child.

“Some of it is accommodated of course by differences in our political taxation system, so education and universities and hospitals are the two major areas of that change, but that doesn’t account for all of it.

The biggest difference is America is a much more religious society than we are. Their donations to churches, and I use ‘churches’ in its broadest sense, is a much more important part of their giving network than it is to Canadians.”

The vast majority of work that Pinnacle Direct does in Canada is bilingual. Golberg explains that most of these are Quebecbased companies with a national presence.

“The response rates these days are, give or take, about the same [between French and English Canada], which is different from what it used to be when I started in the business,” Golberg observes.

“The Francophones are coming clearly to understand more about their responsibilities to help those

in need. Average gift rates are still probably about $10 per gift less [in Quebec]. The Anglophones, particularly in Montreal, are a very generous community and also a very proud community.”

Golberg notes that a key aspect of bilingual and multicultural marketing is proper customization and offers the following example: “We have a street [in Montreal] called Mountain Street—we pretend that that thing in the middle of the city is a mountain.

The original name of the street was Mountain Street. It is now officially Rue de la Montagne. Canada Post says that is the mailing address.

However, there are Anglophones who have been living on Mountain Street for 50 years who live on Mountain Street no matter what anybody calls it. So what we’ve done is after Canada Post has verified the files we then take them back and for those people we convert it back to Mountain Street.

It still gets delivered.

“You want to give the client what they think is right. That’s how you maximize donations on every level. You try to put that additional service into it, that additional cross-process into it to make sure you do the absolute best and you find your way around the problems that are thrown at you.”

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Regional Report

Montreal Montreal’s multiculturalism offers a huge advantage

“In Montreal you can be confident that you can staff a call centre to provide multi-lingual service.”

Simon-Pierre Trahan, vice president strategy and corporate development at Voxdata.

Voxdata supplies outsource call centre services for a roster of national clients serving a bilingual clientele. The company’s main centre is located in Montreal, with currently about 700 employees.

“We used to have a call centre in Mississauga which stopped probably about five years ago,” notes Simon-Pierre Trahan, vice president strategy and corporate development. “That was mainly due to the fact that, in terms of a unilingual English person or program, you can find that in Montreal at a lower cost. The cost of man power will reduce if you get out of the Greater Toronto Area. Just in Mississauga, where we have our business office, you have Purolater, FedEx, all sorts of large operations. It has created some more demand for customer ❱ DMN.ca

service people, so the salaries are definitely up.

“If you’re talking about getting a bilingual person in the Mississauga area or the Toronto area, this is definitely possible but the cost of those people will be way higher than in the Montreal area.”

In addition to lower operating costs, Montreal offers other important benefits to Voxdata related to the city’s linguistic diversity. “If you look at the province of Quebec, Montreal is the only true multilingual city,” says Trahan. “By multilingual I mean by that if you want someone who’s mother tongue is Spanish, you’re going to find them in Montreal. Russian? You’re going to find them in Montreal. There’s no limit to the assembly of languages that you can do.

“If you go back to just the national languages, French and English, I don’t think you could assemble an accent-less workforce in Quebec City, as an example, which is the second largest city. I think Montreal is also providing the labour from students—I think in Montreal we have five universities.

“We have some programs here

[at Voxdata] that cover North America, so Spanish and other languages which we can service from Montreal. Maybe there’s some people speaking Russian in Quebec City, but in Montreal you can be confident that you can staff a call centre to provide multi-lingual service.”

As the contact centre industry evolves, so too does the importance of access to a workforce who can not only speak fluently in a variety of languages but, increasingly, also write well.

“We started email processing in 2014 and even more interestingly we started social media presence management in 2015,” notes Trahan. “So we are fortunate to work with some leading brands in Canada and I think from a generational point of view, even though email and social media are not necessarily the predominant way for people to contact a service provider, it is something growing and it is very interesting for us because it allows us to add value and change a bit the ground rules that apply to telephone customer service. It requires a higher skill set as there is more latitude in how the interaction will be performed.”

May 2017

// 15

In the mail This column is sponsored by

To learn more about Canada Post’s integrated direct marketing solutions, please visit canadapost.ca/smartmailmarketing.

