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Loyalty presentation

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Loyalty Marketing Basics

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Loyalty presentation

  1. 1. Loyalty Marketing
  2. 2. AGENDA• Loyalty Marketing – Understanding – Objective & Scope – Process• Failure/Success in Loyalty Marketing• Minimizing operational cost• Case Studies• Implications
  3. 3. Loyalty Marketing• Best-kept secret behind incredibly successful businesses• Develop a stronger relationship with each and every“one of the companys “ best customers• Based on strategic management• Focuses on growing and retaining existing customers• Less investment & high profit• Long term business relations
  4. 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. 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 entirethan anybody else catchments – more spends Categories failing to attract customersIdentify the core spending large amounts on other categories  ‘shop the shop’ initiativescustomers contributing to the  No LBM: promo’s to all customers– morebusiness and to allow these spendsprivileged 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 offersinformation to sell more of – bill value based or sku based  No LBM:higher gross margin Anonymous customersproducts 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 benchThe power of data from an mark brandsinclusive 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. 6. REACHING THE CUSTOMER – JUST GOTPERSONAL• 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. 7. Why do we need this initiative? • Create a jump in enrolmentsTarget1: • New members getting attracted through the special benefits offered to membersTarget 2 : • Create interest for current membersTarget 3: • Reward them for being members –special feelTarget 4:
  8. 8. Communications - Sniper approach Vs the traditionalshot 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. 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. 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. 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. 12. CASE STUDIES International Case Studies Domestic Case Studies
  13. 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 • 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 AutocareSource: Company website, Annual Report
  14. 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 BankSource: Company website, Annual Report
  15. 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 BankSource: Company website, Annual Report
  16. 16. CASE STUDIES International Case Studies Domestic Case Studies
  17. 17. Reliance Retail Loyalty Program Features • Reliance One Card- For use in all Reliance Retail outlets as well as otherVariants 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 monthlyAdditional shopping of Rs.1,100 Perks • Accident insurance worth Rs. 50,000 free on enrollmentPartners • Citibank
  18. 18. Future Group Loyalty Program Features • ICICI Bank Future Card- For use in all Future Group outlets as well as other merchant outlets ― Silver ― GoldVariants • 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 PointsRedemptionAdditional • Special payment counters for cardholders Perks • Exclusive offers for cardholders from time to timePartners • ICICI Bank
  19. 19. Shopper’s Stop- First Citizen Loyalty Program Features • First Citizen Card- Closed Loop, for use across Shoppers Stop outlets ― Classic ― SilverVariants ― 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. 0.7Redemption • 1 point earned at other merchant outlet worth Rs. 0.65 • Invites to end of season sales preview for all membersAdditional • Special offers only for First Citizen members Perks • Free parking for Silver and Golden Glow members • Exclusive cash counter for Golden Glow membersPartners • Citibank
  20. 20. Action Outline• 1. To Select market segment – Identify most valuable customers – existing – Identify customers who might become valuable - prospects2. 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 community3. 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 customers4. To Measure effects of program and redesign – Maintain constant communication with the loyal customers – Monitor costs and results of the program
  21. 21. The Loyalty Triangle Social Network / CommunityProvider Customer
  22. 22. The Loyalty Triangle – Implication on Education business Student Community/ Counselor forum Education Business Student/Centre
  23. 23. Building a Community• Student Community1. Use a newsletter to share news about industry/career2. Develop an online forum for customers to stay in touch3. Organize annual events “by invitation” for top customers4. Facilitate picture / story sharing5. Help customers help each other6. Give a name to the communityCounselor 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. 24. Thank You