Savvy shoppers wait in anticipation, while Australian retailers are gearing up for the onslaught. Amazon’s arrival is imminent.
Prompted action via eDMs is a “vicious circle” that only encourages “bad loyalty”, according to Bookworld CEO, James Webber.
During a presentation at the Ad:Tech 2015 conference, Webber described how Bookworld’s customer engagement strategy draws from the failings of the now defunct Borders book shop loyalty program.
Following the closure of Borders in 2011, the company was bought out by media conglomerate, Pearson, which rebranded the Borders website as Bookworld, an online-only book retailer.
The company has since worked on developing a new loyalty strategy focused on interaction and engagement, rather than just prompted action based on special offers and one-off discounts.
“Engaged consumers are 23 per cent more profitable than the average consumer, so we knew the time and effort into making customers more engaged was going to pay off,” Webber said.
“We had the loyalty programs and we had promotions [with Borders], which drove traffic, but they don't drive the same emotional connection to a brand than some other forms of engagement. It's that emotional connection that’s probably the biggest indicator of long-term profitability and growth.”
Bookworld’s answer to this is ‘citizenship’, a loyalty program where users sign up for free to receive 10 per cent off all listed prices.
The new program has been responsible for a huge amount of Bookworld’s growth, accounting for 80 per cent of overall sales and 60 per cent higher sign-ups to marketing. According to Webber, ‘active’ citizens purchase 20 per cent more than the average citizen, and revisit the store 70 per cent more than the average consumer.
Bookworld is also using eDMs and social marketing to invite ‘citizens’ to vote for which products they want to receive special offers on, or where to set up the company’s next pop-up campaign.
Webber explained how, prior to its closure, Borders relied heavily on “prompted activity” through emailed promotions, which he saw as an ineffective loyalty tool.
“That leaves the consumer sitting and waiting for an email… and over time, they become addicted to these emails, and they won't come into your store until you send an email,” Webber said. “Why? Because they know another one is coming soon.”
What’s worse, management also becomes addicted to the eDM system, relying on this cycle to pull through if sales are low, Webber claimed.
“What’s happened, of course, is you over use this, and the more you over use it the more you create a diluted experience. I call this a 'vicious circle'... a 'prompted action' circle,” he said.
The next challenge for Bookworld is how to continue providing value to its ‘citizens’ following a hiccup with Google Shopping. As the new tool doesn’t list products with membership pricing, Bookworld was forced to make ‘citizen’ prices universal.
“The problem was what happens to our citizens? They used to get 10 per cent off,” Webber said. “The answer to that, unfortunately, is they get emails and promotions, which means we're now back into the [vicious cycle]... we won't be staying there. We will change that.”