Neighbourhood Mail produces hot results for Yummi Candles A creative piece of mail nearly doubles transaction rates, helping lift revenue by 67% for this Toronto retailer

By Jennifer Campbell

W

Campaign results +80% in response rate +22% in web traffic +67% in sales revenue

May 2017

hen customers arrived at the Toronto location of Yummi Candles looking to collect a free scented votive in a glass jar, Sokratis Antonopoulos, the company’s director of marketing and e-commerce, was thrilled.

Over the course of a month, some 1,350 customers visited the store, each of them carrying a piece of perforated card stock found in their mailbox. The card came with instructions on how to fold it into a candle holder and the promise of a free candle if they brought it into the neighbourhood store.

“In fact, we had three goals in mind,” says Antonopoulos. “We wanted to promote 30 new fragrant candles, drive traffic to the store and create brand recognition. The campaign was successful in all.”

Antonopoulos partnered with Canada Post, with which he had worked closely before and from which he’d won the E-commerce Innovation Best Mobile Experience Award in 2014. Together they designed the direct mail piece that brought customers in-store in droves.

More sales and greater brand recognition The campaign occurred in December 2015. Yummi Candles sent out 114,500 unaddressed offers to homes close to its store. Shortly after the mailing, in-store transactions nearly doubled compared to December 2014, helping lift revenue by 67% year-over-year.

Loulou Downtown, a Toronto blogger, received the offer and wrote about it for her community of followers.

“I can’t remember ever being so interested in a piece of unsolicited mail as I was by that flyer,” she said.

The future looks bright for Canada Post and Yummi Candles The campaign worked so well, Antonopoulos repeated it in November 2016, sending the offer to 26,000 other residents of the area. Yummi Candles also integrated direct mail with digital media to help drive consumer action.

“We extended our direct mail promotion to the digital world. People who texted me the word Yummi were offered a free candle in store,” says Antonopoulos.

“There are so many possibilities to connect traditional and digital campaigns, and Canada Post is helping us leverage them.”

In fact, a recent Canada Post study showed that consumers paid 39% more attention to integrated marketing campaigns than to single-media digital campaigns.

60% of consumers say really good advertising mail helps keep brands top-of-mind.

Jennifer Campbell is a freelance writer based in Ottawa.

DMN.ca ❰

// 16

Disruptive technology

What personality is that billboard?

Clear Channel develops customer-centric approach to selling outside ad space

By Jim Green

I

magine you’re a media buyer for a clothing store chain and you’re looking to buy outdoor advertising space in downtown Ottawa. You could take the easy route and turn to the usual suspects: well-known neighbourhoods like Sparks Street or around the Rideau Centre. But how can you be sure ads in those areas would reach your target customers? Are there locations that are more likely to grab your customers’ attention and wallet share?

By analyzing location trade areas according to target audience reach, business proximity and PRIZM5 lifestyle segments, Clear Channel Canada’s “street furniture planning tool” can tell you which outdoor advertising assets, such as bus shelter screens, are likely to be seen by which audiences. If, knowing your customers’ personalities, you select “Fashionistas” and “High Earners” as the target audience, the tool brings up a list of assets that match the criteria. You purchase ad space on a dozen shelters chosen not on total foot and car traffic but on the number of your targeted customers found in the area.

❱ DMN.ca

There’s a quiet revolution occurring in out-of-home (OOH) media and Clear Channel is leading the way. By providing a deeper, lifestyle-based understanding of the trade areas around advertising assets, the global media company is altering the way brands think about and buy outdoor advertising.

Traditionally, companies sold ad space based on the number of people who traversed a particular location using broad demographic characteristics like age and sex.

As a result, advertisers viewed outdoor billboards and bus-stop advertising as mass marketing channels. The more crowded the real estate on downtown streets and highways, the higher the cost to advertisers.

But Clear Channel sought a better way to help its clients select the right OOH media to reach specific consumers in the right environment when they are in the right state of mind.

