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...secure the loyalty of millions of customers.

To spearhead this, HMV hired Matt Button, head of CRM at car maker Lexus, back in October 2008.  Avid music fan Button needed little persuasion to head the launch of HMV's new loyalty scheme, purehmv. One year into the job, Button describes the challenges of running a loyalty scheme in a recession, what's in it for purehmv's partners and the task ahead.

Marketing Direct: Given the state of the car market now, do you feel lucky in having left Lexus when you did?
Button: I didn’t leave Lexus because of the market or Lexus itself, but because this job is exceptional and matches my own interests and passions. It was certainly the right time for me – you could see the [car] market was starting to slow down and has continued to do so. It’s a struggle, but it’s a struggle pretty much everywhere.

Q: What does your job at HMV involve?
A: I look after two areas that dovetail very nicely. One is eCRM – that is, all of our customer communications via email to our online customers. The offline component is the other part of the team – which is the purehmv rewards scheme that operates in store and online. There’s a tiny bit of print involved – we create cards and membership forms but all the customer communications are via email. We are not producing direct mail but we never did.

Q: What’s been the most challenging thing about the job so far?
A: The week I joined we started piloting the purehmv rewards scheme. We ran that for six months for two regions, so the challenge from the word go was to understand how to make that programme work. It touches on every aspect of the organisation - that’s what makes it challenging and exciting.

We rely on IT to make sure data flows correctly and effectively. We are rely on our operational colleagues to make sure staff in the stores understand the scheme so they can proactively sell the cards. And we work with other colleagues in marketing in terms of in-store merchandising, and with online marketing to make sure purehmv promoted across the website.

Q: How different is it to your job at Lexus?
A: At Lexus the focus was based around acquisition and nurturing people who might convert and buy something every three years. At HMV the focus is on retaining customers and managing a high volume of them, as well as making sense of all the data associated with that.

Q: How do you collect data?
A: People register on the site. They set up an account when they buy something, and tell us what they’re interested in. We send them emails relevant to their interests and to their purchases. So preference and transactional data drive our communications. More than 1m customers have opted in [so far].

We don’t buy cold data as I can’t make it work in terms of ROI. The cost of email data is high and even when we look at projecting customer lifetime values over a year or longer, it doesn’t stack up. There are acquisition campaigns running through a number of different channels, managed by Jon Bigwood, our head of online acquisition. He works with affiliate networks and comparison websites, and the rest.

Button: 'I don't buy cold data - I can't make it work from an ROI point of view'

Q: At Lexus you had just one team member and were very reliant on your agencies. What's the set-up at HMV?
A: It’s different to Lexus. I’ve got a purehmv team of three people and they are responsible for managing all aspects of the reward scheme. Then I’ve got an eCRM team of three who manage all aspects of eCRM communications. I report to Graham Sim, HMV’s marketing director. Our key [external] relationships are with EHS Brann and Brann Discovery, who manage our customer database, and Cheetahmail for email.

Q: To what extent can a retailer such as HMV have CRM-type relationships with customers?
A: HMV can have strong, profitable relationships because people are genuinely passionate about the stuff we sell – music, film, games. So many different things. It's about your product range, making it relevant to your customers and making it come alive for them.

Q: How does purehmv work?
A: We're a few weeks in to the national launch of purehmv. It operates like any other rewards scheme - you gain points for purchases you make. But the rewards in place are unique – cool stuff that money can’t buy – events and experiences. These might be, for example, an opportunity to be a roadie for Anvil Download Festival, VIP tickets for all the key festivals over the summer, signed guitars from New York Dolls.

Q: And what’s in it for purehmv’s partners?
A: Some of the rewards we offer are sourced through our relationships with music labels, film studios, games publishers.
The value for our purehmv partners is that the scheme gives them access to our highest value customers. For example, we can help support and promote particular artists or products when we want to boost pre-orders of a product across different categories.

We could put together a marketing plan to help support Metallica – we’ve got Metallica CDs, DVDs, games and merchandise in store. And when they’re touring, we can offer tickets. It’s a strong and unique proposition. Pure can help promote these bundles and identify the right targets through the database.

Q: How is success measured for purehmv?
A: We have targets based around number of members we’ve been tasked to achieve and we’ve done achieved them by a considerable margin.

Q: So what’s next?
A: We’re making sense of the wealth of data we’re now collecting and ensuring we build relationships with the people joining the programme.

It’s about having a relationship with customers over time and not just a series of transactions. We’ve been auditing that customer journey – understanding what it looks like from a customer's perspective – mapping that out.

We make sure we have regular communications with purehmv members. The sheer scale and volume of activity is another difference with Lexus. In the last six months we ran more than 120 email campaigns based on behavioural and transactional segments.

Q: What’s the most exciting thing about the job at HMV?
A: Where do I start? People are genuinely very smart and very passionate about the product. There are some real experts in their fields. It’s very fast moving and dynamic – there are lots of new ventures like the recent announcement with Curzon creating cinema spaces and our strategic partnership with Orange, which sees us selling Orange products through our stores.

Q: What’s your favourite piece of DM ever?
A: I absolutely loved the Bob Monkhouse Prostate Research campaign by The Communications Agency [where the late comedian spoke from beyond the grave about the illness]. It was such a simple idea to think, what if we could bring him back to life? They pulled it off brilliantly and it made a real difference to that cause.

For its sheer simplicity,  the classic milk bottle by Partners Andrews Aldridge – Steve Aldridge's piece de résistance. Elegant. Fantastic.

Q: Which agency people do you stay in touch with from Lexus days?
A: I’ve kept in touch with Marc Nohr [managing partner at Lexus agency Kitcatt Nohr Alexander Shaw] and saw Phil Andrews [CEO at Partners Andrews Aldridge] at Christmas time.

Q: You’re at HMV eight months now. What challenges lie ahead?
A: Staying focused on the bigger picture – what the business is judging you on, the commercial goals and the best way to achieve them. I have clear goals to achieve for purehmv, based around the number of members we want and spend from those members. And no, I can’t tell you what those targets are!