THE VOICE OF THE LOYALTY MARKETING INDUSTRY SINCE 1990 VOLUME 11, ISSUE 1, 2003
(käl´ a kwe ) n. 1. A conversational
Is your business stuck
in data infancy?
Learn how loyalty analytics
can help you grow your
business from the toddler
stage through adolescence…
and on to analytical adulthood.
Also in this issue ...
• Shell Stays the Course • U.K.: Air Miles vs. Nectar
• Technology Report: Doing it in Real Time
Online exclusive ... The COLLOQUY Interview with Fabio Garcia, Banco Popular
visit COLLOQUY online
Doing it in Real Time:
A true real-time loyalty solution means
never having to say you’re sorry
By Jim Kuschill
The Holy Grail of loyalty marketers, extra terminals cost money, they
as we all know, is the ability to take up space at the register and
reward and recognize customers increase the checkout time. They
in real time. But sometimes the also require maintenance and
technical limitations of your POS repair, perhaps an additional
world will push back the strategic telephone line, and training for
design of your loyalty program. If your people to use them.
your POS system can’t accept a
member number— the most basic The only data you can realistically
technical requirement for running expect to collect with these solutions
a program— then you’re certainly is the transaction total— nothing
a long way from real-time loyalty. about tender or product. Even
So how do you get there? worse, these solutions increase the
potential for error and fraud from
If you have a credit card terminal incorrectly keyed amounts. You can
separate from the POS, then you catch a lot of fraud and associate
have a few less-than-optimal basket details by reconciling keyed
solutions. You can limit your loyalty transaction amounts with trans-
program to holders of your private- action logs from the POS. But your
In Part I of Jim Kuschill’s loyalty label credit card. Or you can success will vary depending on
require members to register their how well your standalone units are
technology audit (“Cashing Your credit cards when they join, and synchronized with the POS; if the
then filter your transaction log to loyalty card terminals have different
Reality Check”, COLLOQUY 10.4), select the registered cards. Both dates, times or lane numbers, then
options affect your strategy. In the you’re in trouble.
we learned about the challenges first case, you’ve limited your
loyalty program to a credit-related But let’s say that your POS system
of reconciling loyalty strategy with solution; in the second case, you’ve is smarter than an Enron accountant,
sacrificed brand and program and primed to accept member
reality at the POS. But what can recognition upon the altar of third- numbers. How close are you to
party cards. Both solutions also real-time loyalty? Do you have
you do if your POS terminal won’t change your ROI model— the first an in-store network? Are your
much more than the second. And POS devices on that network? If
play ball? Can you still enact a in both cases you are going to so, do you have in-store servers
ignore your customers who pay by that can communicate with the
real-time loyalty program? Or are cash or check— this is generally outside world?
not a good idea.
you stuck punching holes in cards If your stores are networked and
There are a few additional alterna- online, then you’re close to the
or handing out stamps? In Part II, tives. In very low-volume situations, Grail (though that situation is
you might actually be able to key currently as rare as an albino
Jim outlines your options and the transactions into a spreadsheet, alligator). If your POS systems are
which you later upload into the not networked, then real-time
cautions against stopgap measures. loyalty program database. You might means a standalone terminal and
also deploy a standalone device, all its associated problems. But if
typically a standard credit authori- your store is networked but not
zation terminal, to communicate online, then you might fall prey to
with the loyalty program. But the a seductive solution that we would
COLLOQUY 10 Volume 11, Issue 1, 2003
visit COLLOQUY online
counsel you to avoid: the “home If you’re storing thousands of information to the right locations.
store” solution. member records at each location, Your POS systems can talk to the
then sequential data scanning in-store server, allowing you to thank
Because customers can’t geograph- would simply take too much members by name, give them their
ically get to too many stores, time. You need some sort of point balances and even target offers
program members tend to frequent indexed access capability, which based on historical purchases in
the same stores regularly. When you makes the application that much real time. What’s not to like?
combine this knowledge with the bigger and harder to certify.
low cost of PC disk space, the lure The most often overlooked issue
of storing member information • The first time a member visits a associated with the “home store”
within individual locations is strong. store she hasn’t been to before, the solution is the necessity of distrib-
After all, many retailers poll local database won’t contain her uting the loyalty program rules to
individual stores on a nightly information, which means no point each POS device or to the in-store
basis to collect POS or inventory server. If the rules are distributed,
balance on her receipt.
information while pushing back then of course the “rules engine”
Since the store really isn’t online,
price changes and reports. Why not (the software that interprets them)
member actions at one store
collect loyalty program member must also be distributed. Some wags
information while we’re at it? have argued that the distributed
model works best— and it does in
Well, there are lots of reasons to
“If your stores are networked fact offer some real advantages.
avoid the “home store” solution.
Providing a point balance on a
Here are a few: and online, then you’re close receipt does reduce call center
• Will the IT group let you install a new to the Holy Grail of real-time volume, which likely outweighs
application on their store servers? the increase in bad-balance
loyalty— though that confusion. You might also be able
If so, can they install the software
automatically and remotely? If situation is currently as rare as to get by without a large central
processing capability, although the
not, then you probably just blew an albino alligator.” lack of such will degrade your
• How much data do you need to move?
You’ll need to know how many But maintaining hundreds or even
members buy from each store daily, thousands of copies of a program’s
won’t reach the other stores until
how many stores they frequent rules, along with the supporting
the update cycle completes. What
and the number of transactions engine, involves a “distributed
happens if the member visits
per member over a given time level of detail” of nightmare
two stores in the same day? The
period. And since you’re trying proportions. Even if you solve this
second point balance is incorrect,
to keep multiple databases in problem, you’ve nevertheless
and you’re no longer working in
sync, you’ll need a full refresh introduced hundreds or thousands
regularly— a data enema, if you of data silos that won’t be able to
will. The time required for such a participate actively in a world
• Then there’s the fraud potential.
download is small, but unless where multi-channel information
If I’m unscrupulous, I could
you download all transactions delivery and interaction will
redeem the same points a
and post them before you update become the norm.
number of times in one day by
the store data, you’ll create visiting multiple stores. To All of the above can be boiled down
synchronization problems if a combat this problem, you can to a fairly simple rule of thumb: if
member transacts at two or more either prohibit in-store redemp- you want to do one thing in real-
stores in a day. tions or dial out and check the time, you need to do everything in
master database in real time. real-time. To do anything less
• You need to keep the data at the store
and provide a way to access it. short-changes both your customers
Let’s assume that you’ve worked
Thankfully, even low-end PCs and your organization.•
through these problems. You’ve
now have some pretty massive certified and downloaded your Jim Kuschill is COLLOQUY‘s
disk drives, so you likely won’t application. Your local store technology editor.
need to add local storage space. calculation processes are humming
But how do you access the data? along and sending the right
Volume 11, Issue 1, 2003 COLLOQUY 11