Almost 20 years after the introduction of the first loyalty card programs, the promise of a new way of doing business, smartly targeted and one to one, remains elusive. I recall reading everything the Brian Woolf (former CFO of Food Lion) had to offer on the subject. His 1996 treatise, Customer Specific Marketing, was poised to be the Bible of the new order of supermarketing. He made a very strong case for the economic advantages of moving from mass communication to thoughtful customer-centric targeted relationships. Finally, I thought, a new initiative in the mundane world of grocery store marketing that was more than an acronym, more than just something that was fun and creative. This could work because it made economic sense.
But two decades later, only modest progress is evident among most CRM-savvy supermarkets. Sure there are some good programs out there that have distinguished themselves from the pack. CVS Drugs and their reward program comes to mind in that almost anything marketing related has to do with their little red key fob and offers and coupons printed directly on the customer’s receipts. Kroger has devoted dollars, energy, and human resources to its “dummhumby” approach to customer segmentation schema. Their periodic vendor funded mailers are steady and reasonably effective (depending upon whom you talk to) and they appear to be using the customer data to fine tune their assortment, pricing, and in-store merchandising.
But beyond CVS and Kroger, most others seem to be struggling to achieve the prominence for their programs that was foretold by Brian Woolf and others. In fact, twenty years later, paper coupon usage is up, not down….pages and pages of print circulars still clutter mail boxes and driveways each and every week, despite prognostications of weekly ads and the expense of tons and tons of newsprint disappearing from the landscape.
The reasons for the lack of progress of CRM are many. But no reason looms larger than the persistence of both brand and retailer basing their financial relationship off of their short-term insatiable appetite for volume and quick bottom-line dollars. In the case of the brands, the pure number of cases sold, no matter how inefficient the process remains paramount. To that point, diverters still have plenty of product to fuel their discount pipelines.
Many retailers continue to want “all the money brands have “while having no specific commitment to spend the money in accordance with the brand’s strategy or providing any consumer response data back to the brands.
I am not suggesting that volume and case sales should cease as an end goal. Nor do I think that mass print circulars should totally vanish from the scene. What I do strongly believe is that CRM should be the first option. Targeting and relevant offers should dominate, not be the exception. Retailers with customer databases and new digital touch points should make their own investments into changing the way they do business and provide “preferred status” to brands which partner and provide content for those initiatives.
Brands should continue to embrace “shopper marketing” for it’s true and practical benefit. That is, they should work through, not around, retailers with incentives and resources to enhance their targeting initiatives, thus drawing dollars and resources away from mass initiatives such as sweepstakes, case discounts, and FSI’s and funnel that content to the retailers who are willing to use it to reward their customers, not filling their financial funding buckets.