InT uch From GI Insight
Database Marketing and Customer Loyalty Experts
REMOVE THE HURDLES TO SUCCESS OUTSTANDING SUCCESS
See how GI Insight helped Pets at Home launch their VIP Rewards Club
IMPORTANT RESEARCH
How does your sector perform in our Customer Intimacy Index?
Issue 02
Welcome to InTouch Welcome to InTouch – the customer magazine from GI Insight focusing on current topics, industry news and features on customer loyalty, communication and database marketing. Many customers these days are challenged with static or even reduced budgets, but are still expected to deliver the same or better Return on Investment (ROI). Quite a mission! On page 4 and 5 we show how to use data analysis to reduce mailing volumes while maintaining or even increasing ROI. It was great to have supported the successful launch of the Pets at Home VIP rewards club – VIP standing for Very Important Pets – and we were thrilled when they were short-listed for three categories in the Loyalty Awards. See page 3 for more details about the launch. This issue of InTouch is bursting with good things, including details of the Cross Media event coming up in October. Please let us have any feedback and thank you for reading InTouch. Yours sincerely
Andy Wood Managing Director, GI Insight
Contents 03 | Outstanding success of Pets at Home loyalty launch 04 | Remove the hurdles to success 06 | Be creative with variable personalised maps 06 | Shortlisted for Loyalty Awards for Pets at Home launch 07 | Ask the Expert 07 | Do you treat your customers like a ‘close friend’ or a ‘total stranger?’
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2 | InTouch
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InTouch Case Study
Outstanding success of Pets at Home loyalty launch BRIEF
LAUNCH
Pets at Home are the leading pet care retailer in the UK with over 300 stores nationwide. Pets at Home put pets first, leading the way in pet products and pet nourishment. To reward their growing base of loyal customers, Pets at Home decided to launch a loyalty club. They wanted to tailor their communications to their customers, improve customer engagement and stand out against the competition. Pets at Home decided to work with GI Insight to give them a fully managed service for all the requirements.
The programme was launched in-store and online. In-store activity included roadshows with stands and balloons, displays on the terminals and dedicated Pets at Home colleagues encouraging registration. The animal charities that had been approached prior to the launch also got involved, raising the profile of the programme with their fundraisers and donors. This gave Pets at Home 2 million additional social media alerts. Customers can register in-store and online through a microsite, created and designed by the GI Insight team, which requests pet details and selection of preferred animal charity. Customers who had responded previously to email communications were sent an invitation email and subsequent emails thanking the customer for registration and offering further exclusive offers. Registered customers receive a Welcome Pack containing a thank you and a personalised plastic card and key fob.
SOLUTION To ensure the club was successful, GI Insight worked with Pets at Home to create a single customer view database with a CRM system at its core. Customer and pet information is captured and held and then linked to customer transactions and campaign responses. An emotional benefit was important. Customer spending at Pets at Home earns points. These points are called Lifelines and directly benefit the customer’s chosen animal charity. The points are collated and once a quarter are turned into moneyoff gift cards which are given to the chosen charities. These charities can then exchange the gift cards for food, bedding, and anything else they need from Pets at Home, leaving them to spend other donations on core charitable work.
“The VIP – Very Important Pets Club – launch was extremely important. We value our customers and their pets and know that a well executed rewards club will deliver many benefits. GI Insight supported us with their knowledge and expertise and helped make sure the launch was a great success.” Gavin Hawthorn Head of CRM, Pets at Home
marketing@gi-solutionsgroup.com
RESULT Pets at Home are thrilled with the results. They are now operating a successful rewards club which is engaging their customers, delivering incremental revenue and gathering vital business insight. In the first five weeks Pets at Home achieved 48% of their target sign-ups for the whole year and achieved strong incremental revenue. Their customer engagement continues to improve with NPS (Net Promoter Score) showing 7% higher from VIP than non-VIP members and members spending an average of 20% more per transaction. A total of 300+ stores are operating the programme and Pets at Home have recruited and engaged 350+ local and national pet charities which are now beneficiaries of VIP Lifelines.
