This document outlines a 3E framework for designing benefits for a consumer loyalty program. It discusses how economic, emotional, and ego benefits can be provided to encourage loyal customer behavior. The document then tells a story about a shoe store owner, Maalik, who uses these benefits like free shoes and home delivery to retain his best customer, Kharidar, against a competitor's discount. The key lessons are that economic benefits are indispensable but emotional and ego benefits can catalyze advocacy, and that listening to customer needs is crucial for success.

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3 E FRAMEWORK
TO
DESIGNING BENEFITS
FOR
A
CONSUMER LOYALTY PROGRAM
Prepared for Apeejay School of Management
by NetCarrots Loyalty Services

2. Function of the Whitepaper
2
1. Is NOT to take a position or espouse a
philosophy
2. Is to assist with Education on a
framework we’ve profitably used for
many years
3. Learning happens best with learning and
analogies
4. Hence half this paper is, but, a STORY
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.

3. Detailed write-up on slides at:
http://responsemerchant.blogspot.in/2011/12/story-explaining-4-e-framework-to.html
3 Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.

4. What is a
Consumer Loyalty Program
4
Loyalty programs are
structured marketing efforts
that Reward,
and therefore Encourage,
Loyal buying behavior
— behavior which is potentially beneficial to
the firm
Sharp, Byron and Anne Sharp
(1997)
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.

5. Visible Examples in India
5
1. i-mint (now called Payback)
 9 million members and
 1,500 network partners
2. Hero Honda's passport program
 Over 3 million members
3. BPCL's PetroBonus fuel card program
 Over 2 million members
4. IOCL’s fleet (XTRAPOWER) & retail (XTRAREWARDS) cards
 Over 3 million members
5. Maruti Suzuki Auto Card,
 Over 370,000 cardholders
6. Kingfisher Airlines King Club
 Over 2 million members
http://en.wikipedia.org/wiki/Loyalty_program#India
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.

6. Framework for Benefits Planning
6
Advances in Consumer Research, by
Misra, Malik, & Bhaskar (2009)
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7. Economic Benefits
7
Value Appropriation 1. Retailers advertising
between “Buy Two, Get half
Business & Consumer off on Third”
due to savings of Scale
2. Fixed Entry Price in
an Amusement Park
with unlimited rides
upon entry
3. Free Shipping for an
order size above a
certain quantity
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.

8. Emotional Benefits
8
“All things being
equal, one would
rather do business
with a friend.
Sometimes, all things
not being equal, one  Experience vs. Cash
would still rather do  Rewards Items
business with a  Greeting Cards
friend!”  Events
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9. Ego Boost: (A sub-set of Emotional Benefit)
Fulfills Esteem Needs on Maslow’s Hierarchy
9
1. Separate queue for
Self Gold & Platinum Tier
Actualization members and
preferential
boarding
Esteem
Needs
2. Recognition Events
Belonging for Best Customers
Needs
/ Donors
Security Needs
3. Car check-in for
premium guests of
Basic Needs luxury hotel chains
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.

10. 10 Story
Shoe Store Owner: Maalik
Customer: Kharidar
Competitive Owner: Hareef
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.

11. Chapter One
11
 9 pairs of Shoes MAR 1 PAIR
from March to APR 2 PAIRS
November MAY 3 PAIRS
JUN 4 PAIRS
JUL 5 PAIRS
 10th Pair Free! AUG 6 PAIRS
SEP 7 PAIRS
OCT 8 PAIRS
NOV 9 PAIRS
DEC FREE PAIR!
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12. Chapter Two
12
 10% Discount
offered by
Competitor in
October
 Stakes too high to
Defect
 2 more pairs before
free pair
 Eavesdropping
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13. Chapter Three
13
 Puja Thali
Welcome at Divali
 Emotional Connect
 Wife not
Impressed
 Eavesdropping
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14. Chapter Four
14
 Value Creation Acting on
 Home Delivery
 Engaging Family Voice of Customer
 Home-Shopping for (Eavesdropping)
Wife
 Free Sandals Scheme
for Wife
 Ego Boost
 Picture on Christmas
Cards
 Consistency
 Another Puja Thali
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.

15. 7 Key Take Away’s
15
1. Business can only discount for customers of value, not all customers
2. Economic Benefits indispensible for most consumer loyalty programs
3. Economic Benefits set foundation for other benefits
 Emotional and Ego benefits are relevant on the back of Economic Benefit
4. Ego benefits catalyze Advocacy
 Wife will now be sold through husband
5. Good programs follow Principles of Win:Win
 Home Delivery: Value for Customer + Lowered costs for business
6. A pure Economic Offer will typically fail against an equivalent
Economic Offer with Ego and Emo benefits
7. Most Important: Eavesdropping
 Voice of Customer is crucial to plan benefits
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.

16. LETS BEGIN
A WIN:WIN RELATIONSHIP!
Ashish.Merchant@netcarrots.com
+91 98671 50505