Closing the Redemption Loop

RetailWorld
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AUGUST 22, 2014
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BUSINESS – MARKETING
Closing the redemption loop
Discounts drive sales, but they can also influence marketing activities.
A
Peter Huskins
Director
Peter is a joint director
of ShopAbility. A career
retailer who is widely
known and respected
in the Australian
FMCG industry with
extensive experience
in department stores,
DDS, liquor and
supermarkets, Peter
has been working with
suppliers and retailers
developing business,
category, customer and
channel strategy and
competitive points of
difference for 10 years.
Contact Peter on
0412 574 793 or
email him at peter@
shop-ability.com.au.
Reggie George
Retail expert
Infosys
Reggie is Associate
Vice-President and
Australia/New Zealand
Head of Retail at
Infosys. He heads
up the CPG and
logistics practice for
the global business
and technology
consulting firm. He
has worked with a
number of leading
Australian retailers to
drive transformation
initiatives.
Portland Group is
a supply chain and
procurement consultancy.
It’s mission is to make
clients successful by
increasing their efficiency
and profitability.
62
62.indd 62
ustralians love a bargain.
As with most developed
countries, price-driven activities
are the fallback position for driving
slow or falling sales and also in the
assumption that this positioning can
be ‘unique’, but how do you gain
value from these activities and drive
loyalty and repeat visits and, at the
same time, learn a little more about
your shoppers? Reggie George
explains a few home truths.
The big two supermarkets’ battle
for market supremacy has tapped
into their customers’ desire for
savings at the petrol bowser, with
fuel vouchers now a key source of
customer retention and brand loyalty.
The rise of flashy ‘daily deals’
websites such as Groupon,
Scoopon, Spreets and Catch of the
Day over the past few years also
highlights our appetite for a deal
and has evidenced a shift from
traditional discount coupons to the
digital era.
Digital marketers now have a
variety of tactics at their disposal
to target customers and attempt
to cut through the proliferation of
discount codes, exclusive deals and
vouchers filling email inboxes and
junk mail folders.
QR codes, mobile device barcode
scanning, online voucher codes and
near field communication (NFC)
technology all offer retailers unique
opportunities to reach customers.
To capitalise on these tools,
though, retailers need to employ a
simple and effective system to close
the ‘redemption loop’ that allows
them to identify where the customer
offer originated, who the customer
is and where the transaction
happened to help inform their
future marketing activities.
What is the redemption loop?
It is the life cycle of a promotion
from when the customer receives
the offer to when they decide to
depart with their cash and make
the purchase. As shoppers migrate
online, the redemption loop can be
applied to advertisement banners,
click-throughs and impressions
through channels such as online,
mobile and social media.
Why is it important to track offers?
Closing the redemption loop
is the holy grail of consumer
marketing. It provides evidence
that promotions have been
card rewards. The NFC payment
model is opening a new channel
to track offers, enabling retailers
to implement IT systems that
automatically recognise and activate
offers and record the redemption,
along with customer data.
To kickstart this process, retailers
could offer a gift or discount
as an incentive deal to pay by
‘contactless’ on their mobile
device. As soon as the transaction
is made, the cashier is aware of
the customer’s name and buying
patterns, which can lead to a more
personalised service.
The same tactics apply with
physical vouchers, where the code
can be input in-store or online
and tracked with support from IT
systems. Once that code is entered
in the system, the marketer knows
the redemption loop has been
closed.
successful and, if done well,
can deliver a significant level
of customer information. It is
important for the marketer to know
which segments of their brand’s
audience are redeeming offers and
vouchers, and how. By tracking
offers, retail marketers can identify
which channels are most influential
in order to target future offers
more effectively.
What is the best system for creating
an insightful redemption loop?
For online retailers, the easiest
way to track offers is through
the use of discount/voucher
codes. Codes can be displayed
in advertising, through direct
marketing materials or anywhere
online during their shopping
experience, and can be traced from
origin with unique codes that are
entered into the online shopping
system during purchase.
For bricks and mortar stores, the
use of mobile devices is becoming
the preferred method for closing
the redemption loop. Customers
can simply show the merchant a
unique code or barcode from their
mobile device, which the merchant
can input into their system.
Customers are becoming more
comfortable using their mobiles at
POS, with Coles recently launching
a mobile wallet system that allows
approved customers to tap their
device for payment and loyalty
How can tracking help deliver
a more personalised marketing
campaign?
Rather than the broadcast
approach of old, where retailers
would rely on the number of people
reached and hope some of them
were the right people, the customer
information gained from the
redemption loop helps marketers
reach the correct people at the right
time. It also helps improve customer
loyalty and experience as they only
receive personalised offers in the
form they want to receive them.
Loyalty card programs are a good
example of the redemption loop
process informing marketing. Both
Coles’ and Woolworths’ loyalty
schemes have a data-driven and
customer-centric approach, which
harnesses big data to develop key
customer insights to ensure real-time
personalisation of offers designed to
hit the correct segment and channel,
and at the perfect time.
How does the redemption loop
affect the bottom line?
The more a customer redeems
personalised offers, the stronger
the information retailers can gain
from the redemption loop: meaning
better offers and a loyal returning
customer. This helps improve topline numbers due to an increase
in sales, while also improving the
bottom line because the marketing
budget is spent more wisely and in
the appropriate channels.
AUGUST 22, 2014
11/08/14 3:57 PM