The department store is trying to engage more directly with its key customers rather than talking to different demographics. David Walmsley, chief customer officer at House of Fraser [IRDX RHOF], tells Penelope Ody how it’s doing this
“What does loyalty mean?” asks David Walmsley, chief customer officer at House of Fraser (HoF). “The focus is always on how loyal the customer is to us, rather than how loyal we can be to them.”
Seven months into his job at HoF, David Walmsley, formerly the digital director at Marks & Spencer, is transforming the department store’s view of its customers. Focus groups, analytics and social media have helped identify the chain’s core customers as women in their 40s, typically with two children, earning two or three times the national average and likely to have a higher level of education. “Traditionally, department store shoppers divide into two groups: young mums and older women,” he says, “but our core customer is bang in the middle. She’s interested in fashion and knows her style but dislikes such expressions as ‘age appropriate’. She also wants to be challenged and discover new things.”
Like many other retailers, HoF used to divide its customer base into six basic segments, which guided targeting for email promotions. Today, the emphasis has shifted. Core customers – who often have both a House of Fraser credit card and a Recognition Reward loyalty card – now receive personalised and well-targeted emails with rich content, high-quality imagery and plenty of style.
“If a customer receives a beautifully crafted email on Thursday from House of Fraser full of the ‘wow’ factor and highlighting something new and stylish, then she’s much more likely to visit the store on Saturday to take a look,” says Walmsley. “We know from our focus groups that our customers don’t want to keep on receiving emailed promotional offers or money-off deals.”
Changing the email approach has meant a fundamental switch in how HoF measures success. Previously, RoI was the key metric for assessing achievement. Send out a discount offer and it was very easy to measure the take-up.
However, the new personalised approach uses an individual’s shopping and browsing behaviour to drive a targeted message. This might be, for example, about new ways to wear a simple fashion item illustrated with that “bit of wow”. Success may be harder to quantify but the company’s record sales figures in the run-up to Christmas 2016 suggest that the approach might be helping.
Asking customers for their opinions is something that HoF has been doing for a couple of years through its Your Say shoppers’ panel. Consumers join via the website and then form a readily accessible group for instant feedback. Typically Your Say panellists may be asked for reaction to a new advertisement or which brands they would like to see in store and, as Walmsley says, panel members are “not shy with their views”.
Focus groups, customer panels, loyalty and credit card analytics, customer satisfaction studies, verbatim comments from shoppers and “social listening” have all helped Walmsley and his team to gain a clearer view of customers’ needs and opinions. Not only does this enhance engagement, it also helps to “hold a mirror to the business, which is the key role of my team”.
Changes are also planned for the company’s loyalty scheme. Launched some 15 years ago, the Recognition Reward Card is still predominantly about collecting points that can then be ‘spent’ in store. “Our core customers like their points,” says Walmsley, “but they also like new experiences. We’ve just kicked off a new project on loyalty, possibly looking at moving towards more of a club concept.” The current loyalty scheme also includes the HoF app but that too is under the spotlight. As Walmsley says, “Ask why we have an app and the answer is along the lines of ‘We’re a retailer and retailers have apps’. But there has to be something in it for the customer.”
As with many long-established UK chains, HoF has had its problems in recent years. Its year to 31 January 2016 was the first to deliver profit before tax since 2016, with ecommerce standing at around 19% of total turnover. Despite current trading challenges, as it continues to move away from an emphasis on ‘deals’, engages more closely with its core customers and focus on delivering the brands those customers want to buy, long-term prospects look more optimistic.
As David Walmsley points out, today’s shoppers are savvy and understand perfectly well that if something is heavily discounted, it is probably over-stocked or is a special purchase to give a low-price offer. By buying it, they’re helping the retailer. “They see it as rewarding the retailer, not rewarding themselves,” he says. “We need to remind our customers that we love them rather than shouting about deals.” Typical of this approach – perhaps not unconnected with Valentine’s Day – was to send a gift of chocolates to the company’s best customers. “That is how we engage with customers,” he says, “by telling them that we love them.”