Were this retailer’s loyalty members turning into vapor?
This is what a major retail client suspected of a significant number of customers who joined its rewards program. Fewer members were showing up in its customer database than the number signing up for the program at initial point-of-sale. Far fewer.
It was as if, after enrolling in the program, the names and contact information of hundreds of thousands of new members evaporated. For every gallon of raw data that was fed into the company’s pipeline, just one quart of insights were refined.
“We suspected a leak somewhere,” said Christy Ehlers, the director of the retailer’s loyalty program at the time. “The trick was pinpointing the precise location in a network of loyalty data piping that crisscrossed more than 1,000 store locations across the nation, not to mention our ecommerce channels.”
We have a hunch this kind “hissing” data loss occurs more frequently than companies realize. Perhaps this is partly why less than half of loyalty members who share data with an organization say they ever receive content based on that information.
Could this retailer have been losing nearly half of its new members soon after enrollment? Here’s how one team of experts recovered a bounty of “lost” signup email addresses by going undercover and playing the role of new members.
The Data Became a Haze; The Cause Was Not
Companies know that reward program members spend more than non-members – by as much as 37%, according to some research. When only a relative trickle of contact information began entering our client’s database, it saw what was not there: millions of dollars in unrealized sales.
The first signs were evident by email. This retailer relied heavily on daily email communications to engage its enrolled customers, and the volume of new contacts being entered at the store level did not match the number of names collected by its third-party technology provider – not be a long shot. How could, say, 1,000 people buy something as a new member – meaning their information successfully entered the system – but only 500 show up in the database?
Data-input reports submitted by the tech provider revealed enough inconsistencies to raise the red flag. The conflicting information also made clear that if we wanted to find the data leaks, we were going to have to suit up and follow the data all the way through the pipeline. We decided to perform a real-time audit.
Heroics: Crawling Into The Data Pipeline
For background, it helps to know that our team members are dispersed across the country, a structure that played a critical role in the data audit.
Each member of the far-flung team enrolled in the client’s loyalty program and signed up to its email list at point-of-sale. The teammates were now each uniquely identified, or tagged, so they could be followed throughout various brand engagements and processes. It was literal follow-the-numbers-backwards work. Over a period of weeks, as we parsed through these numbers, we could see the associates – meaning their identifying tags – leaking through the cracks, and why.
It boiled down to a few critical instances of weak data piping:
- A shortage of talent monitoring the pipeline. It seems overly simply, but this challenge required a boots-on-the-ground approach. In this respect, a dedicated team of “data nerds” were crucial to spotting the leaks. They envisioned the end-to-end system as a giant puzzle that was missing pieces. Through funnel tracking and trial and error (within a predetermined allowable margin of error), they identified where pieces were missing, adjusted for variables and then restored those pieces, to complete the picture.
- No email hygiene tools. Store employees were doing their jobs by signing members up, but an email validation program, such as FreshAddress, had never been installed to vet the new email addresses. As a result, everything was being pushed through the pipeline. This could be a costly oversight: As many as 30% of emails entered on a list are invalid, according to VerifyBee. Research shows that a company can improve profits by 25% or more if it increases customer retention by just 5%. Lose a new loyalty member, and you get the opposite.
- Failure to send follow-up confirmation. This step would provide the retailer a real-time figure of database entrees to compare with transactions. Our client was not alone: Nearly 80% of companies spend less than 30% of theirbudget on customer-retention messaging.
Fixing these foundational issues took only a few weeks.
A Million Names Recovered
When our team returned from their pipeline excursion, they did so with more than 1 million retrieved customers. We plugged their information back into the pipeline, engaged them with a new one-to-one communications approach, and within months, our client’s loyalty activity accelerated, like foot-to-the-floor fast.
All of those missing-in-action members, upon receiving the marketing, started visiting its stores at a stepped-up rate. Within 100 days, the retailer recorded a $30 million sales bump. And the number of net new names that made it to the database rose 8% a month, indicating the leaks were sealed. No more vapor.
The “plumbing” work also enabled the retailer to build out more robust technologies, ensuring that every data-capture opportunity, at every customer touchpoint, was optimized to maintain member engagement, collect more insights and accelerate the cycle.
The best part: It was a relatively inexpensive and wholly unobtrusive fix, particularly when considering the sales upside. Those buried pipe lines may not be as sexy as unique rewards, but a successful rewards program depends on them for survival.
This article originally appeared in The Wise Marketer.