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Courting Loyalty Template Version

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A look at what\'s wrong with most points based programs in India.

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Courting Loyalty Template Version

  1. 1. Loyalty Programs – From Transactions to Transformation! Kartikeya Kompella – Lowe Lintas
  2. 2. The Era Of AcquisitionA growing economy with a large populationConsumption oriented growth boomingAcquisition the name of the gameRetention / loyalty – not a focus area for most But Loyalty Programs Are Important !
  3. 3. How Do Loyalty Programs Help ?If 80:20 is true and it is, then it’s too much of a risk to takeCompetition is eyeing your customers and vice versaCustomers can defer purchasesHappy customers – give good referrals
  4. 4. A Rash Of Loyalty ProgramsLoyalty programs - sprouting up at every cornerThe energy and focus required for loyalty programs - seem to be lackingLeading to largely undifferentiated programsAn evolutionary phase ?
  5. 5. Loyalty Programs Are StrugglingColloquy Loyalty Census : The average U.S. household has signed up for 14.1 loyalty programs, but only participates in 6.2 of them (44%).Low awareness - Lintas survey
  6. 6. Why Are Loyalty Programs Struggling ?They just don’t touch customers Transactional Predictable Lack relevance
  7. 7. Loyalty Programs DefinedLoyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially of benefit to the firmRepeat purchase – the proof of loyaltyHypothesis: The greater the joy a program provides, the greater consumers’ willingness to repeat purchases
  8. 8. Two Ways Of Running ProgramsThe transactional approach – build your programs around a set of transactions – points, birthday cardsThe transformational approach – build your program around the customer
  9. 9. If you ran a program for your most important customers …. ‘You’d want to enhance the relationship’
  10. 10. But Most Programs Are Scratching At The Surface
  11. 11. Transactional ProgramsMost programs in India are points basedA ready model can lead to incrementalism / lack of imaginationLends itself easily to transactions
  12. 12. Driving A Program Through PointsPoints – a welcome freebie but not a relationship enhancer in any mannerYou can spoil the best relationship by making it purely transactionalDriving a program only through points takes away the magic
  13. 13. Key QuestionIs the customer at the centre of this program ?
  14. 14. Developing Customer Centric Programs
  15. 15. Build AppreciationCrossword does book readingsLevis runs a special edition clothes and accessories that money can’t buyTanishq factory visits help customers know more about the product and the craft
  16. 16. Help CustomersAdd a product to a service and vice versa An apparel brand can offer fashion stylist services An airlines can offer airport bookstore coupons
  17. 17. Random Acts of KindnessEveryone loves a pleasant surprisePredictability leads to expectationsNeed to be spontaneousHyatt’s Gold Passport – free breakfast or drinks on the house
  18. 18. Reward DisproportionatelyRedemption gives some joyMost points go unredeemedThe toss up - give points to all your customers and have a majority unredeemed or reward your main customers disproportionately
  19. 19. Keep Rewards AttainableIsta Hotels After the 4th visit, free upgrade to a suite After the 6th visit, free two day stay
  20. 20. Customer KnowledgeKnowing what a customer wants to buy and when can convert a sale into a serviceMake conversion or sale become more fun or rewarding
  21. 21. Pokisham –The Touchtel STD PCO Loyalty Program
  22. 22. The BackgroundThe STD PCO business in the early-to-mid 2000s was largely a BSNL monopolyTouchtel, an unknown private player had a tough challengeEven in booths where Touchtel managed to get a presence, loyalties – and revenues – were dividedWith margins more or less at par (with BSNL), a stronger differentiator was neededPokisham, a loyalty program for STD PCO customers was launched in this backdrop
  23. 23. Program ConstructPoints based program 1 basic point for a net billing of Rs.100 Greater reward for greater loyalty – 1.2 points for ‘exclusive’ STD PCOs Additional rewards for length of association – tenure bonus points in line with no. of years with Touchtel Bonus points for meeting specific targets/ achieving milestonesGreen token lucky draw – tactical promotions – win consumer durablesRed token lucky draw – win a carPrograms for the family – movies, drawing competition
  24. 24. Redemption and RewardsCustomers could redeem their points against a host of merchandise – jewellery gift vouchers, white goods, holiday packages etc.Additionally lucky draws conducted monthly and quarterlyProgram culminated with a gala ceremony where customers were invited with their families Rewards and prize distribution Lucky draw for one mega bumper prize Variety entertainment, food and beverage
  25. 25. What Made It Special ?Excitement, spontaneity was a part of the program designCompletely customer centricInvolvement across the team starting with Senior MgtFamily involvement brought in pride
  26. 26. Making The Mindset Shift
  27. 27. Transactions To TransformationTwo step process Intent Customer knowledge
  28. 28. The FuturePrograms will continue to proliferateWhile companies will analyse data better – this may not help consumersAs more brands question their loyalty programs – programs will become more customer centric
  29. 29. Thank You !

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