It’s time for Canadian businesses to really get personal, according to the head of one of Canada’s best-known loyalty programs.
Although many companies are using analytics for marketing, not all are truly harnessing the power of personalization, said Peter Danforth, senior director of loyalty and customer analytics at Loblaw Companies Ltd.
His role includes overseeing PC Plus, the loyalty program where shoppers can earn points and receive offers for brands such as PC Financial banking and the Loblaws, No Frills and Zehrs grocery chains.
Many businesses still use data to merely divide their existing customer base into more defined segments, Danforth told the Canadian Marketing Association’s Insights analytics conference, held in Toronto on Thursday.
Instead, businesses accustomed to simply targeting market segments – like moms of babies vs. moms of teens, for example – should use today’s analytics and data processing power to tailor marketing to each individual customer, he suggested.
“Stop looking to segmentations to help define your customer strategies. No two customers are the same,” he said, adding that success is more likely “the closer you can get to dealing with (a customer) on a one-to-one level.”
Danforth told the audience that back in 2011, Loblaw tried to rethink the marketing strategy for its PC Plus loyalty plan. It was a tall order, considering that over 30 Loblaw-owned brands are included in that program.
Loblaw looked to the airline industry for inspiration, specifically U.S. carrier Delta Airlines. As Danforth explained, the airline sector often lost out on potential revenue when seats went empty or too many tickets were sold at deep discounts. Using digital data about the behaviour and transactions of individual customers, Delta was one of the first airlines to adjust seat pricing for optimal revenue potential in near real time – “and it saved their business,” Danforth said.
Encouraged by Delta’s success, Loblaw shifted its own marketing focus from customer segments to specific shoppers.
“What we asked when we started this is ‘what do individual customers do?’” said Danforth.
The ability of newer technologies to collect, process, analyze and aggregate huge amounts of data allows Loblaw to “make 10 million promotional decisions on a weekly basis” in almost real time, he said.
Paper vs. personalization
“We said you can build a (paper advertising) flyer and you’re going to be wrong 95 per cent of the time or you can let us build you 10 million digital flyers” personalized for each shopper, Danforth recalled.
(Loblaw is consistently tight-lipped about the impact of PC Plus on its overall revenue stream; the company includes results for PC Plus within those for its financial services division instead of breaking them down separately. But Danforth did reveal that the loyalty program now has 10 million active members, up from 6 million in 2014.)
He urged retailers to always base marketing on customer needs rather than on their own business needs. At PC Plus, that means sending each customer offers on specific items they actually buy, not sending them coupons for products they never buy just so Loblaws can shift certain inventory, he said.
“The second you decide what the customer should be seeing instead of relying on the data (about what they really want) is when you’re not doing personalization, you’re imposing your will on them … It’s direct marketing but it’s not personalization.”
A global survey released last September appears to bolster Danforth’s argument that consumers prefer marketing that is personalized for them. The Aimia poll of 20,000 consumers in 11 countries found that only eight per cent feel they receive better offers from companies in exchange for sharing their data.
The study’s authors concluded that “businesses are not using customer data to personalize and tailor customer experiences effectively,” with only 23 per cent of consumers saying they receive communications from businesses that are “highly relevant to them.”