When Sue Smolenski started working at True Value three years ago as its Director of Loyalty, CRM and Mobile Strategy, the company’s loyalty program was siloed and not leveraged or integrated.
During her Tuesday session titled, “Using Data Analytics to Move Customer Loyalty to Enterprise-wide Success,” at the 8th annual Loyalty Expo presented by Loyalty360 – The Loyalty Marketers’ Association, Smolenski shared a story with attendees that occurred shortly after she started at True Value.
“You seem like a nice person,” someone at True Value said to Smolenski. “Why did you want to lead that program?”
Well, in the past three years, due to some very hard work by Smolenski, her team, and assistance from Cogensia, True Value has raised the bar on customer loyalty and it has paid off.
Barb Olson, Senior VP, Loyalty & 1:1 Solutions, Cogensia, shared what she believes are the keys to enterprise loyalty marketing:
Executive buy in + cross-functional team work
Get a handle on data
Understand customers and channels
Get relevant with your customers
Use data insights to drive your strategies
Smolenski offered a comprehensive overview of what has transpired at True Value.
First, True Value’s marketing programs comprise the following:
• Circular
• Loyalty
• Email
• Local Events
• Ecommerce
• CSAT
• Credit Cards
• Gift Cards
“Analytics and measurement inform and drive our strategy,” Smolenski explained. “Loyalty demands an enterprise wide approach and commitment.”
Smolenski said that store segmentation + customer segmentation = increased relevance and results.
She also said True Value had to get a better understanding of its stores:
Core store attributes (Annual Sales, years in business, growth in sales, value tier (6%/12%/22%/60%)
True Value importance to store (% of sales from True Value, Early Adopter, Supporter, engagement with programs)
Location type (Type of mall, size of location)
True Value HH Profile (Household profile of TV customer, measured around each location)
Geography (Zip code specific levels of population density and urbanization)
Owner demographics (TV owner household information including demographics, lifestyle, and likely capitalization)
Consumer demand (Total homeownership in trade area, trade area definition)
Market competition (Third-party location data (Big Box, small box, local)
Product assortment (TV product sales by class (or higher level)
Smolenski said core stores were identified and classified based on: KPIs, Ideal segments, opportunity stores, limited potential, role of loyalty program, and test and control store groups.
Store Segments/Loyalty
Product assortment in stores (i.e. growth of pet department)
Identifying new store locations
Identifying likely successful owner based upon profile
Where to further penetrate the loyalty program
Program ROI by store
In addition to understanding stores, developing loyalty demanded understanding customers and this required a complex, multi-dimensional approach to defining and tracking customer profiles and behaviors.
True Value’s customer segmentation goals:
Understand customer purchase habits
Expand customer valuation from RFM segments to include more individual dimensions
Identify customer current and potential value
Define test and control groups for future campaigns and metrics
Avoid giving customers same offers
Several dimensions were explored for classifying customers
RFM dimensions: Value
Basket size
Visit frequency
Seasonality
Customer characteristics:
Demographics
Category demand and expenditures
Product affinity
In addition to creating customer segments, dimensions serve as tactical levers for selecting marketing campaigns.
Advanced Customer Analytics
With extensive analysis, the ultimate customer segmentation is based upon:
Seasonality
Store Segment
Product Affinity
Marketing Responsiveness
Category Demand
Customer segmentation results:
Loyal Small Town Shoppers
Frequent Family Couponers
Suburban Home & Garden
Full Price Winter Essentials
Low Value Convenience
Bubble Gum Only
Segmentation helps inform enterprise level decisions. Segmentation influences True Value’s corporate strategies: Marketing, merchandising, and retail growth.
Using data and analytics, True Value receives higher customer relevance and better business results
“It’s about the value of the data,” Smolenski said. “How various departments can leverage the data and insights you’re able to drive. We didn’t really understand our stores. We looked at core attributes and we were trying to put like stores together. We mapped store segmentation. We had to get our store segmentation down before our cost segmentation. We want to ensure that our stores are set up to meet their local customers’ needs.”
Regarding customer segmentation, True Value focuses on:
The right investment level in customers
Relevant offers at the right time
Targeted new product launches
Greater loyalty to True Value store thru True Value Rewards
Better metrics
Cogensia created new DIY (Do It Yourself) VIP segment for True Value Rewards. The segment generates lower cost while maximizing incremental sales and margin with an astounding 800% ROI.
ROI analysis is developed and shared with each store participating in True Value Rewards.
“Data analytics influences our business decisions every day,” Smolenski said. “Management is on board and our cross-functional teams are engaged. They are getting a handle on our big data and driving strategy utilizing our customer and channel analytics. We are getting more relevant, investing wisely in customers, and getting results.”
Olson said True Value is “really getting it now and is being more relevant with its customers. This is the power of loyalty. It’s really in the data.”