Pick ‘n Pay Cuts Costs with Personalised Loyalty

50 years after it was founded, Pick ‘n Pay remains faithful to its core values of consumer sovereignty, business efficiency and doing good. Revamping its loyalty programme is part and parcel of driving these values.

The group turned over just under R80-bilion in the last financial year and is well on its way to becoming more sustainable.

Overall, the retailer aims to be better for customers, says Chris Shortt, GM: Information services at Pick n Pay.

“We have invested heavily in technology to improve the customers’ experience,” he adds.

Apart from its SAP systems, Pick ‘n Pay has rolled out more tap-and-go points, as well as adding fibre to every store in South Africa and many of the SADC stores as well.

“We have also seen a 30% growth in our online business,” Shortt adds. Online still represents only about 1% of total revenue, but it is growing well, and there is also a lot of interest now in the mobile application.

With South Africa experiencing a tough economy, the retailer aims to lower prices and reduce costs.

“In relation to that, we are changing the way we think about the SmartShopper programme,” Shortt says.

One of the goals for the programme is for each member to receive a personalised message each week, with special offers targeted at the individual.

Pick n Pay has recently completed “Project Bulldog” to improve its SmartShopper programme.

The loyalty programme itself is quite complex, Shortt adds, with many ways for members to gain and spend points.

The group wanted to improve the platform efficiencies in order to generate savings. Greater efficiencies could also be achieved by giving call centre agents access to data.

It also identified a need to improve the customer journey when interacting with the programme, particularly for voucher redemptions and voucher usage.

“We were also concerned about data ownership,” Shortt adds. Outsourced data and the impending Protection of Personal Information (PoPI) Act made it important to find new solutions.

The project aimed to insource the points and campaign management engine into SAP CRM and SAP HANA; to insource programme management into the SmartShopper team; and to insource more of the basic analytics and customer segmentation.

“This was a fair amount of change,” Short adds.

The project’s guiding principles said no customer could be offered less that they had before, while the system has to be flexible and offer a quick turnaround.

Project Bulldog was built on the SAP CRM and Campaign module and the SAP HANA database.

The processes to be covered were loyalty membership management, loyalty partner management and campaign management.

UCS Solutions was the implementation partner and the programme was rolled out with SAP ASAP combined with the Pick ‘n Pay methodology.

Once it got underway, Project Bulldog took about 16 months to implement, going live in August 2016.

It involved migrating 51 users and 12-miilion customers through integrated self-service options like instore kiosks, the mobile app, the online store and a customer interaction centre – all working in a single operating mode.

The number of customers is expected to grow by about 4-million over the next couple of years.

A big part of this kind of project is communication, so the company spent a fair amount of time working out the communication to consumers and to the wider business.

Part of this communication included a specific kiosk running instore, a plan for the contact centre, email and mobile app communications, and messaging on Facebook and the online platforms.

“We were also focused on those 12-million active card members, so we built in support in case things went wrong,” Shortt says.

“When you have that much momentum and speed, small things can get big fast. Fortunately none of our emergency plans were necessary, but we were geared for it.”

At the end of the day, Pick n Pay was the first retailer in the world to implement realtime processing for central earning and redemption of loyalty points. The group collaborated with the SAP product owners and SAP loyalty development team to enable central processing with acceptable response times.

The team applied the voucher and loyalty rule in realtime to a retail-orientated  transaction model. And, although the system design included extensive customisiation, Pick ‘n Pay used the SAP architecture and SAP development team to verify the approach.

To mitigate the dependency on SAP development timelines, the team developed the proposed approach inhouse. The coding was shared with the SAP Development team, who worked with Pick n Pay to ensure that the solutions were closely aligned, Standard changes were retrofitted during the test phases though the application of OSS note from the SAP Development team.

The system was tested on Pick ‘n Pay’s own in-house store, with worked well in letting the team iron out any problems before it was released to the general public.

Contributing to the project’s success was focus on communication and readiness in case of things going wrong.

The team overcame a number of challenges, most significant being the fact that the solution wasn’t suited to realtime processing, but it worked with SAP to make that a reality.

In addition, the existing system was part an integrated realtime system that includes mobile, kiosks, point of sale and more – all of which had to work in realtime. “We are going to move to personalisation soon, and it will be reatlime personalisation,” Shortt adds.

“It is safe to say that the scale and volume of users and transaction is going to grow exponentially, and we have been working very hard to make that possible.”

Pick ‘n Pay will replatform its online systems within the next few weeks, so Project Bulldog also had to proactively include a platform that isn’t live yet.

During implementation, the scope, timelines and target date were managed closely with UCS. The company worked on a joint risk arrangement with the implementation partner by agreeing to a fixed price commercial basis.

Pick ‘n Pay was able to save on infrastructure costs by migrating to SAP HANA-based architecture with appropriate data archiving in place.

It integrated the strengths of traditional waterfall methodology with concepts from Agile to demonstrate progress and to verify design alignment with business users.

Meanwhile, the proactive use of a steering committee drove all decisions regarding time, scope and budget.

Meanwhile, the total cost of ownership (TCO) has been positively impacted by more than 15% reduction in the costs of the loyalty programme, from an IT and cost of programme point of view.

Among the key lessons that Pick ‘n Pay learnt is that collaboration with SAP can ensure that a customised solution can be retrofitted.

A design authority should always be established in projects like this to resolve integration issues, Shortt says.

Importantly, strong leadership is needed from business and IT sponsors to ensure that scope is contained and pilot implementation managed, and that business is aligned with IT to achieve a clear business case.

The bottom line, Shortt says, is that the business case was on reducing costs and an improved customer journey. Its qualitative and quantitative goals were a ROI of 42% and a payback of 1,8 years. The team wanted to improve customer service and to reduce the complexity of IT support to systems.

The actual business benefits exceeded the goals. “We had an ROI of 52% with a payback period of 1,4 years,” Shortt says. “It is simpler for customers and we have improved customer service.

“We have reduced complexity n IT support of systems, with support resolution times halved.”

The company will next embark on driving integrated realtime campaigns and more personalised offers, while adding new clubs to the loyalty programme – without adding infrastructure and retaining the significantly lower costs it has experienced so far.