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Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
Loyalty Programme Marketing
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Loyalty Programme Marketing

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Review of loyalty programme business economics and management using big data and tactical retail marketing management.

Review of loyalty programme business economics and management using big data and tactical retail marketing management.

Published in: Marketing, Business, Technology
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  • 1. Retail Loyalty Programmes
  • 2. Contents
    • What is a loyalty programme?
    • Loyalty Success Factors
    • Introduction to Retail Loyalty Programmes
    • Loyalty Programme Structure Secrets
    • Loyalty Programme Promotions - Driving Sales
    • Loyalty Market
    • Summary
  • 3. What is a loyalty programme?
  • 4. What is a loyalty programme?
    • The systematic collection of customer data in return for rewards or benefits, often used to give customer additional privileges or services to best/loyal customers
    • Opportunities
    • Understand customers
    • Give discounts to best customers only
    • Adjust real price for certain customers
    • Use data to negotiate with partners
  • 5. Loyalty Programme Options Points Discount Rebate
    • Earn points and redeem for rewards Good
    • -Offers control
    • Customer understands
    • Lower cost Bad - Points cost are knowledge
    • Accrued liability
    • Immediate discount for presenting card Good
    • Easy and instant
    • No liability
    • Bad - Discount has to be large (+10%)
    • - No control
    • Reward spend over time Good
    • Easy to manage Bad - Little control - Easy to copy e.g. stampcard
    • Little emotional connection
    Esso Smiles Jusco Starbucks Krisflyer Privilege
    • Earn points and redeem for rewards plus tiers of privilege Good
    • -Privileges lead to loyalty
    • -Offers control
    • Customer understands
    Bad - Low spend customer disillusion - Competitors can match Cathay Marco Polo
  • 6. What is a privilege program? Tiers of benefits over and above points for miles.
  • 7. Loyalty Programme Options Coalition Single Owner Lucky Chances for spend Up to $200 Rebates for spend over $200 VIP Privileges and private sales for spend over $1000 Hybrid Model Coalition Model Octopus
  • 8. How does it work? 122132 Customer card Nets & Credit Bank Data Transaction Database Customers Analysis services Marketing Planning & Promotion tactics Data entry 122132 name email mobile Application Form age family NRIC 122132 name email mobile age family NRIC
  • 9. Considering a programme?
    • Steps to launch
    • Planning
    • Feasibility audit
    • Customer research
    • Financial planning
    • Develop programme model
    • Implementation
    • Implementation – develop systems/communications
    • Launch
    • Management (operations)
  • 10. Loyalty Success Factors
  • 11. Balancing Loyalty Investment Against Return Loyalty Programme is a cost of learning about customers Additional Customer Profits Loyalty Programme Investment + Loyalty Promotions Costs >
  • 12. Critical Success Factors for Customer Loyalty Target Audience Brand Positioning Customer Loyalty Drivers Degree of Participation Choice of rewards Generosity Delivery of rewards Liability risk Investment Cost Getting Customers to join Competitor Strength Sales Focus
  • 13.
    • Jusco Program
    • Barcode card
    • Hybred model
    • Instant privileges
    • Discounts for members
    • Birthday privileges
    • Points
  • 14.  
  • 15. How is it successful? Target Audience Regular shoppers
    • Brand Positioning
    • for everyone
    • Birthday treats
    • Members only
    Customer Loyalty Drivers Use membership To make offers Degree of Participation High Choice of rewards Choose from whole store Generosity Very generous rebate up to 20% Delivery of Rewards – rebate vouchers (cash effectively) Liability Risk High but also High redemption Investment Cost High Getting Customers to Join Easy – free membership Competitor Strength n/a Sales Focus Very High
  • 16. Loyalty Program Structure Secrets
  • 17. Loyalty Programme Structure Secrets 2 5 4 6 1 3 7 8 Data Collection Sales Promotion Integration Loyalty Programme Mechanics Brand Extension Clubs within programme FMCG Partnerships Value Proposition Investment Ratio
  • 18. Loyalty Programme Structure Secrets
    • Strategy
    • Capture all data relevant to the customer relationship
    • Approach
    • Use Loyalty cards to capture all customer transactions, point redemptions, online transactions and calls to any touch-point
    • Segment the data according to shopping behavior , lifestage , lifestyle and other differentiating factors
    • Advantages
    • Understanding of customer behavior, identify valuable customers and communicate one to one with customers creating a more personal relationship
    Data Collection RFM Lifestyle Lifestage Basket Attitude Shop Habit Geo -Dem Data Warehouse Segmentation Engine Segmented Promotion Marketing Interest 1
  • 19.