“The goal was to pull together data about our audiences and then, once we get a brief from clients on who they want to reach, we can associate the best assets for the client,” says Natalia Lafforgue, marketing manager with Clear

Channel Canada. “With more detailed audience data, we could stop selling our inventory by quantity, but by quality, offering a specific audience profile.”

In 2015, Clear Channel began working with Environics Analytics to build the sales tool. Rather than rely on broad audiences, analysts identified the 12 most valuable target audiences for advertisers, defined by such characteristics as age, lifestyle, average household income, occupation and consumption habits. Called “street personalities,” they had names like Tech Savvy, Dual Income/No Kids and Fashionistas.

Analysts then aligned the 12 personalities to EA’s PRIZM5 segmentation system, which classifies all Canadians into 68 distinct lifestyle types. Every bus shelter was analyzed to identify the location’s dominant PRIZM5 segments, but that was just the start. Clear Channel also wanted each asset tagged with information on businesses and services operating in the vicinity, so sales people would know, for example, whether a location scores low for coffee shops, medium for bars and high for schools.

Analysts also established an area of visibility around each shelter, indicating a high likelihood that people in the area would be exposed to the shelter’s advertising. Areas of visibility vary depending on the specific neighbourhoods. For example, the area of visibility for shelter OT8030CI located in downtown Ottawa was defined as a fiveminute walking distance from the shelter. By running a trade area report, analysts identified which PRIZM5 segments were present—and therefore which Clear Channel personalities corresponded to those segments.

Around shelter OT8030CI, three PRIZM5 segments dominate: Urban Digerati, Grads & Pads and Rooms with a View. And using PRIZM5, marketers can mine a wealth of information on the buying habits, lifestyle preferences and mindsets of these consumers.

After undertaking this analysis for every shelter in their network—and that would be 1,782 shelters just in Edmonton and Ottawa alone—Clear Channel created a comprehensive database of shelters and their associated street personalities. Salespeople

May 2017

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Disruptive technology

now have a complete picture of which target groups will be found around which shelter. If a client wanted to engage a particular group of Millennials, for instance, Clear Channel would identify screens that reached their Tech Savvy personality.

The company launched the OOH Street Furniture Planning Tool last September, and though it’s too early to quantify its success, Lafforgue has received encouraging feedback.

“Our clients are impressed,” she says. “We used to sell boards manually, but now we can profile our boards using a data-based system. And no one else is doing this, providing this level of insight in the market. Our whole approach shifted to where we tell our clients, ‘it’s not about where you want to be but who you want to reach.’”

Now when Clear Channel gets a brief from a client, analysts simply identify the client’s target audiences—or personalities—and the tool generates a list of all the shelters with the corresponding street personalities. Analysts can provide even deeper insights into the target audience, such as how they compare to national averages for purchasing, say, sports equipment or home décor items.

Buyers then decide how many shelters to select in the desired market. The result is a targeted, efficient advertising campaign that delivers both effective, measurable reach and improved ROI “Most TV and radio buys are based on age and sex,” observes Adam Butterworth, president of May 2017

Clear Channel Canada. “We can give advertisers lifestyles and values. It’s a complete profile of whoever they want to target.” He estimates the company’s use of audience research to sell OOH media puts Clear Channel “three years ahead of the rest of the pack. They don’t have the research to go the extra mile that we can offer today.”

As an innovator in its industry, Clear Channel had to provide training to some clients as well as agencies and media planners who up to now have only had access to basic demographics like age and gender. Internally, change management efforts focused on training and coaching sessions for sales and client service teams.

And Lafforgue’s team developed a presentation for salespeople to pitch clients on the advantages of lifestyle-based target groups and “street personalities.”

“You can’t just click your fingers and it’s done,” says Lafforgue.

But as the “ah-ha” moments piled up during sales pitches and demonstrations, resistance plummeted. For example, when an analysis of consumers around Toronto’s Billy Bishop Airport showed that 66% were members of the Millennials target group, light bulbs went on all over the company. “Those ‘ah-ha’ moments are encouraging us to dig even deeper into the data,” she notes.

Targeting audiences for outdoor media assets using customer insights has proved to be a game changer at Clear Channel and the company continues to think

differently. It’s planning to migrate the planning tool program to all of its other assets and making it accessible on its website, paving the way to selling advertising boards online in all of its Canadian markets.

