Currently, we are conducting a study on customer data from GameStop, a global retailer of multichannel video games, consumer electronics, and wireless services. GameStop has its own established loyalty program, PowerUp Rewards, that tracks and works for both online and offline purchases. Through analysis of GameStop’s online and offline customer data, this study aims to examine the relationship between online and offline purchases for the same retailer and how this relationship influences customers’ shopping and purchasing behaviors.
With the exponential growth of e-commerce and the online retailer giant Amazon, many retailers today face unprecedented challenges to retain and attract customers at physical stores. At the same time, many retailers are also devoted to the development of their own online business divisions to capitalize on the macro trend of digitalization, yet they often struggle to create an effective synergy between the online and offline departments. The typical situation is that a traditional retailer builds its separate online business division somewhere in California, far away from its headquarters. With completely different management teams and little affiliation, the online and offline departments often compete with each other, resulting in cannibalization of physical store sales, and fail to create an integrated and cohesive network that can provide customers with seamless service and experience online and offline.
At IMC, we believe that businesses and brands should commit to building integrated marketing communications with customers via different channels. Whether it is loyalty programs, customer service, or the shopping experience, cohesive and consistent communications via various touch points is the key to successful brand building. From the GameStop data, we identified four different customer groups with distinctive characteristics:
- Non-PowerUp Users: These customers are not registered in the PowerUp Rewards program. They are considered as the baseline group in the study.
- PowerUp Users: PowerUp Rewards members constitute around 2/3 of the entire GameStop customer population. Their average spending per visit (online or offline) is twice as much as non-PowerUp users.
- Online-Only Users: This group consists of customers who have only made purchases online. They could be PowerUp or non-PowerUp users. Online-only users’ average spending per transaction is much less than customers who visit stores. Also, they often only purchase one to two items per transaction.
- Omnichannel Users: These are customers who are PowerUp users and purchase from both the online shop and offline store. Their online and offline spending is significantly higher than other groups: four times as much as Non-PowerUp users and twice as much as PowerUp users.
Based on our analysis, we found that loyalty program membership is positively correlated with store visit frequency. Moreover, the online store could potentially magnify the effectiveness of loyalty programs and increase customer spending. From the mobile user data, we have also found that customers typically have shorter interactions on mobile devices.
According to our findings, we believe it is critical for retailers to have a cohesive system of online shops, offline stores, and loyalty or rewards programs that provides a seamless shopping experience to customers across all channels and touch points.
For the next phase of our study, we hope to dig deeper into the dynamic relationship between online and offline shopping and purchasing behaviors, and in particular the role loyalty programs play in today’s digitalized retailer world.
Written by Martin Block, Professor at Northwestern Medill IMC
Edited by Zoe Liu, Medill IMC Class Of 2017