Push to play Myer card right

Bernie Brookes, Myer's chief executive officer, calls them "The Brains from Thunderbirds" but the team responsible for crunching the data for the store's loyalty card is unlikely to be able to help him with his present quandary.

Which is how far does he take the card, which he says has the potential to be every bit as good as the Clubcard loyalty scheme run by the British supermarket chain, Tesco? Will an increase in direct marketing come at the expense of the Myer brand?

Brookes, a former marketing director at Woolworths, took over as Myer chief executive in 2006 when the chain was sold to a private equity company. He is weighing up what is the best balance between the push - , direct marketing aimed at existing cardholders - and the pull, the activity of a brand in the market that attracts customers to the store.

"Just about all of our growth in expenditure of marketing and media has been in the direct marketing [field] and we are growing that at twice the rate of [our] mass media," he said.

Myer spends about $100 million a year in marketing and has increased that amount by between 3 and 8 per cent a year since the takeover in June 2006, Brookes says.

"But you have to be careful . you can't go too far as you lose the brand building and can't attract new customers. It's about striking a balance.

"There's a fulcrum of trying to identify where that balance sits and we play with it all the time. I am confident that we will move more into direct marketing but, even in the mass media, to be more relevant in placing [it]."

Two years ago, Myer's store card had 1.2 million holders and accounted for 40 to 45 per cent of sales; today there are more than 2 million cardholders and the program accounts for 60 per cent of the chain's $3 billion annual sales, he says.

Brookes says any further growth of the program risks him not being able to build his customer base; presently 3 million people go through his stores a week, about 10 to 20 per cent of whom do not want to be included in direct marketing campaigns.

But when the card is delivering such good results, Brookes says, it is hard to rein in the activity. "We are looking at 20 to 30 per cent pull back [redemption rate] and that's a great sign in most loyalty marketing programs. If you are getting 3 per cent to 10 per cent you are doing well so we are tripling the average," he says.

His Thunderbirds team, which he is expanding, is dividing the Myer One customer base into 11 separate segments, which are being sent offers tailored to them, rather than the bulk mailouts that were previously sent out to all cardholders.

For example the 200,000 people who are "premium fashion buyers" are sent offers to fashion-related events, while the 18,000 cardholders that spend more than $7500 a year are invited as guests to events such as the cricket and L'Oreal Melbourne Fashion Week.

Myer has chopped and changed its marketing strategy; early last year it stunned the market by ping Nine Network from its advertising schedule and downgrading Fairfax Media newspapers. The move into direct marketing is likely to come at the cost of its $50 million main media budget.

Loyalty card experts are surprised by the advances Myer is making. Mike Ebstein of MWE Consulting says the introduction of a Visa card last year, which rewards shoppers with more points if they use it in store, was a good idea. "If you get a $20 Myer voucher then you are likely to go in and spend $50 in store. That's a smart strategy," Ebstein says.

In November, David Jones, which has 800,000 store card users, will launch its own credit card. The fight is on, Ebstein says.

"[The Myer card] has the potential to be as good as [the Clubcard] as it gives them huge amounts of information on their customers' purchasing behaviour," he says.