And by offering clients a new, data-driven perspective on how to reach consumers, the company is

strengthening bonds with those clients while setting itself apart from its competition. It doesn’t get any more “ah-ha” than that.

A vice president at Environics Analytics, Jim Green assists retail and media clients to ensure they realize the most benefit from EA software and data products.

usly

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// 18

Disruptive technology

Your location says a lot about you How EQ Works is using location data to extrapolate customer profiles

By Geoffrey Rotstein

M

arketing based on a person’s location is not a new phenomenon.

This has been a popular tactic for about as long as the marketing profession has been around. Fifty years ago, advertisers placing an ad in the New York Times could assume that they were reaching their consumers at home, probably in the morning, as they ate their breakfasts.

Twenty years ago, as television commercials became popular, marketers were again sure that their ads were reaching consumers in their homes, likely in their living rooms. Out of home wasn’t really a “thing” with TV. After all, those TV sets weren’t changing location much, especially considering their size and clunkiness.

But as billboards and other out-of-home marketing techniques expanded in the last decade, marketers became even more specific with the location of their audiences. Over time, copy and tone were created to reflect an even more targeted location.

However, none of these scenarios actually allowed marketers to know who the consumer was. And even if they did, the large-scale nature of billboards and television commercials left very little room ❱ DMN.ca

for customization.

Enter the world of mobile.

Over the last five years, mobile devices have completely changed the location game. Now, marketers can reach customers almost anywhere. Geo-targeting uses location coordinates to target large “fenced-in” areas. This is a good way to market to towns, cities or even entire countries. Point of interest marketing uses technology similar to that used in geo-targeting, only this aims to target specific addresses or establishments.

Beacons use Bluetooth to connect to wireless devices within a certain range. Because this usually requires a specific app to be open, it is not terribly effective and does not scale well.

All of that said, just because you can reach a customer at a specific location doesn’t mean you should.

Where does she live? What are her interests? What intent-based cues can we see from various data sources?

This gap in the marketing space inspired EQ to create Locus, a location-based data service that can be integrated into virtually any marketing platform. Locus uses location statistics to create unique audience behavioral segments to help marketers target more effectively by combining location data with an understanding of the

potential consumer.

For example, let’s pretend that you want to reach all the elementary school teachers that work in Toronto, live in Mississauga, take the GO train and drink Starbucks. Sounds like a tall order, right? Here’s what Locus would do: 1. Identify teachers who work in Toronto Using an audience creation filter, Locus will identify devices at elementary school locations in Toronto. Based on the hours these devices are identified at these locations (and the knowledge that elementary school teachers are generally at school before and after students), Locus will separate teacher’s devices from those of the students.

2. And take the GO Train to/ from Mississauga Now that we have identified the elementary school teachers, Locus will continue to listen for, identify and capture those same devices that travel along known GO train routes to and from Mississauga.

the above devices enter a Starbucks location, it will be noted. If a device is identified at a Starbucks location multiple times during a short period or at off peak hours, these too can be excluded as part of the audience set.

And that’s how it’s done.

By combining advanced mobile technology with known location marketing tools, mobile location data and good old-fashioned process of elimination, we are helping enable marketers to reach their ideal audiences with surprising specificity. It’s as simple as that.

It’s important to note that while Locus captures location, it does not capture specific details about a consumer or identify them individually. Privacy attributes are always maintained and device identities are consolidated and only used at a group level.

Over the last decade, technology has evolved at a quicker rate than ever before and its not slowing down. This is just the most recent step that we’ve taken at EQ to try to stay ahead of the curve.

Geoffrey Rotstein has been the CEO of EQ

3. And enjoy Starbucks While noting the travel routes above, Locus will also pay attention to Starbucks locations as points of interest. When any of

Inc. since January 2006. Geoff’s work at EQ entails everything from strategy and product development to finance, operations and industry development. He lives in Toronto with his wife and three kids (and his epileptic dog).

