DRIVING RETAIL LOYALTY THROUGH REAL-TIME CUSTOMER INTERACTIONS AT THE POINTS OF TRUTH

This Whitepaper focuses on taking a critical look at the overall paradigm of Loyalty with a dual ambition; first, to separate out transactional and strategic aspects of Loyalty, so that the real transformational value can be focused at; second, to propose an interesting, easy-to-implement technology enablement idea that could unlock this value for the retailer, and most importantly, for the loyal customer as well.

Saugata Chatterjee Head Retail & Large Business Accounts ITC Infotech
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DRIVING RETAIL LOYALTY THROUGH REAL-TIME CUSTOMER INTERACTIONS AT THE POINTS OF TRUTH
Introduction
The trajectory of retail evolution has climbed far and high in terms of lifecycle maturity, and especially in the developed retail economies of the world today it seems so far ago that retailers knew their loyal neighborhood customers 1:1, engaged them in conversations that held personalized meaning, and were able to enrich shopping experiences by providing information and offers that were relevant and valuable to their loyal customers, while they were in the store, shopping. From those early days of personalized shopping, the two-sided coin of business and technological advancements have spun and told its tale, and while on the oneside, times progress has seen aggressive business growth and the birth of such mega-scale, technically cutting-edge retailers as the $350B+ Wal*Mart, on the other side, it has increasingly witnessed the shopping experience becoming an impersonalized chore and customer loyalty becoming an elusive theoretical concept. If I were reading this paper for the first time, it is at this point that Id go: Oh no. Not another essay on Loyalty. So let me hasten to assure the good reader here that this is not one more of the endless series of generic essays that today any Google search with the keyword Loyalty will throw up by the hundreds, with topics such as: Ten Simple Ways for building lasting Loyalty or What Loyalty Programs should do to yield immediate ROI. Rather, this Thought Paper focuses on taking a critical look at the overall paradigm of Loyalty as such, with a dual ambition: first, to separate out the transactional and strategic aspects of the Loyalty topic, across both business and technology dimensions, so that focus can be concentrated at where the real transformational value of such program lies at; and second, to propose an interesting, yet relatively easy-to-implement technology enablement idea that potentially can unlock this value for the retailer, and most importantly, for the loyal customer as well. Happy reading. Saugata Chatterjee

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DRIVING RETAIL LOYALTY THROUGH REAL-TIME CUSTOMER INTERACTIONS AT THE POINTS OF TRUTH
Anatomy of a Loyalty Program
The Lowest Common Denominator characteristic of any and every Loyalty program in the world, even beyond the retail domain, is that the business wants to identify its most valuable customers, and reward them for their ongoing business. Such rewards need to be calculated, cumulated and offered with every transaction the customer makes, naturally, and a simple mechanism for doing so is through Points, which a customer can accrue and redeem, based on various purchaserelated rules. This, therefore, is the basic transactional core of every Loyalty program, and bestin-class off-the-shelf CRM/Loyalty products such as Oracle-Siebel, or custom built applications of various kinds, all provide the technology enabler layer forautomating this fundamental function based on various rules logic and workflows. While there cannot be a Loyalty management system without this functionality, just a rule-based Points management engine hardly creates any remarkable business value, even if there be certainly transactional level interests in seeing how technology can help make such management simpler, user-friendly, flexible, more multi-channel-enabled. As soon as this basic engine is fired, retail transactions start cumulating across various Loyalty members and transactional data starts rapidly building up. While management of such rapidly amassing data is a technical job, what a retailer doeswith this increasing pile of consumer-centric data is left up to the retailer himself. The innovative retailer can definitely add a lot more business value by leveraging this data intelligently, taking thus his Loyalty program to a value-level that is superior vis--vis what he can do merely through Points and POS transaction management. The analysis of such data can potentially reveal deep insights about the retailers unique customer portfolio, and about each customer segments unique drivers andbehavioral characteristics. Based on such insights, a retailer can tailor its merchandise range on offer, the promotions it runs, and the Loyalty rewards it offers. In the process, and based on the acuity of such data analysis, the retailer can take a first but very significant step towards understanding its customers and starting to do things that create meaningful and relevant value for such customers the first step as well towards earning the Loyalty of its patrons. To what extent is a retailer successful in this endeavor will very significantly be determined by the twin factors of: How rich is the customer-wise data that the retailer is able to capture How insightfully is the retailer able to segregate and analyze this data towards creating clear attitudinal or behavioral segments of customers

