LoyaltyOne is the coalition loyalty programs experts. Your source for retail marketing insights, customer analytics (Precima) and consulting services. Loyalty Programs. Loyalty programs are often part and parcel of a comprehensive customer relationship strategy. So welcome to our loyalty marketing best practices section. Loyalty programs are structured marketing strategies designed. Wal-Mart does not have a loyalty card plan though anyone who purchases a gift card can generally get a 3 cent discount per gallon of gas at the fuel stations located on Wal-Mart premises. [citation needed]. German loyalty program operator Loyalty Partner took a controlling interest in i-mint in June 2010 and renamed the program Payback India in July 2011.
Loyalty Marketing Best Practices. Loyalty programs are often part and parcel of a comprehensive customer relationship strategy. So welcome to our loyalty marketing best practices section. As a customer's relationship with the company lengthens, profits rise. And not just by a little.
Companies can boost profits by almost 1. F. P. Reichheld Introduction.
Loyalty programs have been used in commerce for many years, originating in Germany where price based competition was disallowed by governmental restrictions in certain industries. In the 1. 95. 0s, S& H Green Stamps rewarded grocery store and gas station customers with stamps redeemable for appliances and other merchandise. The modern day loyalty program was launched in 1. American Airlines, and was quickly duplicated by other airlines and other hospitality industries including hotels, car rental companies, and credit card organizations.
Two key ingredients for small business success are encouraging customer loyalty and promoting purchase behavior. One way to accomplish these is by creating a loyalty program -- a tailored marketing plan that rewards customers for their participation. These programs can range from simple punch cards. Developing a customer loyalty program which decreases churn, represents your marketing plan, and simplifies customer engagement. Your marketing plan is key. 7 Customer Loyalty Programs That Actually Add Value. Written by Lindsay Kolowich | @ Share. Share. Tweet. Did you. A loyalty program is a rewards program offered by a company to customers who frequently make purchases. there needs to be a way to measure your marketing success. Customer loyalty programs should increase customer happiness and retention. Review of loyalty programme business economics and management using big data and tactical retail marketing management. Loyalty marketing is an approach to marketing, based on strategic management, in which a company focuses on growing and retaining existing customers through incentives. Our loyalty marketing strategy utilizing customer retention analytics ensures that you reach customers at every touchpoint - in real time.
Retail loyalty programs evolved when progressive retailers recognized that without a "customer identification tool," they were unable to recognize individual customers and reward them for desired behavior. This was in obvious contrast to banking and telecommunications industries, among others, that have a customer database as part of their regular service offering. Both businesses and consumers have recognized the value of loyalty programs. Only 1. 2% - 1. 5% of customers are loyal to a single retailer, according to the Center for Retail Management at Northwestern University. But that small cadre of shoppers generate between 5.
Some food retailers find that as much as 6. In general, loyalty programs are often developed with good intentions but unclear objectives.
While retail loyalty programs have many purposes, the greatest value that is created for retailers is the ability to identify individual customers and to measure and understand their individual behaviors. This consumer behavior data far outweighs the "currency" value of providing consumers the opportunity to build a reward opportunity by shopping at one particular retail banner.
This opportunity is often misunderstood by retailers and consumers alike. The basic benefits of using a loyalty program to obtain customer information are summarized below: - Shift - Acquire new customers - Lift - Increase the spending of existing customers - Retention - Improve the natural churn rate of customers - Profit mix - Shift spending to higher margin products. These loyalty program benefits form the basis for all loyalty program initiatives. Fundamentals of Loyalty Marketing. For loyalty programs, communications used to focus on tangible benefits - what we call the "ER" words. That is to say, "Our program is.." 'bigger,' 'better,' 'faster,' 'easier.' These words have ceased to have meaning.
Everything works now. These are the table stakes. As such, the market has changed in that consumers are demanding more. Rewards have evolved in the marketplace from being a nice little extra for one's loyalty to being perceived as an entitlement (partly the result of the commoditzation of loyalty programs). Concurrently, consumers have shifted, to some extent, away from a desire for possessions to a desire for experiences - partly due to changing demographics. Overall, consumers are looking for the meaningful (which includes value and relevance).
The rising tide of expectations necessitates that loyalty marketers develop truly innovative loyalty programs, utilizing loyalty marketing best practices. In reading through this page, and this website for that matter, keep in the back of your mind the question of how your program can tap into not only changing lifestyles, but changing attitudes. The answer is not just in the rewards catalog, but in understanding the fundamentals of loyalty marketing. It is estimated by Colloquy (2. US (a 2. 6% increase from their 2.
