Loyalty Program

Presentation Flow• History • Why we need loyalty program ? • Target customers • Loyalty program essentials • Building blocks

Data Value propositionMechanicsInvestment ratioClubsCoalition

• Summary

History of Loyalty Program

1896(tasty rewards)

Betty crocker points are used for a popular

reward catalog

How: Customers accumulate points by buying Betty Crocker products which they

could redeem for rewards

1981(reward program

with wings)

THE CONCEPT OF POINTS IS INTRODUCED

!

American airlines introduces the first

frequent flier program with AAdvantage

FREQUENT FLYER MILES ARE BORN

1985(subway enters)

Subway rolls out the Sub club, stamp based

loyalty program1990(Theatre)

AMC introduces Moviewatcher, the very first customer rewards program in the theatre industry

1991(retail rewards)

Nordstrom establishes Nordstrom FSB

How: It offers Nordstrom customers cards under

Nordstrom fashion rewards - Its customers loyalty program

1995(the first one !)

UK based supermarket, TESCO launches the clubcard program, believed to be first card based

loyalty program

2002(custom loyalty at your hotel)

Kimpton hotel launches the Kimpton Intouch loyalty program based on preferences instead of

points

2003(get in the zone!) Best Buy introduces the

Reward Zone loyalty program

2005(the Subway stops)

Subway discontinues Subway club stamp

program due to fraud

2007(enter automobile

sector)

Avis launches Avis First, a new customer loyalty program for

frequent renters

2008(time for coffee)

Starbucks launches their own loyalty program for

customers

RECOGNITION BASED REWARDS

ARE FIRST INTRODUCED

How: the concept of short, quick rewards that influence customer behavior - coupled with a gold

card makes customer feel special

2011(no need to

carry weight)

Mooyah burgers and fries launches Mooyah rewards

powered by RewardMe

How: Customers enter their mobile number on an Ipad screen to join the rewards program and earn points

House of Hiranandani launch Loyalty program for real

estate customers

How : ???

Loyalty Program - WHY ?GIVING POINTS DOES NOT CREATE LOYALTY

How Loyalty program Pays

➢ Help to acquire data, not just repeat purchase.○ Helps to learn more about the customers.○ Know Customer preferences.○ Find who is more profitable and who is less profitable.○ What changes they want.○ Custom made programs, make them more loyal.

➢ Rapid market penetration with coalition programs.○ Helps to capture quickly significant portion of customers.○ Expand into well established sectors - Groceries, fuel retailer,

credit card, mobile store, major telecom provider.○ Raises customer awareness.

➢ Loyal customers directly impact profitability.○ They buy more and willing to pay more.○ Helps in a steady flow of cash.○ Impact on friends and family is more than any ad campaign.○ More forgiving when you make mistakes.○ More familiar with the way of business.

➢ Target customer acquisition accurately.○ Depends on how valuable are rewards for them.○ Make demographic profiles of 'best customers' depending

upon program data.○ Acquisition campaigns based on previous data.

➢ Move customers up the spend band.○ Grading the rewards to encourage low

spending customers to spend more and increase the sales for top spending customers.➢ Win back profitable customers that are no more active.

○ Data for such customers is already available, can be easily reached.

➢ Building customer relationship based on relevance.○ Providing products and services that cater to customer's

unique needs.○ Various surprises and delights based personal offers -

Discounted shopping days on Birthdays and Anniversary.

➢ Intelligent response to competitive challenges. ○ Handling future threats from competitors.○ Making strategies on how to not lose our

customers to others.➢ Reduce promotional and advertising costs.

○ Generate savings from targeted advertising.○ No need to take pages of newspaper that

nobody will read.

Goals to customer loyalty programCore Goals Primary Goals Secondary Goals

• Revenue• Profit• Market share

• Customer loyalty• Acquisition of customers• Retention of customers• Building a database• Create engagement opportunities.• Increase customer relationship

• Increase repeat purchase.• Increase referrals.• Better customer support• Customer satisfaction• Improve brand• Improve company image

Loyalty program - For WHOM ?

IT IS NOT FOR ANYONE AND EVERYONE

• Entrepreneur, Inheritor and Professional are three customer segments for HNI/UHNI [Source: Kotak wealth management]• Lifestyle and value for money are 2 most important drivers of spending for Entrepreneur, Inheritor and Professional.• These attributes helps us in behavioral study of HNI/ UHNI.• Discretionary expenses is a cost which is not essential in operation of a home or business, example - entertainment, eating out.• Non discretionary expenses are those which cannot be changed, example - rent, basic food, clothes.• Investment is 2nd highest factor of expenditure after Non-discretionary expenses.

• These different areas of interest and spend let us know what features we need to have in loyalty program.

• All areas of spend can be included in reward section.• Environment, education and health factors should be

used as opportunities for philanthropy.• Customers will spend more only when they see value in

Loyalty program.

Loyalty program - Essentials

Rewards - help to achieve and entice loyalty program goals

• We need to give the customers some reason to give us their details.• Need rewards for some one-on-one time and strentghen the relationship.

➢ To encourage customers to perform more actions○ A reward just for signing up.○ Create rewards at different interval to keep them excited.○ Actions which otherwise are hard to get.

