Thanx to the Future: How Big Data and Customer Loyalty Can Save Offline Retail
Nearly 300,000 employees at General Electric could tell you the company’s single largest customer (hint: it represents 3% of revenue). The same is true at newer enterprise software companies such as Box and even eCommerce brands such as Fitbit (if you’re curious, answers at the bottom of the post).
Yet brick-and-mortar merchants — from single locations to sprawling chains — are almost universally unable to answer this basic question.
Excluding the particularly on-her-game store manager with world-class facial recognition recall, high-value customers are often completely anonymous at their favorite pizza place, car wash, bowling alley or hardware store. And that anonymity merely masks a far deeper threat to the future of retail as we know it.
Yesterday, Thanx announced an additional $17M in venture capital financing to solve this problem. It’s a question far broader and more fundamental than merely identifying a single VIP customer. Data is king. From customer relationship management to marketing automation, from Net Promoter Score to cost-per-conversion advertising, business success is increasingly defined by a company’s ability to deftly capture and take action on data about their business generally and about their customers first and foremost.
When nearly 70% of revenue comes from the top 25% of customers, that’s clearly the place to start. Amazon uses past purchases and similar customer profiles to predict what you’re likely to want bundled with the current contents of your checkout cart. Hubspot monitors data signals from website visitors (such as downloading content or repeat trips to your blog) to parse high-potential, near-term enterprise buyers from those who are merely browsing. Adroll delivers highly targeted advertising based on previous web browsing so that Gilt, for instance, can tease your Instagram with specific items that you’ve already considered buying — and then actually determine how often it converts you. The theme is data, personalization and to-the-dollar measurement; brick-and-mortar merchants have few analogues.
“In the online world, businesses have the opportunity to develop very deep relationships with customers [by] observing their purchase behavior over time so that you can get individualized knowledge of the customer… Then the customers are going to feel a deep loyalty to us, because we know them so well.” — Jeff Bezos, CEO of Amazon (1998)
It’s not their fault. For offline merchants, attributing specific purchases to specific individuals (aka “closing the data loop”) is notoriously difficult and personalization sans data is nearly impossible. Thanx offers a different view of the future:
- The easiest way for offline merchants to capture transaction data tied to specific customers.
- A robust suite of automated, revenue-generating marketing tools to act on that data.
Here’s how we’re doing it:
Thanx completely eliminates the technical burden of hardware or on-site integrations which have previously made it difficult for brick-and-mortar merchants to access and act on customer purchase data. Through direct partnerships with Visa, Mastercard and American Express, Thanx captures transaction data in real-time — without any hassle for merchants or consumers.
This approach has several key advantages:
- Significantly higher long-term consumer engagement. Of the three billion loyalty memberships in the United States, only 40% were active in the last year. By comparison, 98% of Thanx members remain active. The markedly-better retention rate can be attributed to a seamless consumer experience, as simple as paying with any credit card. But its more than just consumer-friendly: with 30x lower breakage Thanx captures a far more robust data set than retailers have ever seen before.
- Up and running in days without involvement from IT. As many as 50% of multi-location restaurants, for instance, have deployed more than one POS technology across their system. With each additional technology, integration becomes costlier in terms of both money and time. Resources are exhausted just getting the program live and ensuring that all the systems remain in communication functional as the IT landscape evolves.
- Directly measurable return on investment. When a merchant sends an email or launches a television campaign, it’s nearly impossible to track — down to the dollar — what kind of results it generated. With Thanx it’s easy. Our campaigns drive traffic to slows dayparts, reward VIPs for their undying love, and even identify and recapture lapsed customers, tying specific purchases to the promotion that brought them back in (these Winback campaigns deliver as much as 4000% ROI).
No longer will offline retailers have to watch the data revolution from the sidelines — which is good because it’s far better to be riding the tsunami than watching it crash on top of you. As Amazon attacks brick-and-mortar businesses that were previously thought “safe” from online incursion (see Amazon Go) and malls experience massive year-over-year traffic declines, brick-and-mortar businesses are being forced to adapt. Those, such as Chipotle, who long fought the idea that loyalty and customer data were critical to success, have learned the painful cost of waiting until its too late (hint: once your brand is already in crisis, its too late). The data revolution is just beginning for brick-and-mortar businesses which (even after a few tough years) still represent 13x more spending in the United States. Thanx is the catalyst. It all starts with identifying your top customers and showering them with love.
By the way, the answers from the first paragraph: GE’s top customer is the United States government. Box’s top customer is GE. And Fitbit sold over 300K devices to Target as part of an employee perk program. You can be sure that in all three cases, these massive businesses are rolling out the red carpet for their biggest spenders. It’s a good thing they know who it is.
