Penn found that IKEA customers, following the signature yellow path, walk through the entire warehouse store. They get lost, encounter products they weren’t looking for and spend enough time shopping that they feel justified making impulse purchases.
Here’s a customer heatmap from Penn’s presentation, followed by the video.
- TURN YOUR LIFE AROUND: 14 Ways To Make Better Decisions And Strengthen Your Willpower
- 19 Tips And Tricks On How To Read People
- This Vietnam Study About Heroin Reveals The Most Important Thing About Kicking Addictions
Credit cards have been a staple for retail rewards programs for decades (you know, like that Visa card they try to make you sign up for every time you go to Gap). They’ve been an effective way to reward customers, and for retailers to get additional funding.
But a new report by analysts Michael Exstein, Chrisopher Su and Trey Schorgi at Credit Suisse says that it’s time for retailers to abandon the credit card. Why are credit-based rewards programs not the right way to go anymore?
1. The cost of rewards programs keeps rising for banks. As rewards competition ramps up, issuer margins are pressured.
2. As the programs get more expensive, banks will offset costs in other areas. This will result in either less beneficial terms for retailers, or higher fees for consumers. Retailers may have to increase their own rewards programs to remain competitive
3. Retailers’ relationships with their customers could be hurt, because banks (who are now in control of many retailers’ credit businesses) could squeeze consumers. Since the programs are branded for retailers, not the banks, consumers would deem them responsible.
Credit Suisse instead suggests that the answer to these woes is simple. Switch over to programs based around membership fees or other upfront investments. “Going forward, we think the emerging trend will be the need for consumers to “invest” in loyalty programs, thereby creating a “vested interest,” says the report.
So what brands are doing it right so far?
Amazon — The Amazon Prime membership program has been vastly successful. Consumers pay an annual membership fee of $79, and get shipping benefits, free use of Amazon Instant Video and perks for their Kindle.
Costco — The largest membership warehouse club in the world has three levels of membership. There’s a $55 annual fee for businesses, a $55 ‘Gold’ card for individuals and a $55 executive member upgrade, which gives folks a 2% discount on most purchases.
Sam’s Club — Walmart’s warehouse subsidiary has a similar system, with a $40 per year Advantage card for individuals ($100 for Advantage Plus which offers extra savings) and a $35 per year Business membership ($100 for Business Plus).
Macy’s — “Thanks for Sharing” is a program that’s working for Macy’s to generate loyalty. It requires a $25 upfront investment (which is actually a donation to charity), in exchange for rewards.
Target — The REDcard is a ‘hybrid’ method which has been working well since the retailer started it up in 2010. It offers 5% savings on everything and includes shipping benefits.
These programs all capitalize on the concept of creating that “vested interest.” Customers, having already paid a set of promised benefits, will be more likely to keep spending to use those benefits that they’ve already paid for. They’ll keep coming back.
- How Wendy’s Plans To Pass Burger King And Become The #2 Burger Chain
- How This Family-Run Champagne Brand Plans To Beat Dom Perignon And Cristal
- The Postal Service Is Now Selling Ads On The Side Of Its Trucks
Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
Collaborators – Digital Profs
- Netflix vs Blockbuster - Perfect example of an industry replaced by a more efficient version of itself
- Marketing Costs Normalized to CPM Basis for Comparison
- Coke vs Pepsi vs Dr Pepper
- On Sept. 15, Google Will Make A Massive Bet Against Apple's iPhone 6 Strategy (GOOG, AAPL)
- Why Urban Outfitters Keeps Selling Offensive Clothing
- Here's Why Alibaba Is Becoming A Huge Threat To Amazon And eBay
- Tim Cook Ripped Apart Google's Business Model In Two Paragraphs (AAPL)
- US CMOs Report No Growth in Use, Influence of Marketing Analytics
- HP Mini 311 Nvidia ION Netbook Hackintosh'ed
- Brand Advertisers: Escaping an Ecosystem of Digital Advertising Fraud
- #SESNY: Toward a Performance Mindset for All Advertising
- Tips for Marketers Selecting a Digital Agency
- Context Is Not King or Queen; It's Just Necessary
- 2013 New Year's Digital Marketing Resolutions
- The Good, Bad, and Ugly of Online Campaign Ratings and eGRPs
- Why You Should Banish the Net Promoter Score Immediately
- Digital Strategy To-MAY-to vs. To-MAH-to
- The Agency-Client Relationship is Forever Changed
- Targeting vs. Privacy - Who Will Win?
- September 2014 (73)
- August 2014 (44)
- July 2014 (92)
- June 2014 (118)
- May 2014 (173)
- April 2014 (130)
- March 2014 (247)
- February 2014 (167)
- January 2014 (222)
- December 2013 (167)
- November 2013 (111)
- October 2013 (116)
- September 2013 (214)
- August 2013 (210)
- July 2013 (200)
- June 2013 (87)
- May 2013 (87)
- April 2013 (70)
- March 2013 (114)
- February 2013 (89)
- January 2013 (136)
- December 2012 (96)
- November 2012 (130)
- October 2012 (147)
- September 2012 (94)
- August 2012 (93)
- July 2012 (112)
- June 2012 (71)
- May 2012 (82)
- April 2012 (80)
- March 2012 (122)
- February 2012 (114)
- January 2012 (129)
- December 2011 (60)
- November 2011 (54)
- October 2011 (29)
- September 2011 (17)
- August 2011 (30)
- July 2011 (18)
- June 2011 (19)
- May 2011 (23)
- April 2011 (23)
- March 2011 (52)
- February 2011 (69)
- January 2011 (108)
- December 2010 (82)
- November 2010 (67)
- October 2010 (68)
- September 2010 (44)
- August 2010 (101)
- July 2010 (61)
- June 2010 (28)
- May 2010 (28)
- April 2010 (26)
- March 2010 (33)
- February 2010 (21)
- January 2010 (13)
- December 2009 (4)
- November 2009 (2)
- October 2009 (14)
- September 2009 (6)
- August 2009 (19)
- July 2009 (34)
- June 2009 (11)
- May 2009 (4)
- April 2009 (6)
- March 2009 (13)
- February 2009 (32)
- January 2009 (25)
- December 2008 (1)
- October 2008 (1)
- June 2008 (1)
- November 2007 (1)