DIAL Turns 30 This Year: Happy Birthday!

As it approaches its 30^th birthday, the DIAL model remains the powerful engine to deliver personalization to drive sales growth and customer lifetime value.

DIAL or DATA leading to INSIGHTS, which power ACTIONS that drive customer LOYALTY, is a retail marketing concept developed some 30 years ago as the underlying strategy behind the launch of the Tesco Clubcard.

This framework was established as a cornerstone of the Clubcard scheme to ensure the business’s substantial investment in its first-to-market grocery loyalty program would deliver a positive return.

While it may be a seasoned concept, DIAL remains just as crucial for today’s consumer-facing businesses. Customers crave appreciation and recognition and want to be rewarded for their loyalty. But companies can only do this effectively if they start at the beginning – by understanding their customers. This means that any organization that seeks to be customer-centric must focus on developing a rich source of customer data.

In 1995, when the Tesco Clubcard debuted, the path to customer data was relatively straightforward. Shoppers would sign up for the loyalty program while in-store and a plastic Clubcard would be mailed to them. This physical Clubcard would then be used to identify themselves every time they made a purchase at a store. Customer data would be collected and transmitted to the data experts at dunnhumby, the renowned global data science company tasked with transforming this data into valuable insights. Those insights were primarily actioned through the special offers sent to customers via the quarterly Clubcard statement, mailed to the home of every Clubcard member.

The success of the statement mailings and all subsequent actions driven by these insights would be rigorously assessed and measured to determine their impact on customer loyalty, with the findings then looped back into the data machine for further improvements.

Indeed, much has changed in the 30 years since the scheme’s inception. Nevertheless, the fundamental concept that the Tesco leadership and dunnhumby teams recognized all those years ago remains resoundingly valid today: forging customer connections and the insights those generate remain powerful drivers of business growth with the right actions.

True one-to-one marketing based on the DIAL model wasn’t even the vision at the time of Tesco Clubcard’s creation because executing it would have been impossible in the pre-smartphone era. - But while DIAL has become more powerful in the ensuing decades, putting the concept into practice has become more complicated simply due to the volume of information available. Along with having more expansive product and service lines than thirty years ago, today’s companies also have several additional data sources, from first- and third-party data to multiple online and offline sales channels to geolocation and physical store metrics.

Competition has also intensified and become more diverse with digital-native giants like Amazon and omnichannel retailers alike. Simultaneously, consumers have become ever more conscious of the power and value of their data, prompting them to be much more discerning about how and to whom they share it.

These shifts highlight the importance of implementing personalized marketing based on the enduring DIAL model, which continues to serve as the foundation for personalization strategies critical for success in today’s dynamic retail landscape.

DIAL Then and Now

While DIAL is as relevant as ever, its components have evolved.

Yet too many retailers overlook the comprehensive DIAL model, instead skipping the vital step from data to action or, even worse, generating insights that go unactioned. It’s well known that ‘customer data is the new oil’ and provides the foundation for building solid and engaged customer relationships. But it must be supported by effective execution to yield true personalization.

Personalization at Scale is Critical

And it’s what drives loyalty and sales growth.

In our latest publication, Omnichannel Retail: How to Build Winning Stores in a Digital World, co-authored by Eagle Eye’s CEO, Tim Mason, and myself, we emphasize the substantial benefits of personalization at scale, which often delivers a 1-2% lift in total sales for grocery retailers by boosting loyalty and share of wallet among already loyal customers. Across all sectors, McKinsey’s research reveals that personalization can lead to revenue growth of 5-15%, all while reducing marketing costs by 10-20%. The lost opportunity cost of not delivering personalization is too big to ignore.

The good news is that many loyalty program leaders are already making strides to scale up their personalization efforts. A recent Eagle Eye survey of loyalty program professionals found that 36% of them are prioritizing delivering more personalized offers in the next 3-6 months, aiming to generate improved redemption rates, more significant loyalty program interactions, and higher revenue compared to competitors that fail to seize the opportunity.

The Impact of AI

New developments, including the integration of AI, are also helping unlock DIAL's full potential for delivering true personalization at record speed. AI enables retailers to turn data into insight faster than we previously thought was possible. AI can be used to automatically construct offer permutations based on a variety of factors, including purchase history, customer activity, rewards thresholds, and optimal stretch increment, ensuring that shoppers are presented with unique promotions calibrated to their exact circumstances – a contextual approach to activation and engagement we’ve termed “Marketing in the Moment.”

What's even more promising is that AI will increasingly enable companies to track evolving customer behaviors in real-time, allowing them to adapt their strategies on the fly, bringing the vision of 'Marketing in the Moment' to life.

Retailers must now leverage the additional power of AI to help them unlock new monetization opportunities, deploying even more personalized customer interactions that drive loyalty and grow incremental spending, ultimately increasing customer lifetime value.

Make Sure Your DIAL Approach is Fit For Purpose in 2024 and Beyond...

At Eagle Eye, our vision is to power the personalized marketing revolution globally, and we do that by enabling our customers to implement DIAL principles through our best-in-class loyalty and promotions personalization platform, AIR. AIR ensures that the DIAL model bears fruit in today’s increasingly complex world of retail marketing.

Data: Through our Eagle Eye Wallet, AIR enables the consolidation of customer data at an individual level, providing the most flexible and scalable data model to execute personalization at an unrivaled scale.

Insight: Through AIR's integration with every customer touchpoint - including the POS and retailers’ downstream analytics and AI systems (both in-house and 3rd party) - we provide real-time data feeds that expedite the insight generation processes.

Action: Insights are turned into actions via AIR, which provides the single platform for all loyalty and promotions execution across every customer touchpoint (email, push notification, SMS, in-app offers, direct mail, and more).

Loyalty: The impact of every customer action is tracked via AIR, which facilitates real-time measurement and enables retailers to use this data to optimize their future marketing and promotional activities.

When implemented in partnership with a solutions provider well-versed in its principles, DIAL becomes a virtuous circle for retailers, continuously enhancing their strategies. Eagle Eye is precisely that kind of partner - we help bring the DIAL model to life for businesses today. Through our AIR platform, we consolidate customer data, connect it to insights platforms and providers in real-time, harness those insights across channels, and execute highly personalized communications and tailored offers. This approach ensures that customers remain engaged and consistently spend with the retailer, reinforcing the relationship between retailers and their valued customers.

The Effectiveness of DIAL Doesn’t Grow Old

If the DIAL concept teaches us anything, it’s that loyalty isn’t a ‘one-and-done' proposition or transaction.

Customer desires and attitudes frequently change, resulting in new behaviors revealed in data. The offer a customer finds compelling today may not be as attractive in a few months or weeks, so having flexible and agile ways to act on insights is paramount. To attract, convert, and retain customers, retailers must continually engage them with compelling experiences that are relevant, useful, desirable, and valued.

By developing comprehensive data capture and analysis capabilities, retailers have the foundation for the advanced personalization strategies needed to improve customer interaction, increase loyalty membership participation, offer redemptions, and boost sales.

While many of the technologies for data management and timely offer delivery are very new, their effectiveness still draws from the enduring principles of the 30-year-old DIAL model.

So here’s to DIAL marking its 30th milestone, and may you continue shaping successful retail marketing strategies for another three decades. Happy Birthday, DIAL!