Ingrid Maes, director of loyalty and data at Woolworths, addressed this subject at the Mumbrella Retail Marketing Summit, where she acknowledged that the initial changes – which saw popular frequent flyer rewards axed in favour of store-based incentives - were a blunder.
"We made a mistake with the orange ticket mechanic we employed when we first revamped our loyalty program," said Maes. "No surprises. But we listened to customers and we changed." (For more details read Warc's report: How Woolworths achieved loyalty personalisation with big data.)
Woolworths' own research found 70% of consumers want to receive tailored offers that are relevant to them as an individual, so the first step in rebuilding the loyalty programme was to do away with demographics and traditional segmentation, the use of which Maes likens to "carpet bombing".
She said: "For years as marketers we've been led to believe we were personalising our experience because we were sending communications to segments of customers that looked the same. But the truth is, it doesn't matter whether your demographics look the same, ultimately (they) are still very different people."
Woolworths, with the help of Quantium, created a personalisation engine to fuel the supermarket's email marketing efforts. The team began with 20 trillion data records and put them through a Gradient Boosted Machine learning model, with the end goal being highly targeted offers.
In order to do this, the model crunched the data for every customer looking at products they did and didn't buy at every price point in history. With the combination of the purchase histories of 9.5 million customers and around 5,000 offers a week, this has been no mean feat.
But scan rates have increased as more customers swipe their card at the checkout. There has also been a 16% increase in email open rates while opt outs have gone down significantly. The number of members has also increased while Net Promoter Scores are on the rise.
"Hyper-personalisation at this scale hasn't been done in Australia before and from what we're seeing with the conversations we're having internationally, we are truly setting global practice," said Maes.
Data sourced from Warc