'What I Know for Sure' CEO Insights on Loyalty

With Victor Paterno, President and CEO 7-Eleven, Philippines

Very few brands can claim to have 2 million customers shopping with them everyday, so there are fascinating lessons in loyalty for convenience retailers worldwide from the incredible success that 7-Eleven has achieved in the Philippines. As the number one convenience brand in a country of over 100 million people, 7-Eleven enjoys 72% market share through the more than 2,000 stores they operate. Speaking recently at the NACS Convenience Summit Asia, Victor Paterno, CEO and President of 7-Eleven Philippines, discussed his views on the role of loyalty in convenience so we in Liquid Barcodes were delighted to talk to him and get his perspective on building loyalty in Asia.

A key question we ask in these articles is ‘What Do You Know For Sure’ about loyalty. The simplicity of the question allows us capture key insights that are useful for others in the industry. When I asked what Paterno knows ‘for sure’, he is clear that his loyalty programme creates the ‘digital connection to customers’ – an essential link between online and offline channels. That’s 90% the reason that his programme exists. Paterno is clear that the acquisition cost of driving programme membership is high, but as the customer is already in the store, it’s ‘much cheaper’ than relying on external digital communication channels such as social media.

In order to achieve this digital connection, Paterno is embracing technology and the early seeds of the digital infrastructure in 7Eleven in the Philippines were planted almost five years ago in 2013. From glass scanners, to in-store kiosks and a fully online POS, plus the development of comprehensive digital loyalty solutions, Paterno sold rewards cards to an impressive 7 million people, with more than 500,000 already using the mobile app which was launched in 2016. The loyalty programme is called Cliqq Rewards and while the app version is free, physical rewards cards are charged a nominal fee of approx. 20 US cents. Card-based members can be contacted via SMS messages but this is both intrusive and expensive to use, so the app is the real focus for the business - offering direct communication channels with members and also housing the entire eco-system of loyalty partnerships including suppliers, eCommerce merchants and complementary loyalty programmes. As an emerging market, Paterno noted that not all smartphones have sufficient space to house many apps, so app download decisions really have to be earned.

In order to achieve this essential digital connection to customers, the Cliqq Rewards programme combines best practice loyalty and gamification techniques to drive engagement. Paterno outlined several key loyalty success principles which include simplicity and a compelling offer, supported by staff in stores continually reminding customers to join and scan.

Four best-practice features of Cliqq Rewards that drive loyalty and engagement include:

i) Simplicity of sign-up. Instead of creating customer ID or card numbers, across all channels the Cliqq Rewards programme uses the customers phone number as the unique identifier.

ii) Instant gratification: for example, the minute the customer engages on Messenger (one-click button), they are rewarded with 200MB free wifi in any 7-Eleven store.

iii) Flexibility: The Cliqq Rewards programme is built as a currency that other retailers can buy for their customers. 7-Eleven products also provide low-cost reward options that are easily accessible and universally appealing.

iv) Rewards: For merchants, loyalty programmes are created to drive customer behaviour, for customers, it’s all about the rewards. 7-Eleven offers a relatively rich reward value of 2% in points, and is also developing conversion of points to store credit in response to customer’s demands.

By contrast, one initiative that hasn’t worked as well as expected is the loyalty platform integration for Cliqq Rewards with Facebook Messenger. Although it should be very useful given the penetration of Facebook, surprisingly, this development has not been as useful or effective as expected – an experience Paterno says is shared by many brands that have experimented with messenger bots, so this is a caution for other programmes considering adopting the channel.

Measuring Success:

As expected, the key performance indicator that 7-Eleven monitors and measures is the penetration of its transactions that are ‘carded’ – either digitally or physically. Given the small transaction amounts being spent, especially in emerging markets, this behaviour is more difficult to drive than in larger format stores and Paterno admits the current penetration is lower than he would like. In larger spend grocery stores, market penetration is estimated in the 60-80% range, however convenience stores rarely achieve even 40%.

A Vision for Loyalty

Paterno believes that 100% of customers can be recognised and rewarded using the latest technology, but their trust will first have to be earned. Innovative solutions such as facial recognition are compelling to business owners in any retail environment as the application is truly universal and it is already used extensively in countries like China where privacy laws are lax. It is also prevalent and an accepted technology for international border control in many countries, however it has yet to the trialed extensively in the convenience/retail sector – until now.

Paterno’s colleagues in 7-Eleven in Thailand just this month announced trials of facial recognition technology in all 11,000 stores – a truly ground-breaking project in terms of sheer scale of adoption by one company, so Paterno is excited about that project’s potential. However in the current climate of questionable privacy policies and data protection by the giants of social media considerable delays are likely before this technology is implemented in the Philippines or 7-Eleven stores elsewhere.

Future Focus:

Paterno’s vision is built on the importance of selling ‘more than just a little bit’ to customers, creating physical retail solutions for eCommerce merchants that leverage the power of 7-Eleven’s distribution and logistics capabilities and combines them with the marketing permissions earned by building an engaging loyalty programme at scale.

No other retailer has the footprint needed to offer retail collection services to merchants and consumers who increasingly shop online but need to get the product home. Using their loyalty insights, expertise and platform, Paterno is creating a powerful solution that eliminates the need for expensive lockers and allows his customers the added convenience of shopping online while saving the cost of delivery.

It’s a masterful stroke and it’s truly on-brand for this retailer that continues to define and drive the convenience sector. With their relentless focus on satisfying customer’s needs whether online or offline, powered by a digital database to deliver insights and rewards, I have no doubt that 7-Eleven will continue to thrive with their innovative services and solutions that benefit consumers, partners and the business alike.

About Liquid Barcodes:

Liquid Barcodes is a global marketing technology company focused on the convenience and foodservice industry. We create and manage compelling digital promotions in real-time for retailers, brands and partners.

How we do it:

We have developed the world´s most advanced dynamic couponing platform. Our technology transforms digital marketing in the convenience sector by closing the loop between the customer and the store. Retailers and brand partners reduce their marketing costs, and connect with their customers using innovative mechanics that truly engage customers and increases their spend and frequency of purchase. That’s live loyalty.

Check out some of our exciting/proven results here:

www.LiquidBarcodes.com

About the author:

Paula Thomas

Chief Content Officer, Liquid Barcodes and Independent Loyalty Consultant

With over twenty-five years marketing experience, Paula specializes in loyalty marketing consulting, advising and managing consumer loyalty propositions, loyalty strategy and operations. In addition to her work with Liquid Barcodes, her clients have included Telefonica O2, Three Mobile, Electric Ireland, Allied Irish Bank as well as Avios. She is also a judge for the Loyalty Magazine Awards.

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