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Loyalty Programs - INDIA
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CONTENTS
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INTRODUCTION• Loyalty programs are structured marketing efforts that reward, and therefore
encourage, loyal buying behaviour• Entitles either discount on current purchase or allotment of points for future use
or special gift vouchers• A way to collect data about the customers.
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Why do we need Loyalty program?
• To not just satisfy customers but delight them• Retain best customers , make good customers better• Reconnect lapsed users• A primary way to interact with customers• Research findings have also supported this realization that it costs up to
five times more to acquire a new customer than to retain an existing customer and a 5% reduction in the customer defection rate can increase profits by 25% to 85% depending on the industry.
• If a brand sells 1,000 crore units a year, it needs to know who its loyal customers are and who are the new customers that are yet to develop loyalty towards the brand. May be, 20 per cent of the buyers have generated 80 per cent of the sales for the brand. So it becomes essential for the brand to reach out to its top 20 per cent customers.
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Benefits to customers
• Monetary Benefits After earning certain points on the purchase customers can avail the
discount which is being awarded in their points range Example:Planet Fashion loyalty program
Lifetime Purchase
Points
0-4k 0%
4-12k 2%
12-20k 4%
>20k 6%
Silver
Gold
Platinum
A customer has to Migrate to Gold
slab, i.e. spend 13k for accumulating
200 points and become eligible for redemption
Cut off for first redemption : 200 Points
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Benefits to customers
• Non-Monetary Benefits Special gift vouchers Example:Tommy Hilfiger Club
No entry barrier
More focussed on giving better shopping experience rather than monetary benefits
No points program and no slabs
Surprise gifts anytime to make the customer feel special
First invitees during sales and brand parties
This program helps in data enrichment and building customer base
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Case Study:
• Eligibility Criteria For Enrollment And Upgradation To Different Tiers
Rationale behind point distribution• Blue Tier :- Lower than 2% does
not remain an attractive incentive• Green Tier :- Other benefits and
rewards offset the need to increase points percentage linearly
TierCumulative
Annual Purchase
Red >=Rs.500 and
<=Rs.5000
Blue>=Rs.5000 and
<=Rs.15000
Green >=Rs.15000
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Heads Red Tier Blue Tier Green Tier
Points • Offer no points • Offer 2% points on sales
• Frequency :- Every purchase
• Offer 4% points on sales• Frequency :- Every purchase
Benefits • Collection, Sale, Brand and Promotion updates
• Collection, Sale, Brand and Promotion updates
• Regular updation of point status after transactions and before expiry
• Exclusive sale preview #
• Collection, Sale, Brand and Promotion updates
• Regular updation of point status after transactions and before expiry
• Home delivery for altered garments• Exclusive sale preview• Stylist wardrobe makeovers
Rewards Nil Nil • Gift Vouchers of Rs.1500 on reaching milestone of Rs.30,000
Campaigns • “Welcome Back” Coupons
• Birthday Coupons• Cross Category coupons
• Birthday Coupons• Cross category coupons• Notification about season launch
Annual Interactions
8 (2 EOSS,1 Welcome back#, 2 Seasons launches, 2 Promotions, 1 Brand Update)
8-9 (2 EOSS, 2 Season launches, 2 Promotions,1 Cross category#,1 Birthday coupon, 1 Brand Update )
8-9 (2 EOSS, 2 Season launches. 2 Promotions, 1 Cross category#, 1 Birthday coupon, 1 Brand Update)
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Growth Opportunities
Consistent flow of data Flexible and responsive
to sales New technology
integrating data and sales
S Inaccuracy of data Resistance for
technology in unorganized sector
Vulnerable to competitive sector
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Expansion of organized sector
Viral marketing programs Focus spending on priority
programs that drive revenue
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Competitive giants with larger budgets
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SWOT Analysis
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INTRODUCTION