Online retailers have raised consumer expectations: Mark Spicer

Interview with Country head, ICLP India

It is difficult to provide customised experience if you have millions of customers. But it is a necessary evil - if you don't do it, your competitor will, Mark Spicer tells Ankita Rai

Customers are much more likely to be engaged with brands today than ever before. A recent report said that consumers are interested in selecting loyalty programmes that provide incentives for actions that are non-transactional in nature, such as sharing on social media, practicing energy conservation etc. How can companies engage these savvy consumers?

Consumer expectations are higher than ever because there is so much information freely available and can be easily researched. So when a consumer enters a store she knows more about the product than the person who is selling it. It is, therefore, a challenge for any business to keep up with consumers' expectations. To engage this new breed of consumers, companies should first understand who the customer is and segment them and try to know them at the individual level. Then target them in the right way. It is not about loyalty points anymore. It is not necessarily about transactions. It is about allowing interactions to happen between the customer and the brands, and among customers.

Loyalty programmes are undervalued in India. It is difficult to provide customised experience if you have millions of customers. But it is a necessary evil - if you don't do it, your competitor will.

Frequent flyer plans are the best example of a brand and the loyalty programmes working in tandem. Many frequent flier programmes are run as separate business because they actually deliver money to the bottom line. A lot of loyalty programmes are seen as huge overhead by the finance people. But it is an important part of marketing mix: as it enables you to understand your consumer.

Which marketing channel is best suited for loyalty programmes? While email remains a staple, mobile-centric programmes are in vogue now. How do you get the cross-channel communication right?

Let the customer choose the channel - be it email, Facebook, Twitter, SMS, Pinterest etc. It is really important to give customers the choice because if you give them the choice they are likely to continue the engagement. For instance, if a consumer likes a page on Facebook, she is signalling a brand that she wants it to communicate with her on the medium. So a brand must keep to that. But if you send her an email it would switch the customer off.

Brands also need to invest in a consistent cross-channel communication strategy. Prices online and offline can vary. However, if a physical retailer has an attractive loyalty programme, consumers may end up buying from there. Online has raised consumer expectations. So brick and mortar retailers need to empower their staff with better product knowledge.

THE LAST WORD

• In his current role as GM at ICLP India, Spicer is responsible for managing existing client relationships and driving commercial growth in the country
   
• Prior to this, he was with Aimia in West Asia where he managed telecom loyalty programme for Mobily
   
• Spicer has over 20 years of experience in the loyalty and incentives industry with particular experience in the telecom and financial services sectors. His clients includes T-Mobile, O2 and Vodafone in addition to Nectar and other pre-plastic card products

The right cross-channel strategy would involve knowing your customer and asking her how she wants to be communicated to - in-store, SMS, WhatsApp and so on. Second, don't underestimate the power of social media. Facebook has gone back to permission-based marketing. So if a consumer likes a brand page, she allows it to communicate with her. If you understand your customer, you will figure out which is the right channel to communicate with her.

Many brands rely heavily on points, discounts and rebates to influence customer behaviour. The idea behind this is customers are loyal to the discount, not the brand. Does this approach work in the long run?

Discounts definitely work but they have to be relevant. It is about understanding who your customer is so you send them the right offer. For instance, if you know who is your regular shopper and which products she consistently buys and you send her an email featuring offers for those particular products, the consumer will come back. It is about maintaining engagement by offering relevant discounts.

India is a very price sensitive market. So if you are not offering a discount, there might be a possibility that you are devaluing your business. However, there are luxury brands like Louis Vuitton and Prada that don't need to discount. They command such status. For them the task is to maintain the brand image so that it doesn't appear arrogant. So give what is right. Treat consumers like VIPs. Discounts are an essential part of promotional marketing. If a consumer constantly shops with one particular brand, it is important that the brand respects the consumer. It should be done tactfully, keeping relevance in the mind.

What are some of the common mistakes companies commit while designing their loyalty programmes?

From a company level, especially in the financial services and the telecom market, the acquisition strategies are so aggressive that they upset the existing consumers. Companies need to treat both existing and new customers the same way. However, it is seen that a lot of telecom companies face product churn. If I have a mobile phone tariff that gives me 100 minutes of talk-time and a new tariff comes that gives me 125 minutes, of course I will change my tariff. This creates a problem for the network as it adds to costs. But remember retaining current customers is always cheaper than acquiring new customers. So stop annoying your customers.

But look at the bright side: loyalty companies are sitting on piles of consumer data. How can data analytics help in designing loyalty programmes?

When a company has a huge amount of data, it gives the company more insights about its customers. You can make the process of collection of data easier by allowing customers to choose how they are communicated to. Social media networks are doing a good job of recommending particular adwords because they can see the consumer behaviour. Companies are splitting their advertising mix to include online and social channels such as WhatsApp, Viber etc. There are so many channels that it makes the job harder for a marketers to choose. It is best to let the consumers decide how they want to be communicated. But whatever you do, you have to make it relevant.

What are the key elements of a successful loyalty marketing programme?

The frequency of transaction should be recorded and measured and is a key element in designing a loyalty programme. There is huge confusion between CRM and loyalty. CRM is communicating with customers and engaging them with your brand. Loyalty is about looking at the transactions between the consumer and brand. But those transactions need not be points related and it can also be non-transactional.

Low margin retailers argue they can't afford loyalty programmes...

Any business can have a loyalty programme and that loyalty programme doesn't necessarily have to be about giving points or discounts. It is not about low margin or high margin retailers. It is about recognising individual consumers who give you repeat business. Give them special treatment. That might be through CRM if you don't have the opportunity to return value to the customer through discounts.