Customer Loyalty Programmes 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
Some Bottom Facts Reduction of 5% of defective customers may result in 80% increase in profitability 60% to 80% of lost customers were satisfied 90% of customers who love a company will repeat but only 30% of customers who like the company will repeat 20-40% of your customers bring 80% of your profits
It costs a business about 5-10 times more to acquire a new customer Current customers of yours spend 67% more than a new one According to the 2011 Colloquy Customer Loyalty Census, of the $48 billion worth of perceived value in reward points and miles distributed by American businesses annually, one-third goes unredeemed by consumer
Types of Loyal Customers Frequency of Purchases + + - High Latent loyal loyalAttachment Spurious Low loyal loyal -
Need For Loyalty Programmes •Reward them for being special •Create jump in enrolments •Create interest for current members •New members getting attracted to new offers
Setting Up Loyalty Programme proposed by MARITZ
Step 1: Loyalty Situation Analysis What is my company’s long-term vision? What are our business goals and objectives? How do we conduct business (operationally) and how do we generate profits? How do we capture customer data, and what data do we currently capture? What are the market conditions that could affect my loyalty program, including industry and competitor-related issues? How much brand recognition do we have in the market, and what type of brand positioning do we promote? How many lines of businesses do I have, and how do they vary in regards to business model, offerings, programs, and target customers?
Step 2: Data Gathering & Gap Analysis Data capture will include: Customer demographics, purchasing/activity levels How you segment customers and/or score their activities How you analyze profits, and any recency, frequency, and monetary (RFM) value models you have built along various lines of business. It may include communication channels, product profit margins, channels of purchase
Step 3: Earnings Overview Identifying customers and lines of business that show greater promise to generate the best profits An RFM earnings model would likely include: Recency of purchases Number of purchases The overall margin/$ of specific products purchased
Step 4: Potential Program Impact Identify potential cross-sell/up-sell, segment migration, retention, and customer acquisition opportunities
Step 5: Loyalty Program Design Design a program that will include the structure, payout levels, and reward recommendations that will drive the desired behaviors of your best customer Essential loyalty reward program characteristics Quality offering, cash value, perceived value, aspirational value, redemption choice, convenience, relevance, unique, communication
Step 6: Estimate Your Program Investment Costs of research and strategy development, setup, operations, project management, systems, support services, communication, mailings, fulfillment, and rewards
Step 7: ROI Model Measuring ROI should be an ongoing process, to ensure your loyalty program is rewarding profitable behavior Projected incremental profit generated by the recommended program Profit by line of business Profit detail by segment Your financial liability, with breakage (points never redeemed by customer)
Step 8: Test the program Test it with a select number of existing customers and/or focus groups Test phase allows to test your introduction method, reward mix, payout structure, and communication schedule and vehicles
6 POS Systems With Loyalty ProgramIntegration ERPLY Square Shopkeep Revel Systems Registroid RetailEdge
Traditional Loyalty Programs VsModern Rewards Programs
Plastic Reward Cards vs Mobile Phones Most loyalty programs require the business to print thousands of plastic loyalty cards. This means the business must spend hundreds or even thousands of dollars in upfront cost to launch their loyalty program. Check-in based loyalty programs utilize guests’ mobile phones as their loyalty cards, enabling guests to “check-in” anytime they’re at your venue. Because you are utilizing your patrons’ phones as their loyalty card, the start-up cost to launch a loyalty program is dramatically reduced.
POS vs Online Dashboard Most traditional, card-based loyalty programs are connected to a point-of-sale system installed at each store. These POS systems enable each business to track customers’ rewards points. However, these POS systems cost thousands of dollars to buy and maintain, further increasing the cost of operating a loyalty program. Most check-in based loyalty programs are packaged with an online dashboard that your business can access to update its loyalty program and view reports on customer visits and rewards. These dashboards are typically provided for free or for a minimal cost for more advanced programs.
Printable Coupons vs Mobile Coupons Oftentimes, traditional loyalty programs deliver coupons and rewards via a mailed coupon or through an email that the guest must print out. These rewards require the guest to remember to save the coupon and bring it with them when they next visit your store. Check-in based programs, which are typically tied to a guest’s mobile phone, deliver coupons and rewards directly to your guests phones. This provides guests with a 24/7 link to your business and enables them to redeem their rewards whenever they have their phone.
Social Media Integration Traditional loyalty programs are stuck in a silo. Only your business knows when a guest earns a reward or visits your business. Check-in programs are social by nature. When your guests check- in, they tell all of their friends they are visiting your business and provide an inherent recommendation. This is a huge benefit to businesses looking to expand their reach to new customers. Check- ins on social networks like Foursquare and Facebook Places increase your social media presence and help new customers discover your business.
Golden rules of loyalty program Identify type of benefits Design programmes based on customer needs and aspirations Keep programmes fresh and updated Use technology to personalize benefits Seek constant feedback Reinvest regularly in refinement
Opt-in Programs Customers provide information about their preferences, likes, dislikes, demographics, etc. and in return receive permission based targeted and relevant messages of promotions/ deals/ events.
