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Data clean room vs. data warehouse: What's the difference and why you need both
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Tractor Supply Company knows what customers want, and that’s because they put the customer first.
Neil Tenzer, vice president of Customer Loyalty, Insights & Engagement at Tractor Supply Company, said this philosophy has helped the nation’s largest rural lifestyle retailer build a powerful—and popular—loyalty program. Neighbor’s Club, their loyalty offering powered by Epsilon, has 37M+ members and supports $11B+ in sales, and has a 75%+ retention rate.
The secret to their success? Data.
Harnessing data and insights from the Neighbor’s Club program has allowed Tractor Supply to reimagine the way they do business. Not only has it transformed their loyalty offerings, it has enhanced customer satisfaction, paved the way for more personalized experiences and helped drive business decisions across the board.
“Listening to the customer and our Team Members makes a tremendous impact on the business, and now when you go in the stores, you hear customers tell us every single day how much they appreciate and like the program,” Tenzer said. “Look at the data and find ways to make [the program] easier and more rewarding for the customers first, then the insights flow and the profits follow.”
Loyalty programs are extremely valuable first-party data assets. With Epsilon as the company’s partner, Tractor Supply has been able to see the full picture of its customers individually and in aggregate: What they like, how they’re motivated and where they’re best reached, for example. This creates an extremely beneficial value exchange.
“We often find that a common loyalty philosophy can be a little mundane—a ‘set it and forget it’ opportunity without understanding that [brands] have all this data at their fingertips,” said Shamba Schmidt, vice president of Solutions Consulting at Epsilon. “It’s not just about capturing all that information. You’re starting to find ways to leverage and use it to fortify and enhance that user experience to reflect what customers want.”
For Tenzer, looking into the data has allowed Tractor Supply to anticipate future customer needs and measure reactions. It also gives them the freedom to make informed hypotheses. Trends in the data—coupled with anecdotal evidence—gives them the confidence to try new things.
“It’s really important to understand ‘the why,’” Tenzer said. “That’s actually the fun part—to spend time rolling around in the data, spend time in stores, and say, okay if this is the way these numbers are moving, why is that happening? What does that customer journey look like? Why are people joining? What motivates them to join and, in those rare instances where they do leave, why?”
When brands communicate more effectively and personalize rewards and experiences, customers feel an even stronger affinity for that brand. According to new Epsilon research, 82% of consumer respondents said they view a brand positively when they advertised a product that a person needs.
Building stronger relationships helps brands, too. Epsilon data shows loyalty members spend 3x as much as non-loyalty members, and it’s 5x more expensive to acquire a new customer versus retaining them.
Earlier this year, Tractor Supply announced enhancements to its Neighbor’s Club loyalty program based directly off feedback (both qualitative and quantitative) from customers. This included adjusting its annual spending tiers, lowering the point threshold for rewards, and giving military service members, veterans and first responders immediate top-tier status.
Tenzer recounted an interaction he had with a customer while visiting one of Tractor Supply’s 2,200+ stores. As the cashier rang up a customer, they asked for the phone number attached to the shopper’s Neighbor’s Club ID.
“The customer said something along the lines of, ‘Oh yeah, I’m part of the program and it seems really great, but I haven’t seen any benefits from it lately,’” Tenzer said. When Tenzer’s team looked at the data, they realized that wasn’t a unique problem.
“And that was the unlocking moment,” he said. “We recognized we probably needed to lower that tier threshold and change that default reward level.”
And it has paid off – since implementing the changes, the retailer has seen a meaningful increase in engagement with current members, on top of millions of new members. Neighbor’s Club now represents more than three-quarters of sales for the company.
Loyalty data also has the power to drive better business decisions. Beyond making improvements to Neighbor’s Club, Tenzer said insights gleaned from the program touch all areas of the organization. From purchasing and inventory to channel optimization, Tenzer said customer data drives nearly all of Tractor Supply’s decisions.
“If we’re making a decision, like where we should put a store, for example, there’s no data silo,” Tenzer said. “We’re leveraging information to see where customers are and how they’re shopping to make that decision.”
Schmidt said that strategic leveraging of first-party data is what sets brands apart. These programs are a treasure trove of deep, important insights, and when used effectively, they create incremental value for the business overall.
“This is really manifesting into this provocative thought process that to know your customer is to know yourself,” Schmidt said. “Leveraging the data and insights you have fortifies the mission you have as part of your value statement across all customer touchpoints.”
Tenzer said a huge part of the program’s success has been Epsilon. Tractor Supply values customer relationships and data-driven decision-making and having a proven partner like Epsilon bolsters its ability to do both.
“Epsilon has been wonderful for the known unknowns—trying to figure something out or think differently—and the unknown unknowns. They challenge us and help us peek around the corner about what’s coming,” he said. “We’ve invested in each other, and that has enriched both of our businesses.”
Kate Jacobson is a Senior Content Marketing Manager at Epsilon.