AWARDS The VIP Club has been shortlisted in three categories in the Loyalty Awards including: • Best Card Based Loyalty Programme • Best CSR Initiative Linked to Loyalty • Best New Loyalty Programme of the Year 0116 412 0017
www.gi-solutionsgroup.com
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REMOVE THE HUR
Reducing costs without losing Re Alison Parsons, Director of Commercial Operations, explains how customers can use the actionable insight from their data to ensure their mailings deliver a positive Return on Investment – particularly when faced with a tight budget.
Step 1: Set the right objective for your campaign This is vital to make sure your campaign is successful and is measured using the correct metric. For example, you may have two immediate challenges: delivering sales in your second quarter and increasing footfall to a new store. Your increase in sales should be measured through an improvement in ROI. Separate this from the store performance and measure this against your target for either footfall or sales for that store. This will ensure you can see the success of your campaigns clearly.
Step 2: Know your segmentation In the difficult markets customers are experiencing at the moment, budgets are being either held at the previous year’s levels or reduced. However, many are still challenged with delivering a Return on Investment that is either as good as or better than the previous year. To deliver this you can use the insight from your customer database to choose who receives your communications, the message you should be sending and the media you should be using. Here we demonstrate how our methodology can prove our methodology deliver a positive ROI and be used to predict response rates, ATV (Average Transaction Value) and most importantly of all, incremental revenue.
4 | InTouch
Your customer data will hold the intelligence of who are your more valuable and less valuable customers. Data analysis will identify these segments based on customer spend value and frequency of spend. By using previous campaign results, you can see who is responding well and what offers are working. By overlaying our methodology we can recommend the best marketing strategy to deliver a positive ROI and predict your response rates – see table opposite. This shows that restricting campaign numbers to performing segments allows a number of things to happen. Firstly, a positive ROI can be predicted and delivered. Secondly, your customers will be receiving well-targeted offers that they welcome and which encourage them to respond. This information on the responsiveness of your customers can be used to continue to improve campaigns in the future.
Step 3: Create a customer journey Using this information you can develop a customer journey for each segment. This differentiates the marketing messages between your more valuable and frequently spending customers and your less valuable ones. An objective should be agreed for each segment – this may be ‘Maintain’ or ‘Increase loyalty and value’. This lets the data dictate the strategy.
RDLES TO SUCCESS
eturn on Investment (ROI) Actual Mailing FEBRUARY
GI Insight Methodology MAILED
CONTROL
FEBRUARY
MAILED
CONTROL
Customers in Cell
1,266,956
45,000
Customers in Cell
592,848
18,570
Customers Spent in Period
109,393
3,976
Customers Spent in Period
67,120
2,329
% Responded
8.6%
8.8%
% Responded
11.3%
12.5%
Revenue
£6,312,168
£187,559
Revenue
£4,222,380
£108,252
Revenue (Excl VAT)
£5,260,140
£156,299
Revenue (Excl VAT)
£3,518,650
£90,210
Txs
162,613
5,847
Txs
104,533
3,529
ATV (ex VAT)
£32.35
£26.73
ATV (ex VAT)
£33.66
£25.56
Average Customer Value for ROI (ex VAT)
£4.15
£3.47
Average Customer Value for ROI (ex VAT)
£5.94
£4.86
Difference between mailed & control per person
£0.68
Difference between mailed & control per person
£1.08
Net difference as a result of mailing
£859,603
Net difference as a result of mailing
£638,723
Cost of Mailing (£0.30 per piece)
£380,087
Cost of Mailing (£0.30 per piece)
£177,854
Gross Margin %
35.0%
Gross Margin %
35.0%
Gross Margin in Incremental Revenue
£300,861
Gross Margin in Incremental Revenue
£223,553
Net Incremental Profit
-£79,226
Net Incremental Profit
£45,699
ROI
-21% £48.08
ROI
26% £52.42
Average value per spending customer
Average value per spending customer
NB: The above table shows that the amount mailed using the GI Insight Methodology has been reduced to the responsive segments of data which has improved the ROI of the campaign and reduced waste. This table is example data based on an average data analysis performance.
Step 4: Send the campaign
Send your campaign containing the relevant targeting and offers for your customers. Always include a control cell that receive your standard messaging. This ensures you can benchmark your activity.
