This document discusses loyalty marketing, including its objectives, scope, process, and case studies of successes and failures. Loyalty marketing focuses on growing and retaining existing customers through strategic relationship building. It aims to better understand high-value customers and provide them targeted benefits to increase their lifetime spending and profitability. Case studies show that successful loyalty programs like AirMiles clearly communicate benefits to attract and reward loyal customers, while failures occur when programs have no communication, low redemption rates, or unsustainable costs.

1. Loyalty Marketing

2. AGENDA
• Loyalty Marketing
– Understanding
– Objective & Scope
– Process
• Failure/Success in Loyalty Marketing
• Minimizing operational cost
• Case Studies
• Implications

3. Loyalty Marketing
• Best-kept secret behind incredibly successful businesses
• Develop a stronger relationship with each and every“one of the company's
“
best customers
• Based on strategic management
• Focuses on growing and retaining existing customers
• Less investment & high profit
• Long term business relations

4. Why talk about Loyalty?
• Mature Industry
– Increasing competition
• Focus on getting more customers
– Market share Vs. share of customer
• Competitive advantage
– Price
– Service quality
– Loyal relationships

5. Objective & scope
Is 80 – 20 principle valid ?
If yes – who are the top 20%
How do we retain them
 No LBM: anonymous customers
Lost customers to new competition
Know our customer better  Attract back with relevant inputs
 No LBM: general offers for entire
than anybody else catchments – more spends
Categories failing to attract customers
Identify the core spending large amounts on other categories
 ‘shop the shop’ initiatives
customers contributing to the  No LBM: promo’s to all customers– more
business and to allow these spends
privileged customers to special Low cost communication in catchments –
(specific) benefits specific - relevant
 No LBM: mass media communication -–
more spends
Leverage customer Attract drop out customers with specific offers
information to sell more of – bill value based or sku based
 No LBM:
higher gross margin Anonymous customers
products general offers – more spends
Customers shopping only once or irregular
Get them back for incremental spends with
specific offers
Create life time customers  No LBM:
Anonymous customers
general offers – more spends
Own product launch – trial offers to bench
The power of data from an mark brands
inclusive loyalty program to  Large consumers can get more inputs
Track trials, gain/loss.
deliver the above  No LBM: one size fits all – more spends
Effectiveness of promotions
Pre, during and post promo tracking at customer
level
No LBM: anonymous customers

6. REACHING THE CUSTOMER – JUST GOT
PERSONAL
• Use Complaints to Build Business
• Reach Out To The Customers:
– Contact . . . contact . . . contact with current customers is a
good way to build their loyalty
• Profile of Customer :
– The key behind a successful customer loyalty program is
knowing who (Profile of Customer) purchases
what, where, when, how much (History of Transaction), and
using this magical insight to drive (Desired Behaviour)
• Employees’ loyalty impact on customer loyalty

7. Why do we need this initiative?
• Create a jump in enrolments
Target1:
• New members getting attracted through the special benefits offered to
members
Target 2 :
• Create interest for current members
Target 3:
• Reward them for being members –special feel
Target 4:

8. Communications - Sniper approach Vs the traditional
shot gun approach
• Focused communication via low cost media vis-à-vis expensive mass media
• Proliferation of communication media
– 22% fragmentation in Television
– 15% inflation in CPRP in TV
Communicating to Loyal customers
medium and 20-25% inflation in
Print medium SMS@Rs.1/contact
– Media spillage Direct Mailers@Rs.25/contact
E-Mailers@ Rs.5/contact
– Reduction in the time spent on One-to-one communication and
Mass Media by the Consumer minimum wastage

9. Who has succeeded and failed?
•410 programs total, 75 stopped - 18% failure rate, many more are underperforming
•Who succeeded
•AirMiles, Canada
•Singapore Airline
• Krisflyer
•Tesco Clubcard, UK
•Who failed
•McDonald’s
• McBreak Card
•Swissair Qualiflyer
•Canadian Airlines
• Plus
•Walt Disney
• Company’s The
• Disney Club

10. Why they failed?
• No programme communication - programme owner does not use
communications to grow spend making programme un-profitable
• Low customer redemption - customers do not redeem rewards, therefore see
no benefit and stop taking part
• Not enough customers - Few programmes attract a critical mass of customers
to justify operation costs
• High set-up costs - Costs incurred are too high to recover from incremental
customer spend

11. Getting to 0 cost loyalty model? Its possible!
What’s in it for LBM
companies?
5% convert to co-branded
credit cards Co-branded credit cards & PLCC:
 Conversion fees
 Share of transaction charge
 Complete cost of PLCC & co-
40% converts to PLCC branded credit cards along with
redemption to be borne by bank
All credit risks borne by bank
Base loyalty program

12. CASE STUDIES
 International Case Studies
 Domestic Case Studies

13. TESCO
Loyalty Program Features
• TESCO Clubcard- Closed Loop, for use in TESCO and affiliated outlets
Variants
• TESCO Clubcard Credit Card- For use in TESCO and all other merchant outlets
• TESCO Clubcard
― 1 point per GBP spent at TESCO stores, petrol stations, online purchase
Points Structure • TESCO Clubcard Credit Card
― 5 points for every 4 GBP spent at TESCO stores, petrol stations, online purchase
― 1 point for every 4 GBP spent at other merchant establishments
• Every quarter-end TESCO sends Clubcard vouchers that can be used for:
― Savings on In-store purchases
― Online shopping at Tesco Direct
Points ― On Clubcard deals which include collecting AirMiles with airlines, vouchers for Restaurants &
Redemption Bars, Holiday packages and various deals that are offered by Tesco
― Tesco Personal Finance products
• There are special schemes like Doubling up Clubcard Vouchers specifically to be spent at Tesco wine club
on Tesco.com
• Free membership for exclusive clubs like Food Club, Wine Club, Healthy Living Club
Additional Perks • Facilities like 0% on balance transfers for 13 months and 0% on all purchases for 3 months for TESCO
Clubcard Credit Card holders
• Royal Bank of Scotland (acquired by TESCO)
Partners
• Avis Car Rentals, National Tyres and Autocare
Source: Company website, Annual Report

