Retailers Rely on Loyalty Cards to Understand Customers

July 10, 2007

This article is included in these additional categories:

Retail & E-Commerce

Gaining deeper customer insight is the key to gaining a competitive edge in the retail industry, according to “Understanding the Customer,” the first of three parts from a new Economist Intelligence Unit report titled “Intelligent Merchandising: Creating a Unique Shopping Experience.”

To identify and understand their best customers, companies most frequently track purchasing records through loyalty cards (40%).

Other popular methods are surveys (26%) and incentive contests (15%). Only 9% of respondents examine complaints and returns as a way to improve their performance.

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Other key findings of the report include the following:

  • Retailers opt mostly for traditional methods to keep customers loyal. Over half of the executives surveyed use new products (63%), local store activities (56%) and discounts for special customers (52%) to enhance customer loyalty.

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  • Customer satisfaction and retention are key measures of the success of promotional efforts. The success of promotions is tracked through customer satisfaction (55%), customer retention (52%) and sales per square meter of retail space per week (40%).
  • Executives rely heavily on sales staff to monitor the “customer experience.” The lowest-paid member in the retail industry is considered the most reliable observer of customer behavior. In-store traffic (31%) and customer opinions (31%) are seen as important indicators of customer satisfaction.

About the study: The report is based on a worldwide online survey of 180 senior retail executives conducted by the Economist Intelligence Unit for SAP. The executives were also interviewed for more in-depth responses and analyses.

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