E-loyalty and

Reward programmes

What is Customer Loyalty?

• Attracting the right customer

• Encouraging customers to buy, buy often, buy in higher quantities and bring you even more customers

• Providing excellent customer service

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Customer loyalty programs

• E-mail newsletters with specials message

• Buy 1, get 1 free

• Discounts

• Bundles

• Incentive to pay on-time

• Special customer contests

• Special events for loyalty club members

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Other ways to build loyalty…

• Personal thank you cards

• Personal bill messages

• Taking advantage of the latest tools available to you to gather customer information.

• Showing that you care and remembering what they like and don’t like.

• Ask your customers how you’re doing – and take it to heart!

• Treat your team well so they treat your customers well.

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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

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Setting Up Loyalty

Programme

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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?

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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 analyse profits, and any recency, frequency, and monetary value models you have built along various lines of business.

• It may include communication channels, product profit margins, channels of purchase

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Step 3: Earnings Overview

• Identifying customers and lines of business that show greater promise to generate the best profits

• An earnings model would likely include:• Recency of purchases

• Number of purchases

• The overall margin/$ of specific products purchased

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Step 4: Potential Program Impact

• Identify potential cross-sell/up-sell, segment migration, retention, and customer acquisition opportunities

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Step 5: Loyalty Program Design

• Design a program that will include the structure, pay-out levels, and reward recommendations that will drive the desired behaviours of your best customer

• Essential loyalty reward program characteristics• quality offering,

• cash value,

• perceived value,

• aspirational value,

• redemption choice,

• convenience,

• relevance,

• unique,

• communication

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Step 6: Estimate Your Program Investment

• Costs of research and strategy development, setup, operations, project management, systems, support services, communication, mailings, fulfilment, and rewards

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Step 7: ROI Model

• Measuring ROI should be an ongoing process, to ensure your loyalty program is rewarding profitable behaviour

• 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)

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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, pay-out structure, and communication schedule and vehicles

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Loyalty Programme Structure

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Factors Affecting Success

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Traditional Loyalty Programs Vs

Modern Rewards Programs

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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.

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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.

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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.

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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.

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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

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Mobile Customer Loyalty Programs

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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.

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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

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Mobile Coupons

• Mobile coupons add interactivity, location and real-time attributes to the traditional coupon. So companies use mobile coupons in different ways.

• Real-time redemption at the point of sale where a customer gets a future coupon in real-time.

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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

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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.

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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

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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

• Brand fests are used to share history

• Keep consuming to stay connected

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Building a Community

• Community• Use a newsletter to share news about customers

• Develop an online forum for customers to stay in touch

• Organize annual events “by invitation” for VIP customers

• Facilitate picture / story sharing

• Help customers help each other

• Give a name to the community

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Geo marketing

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Regular Communication

• Weekly emails with different themes

• Personalized

• Rotating offers

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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

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EBay

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ICICI

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ICICI

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Payback

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Partner Brands

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TESCO

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Enterprise approach to Loyalty

1st : Have a clear articulated Customer Loyalty Strategy

2nd : Must be in sync with Business Objectives

3rd : Business Process to be customer centric

4th : Design Customer centric & Profitable Loyalty programs

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???

• The big question will be whether consumers are willing to simply hand over their identity to every business for added benefits and rewards – and if so, what this says about the real stance as consumers about personal privacy?

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