14. Walmart
Loyalty Program Features
• Wal-Mart Credit Card- Closed Loop, for use in Wal-Mart and affiliated stores
Variants
• Wal-Mart Discover Credit Card- For use across merchant outlets
• Upto 1% cash back on purchases
Points • Upto USD 100 cash advance on purchase
Structure • 3 cents off on every gallon of gas purchased at Wal-Mart affiliated gas stations
Partners • GE Money Bank
Source: Company website, Annual Report

15. Target
Loyalty Program Features
• Target Check Card- Closed Loop debit card for use in Target and affiliated outlets
• Target Credit Card- Closed Loop credit card which can be used in Target and affiliated
Variants outlets
• Target Visa Credit Card- For use at Target and all Visa affiliated outlets
• Target Check Card and Credit Card:
― 1 point per GBP spent at Target and affiliated outlets
Points
• Target Visa Credit Card:
Structure
― 1 point per GBP spent at Target and affiliated outlets
― 1 point for every 2 USD spent in other merchant outlets
Points • On accumulation of 1000 points, customers earn 10% discount on an entire day’s
Redemption shopping at Target
Additional • Target donates 1% of the amount purchased through the REDcard to a school of the
Perks customer’s choice
Partners • Target National Bank
Source: Company website, Annual Report

16. CASE STUDIES
 International Case Studies
 Domestic Case Studies

17. Reliance Retail
Loyalty Program Features
• Reliance One Card- For use in all Reliance Retail outlets as well as other
Variants merchant outlets
Points • 1 point for expenditure of Rs. 100
Structure
Points • Minimum of 25 points to be accrued prior to redemption
Redempti
on • 1 point equivalent to Rs. 0.7
• Return ticket to destination of choice in India once a year on monthly
Additional shopping of Rs.1,100
Perks
• Accident insurance worth Rs. 50,000 free on enrollment
Partners • Citibank

18. Future Group
Loyalty Program Features
• ICICI Bank Future Card- For use in all Future Group outlets as well as other merchant
outlets
― Silver
― Gold
Variants
• ICICI Bank Big Bazaar Credit Card- For use in Big Bazaar as well as other merchant
outlets
― Silver
― Gold
• ICICI Bank Future Card:
― 2 points for every Rs. 100 spent at Future Group Outlets
Points ― 1 point for every Rs. 200 spent at other outlets
Structure • ICICI Bank Big Bazaar Credit Card:
― 6 points for every Rs. 100 spent at Big Bazaar
― 1 point for every Rs. 200 spent at other outlets
Points
Redemption
Additional • Special payment counters for cardholders
Perks • Exclusive offers for cardholders from time to time
Partners • ICICI Bank

19. Shopper’s Stop- First Citizen
Loyalty Program Features
• First Citizen Card- Closed Loop, for use across Shoppers Stop outlets
― Classic
― Silver
Variants ― Golden Glow
• First Citizen Citibank Co-branded Credit Card- For use in Shopper’s Stop as well as other
merchant outlets
― Silver
― Gold
• First Citizen Card:
― Classic: 1 point for every Rs. 100 spent at Shopper’s Stop
Points ― Silver: 1 point for every Rs. 50 spent at Shopper’ s Stop
Structure ― Golden Glow: 1 point for every Rs. 30 spent at Shopper’s Stop
• First Citizen Citibank Co-branded Credit Card:
― Same redemption structure for corresponding level of First Citizen Card
Points • 1 point earned at Shopper’s Stop worth Rs. 0.7
Redemption • 1 point earned at other merchant outlet worth Rs. 0.65
• Invites to end of season sales preview for all members
Additional • Special offers only for First Citizen members
Perks • Free parking for Silver and Golden Glow members
• Exclusive cash counter for Golden Glow members
Partners • Citibank

20. Action Outline
• 1. To Select market segment
– Identify most valuable customers – existing
– Identify customers who might become valuable - prospects
2. To Design a relationship-building service culture
– Identify what type of treatment promotes customer loyalty
– Identify what loyal customers want to give to us
– Identify potential for the development of a brand community
3. To Implement a loyalty treatment
– Design specific communication strategy and message
– Train staff to understand the importance and the process
– Create opportunities to invest and receive investments
– Generate a sense of community among the customers
4. To Measure effects of program and redesign
– Maintain constant communication with the loyal customers
– Monitor costs and results of the program

21. The Loyalty Triangle
Social Network / Community
Provider Customer

22. The Loyalty Triangle – Implication on Education business
Student Community/ Counselor forum
Education Business Student/Centre

23. Building a Community
• Student Community
1. Use a newsletter to share news about industry/career
2. Develop an online forum for customers to stay in touch
3. Organize annual events “by invitation” for top customers
4. Facilitate picture / story sharing
5. Help customers help each other
6. Give a name to the community
Counselor Forum
• Can explore the option to initiate “Facebook” kind of forum where counselors can interact
with each other and gelling into company’s culture – ‘Employees’ loyalty impact on customer
loyalty’
• Develop a loyalty programme for the counselors

24. Thank You