Framework to Designing Benefits For a Consumer Loyalty Programme
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Transcript of Framework to Designing Benefits For a Consumer Loyalty Programme
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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
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011. All rights reserved
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Function of the Whitepaper
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.
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
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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
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What is a Consumer Loyalty Program
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.
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)
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Visible Examples in India
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.
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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
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Framework for Benefits Planning
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.
6
Advances in Consumer Research, by
Misra, Malik, & Bhaskar (2009)
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Economic Benefits
Value Appropriation between
Business & Consumer
due to savings of Scale
1. Retailers advertising “Buy Two, Get half off on Third”
2. Fixed Entry Price in an Amusement Park with unlimited rides upon entry
3. Free Shipping for an order size above a certain quantity
7
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.
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Emotional Benefits
“All things being equal, one would
rather do business with a friend.
Sometimes, all things not being equal, one would still rather do
business with a friend!”
Experience vs. Cash
Rewards Items
Greeting Cards
Events
8
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.
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Ego Boost: (A sub-set of Emotional Benefit) Fulfills Esteem Needs on Maslow’s Hierarchy
1. Separate queue for Gold & Platinum Tier members and preferential boarding
2. Recognition Events for Best Customers / Donors
3. Car check-in for premium guests of luxury hotel chains
9
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.
Self Actualization
Esteem Needs
Belonging Needs
Security Needs
Basic Needs
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Shoe Store Owner: Maalik
Customer: Kharidar
Competitive Owner: Hareef
Story 10
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.
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Chapter One
9 pairs of Shoes from March to November
10th Pair Free!
11
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.
MAR 1 PAIR
APR 2 PAIRS
MAY 3 PAIRS
JUN 4 PAIRS
JUL 5 PAIRS
AUG 6 PAIRS
SEP 7 PAIRS
OCT 8 PAIRS
NOV 9 PAIRS
DEC FREE PAIR!
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Chapter Two
10% Discount offered by Competitor in October
Stakes too high to Defect 2 more pairs before
free pair
Eavesdropping
12
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.
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Chapter Three
Puja Thali Welcome at Divali
Emotional Connect
Wife not Impressed
Eavesdropping
13
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.
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Chapter Four
Value Creation Home Delivery
Engaging Family Home-Shopping for
Wife
Free Sandals Scheme for Wife
Ego Boost Picture on Christmas
Cards
Consistency Another Puja Thali
Acting on
Voice of Customer
(Eavesdropping)
14
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.
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7 Key Take Away’s
Confidential & Proprietary. NetCarrots.com Pvt. Ltd. © 2000 - 2011.
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