Sam’s Club’s Personal TouchPosted by admin updated on 30 May, 2010
Today, most retailers offer across-the-board discounts or deals aimed at categories of customers. But industry experts say they expect retailers to move toward more individualized offers. Tailoring discounts to individual shoppers based on their buying history promises to maximize marketing budgets, build customer loyalty, and increase sales. Sam’s Club is giving this a try by offering personalized discounts for buyers through its eValues card.
The eValues program is the latest iteration in the fast-growing field known as predictive analytics, which uses vast amounts of data to spot trends and anticipate consumer behavior. Of course, retailers have long tried to decode consumer behavior, through surveys or test panels, or by using crude forms of data analysis. During the last decade, many retailers have amassed huge amounts of data through loyalty programs or membership cards. But they have done little with the information, other than using the cards as a branding opportunity or to offer broad discounts.
Some retailers, however, have used the data to figure out the right product mix and layout for their stores, or to offer discounts to categories of customers. Sam’s Club officials say they are “among the first to offer individualized discounts on such a large scale. A major challenge in creating eValues was the scale involved: the permutations of customer, product, location and discount exceeded one trillion possibilities for Plus members alone”. Sam’s Club worked with FICO to improve their ability to predict what each customer will buy and the time frame in which that purchase will occur.
The discounts are available to “Plus” members and can be printed from the member’s email, the Sam’s Club Web site, or from a kiosk located in the store. Using historical data on the shopper and predictive analytics, Sam’s Club is offering these customers discounts on the products or product types they generally purchase and even tailoring messaging to include product attributes known to be of interest to the individual consumer.
Customers are finding the discounts to be highly relevant to their needs. Additionally, these e-offerings are triggering needs customers didn’t know they had. One shopper, for example, came into Sam’s Club to buy food and left with two televisions because he couldn’t resist the $300 discount on a $1200 set.
Linda Vytlacil, vice president for member insights and innovation at Sam’s Club, said coupon response rate has risen from less than 2% to as high as 30% for eligible customers.
Sam’s Club is a chain of membership-only retail warehouse clubs. Founded in 1983, it is owned and operated by Wal-Mart Stores, Inc., and is named after Wal-Mart founder Sam Walton. Sam’s Club chain operates in 48 of the 50 U.S. States serving more than 47 million U.S. members. Sam’s Club ranks second in sales volume among warehouse clubs.