    • Application form is the single most important point of data capture
    • Gather all data in form
    • Gather data incrementally using electronic channels
    • Key Information
    • Contact
    • Age/Gender
    • Family/No family
  • 20. Loyalty Programme Structure Secrets
    • Primary Retail Segmentation Approaches
    • Recency, Frequency, Value (RFV): e.g High Value Frequent Shoppers, Low Value Frequent Lapsed
    • Lifestage: e.g. Young Adult, Young Family, Older Family, Empty Nesters
    • Lifestyle: e.g. Organic, Fast Food, Home Cooking, TV Diners, Ethnic Dining based on basket
    • Internet Shopping: e.g. Trial, Cautious Developing, Everything
    Data Collection Recency , Frequency, Value Segmentation 1 Time Today Visit Visit Visit Frequency Recency Frequency Value $
  • 21. Loyalty Programme Structure Secrets
    • Basket analysis to get shopper type
    Brown Rice Brown Bread Natural Yogurt Organic Carrots Low far milk Eco-Washing Powder Lowest price cola No fresh items Uses 2-1 offers Basket <10 items Lowest price noodles Cheapest washing powder large format 46 other shopping types – tv dinners, deli divers, traditional, ethnic explorers, meat feast, vegetarians etc Health Conscious Price sensitive New organic chocolate New large value biscuits Current Basket Recommended
  • 22. Loyalty Programme Structure Secrets
    • Strategy
    • Develop a research proven value proposition for the loyalty programme underpinned by loyalty drivers
    • Approach
    • Value proposition has emotional and practical appeal and the Loyalty programme aims to deliver the proposition in the customer experience.
    • Advantage
    • Customer benefit is clear and in-line with a customer-focused organization
    • Boots research showed that customers see programme as ‘more indulgent, different, generous and offers better rewards’
    Chance Value Proposition 2 Savings Privileges
  • 23. Design nice benefits for members – Ikea does it well in Singapore + points on top of everything else
  • 24. Ikea get blog reviews like this…
  • 25. Loyalty Programme Structure Secrets
    • Strategy
    • Define the right loyalty programme mechanics to minimize cost while driving customer loyalty.
    • Approach
    • Points because it offers them greater control to stimulate spend, but use in different ways.
      • $1=1pts use points for rewards: voucher redemption integrated with sales promotions.
    • Advantage
    • Greater control while driving customer loyalty.
    Loyalty Mechanics 3
  • 26. Carrefour’s Incremental approach to loyalty Lucky Chance Card Rebate Card Rebate Card & Privileges & Target of 1 Easy to launch No liability Develop card mgt experience Capture all details and transactions Reward only when customers hits threshold spend . Tier rebates at different reward levels $200 get $10 (5%) $400 get $40 (10%) $1000 get $150 (15%) Layer on privileges for best customers. Target every customer with individual statements.
  • 27. Loyalty Programme Structure Secrets
    • Strategy
    • Understand investment margins to determine reward investment and frequency ratios for the market.
    • Approach
    • Average investment is between 1% - 3%. Some retailers are offering under 1% to keep cost down.
    • Advantage
    • Determining the right level of investment is balanced against the rewards that motivate loyalty drivers.
    Investment Ratio 4 Normally 1-3% reward
  • 28. Spend $1.25=1pt Fill up $100 get 80pts Fill up 4x $400 and earn enough for a free coffee worth $5 (1.25%)
  • 29. Loyalty Programme Structure Secrets 4 Investment Ratio $1.00 Spend for 1pt $0.01 Value of 1pt $1,000 Total Store Sales $800 Sales on Card (80%) 800 Points Earned $8.00 Value Points Earned 400 Points Redeemed $4 Value Points Redeemed 0.50% Investment Ratio
  • 30. Octopus – opportunity to earn at hundreds of retailers
    • Octopus card offers a chance to earn with a large number of retailers in Hong Kong – Watsons, 7-Eleven etc
    • Comes in smartcard form or keyring
    • Reward rate can be chosen by individual retailer
      • At Wellcome, for example, one point is earned for every HK400
      • Watsons 0.5% per dollar amount of sale
    A customer consolidating their spend across the members could earn a significant amount of reward $ every month
  • 31. Loyalty Programme Structure Secrets
    • Strategy
    • Data collected drives ALL marketing activity – it is not operated in isolation.
    • Approach
    • Use data to target sales promotion activity
      • Lifestage, Shopping Habits, Location
    • Always offer loyal customers something extra!
    • Target sales promotions by customer segment – mass marketing costs have been greatly reduced.
