The Power of Loyalty Cards

Boots launched its Advantage card loyalty scheme in 2001. Customers sign up for the card and collect points for each purchase that they make at Boots which can then be redeemed against future purchases. Each £1 purchase generates four points for the customer but all sorts of additional activities such as special promotions and in-store events garner additional ‘bonus’ points – an approach which subtly creates a focus on points collection and consequently more purchases. It has extended its scheme to allow customers to collect points at other retailers such as Thomas Cook, ToysRUs and Asos.com which can be redeemed at Boots. Most retailers operate similar schemes but the key to successful loyalty programs rests on the company’s ability to use the information it is collecting on its customers and their buying habits to target them more effectively.

For example, Boots ran a special Christmas promotion in 2009 with the aim of showing customers that they could get gifts for everyone under one roof and at the same time collect bonus points for themselves. It sent a direct mail package to 6 million of its customers to drive them to special in-store events and this effort was complemented by press and TV promotions. But its customer knowledge meant that it was able to send out 400,000 different versions of the mailing tailored to a customer’s previous purchasing patterns. This deep customer knowledge enabled the promotion to be highly successful at a time of year when all retailers are marketing very aggressively. Coupon redemption rates, which are generally very low, rose by 25 percent because customers were receiving more relevant offers. Incremental sales from the in-store events rose by 90 percent year-on-year and incremental profits rose by 60 percent.

Twitter as a Marketing Tool

So some of the Twitter numbers are looking very impressive – an estimated 1 billion tweets per day and a valuation of US$10 billion ahead of a possible IPO. Revenue numbers are not quite so attractive with income from search advertising estimated to be bringing in about US$100 million, well below the company’s current outgoings.

While it is hard to escape the microblogging site, does it have a role as a marketing tool? Like many of the other social media vehicles, Twitter has its own ‘what-not-to-do stories’, most notably Habitat’s use of keywords relating to the Iranian election in 2009 in an attempt to have its tweets picked up by those following trending topics. So far, Twitter has been used in about three main ways. The first, popular with technology companies, is using it to provide updates and product information. Second, popular with consumer goods companies is using it as a sales promotions medium where special offers are available only to Twitter followers – a good approach as appealing offers will quickly be passed on. And finally, some service firms monitor any negative commentary and seek to address it (if possible within 140 characters).

The big attraction of Twitter is its ‘permission marketing’ angle – followers opt in – so they want to hear from you. This is where the best marketing opportunity lies. For example, innocent Ltd uses Twitter to talk to its followers in its usual quirky fashion about a variety of topics. The two way conversation is a perfect medium for the development of the firm’s brand values. And if Twitter is to be used strategically, this is what needs to be done. Understand who is using Twitter (apparently it is mainly older age groups and also more women than men) and make sure all outgoing communications reflects the organisations brand values.