Loyalty Cards Getting Smarter Means Couponing May Be Getting Better
January 26, 2009 1 Comment
Kroger (the nation’s largest traditional grocery chain) and dunnhumby (the British data mining company) have created a joint venture called dunnhumbyUSA that is significantly increasing coupon redemption rates.
It turns out that Kroger is mining their loyalty card data in a way that is signficantly boosting their savings via higher coupon redemptions. It turns out that Americans typically redeem only 1 percent to 3 percent of paper coupons, even in the current recession. But Kroger, In contrast, says as many as half the coupons it sends to its regular customers are getting used.
The difference is that Kroger is augmenting standard purchase information from its shopper cards (lots of companies do that) with dunnhumby’s consumer analysis and customer interview methodologies. This “blend” allows them to send customers the right coupons for the products they regularly buy.
If you’re a retailer or manufacturer you may want to keep an eye on dunnhumbyUSA. In addition to the obvious work the do for parent-partner Kroger, they have added Coca-Cola, The Home Depot, Procter & Gamble, Macy’s an Kraft Foods and others to their growing list of clients. In addition, their web site indicates that they have been adding new offices in cities around the globe.
It will be paticularly interesting to see if or what direction this joint venture might take couponing in the online space. Jedwar.com will keep watching.
Glad they’re finally doing something with all that data. When I worked with Peppers & Rogers Group, a major regional grocery chain asked for help figuring out what to do with the massive database of purchase information. We obliged with a range of options, they didn’t do anything, because — while they decided to collect the data — they didn;t invest in tools to organize, mine or integrate the data into a communications tool. It’s interesting that consumer businesses know the importance of collecting the data, but can’t figure out what to do with it. It takes one company to step up and prove the model, then the stampede starts not to be left in the dust. In all, a sorry business model.