Feature: In-store marketing: Good relations

Angee Walls, managing director of Catalina Marketing UK, looks at how a full customer relationship management strategy can go further than loyalty programmes and provide targeted promotions in-store

Communicating with customers in the retail environment has traditionally been one of the more straightforward elements of any marketing strategy. The target audience is in a controlled environment and already in the shopping frame of mind, making them more receptive to marketing messages.

However, in an increasingly crowded market, retailers are beginning to compete for valuable market share, in an environment where spending is starting to slow down. Retaining clients against this backdrop is set to be a challenge for many retailers, and a well planned strategy can not only create loyalty, but also increase spend and have a direct impact on profit margins.

The first step is to ensure that customers are getting value for money and that prices are competitive enough to stand out in a busy grocery market. Presenting consumers with opportunities to save money through promotions and special offers is the first step towards encouraging return visits and word of mouth recommendations. These approaches can increase footfall, but often fail to deliver long-term value to the retailer due to their lack of targeting. A largely saturated market can also encourage retailers to make significant price cuts that can be damaging to overall profit if there is not sufficient uptake.

In order to go the extra mile, and create an in-store environment where customers want to return, retailers need to consider more than just price cuts. A positive step which has been embraced by many is the introduction of loyalty cards. By rewarding consumers for their custom, and offering incentives for their continued loyalty, retailers have been able to take a significant step towards creating a customer environment that will stand out from the competition. The benefits for retailers are also considerable – by incentivising customers to sign up to loyalty card schemes, retailers can learn more about the demographics and shopping habits of their customer base, and compile their business strategy accordingly.

However, recent research has suggested that customers are losing interest in loyalty card rewards due to the time required to collect points and reap the benefits of the scheme. Additional elements such as having to remember the loyalty card at every shop and concern over theft or misuse of personal details have created an environment where the popularity of the loyalty card is in decline. There is also debate among marketers concerning the actual value of more traditional demographic divides. Does identifying customers by age or geographical location actually benefit the retailer? Loyalty card data also has limited reach, as card-holders will be existing regular customers. This leaves retailers with no means to incentivise and target new or occasional customers, thus encouraging them to increase spend or frequency of visits.

This issue can be addressed with a customer strategy which integrates targeted incentives at the point of sale. Many current point-of-sale schemes in the UK are still using an untargeted approach – handing all customers an identical printed voucher during a fixed time frame. This has similar limitations to the untargeted shelf promotions, as there is no guarantee that the promotion is reaching the right customers, at the right time. The point of sale strategy needs to be expanded to ensure that every communication will be relevant to the individual consumer.

This is where a full customer relationship management strategy is gaining momentum in the UK market. Taking the lead from successes in the US, retailers such as Sainsbury’s are beginning to run point-of-sale schemes that offer individually targeted promotions while the customer is still at the till. The benefits for customers, retailers, and brands are significant – if a brand wants to speak directly to its buyers, it can do so immediately, either encouraging further purchases or offering an incentive to try a new product. For the retailers they will have instant access to what their customers are buying, and can provide customised, relevant incentives that drive consumers back to their chain. This can also run alongside the store’s loyalty card scheme, to compliment the existing strategy.

This approach can also be expanded to include customer communications as well as incentives. These full-colour communications can introduce customers to new product launches, suggest recipes and new ideas, or quickly inform the public of product recalls. This is the key to creating loyalty among a customer base. By regularly communicating with all customers and offering them something personally targeted and relevant, retailers can maintain their position in a volatile market and continue to offer more value than their competitors.