Mindset Reading

NACStech attendees use data to track consumer thinking.

By
Angel Abcede, Senior Editor/Content Development Coordinator

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A growing interest in transac­tion data and electronically connecting with consumers is driving interest in mobile marketing and loyalty, evident in workshops and on the trade-show floor at this year’s NACStech conference.

Held in Nashville, Tenn., in May—and boasting the largest attendance of the conference outside of Las Vegas, at about 1,200 registrants—NACStech sessions addressed the potential of mobile phones communicating discount offers, rewards updates and electronic coupons.

“It’s another layer of communica­tion between us and our customers,” said Kevin Brumley, president and CEO of Sac-N-Pac Stores Inc., San Marcos, Texas, whose chain recently initiated a social-marketing strategy. Speaking to approximately 200 attendees at a session focusing on mobile marketing, loyalty programs and social media, he said, “It’s a communication that’s going to happen with or without us.”

The chain’s efforts began modestly, but over time, Brumley felt a successful social-marketing strategy had to have its own resources. His information technol­ogy (IT) people were focused on day-to-day concerns, trying to keep the chain’s technical engine running.

His 45-store chain would eventually bring on staff to address social marketing, creating goals that included the following:

  • Providing customers a consistent experience.
  • Creating a strategy that would cross all operational areas.
  • Driving action so the customer interaction would lead to increased sales.

Though many results were qualita­tive, the chain found areas in which to measure success, including the following:

  • The number of times the chain engaged customers.
  • Increased participation in its loy­alty program.
  • Increased database of customers.
  • Driving people to the chain’s website.

The company began a points-based loyalty program a few years ago and today uses social media to augment that effort. Using Facebook, Twitter, foursquare and YouTube, it has initiated efforts such as having people take a photo of its company vehicle—heavily done up in the chain’s color scheme—as it drove around town, then post those photos on Facebook.

Similarly, the chain would donate to a particular charity if people “liked” that charity’s photo on Sac-N-Pac’s Facebook page, donating $1 per like and an addi­tional 50 cents for sharing the photo with friends. In that drive, 1,159 people liked the promotion’s photo, while 816 shared it.

Pressure to engage customers is com­ing from multiple directions, other ses­sion speakers said. Houston-based Shell has already “crossed the line,” according to Anton Bakker, president of Outsite Networks, Norfolk, Va., who moderated the panel. The oil company has moved its rewards program beyond ties to partner grocers to cross-discount fuel with c-store items, he said. And, he continued, “it will happen everywhere.”

Mobile communication will become integrated with payment, loyalty and social marketing, with “the power shifting to the consumer,” he said.

To tap into that growing energy, c-store operators are trying to differenti­ate themselves, reaching out to customers in an effort to stand out, according to Axel Kirstetter, vice president of product strategy for KSS Fuels, Florham Park, N.J. “They’re injecting themselves more in loyalty and marketing activities,” he said.

That increased activity benefits solu­tions providers such as KSS, because retailers are becoming more sophisticated with their operations and more interested in looking at options. He also noticed a shift in thinking regarding business-intel­ligence solutions, with dollars moving from capital spending to operational, giv­ing way to software-as-a-service (SaaS) business models.

Mobile Payment?

Meanwhile, other speakers addressed related topics of mobile marketing and payment. In a session on the future of payments, speaker Tilak Mandadi, senior vice president of technologies for Ameri­can Express Merchant Services, New York, asked the group how many believed mobile payment was an inevitable trend. Most raised their hands.

Mandadi followed by asking how many were willing to invest in the devices that will accept that form of payment. Only about 5% of the attendees did so. Mandadi pointed out the irony and asked whether one could happen without the other.

“If you don’t have the merchant acceptance, you can’t have [a new pay­ment option],” he said.

Historic trends show that payment methods will take off in areas most fertile. For instance, mobile banking in coun­tries such as China is growing because of the lack of banking infrastructure. The United States is a different story.

Developing the ability to accept mobile payment is critical for retailers, said a spokesperson for New York-based mobile-wallet alternative Isis. The company exhibited in the Gilbarco Veeder-Root booth, with the two companies promot­ing a partnership. Through Isis and other technological modifications, Greensboro, N.C.-based Gilbarco will be able to accept mobile payment. (See related video online at http://on.fb.me/K8pkzg.)

Navigating Data

Other retailer attendees hoping to take advantage of emerging data-driven consumer insight are finding technol­ogy difficult to navigate. Wright Gore, a retailer with Oil Patch/Brazos Valley Inc., Angleton, Texas, is having a tough time just trying to extract data from his point-of-sale (POS). “The trick is to get the technology and POS system to do more than ring up a transaction,” he said.

One of about 200 people participating in a conference session on data mining, Gore listened to speaker Dave Hamilton, head of global analytics for data-mining company Aimia Inc., Montreal, talk about how it develops databases, segments cus­tomers and creates action plans.

Hamilton spoke of three components driving transaction analytics:

  • Shopper behavior: Develop ways to understand and motivate shopper attitudes and behavior.
  • Retail offer: Create a format, prod­uct offer and promotions tailored to customer needs.
  • Third-party relationships: Nurture mutually beneficial partnerships.

Data-mining companies are able to extract, refine and deliver information that creates an “agent for change,” he said, but pointed out that having informa­tion is only a step toward effective data use. Implementing change is equally as important.

With every transaction, information about the payment, product and the customer comes into play. “After know­ing transaction history, I can say if this person just had a baby or bought a new car,” Hamilton said.

In the c-store business, Hamilton said, frequency is a major goal, with increasing spend per visit adding less to the bottom line than a returning customer purchas­ing a whole new basket of goods.

Appealing to that customer may sometimes mean cutting items, especially if the goods are redundant or fail to add to the “breadth” of opportunity for the store set. For instance, some products are preferable as a second choice if a first choice is not available, he said. Knowing what those products are and having them on hand is critical.

Connecting transaction data to spe­cific individuals so that targeted offers will result can be a complex matter, espe­cially if no names, cellphones or e-mails are involved, Hamilton said. Ultimately, via loyalty programs, those core elements are desirable.

The mood around technology is changing within the industry, said Gray Taylor, executive director for the Petro­leum Convenience Alliance for Technical Standards (PCATS), Stafford, Va. “Used to be that IT got dragged into a project to make sure it worked,” he said. “Now [retailers] drive IT to take the lead.

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