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David Sims Using Customer Data To Drive Customer Loyalty

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 By David Sims

'Know Thy Customer' Just Might Save Sears

It's no secret that Sears has suffered through six years of declining sales and increasing customer dissatisfaction. But it thinks it has a way out.

Industry observer Steve Smith reported at the end of February that Sears Holdings suffered a net loss of $2.4 billion in its fiscal fourth quarter, "and revealed the sale of 11 Sears stores and the spinoff of various businesses to raise cash."

Times are tough. But Lou D'Ambrosio, who's been on the job as Sears Holdings' CEO for just a year and change, is determined to save the company, not sell it for parts. How? By getting to know his customers better. A lot better.

For years now, Sears has served as your reliable go-to resource for case studies on poor customer service. Customer survey consultancy Great Brook has even slammed Sears's customer surveys, ostensibly designed to foster customer satisfaction and loyalty, as contributing to customer frustration and disloyalty.

In the March 12 edition of The Wall Street Journal, D'Ambrosio showed that he knows the stakes. "We saw what happened to Borders," he said. "You don't change, you die."

So Sears is heavily promoting its loyalty program, Shop Your Way Rewards, designed to collect loads of customer data in exchange for discounts and freebies. David Slavick, VP, Retail Consulting for Customer Communications Group, was involved in setting up the program, and says Sears is intent on not only "optimizing ROI from existing customers, but using that insight to acquire new customers."

The program gives shoppers points for purchases at Sears and other Sears Holding retail outlets, such as Kmart, Land's End and MyGofer, points which are tracked and saved at the point of purchase and recorded online, and can be redeemed for merchandise.

Smith says Sears also "allows customers to pick up or return a purchase at the stores in five minutes or less," gives floor sales personnel iPads to help find exactly what the customer wants and follows up "in-store visits to the consumer electronics and appliance departments with a summary of products that were viewed, and the ability to purchase them offsite with one click."

Is it too little too late? Jim Sullivan, a partner at Colloquy, loyalty marketing firm who's not involved with the Sears project, told the Journal that "even the best loyalty programs can't fix a fundamentally broken brand."

Indeed — who's loyal to the greatest ship in the world if it's sinking?

Business consultant Kevin Stirtz notes that, in fact, most loyalty programs don't work, because they're really "customer retention" programs: "Their focus is wrong because it's all about benefiting the company. So, it serves the company, not the customer." Stirtz advocates good, old-fashioned listening to customers, remembering what they say and acting on it as a more reliable customer loyalty approach than gimmicky programs.

Jarrett Paschel, vice president of strategy and innovation for research consultancy The Hartman Group, says the most effective approach to customer loyalty "channels the human desire for surprise and delight with gifts of meaning and significance" -- a hotel putting a free bottle of champagne in a guest's room.

More modestly but just as effectively, the manager of the local DVD rental shop will occasionally give me a DVD free of charge he thinks I'd like, and listen to my opinion of it to better tailor his recommendations in the future. We rent from nobody else.

Following this approach, D'Ambrosio can personalize the Sears brand experience for customers instead of using the stockpiled customer data just to blast out marketing emails: Send somebody who buys a lot of chips a coupon for free dip. Surprise and delight people for little cost.

It isn't the value of the item so much, just that the customer feels known and thought about -- if someone buys a couple pairs of shoes Sears can send them an email saying "We hope you like the shoes, you'll need some socks to go with those. Here's a coupon for two free pairs of socks next time you're in."

It's easy to come up with ideas, and the more offbeat and memorable, the better. Somebody buys a significant amount of lingerie? They get a free box of chocolates or a bottle of wine. This isn't rocket science. The customer gets a chuckle out of it, mentions it to a friend and remembers Sears fondly -- "Target never gives me free socks."

And so the comeback goes, one customer at a time. End

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... personalize the brand experience for customers instead of using the stockpiled customer data just to blast out marketing emails. Send somebody who buys a lot of chips a coupon for free dip. Surprise and delight people for little cost.

 

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