Step 5: Measure the results
It is vital to measure the success of the campaign. Use the comparison of the results from the campaign and the control cell to show how the segmentation of data has paid off in terms of increased incremental revenue. Typically we see incremental revenue of 6 to 1 – so every £1 spent generates £6 in incremental revenue.
For more information on using actionable insight or for a Free Data Workshop, contact marketing@gi-solutionsgroup.com marketing@gi-solutionsgroup.com
0116 412 0017
www.gi-solutionsgroup.com
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Be creative with variable personalised maps Showing where your retail outlet is in relation to your customer’s house can drive store traffic. You may want to highlight how close your location is to your customer within a specific drive time, or you may want to encourage customers to come to your store instead of visiting your competitor.
A map is a good visual way to engage your customers and make them know you want them to visit. You could also include a personalised coupon. This encourages spend and allows you to capture information for database marketing. This production technique uses digital print, which allows you to change each message according to your customers’ preferences. Using digital variability effectively can increase your response rates. Alistair Ezzy is Sales Director for GI Insight’s sister company GI Direct. For more information on communications please call 07970 232 491 or email: alistair.ezzy@gi-solutionsgroup.com
Pets at Home launch shortlisted for Loyalty Awards GI Insight are thrilled to have worked with Pets at Home on the launch of their new VIP loyalty programme which has been shortlisted for the upcoming Loyalty Awards in three categories. The VIP programme gives Pets at Home customers exclusive offers and promotions based on their purchase history and pet profile. Customers spending at Pets at Home also earn points called Lifelines which benefit the customer’s chosen animal charity.
6 | InTouch
Utilising the power of digital print enabled our client, a successful mail order company, to increase response to their mailings by
10-15%
Barry Smith, Senior Consultant at GI Insight, answers your queries on database marketing and customer loyalty
Ask the Expert
We are considering the benefits of a loyalty scheme but are unsure how best to reward our customers. Using accrued points which convert into money off coupons seems to be prevalent but we aren’t sure if this will work for us. What are the options? This is a good question and shows you are considering your customer requirements first – a key aspect to a successful loyalty programme. There are two main types of reward: points and non-points. As you say, points accrue with purchases and are converted into money-off coupons. Although these are high value, show transparent value and can be attractive, they can also work poorly where customers do not undertake enough activity to generate sufficient value to drive them to a purchase. Another consideration is that these are discount offers and as such you will need to accrue for the reduction in revenue when these are redeemed. Lastly, the activity is, by necessity, promoted to all, which means your competitors can see how your marketing is working. Non-points are usually driven by exclusive offers and preferential treatment offered to loyalty club members. This allows you to market ‘under the radar’ without your competitors being aware of your activity.
It is also usually cheaper to operate than a points programme. Without the immediacy of points, it can be harder to create appreciation of the scheme. Rewards must be sent to customers to build recognition but once customers are aware of their offers they anticipate them. As always with loyalty marketing, decide on your objectives and how this will work for your business. This will help you dictate whether points or non-points is your best option.
Barry Smith, Senior Consultant at GI Insight E barry.smith@gi-solutionsgroup.com T + 44 (0)116 412 0017 M + 44 (0)7970 830 035
Do you treat your customers like a ‘close friend’ or a ‘total stranger’? In these days of digital technology and marketing databases, there is no excuse not to communicate often - and well - with your customers. We all agree that targeted and relevant communication leads to improved customer engagement and increased sales. To find out how well companies are doing this, we repeated our research from three years ago to generate The Customer Intimacy Index. This asked customers to rate companies on whether they know them ‘like a close friend’ or treat them ‘like a total stranger’. The findings are interesting and surprising, showing significant differences across industry sectors, age profiles and gender. How well is your industry doing? And what can you do to improve it?
To find out get a copy of the full white paper from marketing@gi-solutionsgroup.com or call 0116 412 0017. marketing@gi-solutionsgroup.com
0116 412 0017
The 2013 Customer Inti
macy Index
A STUDY BY GI INSIGHT MEASU RING HOW WELL KEY INDUS TRY SECTORS ARE CONNECTING WITH THEIR CUSTOMERS
marketing@gi-solutionsgrou
p.com
0116 412 0017
www.gi-solutionsgroup.com
www.gi-solutionsgroup.com
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