May 2017

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// 20

Disruptive technology

Anticipating client needs through optimization analytics The financial industry sets an example of how to utilize optimization solutions to enhance customer experience and exceed business goals

By Kevin Deveau

F

or years, companies have been working to deploy and optimize sophisticated analytics to better anticipate and accommodate their customers’ needs. In the past, analytics have served a vital role in helping companies track product uptake and sales distribution as well as measure profit lines.

However, in the past few years the amount of personal consumer data which organizations have access to has increased. In addition to the content consumers are willingly sharing through loyalty programs and mailing lists, they are engaging with brands in real time through social media like never before.

The question is: Are you using this data to your best advantage?

Many companies have expanded their use of analytics to help identify the best outcomes of potential scenarios and to identify the best possible products and solutions to meet their customers’ needs. Those that are not are letting invaluable information slip through their fingers. An investment in optimization analytics today can mean increased profitability and a better customer experience for years to come.

Globally, financial institutions ❱ DMN.ca

are ahead of the curve when it comes to using optimization solutions to identify the best products. Financial advisors are challenged with the task of ensuring consumers have a pleasant experience with their investments, savings and loans while balancing the potential of loss. Optimization solutions have been able to help these advisors identify the best solutions by factoring in a number of potentially sensitive elements including credit score and history, income, account activity and balance and asset valuation.

In a sector that is often understood to be rigid and tightly controlled, here are three examples of how the financial industry is customizing and individualizing their customers’ experiences: Consumer loans While banks in North America are using these optimization solutions in varying capacities in day-to-day operations, the Czech Republic’s largest bank, Česká Spořitelna, used analytics to redefine their service offerings with great results.

By analyzing multitudes of data, the bank was able to identify the best price and credit limit for each individual borrower, determined by their risk profile, loan appetite,

price sensitivity and personal wealth.

Employing these analytic strategies allowed the bank to personalize their offerings rather than limit clients to a menu of options. Along with increasing new sales by 29% (amounting to $41 million in the first year) and the profitability of existing portfolios by 26%, the bank has increased loan amounts, approval rates and acceptance rates.

Credit and collections Optimization solutions have also helped financial institutions deploy stronger strategies to increase credit line utilization and reduce losses. Here in Canada, Canadian Tire Bank was able to improve their collections process and improve profit margins by applying optimization solutions at both early-stage and late-stage collections. By using optimization to analyze when and how to best reach delinquent customers, they were able to collect $31 more for every one dollar spent on collections activity.

Another large North American bank harnessed the power of analytics to optimally balance profit and risk with credit line increases. The improved optimization strategy resulted in

increased credit line utilization and reduced losses, along with consumer response rates increasing by two per cent, credit line balances increasing by nine per cent and loss rate decreasing by nine per cent.

Mortgage pricing With historically low lending rates, competition for residential mortgages is heating up, motivating some lenders to underprice their products in order to increase revenues. Now more than ever, lenders are seeking mortgage pricing strategies that enable them to optimally balance the trade-off between balance growth and interest income.

Canadian banks are moving toward optimization solutions for mortgage pricing that can provide margin increases without sacrificing volume by discovering optimal differentiated pricing strategies across the customer’s entire portfolio. This allows the bank to deliver high-end analytics and optimization based on a number of factors, while enabling granular pricing strategies for both renewals and originations.

By providing an automatic bridge between back-end analysts and frontline sales teams, this solution makes the important May 2017

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Disruptive technology

connection which allows an optimal set of pricing strategies and terms to be quickly delivered that will work best to suit the individual client’s needs.

Beyond the financial industry The benefits of employing optimization analytics extend far beyond the financial industry and are increasingly being adopted in industries such as social networks, ad placements, merchandising and consumer packaged foods, retail planning, logistics, fraud, supply chains and collections and recovery, among many others.

Many organizational decision makers are continuously chasing the best possible bottom line, but those who offer products and services customized to customers’ needs and preferences are increasing the likelihood of return business and satisfaction leading to increased profitability over time.

