The John Lewis Partnership is an employee-owned company that governs two extremely well respected and well liked retailers in the UK – John Lewis department stores and Waitrose supermarkets. It is a company with a near £10 billion turnover, 85,000 employees (whom co-own the business) and over 340 stores across the country.
Wise to the changes occurring in shopping behaviour, John Lewis has invested strongly in digital and is beginning to reap the rewards – over the booming Christmas period the retailer saw approximately a third of its sales coming from online. It also experienced strong traffic via mobile. But its investments in digital are extending beyond creating easy to use and well designed platforms, it is also using a team that sits between the John Lewis department store and Waitrose supermarket brands that is dedicated to analysing data to better understand who its customers are and offer personalised promotions with the results.
Paul de Laat, the man in charge of this dedicated team, recently explained to delegates at a British Retail Consortium event in London how John Lewis is taking advantage of the ever increasing amount of data that's available to the retailer.
“We know quite a bit – we understand where you shop, whether you shop online, in store, what you buy, whether you're responding to promotions. From that [data], combined with market research, we can create very good profiles that we then use to drive a differentiated customer experience.
“One of the things that we launched two years ago is our loyalty programme – is it earth shattering? Absolutely not. But it is working extremely well. Why? Because we started off with something very simple, which is more like a thank you for being a valued customer. Then it started to evolve into something significantly bigger.”
We aren't bribing people
Unlike other loyalty schemes, John Lewis doesn't expect customers to shop and build up points to reap rewards. In fact, the sole purpose of the loyalty card is for John Lewis to collect data on you in an attempt to understand you better as a customer, so that when it offers you a promotion it is something that will be specific to you.
“There's no points – it's revolutionary. Everyone made fun of us to start, because they said that it was never going to work.”
The Partnership now has 3.7 million people that use its Waitrose membership card on a regular basis and it has 65 percent of sales going through the scheme, which Laat describes as “not bad” considering other companies that “bribe their customers with points” are hitting about the 70 percent mark.
“On the one hand we encourage people to do more of what they like, give them rewards and offers for the things that they already like. But then we compliment that with the things that you are not yet buying and could be buying.
“Because we have millions of customers to compare with, with very comparable profiles, we know that one customer might be in the market for a particular group of products.”
One example of the Partnership's attempt to use customer and transactional data to create personalised promotional offers is by tracking how often shoppers use their card. If a shopper is swiping their loyalty card once a week at Waitrose, for instance, an email will be sent to that customer thanking them for using their store so often. However, if the loyalty card hasn't been used in two months then an email will be sent urging the customer to come back, explaining the benefits of the scheme – rather than a standard email being sent to the entire database.
The Partnership takes this further by tailoring the offers that are sent out to the customer's personal tastes.
“We had a special offer around wine that we based on the products that customers bought and wine they have bought in the past.”
The results spoke for themselves...
“It's quite interesting for the people that went on to buy wine as a result of this, half of them bought the wine that we recommended. It shows you the power of true recommendations and showing you understand customers as true individuals. Give them something that's relevant.
“We are also starting to use all of that insight and data online. Online is a fantastic medium to start interacting with the customer in a much more effective way compared to outbound communications, where you shoot and you hope something comes back at some point. Here you can really start to personalise and really increase the engagement of customers online.”
Getting more from mobile
One area that the John Lewis Partnership has not fully taken advantage of yet within its loyalty scheme is deriving additional benefits through the use of mobile. For example, the scheme is now looking at how it can build promotions into its mobile application – which could also take advantage of location based offers, where a customer walks into a store and he or she is served personalised information to their smartphone. This is something a lot of retailers are keen to adopt, but not many have been successful.
Another trend that could soon develop is the use of loyalty schemes via your smartphone – to save customers carrying around a number of loyalty cards, they could all be stored within an application on your device. Laat sees benefit in this for the customer, but also warns that there are risks for the retailer.
“The risk is that a customer can go in somewhere, ask if that store has a loyalty card scheme and is able to flick through [their phone and find it]. The loyalty schemes become standard to have and people people lose track of which scheme they are using and what the benefits are.
“But that's why we want to continue to create benefits that are highly personal. However, the practicality of storing all these plastic cards in two or three years will be completely outdated.”
The Partnership is now also carrying out trials in its John Lewis department stores to see how iPads can be used by its employees to better interact with customers, by asking the shopper to scan their loyalty card on the tablet when dealing with an employee. Although still in a pilot stage, there is potential for this idea to be rolled out nationally – but Laat is cautious not to impose on the customer.
“Using customer data within the store is very important to us. When you walk into a store today, employees in the store have no idea who you are and have no idea what you have bought before, so are not able to recommend other products and services.
“So we are doing some trials with iPads and tablets where we give our partners (employees) access to customer data by asking the shopper to scan their loyalty card, to see whether that really enhances the experience, or if it's just a hassle. Or whether it's better to focus on the customer in the moment with their needs during that interaction.”
The John Lewis Partnership loyalty scheme is different to many of its competitors in that it doesn't gain brand traction by urging its customers to spend more through a points based scheme – or “bribery” as Laat puts it. Instead, its strategy is to understand its customer better and keep them coming back to the store by making the shopper feel like John Lewis knows them really well, serving them offers that the shopper feels like they cannot get anywhere else. Truly personal.
Although there is a fine line to be drawn between personal or convenient and an annoying invasion of privacy, John Lewis seems keen to test what works for the customer before rolling out anything permanently – as can be seen with the iPad trial.
The John Lewis loyalty schemes are still relatively new, only being a couple of years old. However, if the Partnership is as successful on the mobile front, as it appears to have been with its other efforts, then it could have developed a new model for loyalty schemes and others in the industry are likely to be watching closely.