One For All and One-to-One: Sam’s Club Connects Dots to Members
Through a special arrangement, presented here for discussion is a summary of a current article from the newmarketbuilders blog.
At Bentonville/Bella Vista Chamber’s WalStreet speaker series in September, John Boswell, Walmart’s SVP of marketing, insights, and e-commerce, discussed how critical technology and data are to forging connections with members.
Early in his presentation, Mr. Boswell spoke of the importance of connecting "dots," his metaphor for data, and not just gathering or looking at them. Thirty years ago, no one could have foreseen that Sam’s membership model would offer it a unique advantage in the big-data-driven digital age. Today, while that may be the case, Sam’s must first overcome an obstacle that is both fundamental to its business model and vital to its profitability: convincing consumers that paying for the privilege of shopping at Sam’s is a great investment.
Sam’s is parsing the particulars of its members’ journeys from onboarding to renewal, and looking at ways to customize communication every step of the way. Mr. Boswell outlined the three-pronged framework that underpins its member communication strategy as one-to-all, one-to-many, and one-to-one.
One-to-all encompasses Sam’s mass communications. Mr. Boswell cited the company’s recent partnership with Groupon and Living Social as an example. Through the campaign, Sam’s sold over 150,000 memberships in a three-day period.
Its Instant Savings platform, which offers special savings above and beyond its usual members-only prices, was cited as a prime example of its more narrowly-focused one-to-many outreach. On its second-quarter earnings call, Sam’s CEO Rosalind Brewer referred to Instant Savings as a cornerstone of Sam’s Club membership, driving club traffic and awareness of Sam’s value offerings.
The one-to-many approach is also embodied by Sam’s in-club digital network. Mr. Boswell refers to it as an "integrated digital solution for suppliers." In 600 club stores, the TV walls of yesteryear have been replaced by slick digital signage, and the system has already reduced new content turnaround to a matter of hours, from a previous timeframe of seven to 10 days.
Of course, retail’s universal hot button, mobile, is part of the equation as well. Sam’s new mobile app was credited for helping drive a nearly 25 percent increase in average basket size in the second quarter over the previous quarter.
On the one-to-one front, Mr. Boswell alluded to Sam’s "modeling capabilities," which allow them to individualize communication by member household, and specifically emphasized the importance of engaging with new members in the first 30, 60, and 90 days of membership. It stands to reason that not only does a non-engaged member buy less, but indifference shuts off the data spigot that is the lifeline of Sam’s insight ecosystem.
Discussion Questions
What do you think of Sam’s three-pronged approach – one-to-all, one-to-many, and one-to-one – to recruiting and driving loyalty with members? Which one will be most beneficial in the future? Does their approach give them an advantage in the club space?
I think what Mr. Boswell has done is create a nice model that describes marketing. I don’t find it either a unique or sustainable advantage, but it’s the right approach.
Costco also adds well-paid/happy employees into the mix, and a private label that has great street cred. When Sam’s can add those two prongs into its mix, we can talk about real advantage. Until then, there’s nothing unique here.
All the warehouse clubs have lots of data on membership. Matching up their opportunistic buying machines with that customer data might be the stickiest wicket for all of them.
Brick and mortar retailers that have a strong reason to identify shoppers in the store (Sam’s and Costco with membership, REI with Co-Op, etc…) are really in a unique position to lead the way in terms of personalized customer experiences.
It will be interesting to see if personalized pricing such as Sam’s Instant Savings turn out to be the killer one-to-one app.
Costco just opened within walking distance of a Sam’s Club at Easton Town Center. Virtually everyone in my circle of friends plan to ditch or have already ditched Sam’s for Costco. Never saw a Sam’s Groupon or Living Social push for new members here. (Sam’s does often have a $20 bonus offer for new members. Maybe that is the alternative in this market.)
I have often wondered why Sam’s has not taken advantage of the data they receive from its member transaction. While I don’t like being anecdotal, having been a Sam’s Club member for more than a decade, I have NEVER received any communication from them that would indicate they are looking at my transaction history and making targeted marketing decisions on my behalf.
The “three pronged” approach is long overdue. Sam’s is already pretty proficient at the one-to-all approach. It remains to be seen if they understand the how to use customer data to improve their customer retention, transaction size, and frequency. It will necessarily involve a kickoff campaign to enhance awareness, and then some real commitment to providing targeted communications on a regular basis to its membership.
Powerpoint and Keynote provide very nice SmartArt templates to communicate a “three pronged” approach. Now its up to Sam’s to actually deliver tangible, relevant benefits as a result of that strategy!
One-to-all marketing seems like an idea who’s time is passing. Mass marketing is one of the least effective ways of engaging a customer, and the one-to-one model is picking up speed as modern capabilities allow for it. I would be curious to see how the one-to-one capabilities of the warehouse clubs evolves from the current model that seems to be a few variants of manufacturers coupon books sent to all customers.
Sam’s is in the unique position of being able to gather data on all their customers, so I would expect them to be “connecting lots of dots.” I keep waiting for “frequently flyer” tiers and benefits to show up in membership retail, but so far it’s just been marketing. As Jason points out, personalized pricing could be the killer app.
Paula said it all. This is marketing 101 in today’s retail world. If they weren’t doing this, I would be worried.
I will also parrot Paula on the happy, friendly employees and great private label at Costco. That just can’t be beat. Heads up, Sam’s!
This is a reasonable approach for Sam’s but at the same time, it’s hardly innovative. If anything it’s just a catch up with Costco, though both brands focus on analog rather than digital customer communications. And finally, both brands are years behind Amazon when it comes to relevant customer communications (even if AMZN over-programs it at times)!
If Sam’s wants something to drive business, then I strongly suggest that they honor Costco memberships for $2000 in purchases (cumulative). Most customers deserted Sam’s for a variety of reasons. If you want customers back and feel you have cured your problems, then really send an invitation. Pitty patting around with social media isn’t going to produce significant results.
Using membership cards as a basis for behavioral tracking is a sound idea, although hardly novel. Attaching targeted promotions to a membership card is also in step with current practice.
In-store digital media are fast losing relevance to the smart phone. Slicker, faster execution notwithstanding, I doubt the brands are very excited about in-store video ads at Sam’s or anywhere else.
For my money, areas of innovation at Sam’s include the membership campaign that raised a fast $7 million using Groupon and Living Social and the on-boarding program that reinforces new member behaviors at the 30-, 60- and 90-day milestones. Sounds like a plan to me, although it does beg the question, “what happens after that?”
Finally, I crave more information about the Sam’s mobile app that it says caused baskets to swell by 25%. OK, I’m being polite. What I really mean is show me some evidence.
Sam’s approach seems to cover most of the bases at a high level. Mass media and mass promotions are critical to acquire new members, while broad special offer promotions helped reinforce the excitement of the brand.
When it comes to one-to-one marketing, it seems like Mr. Boswell is only scratching the surface. While it is very important to engage with new members and establish a consistent behavior pattern, it is also important to use individual buying behavior to customize communications and offers; in essence, the strongest strategy for one-to-one marketing is personalization. In order to reinforce brand connection and maintain volume and retention over time, Walmart has the capability and the potential to build communications that lets each customer know that the company values them as an individual.
That is the strongest brand value and the greatest barrier to attrition.
It’s good to hear that Sam’s is leveraging the data they have. Increasingly, consumers are going to expect a more personalized experience that reflects their buying habits.
While the information should also be used to help with their one-to-many and one-to-all strategies, the real magic will come if they can remain dedicated to the one-to-one or alternatively one-to-few strategies that require higher insight and deeper segmentation work.