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Customer loyalty programme Reliance Retail Limited
 

Customer loyalty programme Reliance Retail Limited

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    Customer loyalty programme Reliance Retail Limited Customer loyalty programme Reliance Retail Limited Presentation Transcript

    • 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
    • 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
    • Loyalty Programme Options Points Earn points and redeem for rewards Good -Offers control -Customer understands -Lower cost Bad - Points cost are knowledge - Accrued liability Discount Immediate discount for presenting card Good -Easy and instant - No liability Bad - Discount has to be large (+10%) - No control Privilege Rebate Reward spend over time Good -Easy to manage Bad - Little control - Easy to copy e.g. stampcard - Little emotional connection Krisflyer Earn points and redeem for rewards plus tiers of privilege Bad Good - Low spend customer disillusion -Privileges lead to loyalty - Competitors can match -Offers control -Customer understands
    • What is a privilege program? Tiers of benefits over and above points for miles. (SpiceJET)
    • Loyalty Programme Options Coalition Model Hybrid Model VIP Privileges and private sales for spend over 60000 Rebates for spend over 12000 Lucky Chances for spend Up to 12000 Single Owner Coalition
    • Bank Data Nets & Credit Data entry Application Form name NRIC email mobile age family 122132 Customer card 122132 Marketing Planning & Promotion tactics Analysis services Transaction Database Customers
    • Considering a programme? Steps to launch Planning 1. Feasibility audit 2. Customer research 3. Financial planning 4. Develop programme model Implementation 1. Implementation – develop systems/communications 2. Launch Management (operations)
    • Balancing Loyalty Investment Against Return Loyalty Programme is a cost of learning about customers Additional Customer Profits > Loyalty Programme Investment + Loyalty Promotions Costs
    • Critical Success Factors for Customer Loyalty Target Audience Degree of Participation Delivery of rewards Getting Customers to join Brand Positioning Choice of rewards Liability risk Competitor Strength Customer Loyalty Drivers Generosity Investment Cost Sales Focus
    • Redeem Program Barcode card Hybred model Instant privileges Discounts for members Birthday privileges Points
    • How is it successful? Getting Customers to Join Easy – free membership Target Audience Regular shoppers Degree of Participation High Delivery of Rewards – rebate vouchers (cash effectively) Brand Positioning - for everyone -Birthday treats -Members only Choice of rewards Choose from whole store Liability Risk High but also High redemption Competitor Strength n/a Customer Loyalty Drivers Use membership To make offers Generosity Very generous rebate up to 20% Investment Cost High Sales Focus Very High
    • Loyalty Programme Structure Secrets Data Collection FMCG Partnerships 8 Brand Extension 1 Value Proposition 2 3 7 6 5 Loyalty Programme Mechanics 4 Clubs within programme Sales Promotion Integration Investment Ratio
    • Loyalty Programme Structure Secrets 1 Strategy  Capture all data relevant to the customer relationship Data Collection Lifestyle Lifestage RFM Basket Attitude Shop Habit Geo -Dem Interest Data Warehouse Segmentation Engine Segmented Promotion Marketing 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
    • Application form is the single most important point of data capture a)Gather all data in form b)Gather data incrementally using electronic channels Key Information -Contact -Age/Gender -Family/No family
    • Loyalty Programme Structure Secrets Primary Retail Segmentation Approaches  Recency, Frequency, Value (RFV): e.g High Value Frequent 1 Data Collection 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 Recency , Frequency, Value Segmentation Frequency Visit Recency Frequency Visit Visit Time Value $ Today
    • Loyalty Programme Structure Secrets  Basket analysis to get shopper type Price sensitive Health Conscious Low far milk Natural Yogurt Eco-Washing Powder Basket <10 items Lowest price cola Organic Carrots Brown Rice Brown Bread New organic chocolate Current Basket Lowest price noodles Uses 2-1 offers New large value biscuits No fresh items Cheapest washing powder large format Recommended 46 other shopping types – tv dinners, daily divers, traditional, ethnic explorers, meat feast, vegetarians etc
    • Loyalty Programme Structure Secrets 2 Value Proposition Chance Savings Privileges 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’
    • Loyalty Programme Structure Secrets 3 Loyalty Mechanics 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.
    • Lucky Chance Card Easy to launch No liability Develop card mgt experience Capture all details and transactions Rebate Card Reward only when customers hits threshold spend . Tier rebates at different reward levels 1200 get 60 (5%) 2400 get 240 (10%) 6000 get 900 (15%) Rebate Card & Privileges & Target of 1 Layer on privileges for best customers. Target every customer with individual statements.
    • Loyalty Programme Structure Secrets 4 Investment Ratio Normally 1-3% reward 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.
    • Loyalty Programme Structure Secrets 4 Investment Ratio Spend for 1pt Value of 1pt Total Store Sales Sales on Card (80%) 100 1 1,00000 80000 Points Earned 800 Value Points Earned 800 Points Redeemed 400 Value Points Redeemed 400 Investment Ratio 0.4%
    • Reliance – opportunity to earn at hundreds of retailers  Reliance card offers a chance to earn with a large number of retailers in India.  Comes in smartcard form or keyring  Reward rate can be chosen by individual retailer . A customer consolidating their spend across the members could earn a significant amount of reward every month
    • Loyalty Programme Structure Secrets 5 Sales Promotion Integration 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
    • Loyalty Programme Structure Secrets 6 Clubs within Programme 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
    • 7 7 Brand Extension Strategy  Extend brand using new services Approach  Develop strong own-brand products new nongrocery services  Leverage grocery database to offer re-branded services Advantages  More reward earning/redeeming opportunities  More data from partners and greater marketing reach
    • Loyalty Programme Structure Secrets 8 FMCG Partnerships Grocery Retailer Customer 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.
    • Loyalty Programme Structure Secrets Data Collection FMCG Partnerships 8 Brand Extension 1 Value Proposition 2 3 7 6 5 Loyalty Programme Mechanics 4 Clubs within programme Sales Promotion Integration Investment Ratio
    • Promotions 1. Statements 2. Personal shopping lists 3. Geo-targeting 4. Events 5. Layered promotions 6. Regular communications
    • Loyalty Programme Promotions - Driving Sales 1. Statements - online/offline 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
    • Loyalty Programme Promotions - Driving Sales 2. Shopping lists – online/kisoks 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
    • Loyalty Programme Promotions - Driving Sales 3. Geo-marketing 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 Store Competitor Store Store Catchments Promotion Target Area
    • Loyalty Programme Promotions - Driving Sales 4. Events/Product Sampling Noodle Sampling Events are a regular features for Reliance One Members Strategy  Most valuable customers are invited for store evenings, where specially hosted events are put on around themes such as Noodle,Coffee 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.
    • Loyalty Programme Promotions - Driving Sales 5. Layered promotions 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 6. Regular communications Tips • Weekly emails for grocery but with different themes each week • Offers are rotated • Messages are personalized • All Opt in email
    • 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