Loyalty Rewards • Opt-in loyalty programs gives customers access to the best offers/deals on products that interest them via mobile. • Retailers can proactively send offers/incentives to the customer’s mobile device - thus eliminating the need for membership cards. • Mobilizing the physical card means - retailers can add location based offers, customized coupons and a quick check-out experience. A loyalty reward mobile program can alert a customer to any special offers when he checks-in
Mobile CouponsMobile coupons add interactivity, location andreal-time attributes to the traditional coupon. Socompanies use mobile coupons in different ways. Real-time redemption at the point of sale where a customer gets a future coupon in real-time.
Cross selling - Cross-company programs Cross-selling is the action or practice of selling among or between established clients, markets, traders, etc. or the action or practice of selling an additional product or service to an existing customer Unlike the acquiring of new business, cross-selling involves an element of risk that existing relationships with the client could be disrupted For that reason, it is important to ensure that the additional product or service being sold to the client or clients enhances the value the client or clients get from the organization
Example HiDesign giving away Promenade Discount for Gold Cards Payback Cards
Upselling Upselling is a sales technique whereby a seller induces the customer to purchase more expensive items, upgrades, or other add-ons in an attempt to make a more profitable sale. Upselling usually involves marketing more profitable services or products but can also be simply exposing the customer to other options that were perhaps not considered previously.
Co-creation Programmes Co-creation is the practice of product or service development that is collaboratively executed by developers and stakeholders together Starbucks has received over 67,500 responses for their co-creation programme Food and Beverage ideas – new product and product improvement Experience ideas – ordering and store atmosphere Involvement ideas – community and social responsibility
Brand Communities Group of individuals united through the consumption of your products ◦ Harley-Davidson’s “HOGs” ◦ Club Med’s “Gracious Members” Characteristics ◦ Communality – help and expect help from others ◦ Brandfests are used to share history ◦ Keep consuming to stay connected
Building a Community Community 1. Use a newsletter to share news about customers 2. Develop an online forum for customers to stay in touch 3. Organize annual events “by invitation” for VIP customers 4. Facilitate picture / story sharing 5. Help customers help each other 6. Give a name to the community
Regular Communication Weekly emails with different themes Personalized Rotating offers
Four Ways to Turn CRM into Customer Loyalty Satisfaction does not equal Loyalty if you are thirsty and I give you a Diet Pepsi, while it may “satisfy” your thirst, your true loyalty may still be to Diet Coke Know your Best Customers system of scoring customers based on both current profitability and future growth potential Treat Different Customers Differently grow those with the greatest future potential Understand and Use Marketing ROI focus on clear, highly targeted and measurable solutions that clearly show the returns that they produce
The Tesco Loyalty Card is one of the most exciting and interesting marketing tales of this generation. Tesco’s have gained the reputation as sophisticated loyalty scheme marketers In 1995 Tesco introduced their Tesco Club card The Tesco Club card has become the world’s most successful retail loyalty scheme Tesco Clubcard holders benefit when shopping at Tesco as they receive 1 point for every £1 they spend, and double points on special offers
These points are stored and built up and 4 times a year the holder receives vouchers to the value of points they have saved Vouchers can be spent in store on shopping or used on Club card Deals where they are worth 4 times the value They are also entitled to free access to the Clubcard clubs which include: wine, baby and toddler, healthy food, food and Christmas clubs There are over 150 loyalty schemes within the UK, which equates to the circulation of over 40 million cards
For Tesco the benefits they give to the customers ensures that they can micro- segment customers by lifestyle habits, including individual personality traits from analysis of the contents of each grocery cart They can then target them with newsletters and other personalized information along with a variety of other marketing programmes There are over four million variations of its quarterly customer mailing to ensure that its discounts and offers are tailored specifically for the customer
Casino company Harrahs Entertainment Inc. has had great success in targeting "low-rollers" in recent years By 2002, the company posted more than $4 billion in revenue, $235 million in net income and a streak of 16 straight quarters of "same-store" revenue growth In 1997, it implemented a loyalty program called Total Gold, which was a frequent-player program Total Gold player cards recorded customer activity at various points of sale- including slot machines, restaurants, and shops. Soon, the database contained millions of transactions and valuable information about customer preferences and spending habit
Statistical analysis revealed that the best customers were not the "high- rollers" so coveted by the rest of the industry. In fact, the best customers turned out to be slot-playing middle-aged folks or retired teachers, bankers, and doctors with time and discretionary income. They did not necessarily stay at a hotel, but often visited a casino just for the evening. Surveys of these customers told Harrahs that they visited casinos primarily because of the intense anticipation and excitement of gambling itself.
It developed quantitative models to predict lifetime value of these customers and used them to centre marketing and service-delivery programs on increasing customer loyalty In an indication of success in capturing greater wallet-share, the programs dramatically increased the amount of cross-market (multiple property) play. This grew from 13 percent in 1997 to 23 percent in 2000.
Will 2013 Be The Year of Loyalty Programs During the past year, several mobile loyalty programs sprang up to entice small business owners with limited resources to create low-cost programs to reward frequent customers for purchases These programs, such as LevelUp, Pirq, and Belly, allow business owners to tailor loyalty programs to their specific business needs All the big brands that have existing reward programs are purchased- based or reward for purchases. Now they are starting to recognize that they need a digital layer that sits on top of these programs to reward customers for all of the actions that are taking place, whether it’s when they’re on social media or on the brand’s site
??? The big question will be whether consumers are willing to simply hand over their identity toevery business for added benefits and rewards –