How data is changing customer service

Dubai - Special offers and discounts aren't enough anymore nowadays. You need to go with the digital flow

Customer service and loyalty is not a new concept. Retailers have been looking at ways to encourage repeat business and devise loyalty programmes in different shapes or forms, for decades. They know it is much cheaper to retain a customer than to win one back.
However, as businesses digitally transform, customers are no longer simply looking for discounts, as products evolved into services and services evolved into experiences Today's shoppers are looking for an easy shopping experience, whether it's online or offline. They want a tailored experience, where they are given personalised recommendations based on previous purchases. They want their purchase journey to be as seamless and convenient as possible.
In a 2015 retail report, investment bank Alpen Capital predicted that the GCC retail market would grow at a compound annual growth rate of 7.3 per cent between 2013 and 2018 to reach $284.5 billion. A.T. Kearney has ranked the UAE and Saudi Arabia among the top 10 most attractive retail markets globally in its 2016 Global Retail Development Index, at seventh and eighth, respectively.
Dubai was also ranked second globally for international retail representation by real estate consultancy CBRE in 2016 for the fifth year running and UAE is forecast to see healthy growth. Given these figures, the Gulf region continues to be an attractive proposition for global brands.
Thus, in a region where consumers are spoilt for choice, retailers that stand out are offering experiences like these. And the key to offering experiences like these is using cloud technology, machine learning and data. But how exactly are retailers using data to deliver the ultimate shopping experience?
The purchasing journey begins with marketing. If a retailer is lucky enough to have piqued a customer's interest before, they can use existing data to effectively communicate their offering in a completely personalised way. If they know what customers have purchased in the past, what they've browsed on the website, what they've "liked" on social media and what promotional offers they've responded to, the retailer is able to tailor offers to their interests.
Social insights can be used to make marketing campaigns more effective. Similarly, personalising the content on a retail website to better cater to shoppers' wants and needs is another way for effective marketing. Sears and Kmart saw a 25 per cent increase in online sales in one quarter due to their "ShopYourWay" campaign where retailers targeted Niki Minaj and Adam Levine fans with dedicated Web stores for each artist, complete with integrated social media, tailored suggestions and coupons.
The first credit cards were essentially loyalty cards. Early credit cards were issued by oil companies and department stores, and were only accepted at the business that issued them to create customer loyalty and improve customer services. But loyalty programmes existed long before credit cards were even invented. They date back to the 1800s, when stores offered stamps that could be redeemed for merchandise.
A recent survey by Nielsen, shows that loyalty programmes remain relevant, with 55 per cent of respondents in the Middle East and Africa saying they belong to loyalty programmes. But with digital transformation, loyalty programmes have had to evolve. In the past, the loyalty programme was a way of acquiring new customers with point based programmes that lead to discounts. Today, the loyalty programmes that work are the ones that retain customers by understanding and rewarding them (instant gratification). In fact, while monetary rewards remain important, Nielsen's survey shows that the MEA has the highest percentage of participants looking for flexibility and non-monetary rewards.
The rise of mobile has meant that online shopping has become even more popular, with online stores offering apps that mean shoppers can shop from just about anywhere. While some might view this as the impending doom of the brick-and-mortar store, others will quite correctly view it as a physical store's opportunity to fight technology with technology.
Mobile beacons are becoming more popular and are being used by retailers to deliver real-time, targeted marketing promotions and offers based on the location and movements of shoppers in the physical retail space. Retailers are examining using beacon-triggered notifications to send messages to customer's mobile devices while they are shopping. Data gathered from the consumers' shopping habits can be used to send targeted offers to them, which not only offers convenience, but also encourages impulse buying.
Offering free Wi-Fi is another way of connecting with shoppers, as retailers can direct shoppers to their online channels. The data gathered here will then allow the retailer to send promotions and discounts directly to customers' smartphones, leveraging store apps.
Deloitte says that blockchain is set to reinvigorate the loyalty programme. Many loyalty programmes are not realising their full potential, with low client retention and redemption rates. But blockchain can help any business - big and small - turn this around. Blockchain offers a secure, digitised and interlinked network, eliminating inefficiencies and reducing costs while benefitting loyalty programmes of all sizes. This improves the customer experience as customers have access to most of their rewards programmes in one digital wallet. Blockchain allows all participating agents to intersect and interact in one system without compromising privacy or competitiveness. Established rewards programmes can control how they wish their customers to interact with the programme and small operators are given scale.
The retail landscape has changed - and will continue to change. Organisations that are embracing data, and adopting tools and strategies to ensure the discerning customer is kept happy and stays loyal, are the ones who are likely to benefit from digital transformation and survive in a highly competitive market.
The writer is head of retail, travel and hospitality at Microsoft Middle East and Africa. Views expressed are his own and do not reflect the newspaper's policy.