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DRIVING RETAIL LOYALTY THROUGH REAL-TIME CUSTOMER INTERACTIONS AT THE POINTS OF TRUTH
That said, insightful customer segmentation and understanding of the unique needs of each segment of customers is only a story well began. The naturalclosure corollary of this story is in driving meaningful interactions with such customers and starting mutually rewarding customer dialogs, on basis of such understanding. From the technical domain viewpoint, this is the area of multi-channel campaign management, as also multi-channel service management (call center, web, instore, etc). Like with what a retailer does with Loyalty data, so with the area of customer interaction, the real value of campaigns and promotion management lies in the business vision and innovative business ideas with which a retailer leverages whatever technical campaign management tool he possesses. The combination of analytic insights from cleverly segmented data and meaningful value-oriented customer communications through multiple channels using such insights can be an immensely powerful one-two for any retailer, and can create sustainable competitive advantages in the market. A classic living example of the power of this final level is the UK retail leader, Tesco, who uses its famous Clubcard loyalty databases richness to the hilt, and reportedly has identified over 5,000 needs-segments within its customer database, and drives over 250,000 different combinations of coupon-based promotional campaigns to its Loyalty database, with the actual promotion mix going to a customer finely tuned according to the shopping history and customer segment characteristic of the customer. While this last level therefore represents pretty much the leading edge of current breed of loyalty programs, there is already a next frontier visible. And this next horizon is directly correlated to the typical limitation of the current state of interactions described above: however well designed, however well targeted, most of such interactions with the customer happen offline, through emails, posts, mobile offers, catalogs, or the website. Very little of such interactions happen in real-time, at the moments of truth, when the customer is in the retail store, when the impact and relevance of such interactions can be the maximum. This, therefore, is the next frontier: improving and enriching a Loyalty cardholding customers shopping experience, when the customer is inside the store, by carrying on a non-intrusive, opt-in, meaningful, personalized and relevant dialog with him in real-time to create win-win value for both the cardholder and the business. This dissection of a loyalty programs anatomy, in terms of both business and IT dimensions, with a focus at which layer really holds what level of business impact potential, is represented in the following graphic:

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DRIVING RETAIL LOYALTY THROUGH REAL-TIME CUSTOMER INTERACTIONS AT THE POINTS OF TRUTH

Business Value Impact In-store Interaction Multi-channel Point mgmt Customer Segmentation Interaction (office) (real-time) Technical functionality delivered
Figure 1: Business Value of the Technical dimensions of a Loyalty Program

Personalized, Real-time Interactions for a Win-Win Relationship One of the biggest drawbacks of all traditional forms of token-based Loyalty programs so ubiquitous, that nowadays no retailer even remembers to complain about it has been that the Loyalty card-member identifies herself only at a time when she is ready to leave the retail store. At that point of identification, the focus of the shopper has already shifted from shopping value to checkout ease and speed. Consequently, beyond making the checkout and exit process smoother and better, a retailer can hardly create an impact. More importantly, he has already failed to identify and enrich the Loyalty cardholders most important experiential touch-point with the retail brand the time she spent inside the retail store searching, browsing and selecting merchandize. One way of changing this conventional paradigm is of course through the RFiD route. In theory, everything from the Loyalty card to items of merchandise within the store can be RFiD-tagged, and consequently, using innovatively placed Readers, one can open up a fantastic level of possibilities. However, even apart from the very real commercial and implementation issues that have stymied RFiD adoption globally, there is, for Loyalty, the other increasingly important aspect of customer privacy, and her right to opt-in rather than be intrusively detected without her explicit consent. There are ways of circumventing and addressing such concerns, of course, but that is the topic of another paper. In this essay, we shall propose a different solution, as below.

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DRIVING RETAIL LOYALTY THROUGH REAL-TIME CUSTOMER INTERACTIONS AT THE POINTS OF TRUTH
S. No. 1 Loyalty cardholders Viewpoint Receives (e)mail at home/office, announcing a new and novel shopping experience enhancement program for all Loyalty members, and describing the same in an attractive and simple manner Retailers Viewpoint Pre-announcement ensures that a large section of loyalty database are pre-aware of the need to identify themselves when they enter the store next time in order to avail the benefits of this new program Ensures cardholder handshake and beginning of a dialog at the onset of the shopping process, not at the end of it UnderlyingTechnology Existing mail management systems

Enters a store and identifies herself at a prominently displayed Loyalty Member specific till; in return, is provided a handheld device and a simple usage guidepage

A handheld lightweight bar-code scanner, wirelessly connected to a local server in-store; Local server hosts an application that is integrated with product and customer loyalty applications, including product, inventory, loyalty and segment-wise campaign mgmt systems

Before handing over the handheld, the clerk keys in the Loyalty ID of the customer into the handheld; immediately a small set of personalized promotions pop up in the screen, relevant specifically for the customer

Provides personalized promotion at the point of maximum impact and immediate response

