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It’s a torrid time out there and there seems to be no limit to the industries in line for the chopping block. One of the first to truly feel the effects of this credit storm is, of course, the retail sector.
There is scarcely a day goes by without hearing some more dismal results from the high street or another 11th hour buy-out. With the exception of Tesco, who are faring rather well indeed, it appears that no one is safe.
For all retailers, and anyone in business, the onus at the moment is on demonstrating value and crushing costs. It is at times like these where marketing and its various disciplines often come under fire. The main bugbear for marketers isn’t that what they do is ineffectual but that they often cannot tangibly demonstrate what’s going on.
For years marketers have poured over sales spikes, complicated econometric models and more in hope of finding a viable way of showing exactly what they have done. However, without a board-level sponsor or a CEO that understands the importance of marketing, these models are little protection against a CFO in full ‘hatch battening’ flight. This can, and is, leading retailers to slash marketing budgets where a more forthright strategy might reap rewards.
What this means for marketers is a scramble to become as quantifiable as humanly possible as soon as they can. While in many areas this is an ongoing and seemingly insurmountable challenge, in others concrete actions can be taken right away. My business, loyalty, is a prime example of a concept that, in many cases, is not being wielded to its greatest or most measurable effect.
For those retailers that already have a loyalty programme in place, tracking spend, frequency, category purchases and so on is pretty easy. Certain retailers have become highly savvy at this and reap numerous benefits from their sophistication. But those without loyalty or those that are thinking of implementing a programme don’t seem to understand what these benefits are or how to wield them.
You see those without loyalty programmes in place have pretty much no way of tracking what’s happening out on the shop floor. People come, buy and go, but no one can make any kind of connection between these related events. If a retailer runs an advert sales might spike, but they can’t tell if this is because of them or something else altogether. Not being able to track the results of their marketing and promotional efforts leaves them with a gaping, unjustifiable black hole on their cash flow statement at a time when everything needs to be justified.
However, loyalty programmes have become highly advanced, allowing retailers to do innumerable marketing-savvy things with their customer data. One example is the use of test and control groups to see whether loyalty marketing is having an effect. For example retailers can use direct marketing for one group while not communicating with the other and then observe the result. Unfortunately, this infinitely useful test is one of the things that many retailers don’t yet know they can do.
But being able to track and market effectively to customers is paramount to success in retail, especially in these challenging times for the high street. Loyalty has a huge part to play in this, but far too many retailers just don’t recognise what they can do. Those retailers that want to get the most out of their marketing money in these tough times need to take a step back and really consider what can actually be done with their customer data.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Ritesh Jain Founder at Infynit / Former COO HSBC
08 January
Steve Haley Director of Market Development and Partnerships at Mojaloop Foundation
07 January
Nkahiseng Ralepeli VP of Product: Digital Assets at Absa Bank, CIB.
Sergiy Fitsak Managing Director, Fintech Expert at Softjourn
06 January
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