How Home Hardware is building customer loyalty through relevancy, one customer at a time

In the quest to retain customers, many retailers across Canada have created their own or joined existing loyalty programs. Rewarding customers for their loyalty and leveraging the data that’s collected as part of these interactions as a means to build real relationships with customers has gained a lot of ground with brands—including Canadian retailer Home Hardware. But as most CMOs know, it’s much easier said than done.

Home Hardware, Canada’s largest dealer-owned hardware, lumber, building materials and furniture cooperative, prides itself on providing unique customer experiences across Canada. The guiding ethic of the retailer is that “community and common good is simply good business.” This customer-centric approach coupled with ensuring qualified staff and services are unique to each location based on local market needs has been the ethos that has solidified the retailer’s nationwide success.

In order to offer further value to existing customers and incentivize a new customer base, Home Hardware joined as a partner in Aeroplan in 2007. Aeroplan now has more than 4.8 million members who can earn Aeroplan Miles with a growing network of over 75 world-class partners, representing more than 150 brands in the financial, retail and travel sectors. Given that approximately one in five Aeroplan members shops at Home Hardware, it was a natural fit.

Data that matters

Coalition programs like Aeroplan, by nature, allow participating partners access to the benefits and the power of a larger loyalty program without carrying the burden of operating costs, lengthy set up times, complexity and talent challenges entirely on their own. It provides access to a large wealth of data, a sizeable advanced analytics resource, proven predictive model experience and proven as well as repeatable lifecycle programs to drive many different KPIs for a participating brand. Coalitions encourage members to consolidate their spending at participating partners, in this case, helping to keep Home Hardware a top-of-mind DIY retailer. Home Hardware has seen a significant increase in total spend by Aeroplan members year on year since joining as well as increased basket size and frequency.

With the growth of customer data sets—from loyalty programs, third-party data sources, social media and transactional data—as tools in a brand’s marketing arsenal, Home Hardware was interested in leveraging Aeroplan member data to increase relevancy in member-targeted communications.

Many companies are becoming adept at recording and analyzing consumer data on several levels to inform their customer communications. Past-purchase data gives companies great insight into customers, given that buying often occurs in patterns. When data is used in aggregate, intelligence emerges and predictive models can be built. If a company knows the likelihood of a customer wanting a specific product, that message can be served with specialized content rather than mass messaging.      Additionally, this type of purchase behaviour data can also become the foundation for personalization campaigns that deliver meaningful content and offers.

Most recently, Aeroplan acquired new customers for Home Hardware by using these sorts of member data insights to direct those Aeroplan members with a higher propensity to shop at DIY retailers towards the newly revamped Home Hardware website. As such, the number of Aeroplan members who shop at Home Hardware grew this year by five per cent.

Digital communications have become a very successful marketing tool for retailers but there are, of course, sensitivities and limits around all of this. According to recently conducted research by Aimia, three out of every five Canadians say the volume of digital messages has increased during the past year. 71% of Canadians don’t want to be bombarded with offers and would prefer to be sent offers that are most relevant to them.  Companies need to respect their customers’ preferences and provide them with tangible value to avoid harming the relationship.  The same research noted that the majority of consumers don’t mind when marketers use lifestyle and shopping behaviour data to deliver more relevant offers. 74% of Canadians are most likely to notice emails with the “right” marketing offers that are relevant to them.

12.3% of Aeroplan members shopping at Home Hardware for the first time this year did so because of relevant and targeted marketing driving them to the retailer’s website. These new customers have proven to be of tremendous value to Home Hardware, having an average basket size closely aligned with higher value in-store purchases. The targeted marketing coupled with Home Hardware’s new omnichannel shopping experience, has created an excellent opportunity for growth for the retailer. The online shopping cart also integrates Aeroplan Mile accumulation on purchases, allowing for a seamless customer experience.

New ways to connect

Recently, Home Hardware looked at the direction of the marketing space—with the shifting headwinds of data and customization—and decided it was time to tweak the course of its marketing efforts; and that meant the retailer adopted a more focused approach.

In November 2015, a marketing program was created using Aeroplan’s rich data set, advanced analytics depth and proven execution experience to show the relevancy of Home Hardware communications and offers to targeted Aeroplan members. Home Hardware’s goal was to increase sales by driving click-throughs to their website. A highly segmented email was created to showcase merchandise in categories that were particularly relevant to a number of Aeroplan member segments. For example, Home Hardware carries an exclusive premium line of home wares called Kuraidori that suits the lifestyles of many Aeroplan members. By educating specific members on relevant categories and offering them incentives, the campaign drove an increase in average basket of 16% over the previous year. Through leveraging Aimia’s data analytics capabilities, the campaign put Kuraidori products in front of the right Aeroplan members, avoiding a mass campaign that would cause customer fatigue and irritation.

The ultimate goal is being able to communicate with the customer in a manner that demonstrates an understanding of their preferences. A loyalty mechanism in conjunction with a robust data analytics strategy that rewards not only for desired behaviours but also recognizes those moments where there is risk to the foundations of the relationship should stretch across all customer interactions. This way, you really know your customer and can communicate with them in a meaningful way.

Home Hardware’s November 2015 targeted Aeroplan marketing campaign was not a one-off effort. The retailer understands that building that one-to-one relationship with each and every customer must be a steady and constant effort, continuously moving forward to better understand each customer and their behaviour. A coalition loyalty program like Aeroplan, coupled with proven advanced data analytics and increased digital relevance, allows Home Hardware to continuously make strides in engaging their customers.

John Boynton is Aimia‘s chief marketing officer for Canada.

This article originally appeared in the December 2015 issue of Direct Marketing.