Customer Portfolios, LLC

Getting past “one size fits all” Loyalty Programs

admin — Fri, 21 Aug 2009 21:09:41 +0000

Rampant discounting, promotions and the ever-present “points” have soiled the ability of loyalty programs to drive retention. This decline is directly attributable to the rise of templated, standardized loyalty programs with zero brand specificity. Their sheer volume has dulled the senses of consumers and damaged the ability of all loyalty programs to drive behavior.

Simply put, templated loyalty programs don’t work.

Consumers have come to expect the offers and perks that loyalty programs offer, and an air of entitlement has settled in the marketplace. Consumers now expect all the retailers they patronize to provide them with points, perks and special coupons. In a word, consumers have lost the concept of modifying their behavior to acheive a specific reward. Entitlement and expectation have replaced exclusivity and excitement.

According to a recent Financial Times Article, even once-loyal customers are switching brands in droves. With increased switching behavior and decreased offer sensitivity, loyalty programs are failing to drive retention and failing to generate a return on the investments they require.

The organizations with successful loyalty programs are the ones that understand that loyalty is brand-specific – and that means crafting programs, discounts, timing and messaging.

To address this challenge, organizations will need to re-visit the reasons that they implemented their loyalty programs in the first place. They need to investigate their customer data and truly understand what drives behavior.

Loyalty programs have always been about driving retention, but since they have matured they have morphed into novel offer delivery mechanisms and lost their ability to affect customer behavior.

Marketers need to create exciting reasons why their customers should keep buying from them and not their competitors. To do so, marketers will need to execute programs with precise targeting and messaging, and an enhanced understanding of the customer.

For more info on how to craft loyalty programs that work, check out CP’s newest white paper “Excite Replaces Entitlement: New Models for Behavior-Based Rewards”

Five Parts of the Fashion Buyer Lifecycle

admin — Wed, 08 Apr 2009 12:02:17 +0000

“One of the things that makes fashion retailing different from other businesses is the frequency of the buying lifecycle,” says Nick Godfrey, partner at Customer Portfolios, a Boston-based analysis and marketing service provider. “In some businesses customers will make a purchase several times a week.In fashion the purchases are much more spread out. So the challenge is in understanding the purchase frequency.” Godfrey likens the fashion business to the travel business. Some travel customers, especially business travelers, will have a “frequent flyer pattern.” Others are much less frequent, and may only travel once or twice a year. Marketing the same way to each is counterproductive. However, there are some consistencies to help fashion retail executives manage the fashion buyer lifecycle – even a lifecycle with long periods of time between purchases. Within this framework retailers can develop the strategies and tactics required to capture the data and generate programs that foster the kinds of relationships we have referenced and the positive business results that come with it:

Out of Character

admin — Wed, 08 Apr 2009 12:00:59 +0000

Unlike some businesses that have been wrung out by the downturn, fashion retail has a huge upside. It is the number one industry in the world. More people make their living designing, manufacturing, shipping,or selling apparel and accessories than any other business. According to the National Retail Federation it accounted for half of all dollars spent during the 2008 holiday season. To illustrate how important it is to the economy, according to fashion industry trade group Nolcha, annual retail sales in New York City are approximately $42 billion with $19.5 billion in Manhattan alone. In NYC over 260,000 people are employed in the retail industry with 60,000 of these being employed in clothing and accessory stores. Fashion retailing is deeply embedded in American commerce.

The Indecisive Customer In A Decisive Year

admin — Tue, 31 Mar 2009 11:29:10 +0000

“Fashions fade, style is eternal.”
The words come from Yves Saint-Laurent, the designer who ruled the catwalks of Paris and the aisles of fashion retailers for decades. Saint-Laurent died in late 2008, leaving his fiefdom to a younger avant garde. As these designers and the fashion retailers they supply come and go with the speed of a shutter flash, the wisdom of his statement today is inescapable. Retailers, like fashion itself, can fade. But the customer, like style, is eternal. Problem is, too many fashion retailers treat their customers like “the new black.” They see them as a temporary entity that rage this year, and fade the next. This is not true however. Customers are like the little black dress, turtleneck sweater, or blue blazer of the fashion world. They are the only consistent, and persistent, asset. But they come in different shades, sizes, and patterns. If fashion retailers knew as much about these customer differences as they did about fashion design they might find themselves in better position than the current chaos. The list of 2008 fashion retail casualties makes it hard to deny that a new marketing approach is in order. Among those that have filed for bankruptcy or closed a substantial number of stores: Talbot’s, Jones Apparel Group, Liz Claiborne, Charming Shoppes, PacSun, Steve and Barry’s, and Mervyn’s, just to name a few. 2009 looms as a decisive year. “It could be a slow death for some companies,” said Karen Ghaffari, debt analyst at Fitch Ratings. “On the other side of holiday, we’ll start to see who the stronger players are and who are the weaker players. At that point, we’ll probably hear more about store closings. Once we get on the other side of this economic downturn, I think we’ll probably see more consolidation in this industry.” Thesis: This whitepaper will show how fashion retailers can thrive and be among the stronger players as they recover in 2009. There is a way forward for fashion retailers. Although price, product, service, and location are still its core strategies, the basic element will always be the customer. It is the customer that will determine pricing. The customer will demand service. The customer will be attracted to a location or decline the visit. The customer is the asset. Customer-centric marketing must gain momentum as best-of-class retailers embrace the cross-channel world. We will show how to develop strategies that go beyond the discounts that shrink margins, rebates, and internal cost-cutting. Fashion retailers can develop a dialog with customers. They can move from thinking that they know their customers to actually knowing what needs must be addressed to maintain customer-centric, 1to1 relationships with valuable customers in the aftermath of the 2008 holiday season. As “disaster 08” heads into the uncharted waters of 2009, we think the companies that maintain their competitive edge will be the ones with the “best customer” understanding and the strongest customer relationships.