Retailers could be so much more loyal to their customers

Retailers recognise that customer databases and CRM (customer relationship marketing) systems provide them with the best returns on investment among their marketing activities. But almost half then admit their systems are ineffective.

It’s time to get a handle on customer data

The Loyalty Report for 2010 from The Logic Group (undertaken by Ipsos MORI) found that 21% of retailers believed CRM delivered the best bang for their buck, compared with the likes of online advertising at 12%, PR at 11%, direct mail at 6%, and sponsorship at a piddling 2%.

This is powerful stuff but what then throws things is that a massive 46% of  retailers surveyed admitted that their CRM systems or customer databases were ineffective at accurately analysing and profiling their customers.

Part of the problem for many is that they are unable to bring together the relevant information from across their organisations. This bodes rather badly for retailers as the industry grapples with moving towards a multi-channel future. A mere 25% of retailers expressed confidence in having the highest levels of visibility over their customer data.

Despite this rather poor level of control, the survey found that among the supermarkets the customer still has a fair degree of loyalty towards them. Sixty three per cent of the general public felt loyal to the major grocers – admittedly a lower level than the 72% in 2009.

This is pretty impressive when compared with other retail categories such as clothes shops with 30% loyalty and department stores with 27%. However, all these retail categories beat most other industries including hotels that mustered loyalty from only 11% of people, bars/clubs and pubs achieved 24% loyalty levels and cimemas and theatres 24%.

If you want true loyalty then get one of these

Beyond this core of loyal shoppers the rest of the country’s consumers appear to be a pretty apathetic lot, with around a third of people who have loyalty cards not remembering to use them when they shop with the relevant retailer. Clearly there is more engagement needed with this large chunk of card holders.

Maybe this apathy is down to the widely held belief that loyalty programmes are chiefly designed to benefit the retailer rather than the customer. A massive 60% of the general public think this is the case, which suggests retailers are failing badly in delivering value to their loyalty scheme members.

This is clearly a big mistake. But since 46% admit to having ineffective control over their customer data then maybe this isn’t really a great surprise. Either way, it is surely something that needs addressing sooner rather than later.