Loyalty programs reward customers for repeat purchases and engagement. Originally focused on transactional loyalty through rewards for volume, programs now also incentivize social loyalty by rewarding customer advocacy, and collaborative loyalty by soliciting customer input to improve products. For example, Estonian Air's AirScore program rewards social sharing without flight purchases, while Starbucks' MyIdea crowd-sources innovations. As technologies and customer behaviors change, the most effective programs harness multiple dimensions of loyalty through diverse rewards and engagement opportunities.

1. CUSTOMER LOYALTY DIMENSIONS
Deepanjali
Msc 1st yr

2. LOYALTY PROGRAMME
 Mechanism for identifying and rewarding loyal
customers.
 It includes a rewards program by the company to
customers who frequently make purchases.
 A loyalty program may give a customer advanced
access to new products, special sales coupons or
free merchandise.

3. HISTORY
 The first programme for awarding loyalty
 was launched in 1981
 American Airlines initiated the Frequent Flyer
Programme “AAdvantage”
 The Holiday Inn was the first to initiate such a
programme in the hotel industry.
 Followed in 1983 by the Marriott hotel corporation
with its Honoured Guest Programme.
 Awarded points for overnight stays in the hotel
 It was the first programme that awarded its guests for
spending by giving points for each dollar spent on any
service inside the corporation.

4. GOALS OF LAUNCHING LOYALTY
PROGRAMMES
 Improving customer knowledge
 Undersold product or services
 Highly profitable products/services
 Increase customer retention and purchase
frequency
 Improved profitability

5. REQUIREMENT OF LOYALTY PROGRAMME
 Today’s customers are more informed, better
educated and more discerning.
 Greater expectations - more value for less money
 To attract potential guests and to retain loyal
customers.
 Key source of competitive advantage
 Can be a powerful driver of company growth
 Research conducted by Bain & Co has shown that
retailers with a loyalty programme are 88% more
profitable, on average, than competitors without one.

6. ADVANTAGES OF LOYALTY PROGRAMME
FEATURE DISCRIPTION
INDIVIDUALITY Each guest needs to see him/herself
in the loyalty programme
COMPETITIVENESS It must provide an answer to the
question: Why should a guest
want to join a loyalty programme?
The benefits of a loyalty programme
need to be easy to explain,
simple and easy to remember
INTERESTING A hotel has only a few seconds at its
disposal in which to make an
impression on a guest
EFFECTIVENESS A loyalty programme should provide
true value to guests.

7. ADVANTAGES OF LOYALTY PROGRAMME
FEATURES DISCRIPTION
FLEXIBILITY Points can be redeemed in a wide
variety of ways (for example,
points can be exchanged to pay
for services, or there is a
possibility
of exchanging points with the
longest possible redemption
period)
PROMOTABILITY The programme needs a
resounding name and motto

8. LOYALTY TRENDS
 Volume
 Earlier restricted to the
number of products
customer has bought.
 Value
 Earlier restricted to the
transactional value.
 Volume
 But now also with the number
of product improvements
they’ve suggested, the reviews
they’ve posted.
 Value
 But now also with the value
they have in influencing people
within their networks to
purchase your products.
 Also the additional value that
the customer get by helping in
improving the product and
customers.
Past Current

9. REASONS FOR FAILURE OF A LOYALTY
PROGRAMME
 Not a powerful driver
 Forrester research shows that nearly two thirds of loyalty
programmes for retailers are ineffective, and
 Aberdeen Group research shows that 74% of retailers report
‘partial to no tangible improvements’ from their loyalty
programmes.
 Measuring the wrong things in their attempts to identify
loyal customers
 Unable to link customer loyalty to firm performance
measures
 Rewarding the wrong customer behaviours or attitudes
when designing loyalty programs
 Companies aren’t making the most of the potential
because of poor execution.

10. CHANGES IN THE LOYALTY PROGRAMME
 What is the requirement for a change in loyalty
programmes:
 The proliferation of new technology
 Shifting consumer behaviour
 Changes in the trend
 Competition
 The result
 Companies are able to drive previously untapped value
and volume from their customer base across multiple
dimensions.

11. CURRENT DIMENSIONS- LOYALTY AS 3D
1. Transactional loyalty – a customer demonstrates
transactional loyalty if they buy your product and keep
buying your product (and others in your product range)
over time.
2. Social loyalty – a customer is socially loyal if they’re
willing to advocate your product to their networks,
either on or offline.
3. Collaborative loyalty – a customer is collaboratively
loyal if they’re willing to invest time and effort in
improving your product or experience.

12. BRAND HARNESSING THE POWER OF 3D
 Brands as diverse as KFC, Estonian Air, Starbucks
have all created social loyalty programmes where
they reward a customer’s social behaviour with
points that can be redeemed for products.
 Starbucks MyIdea is a popular example of a brand
trying to harness collaborative loyalty in order to
improve its customer experience, one such crowd-
sourced innovation being wifi availability in coffee
shops.

13. ESTONIAN AIR
 AirScore
 The first-ever airline virtual loyalty program.
 Share Estonian’s offers on their Facebook wall,
including airfares, cultural and sport events taking place
in Estonia.
 Supporters of the airline are rewarded with discounts for
social media advocacy, without even having to fly the
airline.
 Works as a business deal – you distribute Estonian Air’s
ads and they reward you with points of various use.
 The program reached over 1 million wall impressions in
less than ten days and continues to grow

15. CHECK-IN DEAL
 When customers check-in,
Deals are offered in exchange :
 Individual: Offer a discount to an
individual for simply checking in.
 Loyalty: Offer a discount or
freebie for checking in a certain
number of times.
 Friend: Offer a Deal to groups of
friends who check-in together.
 Charity: A check-in results in a
donation to the specified charity

18. IBIBO – REFER AND EARN
 Earn Rs 1000 while
installing the application
 Earn Rs. 200 while
referring it to friends

19. STARBUCKS MY IDEA

20. THANK YOU