From Dixons to the Co-op, a cohort of digitally savvy retailers are transforming big data into smart data. Their secret? Clever customer relationship management
After several turbulent, loss-making years Dixons Carphone announced in the summer that it was out of the red. While the company benefited from a pandemic-induced tech boom, another factor was key to its success: the smart use of customer data.
In June, the electrical goods seller – now known as Currys after a sweeping group rebrand – announced a pre-tax profit of £33m, swinging from a huge loss of £140m in 2020. Speaking to investors, chief executive Alex Baldock highlighted “exciting advances” in data and customer relationship management (CRM) as key to the success story.
The brand is among a new school of retailers using customer data to drive loyalty, deliver unique experiences and boost revenues. These companies aren’t blinkered by the pursuit of new customers; instead, they’re making the most of the ones they’ve got.
The trend is only growing, according to Ol Janus, global head of data at Havas CX, which works with Starbucks and Lacoste.
“The burgeoning amount of data and marketing technology at retailers’ fingertips represents an opportunity to create a stronger, more relevant and more meaningful relationship between a brand and a consumer than at any point in history,” he says.
When combined with the growing shift to online throughout the pandemic, this means customer engagement is no longer a “nice to have,” says Janus: it’s fundamental.
“If you’re not doing this well, your competitors will be.”
Janus is right. In the last year, Sainsbury’s launched a personalised pricing programme for its 19 million Nectar Card users. CEO Simon Roberts is also optimistic about the early accomplishments of Nectar 360; the data platform gives 700 partner brands like eBay and Sky better insights into consumers, while offering shoppers tailored discounts and rewards.
Elsewhere, M&S has been investing heavily in CRM to reach its 8.6 million Sparks card holders through regular email recommendations and offers. These are proving effective, with ‘open rates’ of 60%, referring to the proportion of logged in customers who open the email
Co-op has retooled its membership offering over the last 18 months to introduce more tailored offers to new and existing sign-ups. Since the beginning of 2020 it’s garnered 2 million app downloads and a 400% increase in engagement across its participation channels, which cover everything from member bereavement groups to wine tasting events and beyond.
All of these retailers have noted a jump in sales and profit over the past year. Their successes are testament to the power of strong CRM, underscoring the potential rewards of mining insights from existing customers.
“Gathering high-quality data from existing customers is the only way you can make personalised, timely offers, and the only way you can ensure every piece of engagement is as relevant and meaningful as possible. Without it, you’re probably just spamming them,” says Janus.
The value of adopting a data-driven approach to customer engagement is clear. However, many still face challenges in implementing such strategies.
Charlene Charity, head of strategy at ad agency Digitas and a former Amazon marketer, says it’s because they don’t know where to start. “Brands face a labyrinth of hurdles. Their data is in a mess, and their internal ways of working don’t support an easy path through it,” she says.
Some organisations have millions of fragmented data records across different platforms with mismatched fields, she adds. “Their current marketing technology stacks are mismatched with legacy platforms, systems and processes that have left them hamstrung.”
The power of CRM
So how are the trailblazers overcoming these challenges? In a results-driven world, they’re investing in the tools to ensure effective data capture in areas like research, transactions, behaviour and sentiment and more.
Companies like Currys have also armed themselves with the talent to understand these insights, enabling them to measure their success against operational and strategic objectives. They offer customers a value exchange and recognise that data is a currency.
Currys first began its transition away from discount-heavy promotions towards a more customer-centric CRM strategy in late 2018, poaching Saul Lopes from Virgin Holidays to head up CRM. Simple early changes included the use of AI to draft email subject lines and copy to existing customers, which led to an immediate uptick in open rates.
Lopes also introduced a tool to improve personalisation and content automation. In the 12 months to May 2021, Currys tripled its number of active and contactable customers from 3.5 million to 9.6 million – a boost of 174%.
Co-op is taking a slightly different approach to unlock the power of customer data. The retail group relaunched its membership proposition mid-pandemic with a focus on value for members and giving back to local communities.
Under the scheme, 2p for every £1 spent goes back into individuals’ Co-op Membership account. The same amount is then gifted to community organisations and local causes. Customers also receive tailored offers in-store and on services like insurance and funeral planning.
“We also recognised the need to modernise our proposition, make it more data-driven and digitally enabled, which resulted in the launch of a member app and digital card through which each member gets a personal experience,” explains the retailer’s data and loyalty director Charlotte Lock.
Members are the Co-op’s “most valuable customers”, with greater commercial and emotional loyalty to the brand, she says. Spend per member across the Co-op’s food arm is four times that of non-registered customers, while they also spend more frequently.
In a post-cookie, post-GDPR world, it’s critical that retailers try to understand and manage consent, Lock says, earning permission to contact customers across channels. It’s also vital to invest in the underpinning data platform, she notes, ensuring that contact is informed by consent and a single analytical view of member preferences.
“Doing this has let us get the right message to the right audience through the right channels at the right moment,” she adds. “It’s a more efficient approach to marketing investment, too.”
The Co-op knows that no brand can truly own a customer. On the retail front it’s competing with Tesco, One Stop, M&S, Sainsbury’s, Lidl, Asda and the rest. In its other business lines, customers have a choice of funeral providers and a plethora of insurance and legal services options.
However, the business has found that a renewed focus on existing customers has proved the most “efficient way to drive engagement and value”, rather than chasing new shoppers via first-time discounts only for them never to return, Lock says.
For retail brands starting out on this journey, Janus says, the key is to clarify how you define and measure success. They should set strategic and operational key performance indicators (KPIs), define the metrics to measure these and source and organise the data needed to measure accurately.
“It’s not all about sales – it’s about pushing consumers through the engagement funnel. Each step of that requires focus and investment.”
For Lock, understanding and successfully applying consumer data isn’t just essential for marketing and customer experience; it also drives crucial decisions on products, pricing and promotions.
“The real value exchange is in understanding preference through purchase and designing products, services and experiences that exceed expectations and solve real customer problems – do that and customers are happy and stick with you.”
What’s her advice for retailers that want to emulate the success of brands like the Co-op and Currys? Invest in a strong data platform, a single analytical and operational customer view and the tools to deploy relevant messages across channels.
“It’s the foundation of any successful loyalty strategy and keeps your interactions real-time and relevant,” she says.