Optimization solutions help decision makers within companies to derive exponentially more value from the wealth of data now available to them. Whether it is May 2017

creating marketing campaigns that speak to target consumers or improving consumer experience, analyzing loan risks, providing custom financial products, enhancing product placement in a retail space or improving

sales, these strategies can help organizations reach consumers like never before. Optimization provides businesses the tools they need to remain competitive and better address customer needs, which results in improved

loyalty, improved efficiencies and enhanced outcomes.

Kevin Deveau is vice president and managing director, Canada at FICO.

What is optimization?

As companies progress their use of analytics, they derive exponentially more value. Optimization, also known as prescriptive analytics, is at the top of the analytic spectrum. ❯❯ Most businesses use some form of descriptive or diagnostic analytics, typically known as BI or business intelligence. These focus on understanding what is happening in your business. ❯❯ Predictive analytics are often applied at the customer level and focus on what’s going to happen, e.g. which of these customers will likely respond to this offer or which customers will pay back a loan without becoming delinquent. ❯❯ Prescriptive analytics are used to design decision strategies aimed at optimizing results, such as profit or customer retention. Unlike the other types of analytics, prescriptive analytics don’t just inform decisions, they automate decisions. Optimization takes in all the data you have and calculates the best decision strategy to optimize your stated goals (within business constraints).

This strategy can then be used in real time to make the ideal offer to every customer.

Descriptive analytics are valuable, but moving towards predictive and prescriptive analytics provide foresight and can allow organizations to mitigate risks and reach goals faster. Today’s optimization solutions enable them to better navigate the data-rich landscape, compare scenarios and create product offerings for customers based on that data.

DMN.ca ❰

// 22

Feature

Q&A with Danny Heuman, Environics Analytics’ new chief analytics officer

By Sarah O’Connor

D

anny Heuman has been with Environics Analytics (EA) since day one and has recently been promoted to the role of chief analytics officer. Heuman was the lead developer of PRIZM CE, conducting the research that first linked psychographic social values with geodemographics.

Since then he has led the development of the PRIZM5, PRIZM5 QC, DELTA5, PRIZM C2 and PRIZM QC segmentation systems.

As senior vice president of research and development, his most recent role, Heuman was responsible for planning, scheduling and implementing data production and software programming with EA. Direct Marketing sat down with Heuman to chat about his new position and the path that led there.

Q:

Congratulations on your promotion! Before we discuss your history with Environics Analytics, please tell me how this change will affect your day-to-day work and priorities.

Gary Tannyan

A:

❱ DMN.ca

This promotion is really focused around optimizing the company’s resources.

We’ve recently integrated all of the custom services group—we’re all together now ‘under one roof.’ The data scientists who traditionally work on projects that use PRIZM5 and personify client-based profiles are together now with the statisticians and data scientists. We are all geared toward data-driven execution and understanding the role of analytics, models and visualization tools so that we can better serve our customers.

Up until recently these groups have been focused on certain areas, doing their own thing and May 2017

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Feature

by bringing them together we hope to learn from one another, to consolidate the toolset, bring everyone to a certain level in terms of what the different software packages are that we have and to, of course, promote a “one team” kind of approach toward serving our customers.

Q:

You have a master’s degree in geography, you lead teams of programmers and data scientists and you’re an expert in market analytics and modelling. How would you summarize what it is you do?

A:

That’s a hard one. I’m not a data scientist.

I work with data and I can mine the data and I use the techniques to find things out. But I really see myself more as a problem solver—someone who can take the desired end goal of what clients will want from us and really try to think of the optimal route to get there. Sometimes its circuitous, of course there are always challenges along the way, and I see those more as challenges than obstacles—we can do it, it’s just a matter of doing something to overcome it. I’m a problem solver focused in market research, data analytics and identifying opportunities through data.

If I were to look at my career, it’s always been one of a practical approach to solving problems and using whatever tools you have in the moment to address the issue and find the best answer. If it means programming something because the tool doesn’t exist, that’s great, but if you have tools that are out there that can do it just as effectively and give you the same or a similar answer then do that too. Whatever it takes. I’ve always promoted that kind of can-do attitude—you’ve got the tools, just use what you have. There’s no reason to reinvent the wheel if there is already a serviceable wheel.

Q:

How have you managed to balance complete immersion in all things EA with staying on the cutting edge of wider industry?

