The garden secret

Are you missing out on the real value of data?

Spring is in the air, bulbs are flowering and the Moving Tribes garden renovation project is gradually evolving from ‘sea of mud’ to ‘ooh look, some flowers’.

This is the time of year, then, where anyone interested in gardening engages in the annual ritual of spring - loads of visits to local garden centres to spend lots of money on tiny plants in the hope that some of them will live.

We are doing that a lot, right now, and we have 4 nearby garden centres to choose between. In the one we visited most recently, the sales colleague on the till made an excellent pitch for their loyalty card and its benefits (including the fact that it would immediately apply to the stuff we were buying and instantly pay for itself). Such a good pitch that we signed up on the spot.

The thing is, that makes the full set - I now have loyalty cards for all 4 of our local garden centres (2 national chains, one regional chain and an independent).

At this point, a lot of retail commentators will leap to say “I told you so” - loyalty cards are worthless, they do nothing to change your shopping behaviour and the rewards they give away are therefore a waste of money.

But they, like many observers of the ‘loyalty card’ business, would be missing the point. Loyalty cards have never really been about encouraging some clinical mathematical calculation that results in you switching from one retailer to another. That might happen occasionally, but it is a side-effect, not the main objective.

So what have my local garden centres actually gained by my profligate scheme-joining?

In a nutshell, they have gained knowledge. Each of them, by enticing me to sign up to, and then use, a loyalty card have encouraged me to identify myself. Instead of seeing a series of anonymous transactions, they can now connect together some purchases and generate some insight into who I am and what I am interested in buying.

And there is real value there. In gardening of all sectors, there are many opportunities to take a little bit of information and try to generate a subsequent sale. What kind of plants would go well with the ones I’ve already bought? Have I bought some exotic plants but failed to buy the special compost they need? As the seasons change, can I be enticed to come back to buy some later flowering species? If something unusual comes into stock, might I be tempted to come in and get ‘first look’?

It isn’t difficult, then, to build the business case for investing a little bit of margin in encouraging customers to identify themselves. And all of the example questions I’ve just listed about plants would equally apply to seasonal ranges of clothes, gifts, food, health and beauty products and in many other sectors too.

We might avoid the ‘loyalty cards don’t actually drive loyalty’ confusion if we renamed them. Think of my 4 garden centre cards as ‘membership cards’ rather than ‘loyalty cards’ and the business case for them becomes easier to see.

So for any of us running, supporting or investing in retail or hospitality businesses, it must be worth considering how we can use ‘membership’ to encourage customers to identify themselves and turn anonymous transactions into further marketing opportunities.

In doing that, here are some helpful tips:

You don’t need to give away as much margin as you think

The ‘price’ of getting a customer to join your scheme is the value of the rewards or discounts you give away. This can vary enormously from scheme to scheme, though, and my observation is that if a scheme is well designed, fun, and closely related to your sector then you don’t need to give away as much as you think. Consider the Pets at Home VIP card - the benefits are not that material but it is really well designed and pet-centric - and has millions of members.

The value of the scheme is in what you do with it

It might seem obvious, but if you don’t actually use the data your membership scheme generates to do any marketing then you are wasting your time and cash. That isn’t as easy as it looks, though, and requires some investment in data-science skills (either in-house or external) to generate interesting opportunities.

Personalisation needs to be personal

The most frequent reason membership schemes fail is that the retailer uses them not to generate interesting shopping suggestions tailored to the individual, but to spam out generic marketing emails that clog up customers’ inboxes. That is a quick route to losing members (and also a woefully poor way of actually driving sales).

You don’t need to do this alone

Many small chains or independent retailers assume that these kind of membership programmes are not for them - they don’t have time, money or the data analytics skills to make them work. That may be true, but if we think more broadly there are options to collaborate and for a collective of retailers to work together. Here in Henley on Thames, for example, there is the Experience Henley Card which is effectively a membership scheme for the whole town, and I know that BIDs and town teams up and down the country are considering similar ways to make the ‘whole greater than the sum of the parts’.

In conclusion, then, my 4 garden centre loyalty cards might tell you that I have an unhealthy relationship with plant-buying, but they don’t tell you that membership schemes have no value.

On the contrary, there is great value in the stream of data that already flows through your tills. By encouraging customers to identify themselves and associate those transactions with their accounts, you unlock the opportunity to see your relationship with those customers grow and prosper.

What’s your favourite loyalty/membership scheme? Have you tried to launch one yourself? Do let me know your experience in the comments below.