Loyalty business Nectar provides an interesting case study for the state of marketing and retail in 2016.
The company was transformed in 2015 when it replatformed all of its consumer-facing channels to make them mobile first and digital, with its app now the subject of a major TV ad campaign.
I spoke to Nectar’s MD, Will Shuckburgh, to get his thoughts on loyalty and marketing in a newly customer-centric world.
Mobile has fundamentally changed loyalty.
Mobile has fundamentally changed the dynamics of Nectar’s service.
“Instead of the old model with Nectar where we used to push out paper mailing giving people offers, telling them what is available three times a year (with an average of 10 offers per mailing), we’ve built a program totally designed around the customer, where they can access it wherever they want it.
“And we enable them to access between 100 and 150 offers per week, personalised to them.
“But the important thing is that’s on the customer’s terms – the volume and value is totally different, and all when they want it.”
Nectar’s mobile app
Marketing is changing. Brands need to have more respect.
Will frequently used the word ‘respect’. His view is that customer enablement through mobile is part of a wider revolution in customer-centric marketing.
“The whole marketing industry is going through a period of change… The fundamental driver is that the balance of power between brands and consumers has structurally changed.
“Customers can very easily compare brands, compare choices, understand what their options are. So, brands across the industry need to change how they build relationships. Customers want… brands who respect them and reward them for their long term choices.
“The typical marketing from the ’70s, ’80s, ’90s, early ’00s, was brands telling customers how to behave, what they should do, what offers were available…. [Now] there’s a need to enable customers, to respect their power.”
Promotional rewards are just the tip of the loyalty iceberg.
“Customers are savvy,” Will continues, “they understand where short-term promotions are just trying to win business. That doesn’t mean those brands will fall into the consideration set over a longer period of time.
“Recognising people on an ongoing basis is about appealing to a base human instinct.
“Who are the friends you interact with the most? They’re the ones that have been around the longest, have been most respectful, and make the effort to know you well.”
This idea of a business getting to know its customers is central to Nectar’s platform. The more customers use its offers, the more the platform ‘gets to know them’.
Will argues this is “letting consumers shape the experience themselves, to make it even more personal.”
It’s not just transactions that Nectar seeks to understand when doing this. Will explained how Nectar has sought to “widen the relationship”, with other ways of earning rewards, similar to Walgreens loyalty and its Fitbit integration.
Walgreens’ Balance Rewards
“We’re always trying to explore how we can partner with brands in ways that customers find useful and isn’t just about spending money to get points.”
Over the past few years, Nectar has explored partnerships to encourage exercise (via Fitbug and through local council gyms), recycling, reviewing of products, healthy food purchases etc.
Will admitted that Nectar will “…continue to try more in that area, and when customers like them, we’ll roll them out at scale.”
Tech must meet customer needs (not be implemented just because it can be).
Nectar’s mobile app fundamentally meets the customer need of those that download it, as Will concludes from looking at engagement and satisfaction.
“People who engage with the app earn more points and have much better knowledge of the programme. We have the highest NPS we’ve ever had.
“It’s an illustration of where businesses need to be today – the customer is front and centre, with tech driven by customer needs.”
But Will also highlights the danger of tech for tech’s sake when it comes to new developments such as iBeacons.
iBeacons used by the MLB
“iBeacons are a great example – we’ve had a massive focus on building up our innovation capability over the last couple of years, [within our] Nectar Beta department.
“iBeacons are one of a number of interesting bits of tech – but because it’s there doesn’t mean we should use it. We need to think about how we can be useful to real customers in real situations.
“Which messages do they appreciate, which do they not? How does that change by customer and by brand?
“We see potential – but we want to see how it helps customers before we roll it out.”
Psychographics are more important than demographics.
Facebook’s psychographic targeting of ads has brought the term into more popular use recently.
Will explains what psychographics means when it comes to profiling customers through their data:
“One of our partners has a lot of data and previously they used to target customers for acquisition based on their demographics. They profiled the perfect customer.
“But we understood that demographics weren’t the key factor, it was actually the psychographics – what they felt was important, how they reacted to things etc.
“For that particular brand, the perfect customers were people who were deal seekers. Far more than any other demographic, this made them the perfect customer.
“That’s a simple example but it makes perfect sense. If you pick 10 pieces of info about yourself, that doesn’t give you the depth of colour about who you are, what choices you will make, what’s important to you etc.
“That’s where we’re trying to get to. We’ve got a lot of factual information and enough experience to know that there’s a huge amount to do to understand personalities.
“If you’re really customer-centric as a business, you have to make sure you’re catching that depth where possible. We’re only at the beginning of that journey.”
Will adds that getting this perfect profile of customers also entails “asking them to help shape their experience as well.”
Brands can differentiate themselves on more than just price.
I took the opportunity to ask about supermarket price wars, in the wake of the Brexit vote.
“We’ve actually run a campaign called savvy shopper for quite a while,” Will said. “We ask people to share their tips on how they get the most out of their spending. That’s given us a real understanding of how savvy customers in the UK are.
“People are smart – some people will always search out the best short-term financial deals, but all across the world with Aimia our parent company, we see brands that invest in long-term customer relationships are winning.
“Underneath, customers are savvy – the brands they will always consider are the ones that treat them with respect and thank them for the choices they make.
“Price has always played a big role in people’s decisions. Price competition continues to get more intense in most sectors, but more and more brands are looking to differentiate on more than just price.”
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