May 2017

A:

I think it’s investing your time in appropriate ways. There’s clearly a need to understand the methodologies, to find the best data sources and partnerships out there so that we can build the best data products. That all began in my days at Compusearch and understanding what the possibilities were. Being mentored

by Dr. Tony Lea of course helped, having a lot of experience there, and so that’s on the data side, just understanding what you can do within reason and producing the best results that you can.

Now, at the same time, the world is always changing and the internet has been around now for what feels like forever but it’s probably only been 25 years. But the e-commerce side of things has clearly changed and shifted the retail landscape. The idea of social media and how its quickly taken over people’s lives is another big thing. And how all these things interact is just something that I feel we need to stay on top of. It’s a big part of marketing, it’s big part of understanding the consumer.

This is where you need to balance time between understanding the products and the marketplace and the needs of our customers and improving the methodologies and finding the best data sources with understanding the future and what’s to come and where are we heading. It’s that balance. It’s not an hour or two a day, you can’t put a number to it, but there’s many hours of the week where you’re just trying to catch up with what’s going on in the industry.

Q:

What EA does is impacted not only by the fast-changing discipline of data analytics but also social trends—for instance, are neighbourhoods becoming more or less homogenous? Are demographics becoming more or less important and which characteristics of people are particularly good indicators of how they will behave? These are not static values by any means.

How does that factor into how you’re developing new products— the fact that social dynamics are by nature dynamic?

A:

Things are always changing and to simplify that world we at EA take a snapshot in time.

We’re not trying to keep up with monthly changes at the postal code level and the people who are moving in and out. We’re aware of privacy issues and so we don’t get down to the household level, we always deal with aggregate data. We essentially come up with annual estimates so the dynamic that’s being captured is overall of bigger trends as opposed to the minute details. That being said, it takes us about nine months to produce our estimates and projections data. This is the earliest we’ve ever started but we’ve already started our 2018 data processing for release in Q1 of 2018.

We’re trying to make our best estimates of what’s likely to happen in the 2018 year, starting today, and it’s hard. This is where the partnership data is very important because they do give us insight into the changing attitudes and the changing behavior and the changing landscape of Canadians—by region, by city, urban versus rural, young versus old, affluent versus poor, educated to uneducated. All of those things are things we consider and they all factor in at some level in terms of what we do and how we proceed with our understanding.

It comes down to having a good comprehensive view of the landscape.

Q: A:

What’s getting more challenging about your work?

What’s getting tougher is just clever ways to use the data. We invest a lot in technology and faster computers make it easier to process the data but you still need to have clever methods for how to take a sample of 30,000 respondents to a survey or a client base of 100,000 and you have to know what to do with it. A lot of the traditional techniques work but they don’t always work because customers are inherently erratic and unreliable.

Fifty, 60, 70 years ago brand awareness was critical and once

you were a customer of that bank or jean or car, you tended to stick with that for years. You could count on that kind of behavior.

People today are less loyal and that loyalty factor, that sticky factor isn’t there. So projecting what’s going to happen or being able to state with some reliable estimate of what’s likely to continue is very difficult because the introduction of a new website, the introduction of a new retailer, the introduction of a new technology can disrupt that. People overnight can shift their allegiance from one to another. Our customers, from a marketing perspective are trying to understand, how do we communicate with these people?

What’s the most effective means?

You can’t assume that what used to work will continue to work.

Q:

You mentioned Dr. Tony Lea as a mentor of yours. As you embark on your tenure as chief analytics officer, what are your thoughts in terms of mentoring less senior professionals in this industry?

A:

When I was started out the primary goal was about learning and understanding. It wasn’t about management style or communication, it was really about knowledge. How to best approach and tackle a problem and to do so in a creative way but also a practical, functional way and that’s something that I think Tony imparted.

We have a very loyal staff here, overall. The people that have worked with me and for me in some cases have been with us since day one.

Others have been with us for 10, 11, 12 years. I’ve never seen myself as a mentor. It’s probably happened over the years but I’ve never looked at that as I’m mentoring people, I’ve looked at it as I’m assisting people along the way so that they can learn what I know and hopefully adapt and change what I know to suit their needs. There’s no one way to approach the issues and challenges that we face, there’s always an alternative approach. I’ve tried to show people that the way I would do it is not necessarily the only way.

