2011.25 | Trade Privacy for Convenience

All retailers want to understand their customer better to sell more stuff.  In order to gain an understanding data must be gathered to build customer profiles.  Loyalty or member based card programs were instituted to gather data.  Consumers were and are willing to give up some privacy in return for a reduced price or special offers.  As technology has matured and become ubiquitous, privacy has become more precious to some.  Pricing has become increasingly competitive, and one can only discount so much.

One strategy for driving loyalty and gathering data is by offering convenience in return for taking part in a loyalty program.  One relevant current example is Starbucks’ mobile payment which is available to customers with a registered Starbucks card, and nobody else.  While there are benefits like a free shot of syrup and a free birthday beverage, these are standard items.  More exciting to customers is being able to pay quickly and simply every day, and it can only by done by registered customers.   What if we were to take this registered user benefit further?  Some examples:

  • A customer has coupons and offers tied directly to their card.  The customer only requires a reminder to buy the product to obtain the offer.  No need for customers to clip coupons or remember to bring them along.  When the loyalty card is scanned, and then a product is scanned, the customer gets the special price automatically.  With newer software solutions, this connectivity to the card can get granular enough that individual prices can be offered to individual segments or even individual customers if retailers wish to do so.  Not having to remember pieces of paper in the digital age is a benefit to consumers, and obtaining unexpected offers breeds loyalty.
  • Price guarantees are often provided over a certain time period.  In the online world, pre-orders have price guarantees that are provided automatically.  Why should customers have to go back to stores to ask for their credit?  Why not allow loyalty card holders or high value clients automatic refunds for price guarantees?  While it’s not practical for grocery, it can be done for general merchandise, fashion, and any large ticket items.  While it sounds counter-intuitive to give funds back, it is currently rare enough that it will drive confidence in a retailer to encourage return business on profitable large ticket items.
  • Loyalty customers could be eligible to receive e-receipts.  Retailers like Old Navy and Sears already provide such platforms, however there are some potential holes in the solution as it exists today.  First, if a customer has to provide an email address, there is always a chance that the receipt could go to the wrong place, and the customer will not have a receipt – a potential problem for both parties.  Second, providing e-mail addresses will soon start to slow down the check-out process.  Using a loyalty card or even an account number attached to the card will provide a quicker checkout experience and a database for the receipts.  Apple Stores already effectively do this using a customer’s Apple ID for the transaction based on the customer’s credit card swipe.
  • If a customer leaves an item behind at POS or Self-checkout, they can automatically receive an SMS message to ensure that they have all of their items with them.  This could be triggered by a button on the POS linked to the customer’s loyalty card which has the customer’s mobile number.  If the customer registers their mobile with the loyalty program, when they cash out, the cashier could have a button on their screen that allows them to SMS previous customers a standard message indicating that they should ensure that they did not leave anything behind.
Privacy for lower prices is common enough in the retail landscape.  There are many more creative outlets possible given all of the details in today’s technology.  Sooner or later, a savvy retailer will cash in on these potential differentiators.  These benefits are still novel today, and can win an audience accustomed to convenience and novelty.  Best of all, it uses technology in a way consumers love – in a manner that is ideally transparent to the user.
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  1. […] things like more cash back and returns without receipts.  These items are exactly the sorts of customer conveniences I believe can drive customer loyalty more consistently than prices.  As technology empowers consumers to get better deals, it also […]

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