Developed as a proposal during my PGDM @ Symbiosis,Pune

1. Customer Loyalty Program [CLP]
Design to Introduce a Customer Loyalty
Program for ‘Chevrolet’ car services
within the domestic segment
Bharath Karthikeyan
PGDSSM(2011-12)

2. Objective
Loyalty programs differ from promotions that
they are ongoing campaigns for targeted
customers.
“What you want to do with a loyalty program
is to select and reward your most-valued
customers ”

3. Loyalty in an automobile industry…is it a trap?
• Cars are now almost a commodity, and car
manufacturers have a problem.
• It might almost be fair to say that the most noticeable
point of differentiation between competing, similar
marquees is the dealer who sells the car. Certainly, that
seems to be the area where most can go wrong, and
most complaints arise.
• So much depends on the way the car is sold and
particularly the way that the after sales contacts and
service are carried out.
• It's quite possible that it's for this reason that research
shows less loyalty to dealers than to manufacturers.

4. Objective of having CLPs for ‘Chevrolet’ service centers
• Helps gain customer satisfaction and loyalty to
the brand as a whole.
• After sales service is one among the prime factors
car buyers consider while buying.
• People in India relate to Chevrolet with a trendy
outlook and the company has huge potential to
offer ‘Customizability services’ for its product.
• There are no such initiatives by any other
automobile company in India for such
customization options.

5. Well to just KISS

6. CRM’s major milestone addressed: Make a customer feel
unique and special !
A customer can customize a 4 Lac car to something trendy looking like this
without void of any warranty as services are rendered by the parent company
itself

7. Indian Automobile industry and Chevrolet
• Car Buyers(at least in India) seem to prefer
imported vehicle brands
• India is one among the rapidly growing
‘Developing nations’ and most of the
dispensable income is concentrated on the
demography segment of age: 25-40

8. Types of Loyalty Programs
• Appreciations
Giving customers more of a company's product/service.
• Rewards
Giving customers rewards unrelated to a company's product/service
• Partnership
Marketing to another company's database and allowing loyal customers to
choose their rewards from either company.
• Rebate
Giving customers money back when they buy more.
• Affinity
Building a lifetime value relationship with a customer based on mutual
interests and not on the use of rewards.
• Coalition
Teaming up with different companies to share customer data to jointly
target a customer demographic.

9. Customer Loyalty Excellence
• Design of Services
• Operation Execution with appropriate
technological backing

10. Ensuring Customer Loyalty

11. Objectives for the Chevrolet Car Services CLP
Chevrolet has been a relatively new entrant in the field of automobiles in
India.

12. CLP techniques
● 360 degree view across all channels
● Personalized and perceived customer value
● Actionable feedback / Understanding customer
needs
● Customer win back/ Improved customer
retention / reduction in customer attrition /
enhancing
customer acquisition
● Promoting cross-selling
● Achieving business goal

13. Technology
Analysts have indicated that the success of loyalty programs is influenced by the choice of technology.
Given a differentiating Loyalty Program concept, a lot of challenges relate to the choice of
technology. A good CLP concept, to succeed, needs appropriate technological backing.

14. FAQs with CLPs
● Do Loyalty Programs go beyond cost of doing
business?
● Do Loyalty Programs offer any competitive
differentiation?
● Do Loyalty Programs lead to customer loyalty
or are limited to customer satisfaction only?
● Do Loyalty Programs influence purchase
behaviors or are taken for granted?
● Do Loyalty Programs influence margins

15. Key Advantages of Having a Loyalty Program
• It encourages consumers to concentrate their purchases in your company so that
they can reach a reward faster.
• It increases switching cost so that consumers who have already earned points
through your loyalty program are less likely to jump ship to a competitor.
• Compared with other promotions such as price discounts, a loyalty program incurs
delayed promotional cost, because consumers make purchases first and get
rewards later only after they have accumulated enough points.
• Related to the above cost issue, not all points earned through a loyalty program
translate into reward costs, as there will always be some consumers who never
reach the reward threshold or who never redeem their points.
• A loyalty program offers a way to capture consumer transaction history and can
lead to more in-depth understanding of your customers.
• If you have a sizable business such as an airline, a loyalty program can be a
revenue source as you can sell program currency (e.g., miles, points, etc.) to
partner businesses.
• A loyalty program, when properly designed, can make your best customers feel
appreciated and become more loyal.

16. Key Disadvantages of Having a Loyalty Program
• A loyalty program can be expensive to implement, unless you are doing a
basic punch card based “buy 10 get 1 free” type of program. Also unlike
one-time promotions, a loyalty program is typically a long-term
commitment and therefore needs financial support over time.
• Loyalty program points can represent significant financial liability and may
increase risk to your business. (Note: This can be alleviated by setting an
appropriate point expiration policy.)
• Your best customers may like you enough to want to buy from you any
way. So having a loyalty program may be giving away your profit margin
unnecessarily. My own research shows that existing heavy buyers barely
change their behavior after joining a loyalty program.
• The long-term impact of a loyalty program on true customer loyalty is not
well-established. Consumers may join your program purely for the
financial incentive and will abandon you if your competitor offers a better
program.