DMN.ca ❰

// 24

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Embracing omnichannel retail with cloud-based POS systems

By Scott Blum

A

Scott Blum is vice president of Total

Merchant Services.

❱ DMN.ca

dramatic shift in shopping and retail is happening in the U.S., Canada and other countries. Driven by technological advances, the changes include consumers’ rising use of smartphones, the growth of online shopping and the emergence of new payment types like EMV cards and Apple Pay. Recent trends confirm the shifts in retail, as evidenced in a recent survey by WSJ/comScore regarding consumer shopping behaviors. In 2014, 46% of consumer purchases were made online. By 2016, it had increased to 51%. How consumer purchases are made is also changing—the majority (42%) of consumers now search and buy online. Twenty-two per cent research online and in-store and buy instore while 20% search and buy in store. Finally, 16% research online and in-store but buy online.

In order to respond to these shifting trends in consumer shopping behavior, retailers are changing the way they do business and are embracing an omnichannel approach. In addition, more and more merchants are increasingly migrating from traditional terminal-based solutions toward feature-rich, cloudbased integrated payment technology at the point of sale (POS).

Utilizing cloud-based POS systems has been shown to boost overall revenue for merchants through features associated with inventory management, reporting, integrated loyalty programs and other value-added features. In addition, many of these software solutions enable omnichannel payment acceptance including accepting payments in-store, online and on-the-go through mobile applications.

As 2017 continues, more merchants will convert to cloud-based POS over outdated hardware.

New payment types introduced in the last several years will continue to grow in 2017. First, mobile payments and mobile wallets like Apple Pay and Samsung Pay will continue to gain traction. In 2016, Juniper Research estimated that 148 million payments were made via an NFC-based mobile device and a report from Strategy Analytics forecasts NFC payments will total $240 billion by 2021. In addition to the growth in NFC, EMV chip payments have grown significantly in the last several years in response to the EMV mandate in 2015. In 2016, only 41% of merchants were accepting EMV payments despite the mandate; however, adoption is expanding rapidly and should continue in 2017 as EMV chip payments become the standard.

There are several implications for retailers that

want to succeed in this market and are evaluating new POS technology and services. Smaller retailers that currently utilize terminals and who are evaluating cloud-based POS systems should make sure the solution has the functionality to meet their needs.

First, retailers should check to see if the POS system has EMV and NFC capabilities and is not relying only on magstripe cards. The upgrade process to EMV is time consuming and requires cooperation from their party processors and many vendors still have not upgraded their product.

Secondly, the retailer should check on the omnichannel capabilities of the solution, including capabilities to enable customers to purchase and pay from mobile devices, e-commerce stores, electronic invoicing and other channels. In addition, retailers should evaluate value-added features, with a particular emphasis on marketing and customer engagement capabilities, including abilities to offer loyalty programs, contextually relevant offers and leveraging data to make product recommendations. The cost of the equipment and the payment processing fees should also be evaluated, as well as the ease of use to train existing and new employees.

Retailers with proprietary systems that want to integrate payments need to evaluate the payment providers on other factors. First, the payment processor should provide integration capabilities with multiple payment types, including EMV and NFC. In addition, processor should provide EMV and NFC-enabled payment devices that are fully certified and have a variety of devices that can be used in both countertop and mobile use cases. In addition, the cost of the new device should be reasonable to avoid a significant investment. In order to enable omnichannel payments, the payments provider must enable card present payments in-store, card present transactions on a mobile device, card not present e-commerce payments and payments via app. Ease of implementation is critical for retailers as well to make sure to limit the time and cost of the work for their development team. Finally, the need for security and compliance continues to be an important trend.

While it’s true that the change to EMV and PINcompatible terminals will reduce payment fraud for card present payments, many payment “hackers” are shifting their attention to card not present payments, such as e-commerce transactions. Retailers need to make sure that the payment vendor has strong security solutions which will keep consumers protected.

May 2017

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