US household participating in 2. Approximately 5. 8% of those memberships were inactive (defined as no engagement within a 1. That is a lot to compete with. Not surprising, loyalty varies across industries. As reported in the New York Times, Forrester Research found that across 1. TV service providers and internet service providers proved more fickle. Most interesting is that "A whopping 9.
USAA's credit card customers would consider the firm for another purchase, which ends up 2. This research only reinforces the critical importance of understanding the fundamentals of loyalty marketing. Many confuse "loyalty" with "rewards." This is a fundamental mistake of many marketers. Loyalty denotes advocacy and commitment not points.
As such, let's start with a primer on loyalty. Read through the embedded Power Point document as it is the best explanation of loyalty marketing that we have ever run across and, surprisingly enough, the fundamentals of which, are not well understood by the executioners of some of the best known loyalty programs. This abridged Power Point presentation was developed by Wunderman's Loyalty Marketing Practice. We strongly encourage you to take a peek. Program Positioning Program differentiation starts with the positioning of your program. Most programs don't have one - hence why so many programs look and act the same.
Examples of program positionings are: Air Miles: "Help Collectors enjoy life more, everyday"Citi: "Thank You"Tesco: "Every Little Helps"Hilton HHonors: "Rewarding Experience"Your program's positioning affects everything you do from how you communicate, to what you offer, to how you want to be perceived. We can't emphasize this enough. Develop a vision or positioning for your program, before you even begin developing the mechanics. What do you stand for? Building a Winning Loyalty Program Strategy. Regardless of how you develop your loyalty program - based on hard benefits (e. There truly is a sequence you need to go through in developing a loyalty program.
Too many program designers take short cuts and jump to platform selection or program execution and don't do the basics: Program Objectives Program Positioning. Program Strategies.
Financial Analysis Value Proposition. Currency Strategy. Business Analysis. Data Analysis Platform Selection Segmentation & Test Plan Measurement Plan. Exit Strategy. Below you will find a comprehensive loyalty checklist developed by a top Ogilvy & Mather strategist, Michael Szego. Keep in mind, even following this check list, you can never have the perfect program - you can't unless you change and evolve with the market and your customer. Now Michael Szego's check list: Four Phases of Database Development.
Program development. Collect data and test.
Leverage knowledge. Customer Management. Program Development.
Start with the Facts- Conduct an organizational SWOT- Conduct a competitive SWOT- What is the competitive activity?- What are the core objectives of the program?- What do we want the marketing database to do?- What will be the key success factors- How will this program fit with the brand vision?- How will this program fit with the company culture?- Are there any employee issues that must be addressed?- Are there any technology issues that must be addressed?- Why might this project not work?- What is our current sales channel strategy and how will this program affect/enhance it?- What human resource needs will be created by this project?- What financial resources are available to execute this project?- Who will be involved in this project?- Describe the core, highest margin customer?- How will success be measured and over what time frame?- What are the best practices in the field?- What is the number one complaint from our customer feedback system and can this be addressed with the planned loyalty program? Create your Loyalty Program Strategy- What are the objectives of this program?- What are the target groups for the program?- Will the needs of this group also satisfy the needs of our top customers?- What customer needs will it satisfy? How to identify benefits (brainstorming, small study to measure general feedback to the benefits, large scale study to identify the main value drivers)- How will it increase your differentiation from the competition?- How will customers be rewarded?- How will the data be captured?- How will the data be analyzed?- How will the data be actioned?- Who will own the customer relationship? Define the Program- How will the program be structured?- Will there be a "currency" of the program?- How will customers enroll?- How will customers earn rewards? How will we communicate with customers?
Who will serve the members: outsource, 1- 8. What will be our problem resolution strategy?- How will customers redeem benefits?- What performance standards must the program live up to?- What will be our contact strategy for our program members?- How do you build evangelists?- Recognize that like a store, loyalty programs have a lifecycle, benefits need to be modified periodically (what benefits can we roll out over time to keep the momentum going?)- Cost recovery: entrance fee, annual membership fee, co branded credit card, merchandise sales. Identify Key Performance Metrics for the Loyalty Program- Financial- Human resource- Customer acceptance- Transactional penetration- Supplier participation- What is the break even point or payoff. Build Business Case for Implementation- Investment required- Estimated payback- Break- even point- Go/No Go decision. Develop Action Plan for Implementation- How can employees benefit from this implementation (employee/union involvement)- Training- Employee participation/enthusiasm- Monitoring- Potential for incentives?- Potential to include as part of employee evaluation? Research- Develop a research plan to identify key program elements- Test, test, re- test to ensure customer acceptance and support.