Getting info on your customers can help you target their specific needs, turning unknown shoppers into loyal, repeat visitors.
By Brad Perkins, Contributing Editor
Data is everywhere. It’s in your gas pumps, your computers, your cash registers and your phones.
While some information is just numbers, much of that data can be important to figuring out what customers buy and when.
But how do convenience stores collect, store and use that data in a way that benefits both retailers and customers? The answer is simple and complex.
“Customer data is the holy grail, that’s what everyone wants,” said Lesley Douglas Saitta, CEO of Impact 21 Group, a consulting firm that specializes in the convenience, retail and refining industries.
That’s because collecting relevant customer data is key to understanding how customers interact with your business. With the prevalence of data mining companies and software, gathering customer data is easier than ever.
MINING FOR GOLD
But there’s also more of it. Data is more than demographic information. With segmentation into age groups, purchasing habits and product-specific interests, convenience stores can understand sales figures and target specific customers. But it does involve investing in new systems, either internally or externally.
The first step is securing buy-in from all levels of the organization—from executives to marketing, IT and store employees, who need to be engaged in the experience so that they ask customers for their loyalty cards and ensure data capture at the register or point-of-sale. And it continues with figuring out what customer data is valuable for you.
“Whether you are purchasing business intelligence software or developing it in-house to analyze store level data, the first step is to understand the depth of data that your marketing, operations, loss prevention and financial departments are expecting, said Jenny Bullard, chief information officer for Jones Co., which owns Flash Foods, a 171-store chain in Georgia and northeast Florida. “This initial communication with those departments goes a long way in finding the right business intelligence software for you.”
Stores that collect traditional information like name, address, e-mail or phone can still know who customers are. But to truly talk to customers every time they come into a store, segmenting using data software or a data mining company lets a store understand exactly who its customers are.
“You can segment based on transaction data without a loyalty card, but it’s not as valuable because without registration, you’re just getting transaction data,” Saitta said.
Building a multi-level program can show what customers bought—and didn’t buy—over a certain time period and can drive products and promotions that will bring more customers into the store.
“Do research to find out what customers are looking for in your market,” said Mike Newman, executive vice president of NOCO Express, a family-owned convenience store chain with 37 stores across western New York. “See what drives behavior. That’s the big challenge, how to motivate people to do what they may not do—trying to add on to what they’ve purchased.”
For NOCO Express, the desire to know its customers grew out of the realization that the rewards program it began in 2004 had become out-of-date.
“It started as way for customers to turn the pumps on,” Newman said. “We needed to make people pay first and one way to do that was to do that was to use a card that if they drove off, we’d have their data.”
NOCO evolved the program into its Friends and Family Club, allowing the retailer to offer discounts with an AAA card or by linking a debit card or checking account to earn gas discounts.
It was a great start to understanding what customers purchased, but NOCO soon found it wanted more than general information.
“When they’re anonymous, it’s hard to know who customers are,” said Justin Rokicki, NOCO’s director of marketing.
So the c-store built a new loyalty program, launched this year, aiming to target data that the company previously was not able to capture.
“One driver of the new program is that we couldn’t use data that effectively,” Rokicki said. “We didn’t have the technology and we needed to be better at seeing what kind of cross-sales we need. Now that we’ve upgraded the registers [to NCR registers], we can upgrade the loyalty program so they can speak to each other.”
NOCO performed focus group studies to determine that customers preferred instant rewards and began to build a program to suit its customers, which is a key consideration.
“It can’t be all things to all people,” Newman said. “You have to decide what demographic; what kind of data you want to see and what you want to do with it.”
And that was NOCO’s challenge: to find a way to offer services to customers and find ways to talk to them that ensured the proper balance between what the c-store customers wanted and what it could afford to offer. The new program requires more contact information than the previous program, but also offers customers more benefits.
“Once we get data collection squared away, we’ll send them select offers,” Rokicki said. “A typical person usually gets a 20-ounce Coke and a Snickers bar; if we find a group that never gets a candy bar; we’d send them that kind of offer. We have to see what drives behavior.”
A GO AT NOCO
As customers engage further with NOCO, the company will offer more specials, allowing customers to advance along a savings and rewards tier as they provide more data. Eventually, NOCO will look into added functionality for smartphones, but security issues prevent it right now.
Security remains a hot topic—customers are wary of giving too much information and hacking remains a threat. Like many convenience stores, NOCO’s operation is PCI-compliant as well as vigilant about securing, protecting and reviewing captured data. Another step in ensuring security, Saitta said, is to restrict access to data to only those who need to use it.
“All the things that PCI compliance is driven around has protected data pretty well,” she said. “If you’re a convenience store and you’re collecting that data, you need to treat it like it’s credit card information and use the same firewalls, encryption, security. Everything you’ve done for payments you need to do for loyalty programs.”
Still, most customers and stores feel data sharing is worth it. Stores learn who their customers are and customers appreciate targeted offers and ease of earning rewards and making payments. The key is using data and technology that is right for you. That’s true no matter the size of the customer base—the best way to effectively talk to your customers is to have data on what they do in your store.
“We took what were anonymous customers and truly made them friends and family,” Rokicki said. “It allowed us to communicate to them, market to them and drive them into the store with specials.”