Millennials: The Next ‘Pig in the Python’

FOR GRAYING BABY BOOMERS like me, the awesome power of demographics has in many ways defined our lives. There are a lot of us. We clogged our kindergartens, our universities, our workplaces, our media, our politics and our communities with sheer numerical might; and the retail marketing universe seemed to revolve around our needs and our sense of entitlement.

In his 1980 book, Great Expectations, author Langdon Y. Jones called this phenomenon “a pig in a python” – a rather visceral visualization of how the boomers’ demographic bulge has traveled through America’s culture, distorting as it goes.

Along the way we also had a lot of kids. So many, in fact that we engendered an echo boom that is numerically larger than our own. In case you haven’t noticed, those 75 million “millennials,” as the demographers like to call them, now largely dominate cultural, political and marketing discourse. Not to mention our consumer economy – the 18-34 cohort wields $2 trillion in purchasing power.

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Contactless Payments — What’s Taking So Long?

Mywallet in PolandIT’S BEEN A HALF-DECADE since I first got religion about the potential for “contactless payments” using NFC-enabled wallets in mobile phones. A very bright entrepreneur brought the concept to my attention and asked me to help advise his new firm. I agreed and got myself launched up the learning curve.

Most readers probably know that NFC (near-field communications) is a form of wireless radio that works only across a few centimeters. It’s perfect for enabling a mobile phone to communicate securely with a point of sale terminal. If the phone has an NFC chip and wallet app installed, a tap can function as a substitute for a card-swipe to enable payments and even frequent-shopper redemptions in a few milliseconds.

Mobile wallets are gaining traction throughout the developed world. The image reproduced here documents Eurobank’s version in Poland. Here in the U.S. we observe a slower pace of development, although the recent launch of Apple Pay seems to have kicked up the interest. Then again, yesterday’s disclosure of a data breech affecting the competing CurrentC service from Merchant Customer Exchange (MCX) has a lot of heads shaking.

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Invoking Relevance

RelevanceBEST PRACTICE IN MOBILE ADVERTISING remains an oxymoron, as marketers grapple with the natural tension between intrusiveness and usefulness. There is a strong drive to justify ad spending and validate the business premise behind personalized promotions. Relevance seems to be the key, we are told, and the unique data-capturing and consumer-tracking capabilities of mobile devices should materialize a marketer’s nirvana in which every message is on-target and welcomed.

Recent consumer research from PriceWaterhouseCoopers suggests that this formula may need to be applied with greater subtlty, however.  In Mobile advertising: What do US consumers want?, PwC researchers find, “There is an overall aversion to the prevalence of mobile advertising. Even ads that are relevant to personal interests do not directly translate to ad interest or engagement.”

This poses a challenge indeed, since according to PwC, “The biggest challenge is to leverage the knowledge of how consumers are using mobile to improve monetization from ad delivery.”

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NRF Bulletin: Personalization Done Right

Lewis and McVie at NRF

I’VE BEEN ON RECORD many times as a hater of shopper loyalty, but an advocate of intelligent personalization.

I admit my position can be construed as mincing words, but I remain stubbornly committed to the distinction. When marketers and retailers try to ascribe loyalty to their card-carrying customers they are usually delusional. When they demonstrate their commitment to those customers through good acts – by providing relevant values and experiences – they embark on a golden path.

Supermarket chains so regularly miss this distinction with their frequent shopper card programs that it is a small revelation to encounter one who seems to have it right. In a presentation at the National Retail Federation Convention and Expo this week in New York, Loblaw Companies, Ltd., the leading grocery operator in Canada, shared some insights about its PC Plus shopper program, launched last May, that suggest it belongs in that exclusive tier.

“From our best customers we capture 55-60% of their share of wallet. That leaves so much opportunity just with them,” said Peter Lewis, Sr. Dir., Customer Analytics & Loyalty at Loblaw (pictured at left in the photo above, with Graeme McVie, VP and GM at LoyaltyOne.)

That’s an insightful way of looking at the return from a frequent shopper program that truly distinguishes highest-value relationships and cultivates them accordingly. Best shoppers deserve our best efforts because they are our best prospects too.

Loblaw has embraced this approach with PC Plus, its digitally-enabled frequent shopper program, said Lewis. On a year-over-year basis, enrolled customers who used the targeted offers changed their behaviors in desirable ways:

  • They increased their number of visits by 12%
  • Their average basket size increased by 5%
  • The number of categories they purchase increased by 7%

Lewis also shared some statistics from the first 6 weeks of the program that indicated rapid acceptance:

  • 40% of sales were made using the card
  • More than 6,000 members were signed per store
  • 50% email open rate
  • 35% click-through rate on those emails

PC Plus uses analytics to deliver relevant, highly personalized offers. With thousands of offers available across the store, the mix is tailored down to the individual level, based on each shopper’s history.

“How big is the prize from personalization?” said Graeme McVie of LoyaltyOne, the company which helps Loblaw implement and operate PC Plus. “Even with best customers, opportunities exist to grow share of spend.” He shared an analysis of the 50 store categories across the top 20% of customers, which indicated a 50-70% share of spending, a finding which underscores the present value of best shoppers, but also their upside potential.

PC Plus is increasingly focused on the smartphone app as the “control center” for the shopper, Lewis said. It allows them to manage shopping lists from their phones, informs them of available offers, and allows them to accept offers in real time, even while waiting in the checkout lane moments before a transaction.

McVie added that the design of PC Plus is oriented toward “democratizing shopper insights.” Its strategy is two-fold: understand the needs of individual customers and consistently execute actions to satisfy them.

I’ve stated previously in this blog that we are entering a “post-loyalty” era, but intelligent personalization is far from dead. In fact it may just be hitting its stride at Loblaw.

© Copyright 2014 James Tenser

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