Coles cautious on loyalty card data

Supermarket giant Coles has moved to simplify and standardise its marketing and pricing strategy despite a wealth of loyalty card data about individual customers.

While other organisations look to tap “big data” to customise offers, Coles has focused its analytics efforts firmly on more traditional questions like store locations and product lines.

“Very often, customer insights and offers are too narrowly defined and take too long to drive outcomes,” Coles’ general manager of strategy Richard Wormald told the CeBIT Big Data conference in Sydney today.

“What we’ve learned through the relaunch of [loyalty program] FlyBuys is to keep it simple for customers and really focus on offers that reach a broad section of the population and can be relevant.”

Coles bought out former joint venture partner National Australia Bank’s stake in the 18-year-old FlyBuys program in February last year and mailed more than 16 million loyalty cards to households across Australia when it relaunched the program this April.

Wormald said the retailer had done “a lot of in-house work” to bring together and analyse various data sources over the past four years.

But it chose to use only its anonymised transaction data for most in-house analytics work, with FlyBuys analytics outsourced to loyalty card partner Aimia.

“The analytics we’re doing is more basic; it’s around store location planning, tailoring our range, understanding promotion effectiveness,” Wormald told iTnews at the sidelines of the conference.

“Looking at [transaction data] is actually extremely valuable; we’ve still got years to do I think in improving the way that we operate our business just from that very basic data set.”

Earlier in the conference, former PayPal chief scientist Mok Oh described how the online payment company used its data to find out more about its users.

PayPal had 76,000 tables in its enterprise data warehouse and 2.1 million columns that stored data about its 117 million active users.

That enabled Oh’s team to cluster and target users, cluster merchants, automatically analyse feedback, and address customer churn before it occurred.

Organisations in Australia’s banking and finance sector in particular have moved to apply big data analytics to individual customer data to inform risk and pricing models.

But Coles’ Wormald said the supermarket chain was careful to ensure that its data usage was socially acceptable to avoid appearing “spooky”.

For Coles, he said the benefit of a loyalty scheme was having "a reward currency which is relevant to a group of customers, and it also gives us a communication channel".

“It’s important to have an understanding of what customers expect; whether they want offers to be sent to them and what data they expect to be kept private,” he said.

“We’re a big business and with that comes a responsibility to our customers to do the right thing. Otherwise I worry that some of this can be spooky, and I don’t think that that’s what customers actually want.”