Instore Customer Loyalty

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Getting a customer to go into a retail store and buy something is not always enough – you want the customer to return and buy something else. Most retail stores aim not only to obtain, advise and motivate customers to purchase but also, more importantly, to gain customer loyalty and encourage repeat purchases. Couponing, for instance, has long proven to be a valuable tool in gaining customer loyalty. However, there is a large gap between the successful discounting practices of the past and their modern alternatives. There are now hi-tech alternatives that can improve customer loyalty and thereby aid in the creation of a loyal clientele, while attaining additional customer behaviour data at the same time.
 
A well-known Canary Islands perfume chain store, Fundgrube (literally ‘Treasure Trove’), implemented just such a solution by deploying friendlyway kiosks. In doing so, Fundgrube incorporated digital media that supports the retail store through the introduction, implementation and administration of complex selling processes. The solution, called ‘Discount Box’, means that when a customer makes a purchase instore they receive a bar-coded receipt after payment. At the point of purchase, the cash register system issues a distinct discount item via the barcode, as well as including the date of purchase, cash register number, store number and discount in the bar code. The customers can then take this receipt to the friendlyway terminal, choose a language and scan the barcode.
 
After the discount box displays the percentage discount, the customer is prompted to answer a few questions pertaining to gender, nationality, length of stay, etc. A user-friendly touch screen and, where applicable, a virtual keyboard, facilitate a quick entry of this information, which usually takes less than two minutes.
 
Once the data entry is complete, the terminal prints out a ticket with the percentage discount and the barcode for the discounted item. When scanned at the next purchase, the barcode automatically triggers the discount. The same cash register algorithm is used for the calculation of the barcode. The customer data from each barcode from the terminal is saved into a database, which prevents the occurrence of more than one usage. The store’s central office compiles the data from all the terminals and carries out a daily download to one central database. A comprehensive evaluation of customer behaviour and demographics can then be made.
 
In order to protect the store’s data integrity, direct access to the merchandise management system is prohibited, but the customer does find out the percentage discount that they will receive. The discount scale is designed so that the customer receives a discount of up to 8% on a future purchase, depending on how much they spent on the initial purchase. For example, if the first purchase was €20, the customer would receive a 2% discount, whereas if they had spent over €116 (something easily achieved on perfume!) they would get 8%. These discount coupons can be redeemed on future purchases over €25.
 
The solution relies on friendlyway VAN terminals with 80mm ticket printers, barcode readers and touch screens. The discount box software controls the system so that the data generated is filed into a database, then queried from the ERP system (MS Navision), and converted into an MS SQL database. A direct connection to the merchandise management system was not designed in order to protect sensitive data.
 
According to Martin Wilke from Dreamtech Architects who programmed this solution, “the biggest challenge was to develop a user interface that could be utilised across all age groups, as well as people from various countries. We even went as far as developing distinct virtual keyboards for each language and each data entry. For example, the data entry for length of stay only displays numbers and not the complete keyboard.”
 
So far, the kiosks have been installed in nine Fundgrube stores. The two or three new stores scheduled to open this year are also to be equipped with these kiosks, demonstrating that the kiosk is now a permanent fixture of their store equipment. The daily total sales generated from the redeemed discount tickets accounts for an impressive €1,500. Approximately €800 in additional sales has resulted from the use of these terminals. Each kiosk averages about 50 tickets/ customer interactions every day.