    • Advantage
    • Greater ROI from all marketing activities
    Sales Promotion Integration 5
  • 32. Loyalty Programme Structure Secrets
    • Strategy
    • Develop Clubs within the loyalty program that use knowledge gathered from grocery purchases
    • Approach
    • Create Clubs for key interest groups where product marketing efforts can be targeted and incremental purchase is easy to stimulate
    • Advantages
    • Create greater relevance for Club members and reduce cost of generating incremental spend
    Clubs within Programme 6
  • 33. Specially organized kids activities at Ikea
  • 34. Loyalty Programme Structure Secrets
    • Strategy
    • Extend brand using new services
    • Approach
    • Develop strong own-brand products new non-grocery services
    • Leverage grocery database to offer re-branded services
    • Advantages
    • More reward earning/redeeming opportunities
    • More data from partners and greater marketing reach
    Brand Extension 7
  • 35. Brand Extension Examples – not from Singapore thankfully 1 2 3 4 5 Petrol 6 Utilities
  • 36. Loyalty Programme Structure Secrets
    • Strategy
    • Offer FMCG companies access to customer knowledge.
    • Approach
    • Offer FMCG brands that pay a fee access to customer knowledge that allows the brand to plan promotions that reach the correct target audience.
    • Advantages
    • Stronger offers to the right audience create better returns.
    FMCG Partnerships 8 Customer Grocery Retailer
  • 37. Loyalty Programme Structure Secrets 2 5 4 6 1 3 7 8 Data Collection Sales Promotion Integration Loyalty Programme Mechanics Brand Extension Clubs within programme FMCG Partnerships Value Proposition Investment Ratio
  • 38. Loyalty Programme Promotions - Driving Sales
  • 39. Promotions
    • Statements
    • Personal shopping lists
    • Geo-targeting
    • Events
    • Layered promotions
    • Regular communications
  • 40. Loyalty Programme Promotions - Driving Sales
    • Strategy
    • Use data collected to personalize vouchers/coupon offers and upsell
    • Approach
    • Statement types are personalized based on shopping habits
      • RFV
      • Lifestage
      • Shopper type
      • Lifestyle
      • Shopper Type models
    • Advantages
    • Increased response rates compared to standard
      • 90% to vouchers
      • 30% to cross-sell/upsell
    Example Loyalty Statement 1. Statements - online/offline
  • 41. Loyalty Programme Promotions - Driving Sales
    • Strategy
    • Use data collected to personalize basket when repeat shopping
    • Approach
    • Can make recommendations based on basket
    • Slip in the up-sell offers
    • Advantages
    • Personalization offers a tested formula for increasing response/redemption rates
    Online Shopping Basket 2. Shopping lists – online/kisoks
  • 42. Loyalty Programme Promotions - Driving Sales Store Catchments Store Competitor Store Promotion Target Area
    • Strategy
    • Store catchments areas in overcrowded markets need to be defended from competitors
    • Approach
    • Use loyalty program data to run targeted promotions on areas of highest competition
    • Advantages
    • Powerful threat defense only for customers in risky areas
    3. Geo-marketing
  • 43. Loyalty Programme Promotions - Driving Sales
    • Strategy
    • Most valuable customers are invited for store evenings, where specially hosted events are put on around themes such as wine and cheese.
    • Approach
    • High quality store presentation and grocery expertise allow retailers to create a conducive environment for offering high end grocery products
    • Advantages
    • Meet and reward the best customers in person, while extending sense of privilege that is popular in all markets.
    Wine Tasting Events are a regular features for Wine Club Members 4. Events
  • 44.
    • Strategy
    • Offers attract interest and offer incentives for immediate purchase
    • Approach
    • Types of incentives
      • 2.Personalised shopping list
      • 3. Rebate type vouchers
      • 4. member prices
      • 5. Free gifts
    • Advantages
    • Customers see lots of opportunity to participate – right offer for right person
    Loyalty Programme Promotions - Driving Sales 5. Layered promotions
  • 45. Offer: Shop Online Offer: Mothers Day Offer: Wine Offer: DVD’s
    • Tips
    • Weekly emails for grocery but with different themes each week
    • Offers are rotated
    • Messages are personalised
    • All Opt in email
    Loyalty Programme Promotions - Driving Sales 6. Regular communications
  • 46. Summary
  • 47. Summary
    • Programmes offer opportunity to get to know customer – that’s cost of knowledge that must be recovered
    • Opportunity comes from using the data – to drive more spend - personal shopping lists
    • Customers enjoy being part of programmes if they get privileges of whatever value therefore work hard to give them value

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