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Retail Loyalty Programmes

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Contents

What is a loyalty programme? Loyalty Success Factors Introduction to Retail Loyalty Programmes Loyalty Programme Structure Secrets Loyalty Programme Promotions - Driving Sales Summary

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What is a loyalty programme?

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

Opportunities

Understand customers Give discounts to best customers only Adjust real price for certain customers Use data to negotiate with partners

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Loyalty Programme Options

Ess o Smil Earn points and redeem es
for rewards Good -Offers control -Customer understands -Lower cost Bad - Points cost are knowledge - Accrued liability

Points

Discount
Immediate discount for presenting card Good -Easy and instant - No liability Bad - Discount has to be large (+10%) - No control

Jusc o

Rebate
Reward spend over time Starb Good -Easy to manage ucks Bad - Little control - Easy to copy e.g. stampcard - Little emotional connection

Privilege

Earn points and redeem for rewards plus tiers of privilege Bad Good - Low spend customer disillusion -Privileges lead to loyalty - Competitors can match -Offers control -Customer understands

Cathay Krisflyer Marco Polo

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How does it work?

Ban k Dat a
Nets & Credit Data entry
Application n Form N a e R m m I e aC o a gf b i a el il m e 1 i 2 l 2 y 1 3 2

Customer card

122132

Transaction Database
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Custom ers

Analysis services

Marketing Planning & Promotion tactics

Considering a programme?
Steps to launch Planning
1. 2. 3. 4.

Feasibility audit Customer research Financial planning Develop programme model Implementation develop systems/communications Launch

Implementation
1. 2.

Management (operations)
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Loyalty Success Factors

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Critical Success Factors for Customer Loyalty

Target Audience Degree of Participation

Delivery of rewards Liability risk Investme nt Cost

Getting Customers to join

Brand Positioning

Choice of rewards

Competitor Strength

Customer Loyalty Drivers

Generosity

Sales Focus

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How is it successful?
Target Audience Regular shoppers Degree of Participation High Delivery of Rewards rebate vouchers (cash effectively) Liability Risk High but also High redemption Investment Cost High Getting Customers to Join Easy free membership Competitor Strength n/a Brand Positioning - for everyone -Birthday treats -Members only Customer Loyalty Drivers Use membership To make offers Choice of rewards Choose from whole store

Generosity Very generous rebate up to 20%

Sales Focus Very High

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Loyalty Program Structure Secrets

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Loyalty Programme Structure Secrets

Data Collection FMCG Partnerships Value Proposition

8
Brand Extension

2 3
Loyalty Programme Mechanics

7 6 5 4

Clubs within programme Sales Promotion Integration

Investment Ratio

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Loyalty Programme Promotions - Driving Sales

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Promotions
1. 2. 3. 4. 5. 6.

Statements Personal shopping lists Geo-targeting Events Layered promotions Regular communications

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Summary

Programmes offer opportunity to get to know customer thats cost of knowledge that must be recovered Opportunity comes from using the data to drive more spend - personal shopping lists Customers enjoy being part of programmes if they get privileges of whatever value therefore work hard to give them value

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