Integration with analytic and campaign management systems

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DRIVING RETAIL LOYALTY THROUGH REAL-TIME CUSTOMER INTERACTIONS AT THE POINTS OF TRUTH
S. No. 4 Loyalty cardholders Viewpoint A flashing alert notifies the customer that a shopping list is already created for the customer for her convenience: on clicking, it reveals a set of item that she most often buys, including some items that she put on her shopping cart last time she visited the online store but did not buy GUI shows a set of selfexplanatory buttons/links: one such is product locator: on clicking, allows intuitive entry or search for specific products, and describes (or graphically shows) section/aisle of the store where product is located. If no stock on storefront, provides information of backroom and beyond-store stock and allows calling a store clerk to help Retailers Viewpoint Maximizes market basket value and increases transactional and impulse buy probabilities UnderlyingTechnology Integration with online portal and prior shopping basket history

Minimizes missed transactions on account of not locating the desired product; allows out-ofstock product servicing

Integration with store, backroom and overall inventory systems

On locating a product, when the handheld is taken near the product bar-code, different aspects of product information is displayed (each can be clicked for further detail)

Adds a superior level of customer experience while also allowing realtime promotions to really make an impact

Integration with product and pricing masters, campaign mgmt systems, web 2.0 initiatives, etc

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DRIVING RETAIL LOYALTY THROUGH REAL-TIME CUSTOMER INTERACTIONS AT THE POINTS OF TRUTH
S. No. Loyalty cardholders Viewpoint Product information (composition, source information, certifications, expiry, etc.) Community feeds (reviews and feedback about the product from Web 2.0 sites, if any) Pricing information (incl. Special discounts, if any, specifically for her) Cross-sell information (associated and relevant products, keeping her core profile characteristics in mind) Etc. 7 Finally when ready to check out a button allows calling in an sales clerk with a QueBuster device to ensure quick and painless billing, points update/redemption, and exit Retailers Viewpoint Maximizes market basket value and increases transactional and impulse buy probabilities UnderlyingTechnology Integration with online portal and prior shopping basket history

Ensures the completion of a differentiated, personalized and superior experience for Loyalty members, which can become a visible talking point to induce more signons to the Loyalty program.

Integration with sales alert system and billing systems

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DRIVING RETAIL LOYALTY THROUGH REAL-TIME CUSTOMER INTERACTIONS AT THE POINTS OF TRUTH
A high-level view of the technical solution design for the above is provided below:

Retrieve Shopping List View promotions/ cross-sell Add Items to cart & scan into device Transfer cart to POS System Check price In-store Orders (e.g Meat Counter) Place in-store order Alerts to pick up orders Loyalty points View points Redeem points

Communication between HH device & back-end systems Facilities customer login Publish promotions Allow customer to view promotions Recieve digital cart - send to POS

Retail Store Back End systems

HH App Server

Analytics

Analytical Reporting

Back-end ERP/ POS/ Customer Database Server

Snap shot of customer needs from On-line shopping list Push digital cart to POS for express check out - points redemption Create / manage promotions

In the Store On the Web Create Shopping List View Previous Purchase View Promotions

Internet Server

Figure 2: High Level Technical Solution Design for real-time personalized Loyalty interactions In summary, for retailers with a Loyalty program that is already running with the basic features of Points management, data analysis and campaigns in place, a sterling opportunity to take the program to the next level exists. By implementing the above handheld based solution, the same campaigns and offers that the program delivers today can be impactfully delivered in real-time inside the store, at the points of truth.

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DRIVING RETAIL LOYALTY THROUGH REAL-TIME CUSTOMER INTERACTIONS AT THE POINTS OF TRUTH
About ITC Infotech
ITC Infotech is one of the fastest growing integrated IT Outsourcing Services providers based in India. ITC Infotech is an SEI-CMM Level 5, ISO 9001 and ISO 27001 certified organization. At ITC Infotech, Retail is a leading Business Practice, which has internalized understanding of the domain and the business priorities, infrastructure needs, and IT requirements of the companies operating in this industry. ITC also runs leading Retail businesses in India itself, and to that extent, understands the processes, pains and priorities of Retailers from the inside a vital strength, that sets ITC Infotech apart. ITC Infotech been globally acclaimed as being one of Indias best development, testing and support service providers by leading analysts. Some of the analyst references are given below: Global Services has positioned ITC Infotech amongst the Top 5 Specialty Application Development Providers globally. It has also been positioned amongst the top 100 global services companies. According to AMR Research, ITC Infotech is one of the Key Offshore Testing Service Providers and amongst the Emerging IT Companies in India. Forrester research has recognized ITC Infotech as a Leading Infrastructure Services Provider from India. ITC Infotech is a fully owned subsidiary of ITC Limited. ITC is one of India's foremost private sector companies with a market capitalization of over US $ 20 billion and a turnover of US $ 5 billion. Rated among the World's Best Big Companies by Forbes magazine, among India's Most Respected Companies by Business World and among India's Most Valuable Companies by Business Today, ITC ranks third in pre-tax profit among Indi a's private sector corporations. For more information on ITC, kindly visit www.itcportal.com

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