➢ To show appreciation to loyal customers○ Exclusivity increases loyalty towards a brand.○ A VIP night or a specially designed product.○ Meeting a chef and design exclusive dinner.

➢ To encourage customers to try new product and buy additional product.○ On purchase of two products, give an upgrade.○ Option to customize second on purchase of more than one.○ Give discount on a group purchase.

➢ To encourage customers bring their friends in.○ Referral reward system○ Helps increase customer base

Employee - powerful agent• Everyone working in the company is responsible for creating

customer loyalty.• If employees know about it, they will help to build better

database.

• Let everyone know about the loyalty program.• Everyone should know the mechanism of the program

and how to operate it.• Make such rewards which any employee can use as

examples and tempt customer.• Keeping track what rewards are favored by customers

and implement more such rewards.

Social Media - encourage customers to shareReward website visitors➢ Use the technique - facebook retargeting and twitter retargeting.➢ Helps to drive traffic through a range of pages and reward those

who complete the process.

86%Indian web users visit a social networking site

33 Million Twitter users

90 Million facebook users

18 Million Linkedin Users

Source - http://www.socialmediaexaminer.com/implement-a-loyalty-program-using-social-media/

Reward ongoing facebook engagement➢ Provide points for each Like or comment on

the post.➢ Likes and comment increase exposure.➢ The content will also reach their friends.➢ can be done using Shortstack, Antavo

Building blocks of Loyalty Program

Data collectionEVERYTHING IS DATA, DATA IS EVERYTHING

How ?

Gift/Promo cards

Online survey

Survey

Research

Analytics tool

Loyalty cards

connect with social media

Mobile AppForms

What ?Profile - gender, age

Interests

Investment/ enduse

E-mail addresses

shopping list, spending habits

User preferences,Lifestyle

Residential address

Joint purchaser

Company, designation

Purchase pattern

Customer attributes

Trends

Market scenario

Customer preference

???

Favorites

Category of products

Frequency

Location preferences

Contacts

???

Complete profie data

Friends, colegues

Interests

Analysis

Data

Attitude

Preferences

Habit

LifestyleDemograp

hy

Profile

Data Warehouse

Analytics tool

Targeted• Campaigns• Promotions• Events• Rewards, Discounts• More personal

relationship

Value Proposition

A PROMISE OF VALUE TO BE DELIVERED

"Class apart"

StrategyMaking a statement to which target customers can directly relate and other customers would like to become a part of it.

Approach• Value proposition has emotional and practical appeal

and the Loyalty program aims to deliver the proposition in the customer experience.

• Value proposition for Loyalty program should be made from key attributes of HNI/UHNI (in the same way employees modify their CV based on job description of a company)

Advantage• It makes you focus on aspects of your business and

initiatives that make the biggest difference. • Customer benefit is clear. • Customers see program as more indulging, different

from others and offers more suitable rewards

Philanthropy

VVIP access

Self recognitionValue for

money

Value of time

Luxuries

Achievement Wealth for family

Surprises and

delights

Program positioning

Loyalty Mechanics"Gamification"

iTS MORE THAN JUST GIVING POINTS FOR PURCHASE OR REFERRAL.

Gamification Elements :

Points Level Badge Leaderboard Collection

Introduction• It is a process which can be applied to transform experiences and make them more game-like. • It can be applied to program (loyalty) as a whole or specific to acquisition, retention or various campaigns.

Competition

RecognitionCooperation

InstantFeedback

Cooperation

Recognition

Points, Rewards

BadgesLeaderboard

Instant Feedback

Points, Rewards

Competition Leaderboard

Engagement circle

Points - What Points - How

• Points stay at the intrinsic level. • Used for calculations and rewarding customers

accordingly. • Customers perform actions not to gain points but to get

various rewards - points are added anyways. • Rewards (say points) will be used to increase customer

engagement. • Creative ways should be found to make rewarding system

interesting. • Points can be given for every small action which

customers feel lazy to perform. • Helps to gain valuable information.

• Can be purchased. • For Signing up. • For Providing personal information. • For completing the profile. • For visiting the site. • For exploring pages of the site. • For filling out surveys. • For sharing on social media. • For Liking the page. • For check-ins at various site offices. • For providing feedback. • For attending events. • For timely installment of payment. • For performing any action on alliance brands. • And of course for purchase of property and referral of

friends.

Level - What Level - How• It helps to show progress towards a reward. • Levels should be structures such that goals seem within

the reach. • Gives a feeling of achievement. • Rewards are based on what level the customer is

(expensive rewards - top level) • Each customer jumps a level on achieving a milestone. • A milestone should encourage customer participate in all

aspects of loyalty program. • Levels should pose a challenge. • Not just rewards but sense of achievement and status

should motivate customers to reach new levels. • By giving more rewards to higher level customers we

show that their value to our business is more than just one time purchaser.

• Levels are made on the basis of customer engagement and information provided and not just money spent.

Entry level - For signing up the program. Level 1 - Milestone 1 Level 2 - Milestone 2

• Let every milestone be a mix of 3 factors. • Each factor contributing towards earning respective

currency (platinum, gold and silver). Platinum bars - Money spent Gold bars - Referral made Silver - Social and all other actions.

• Conversion possible from one currency to another, to handle special cases.

Badges - What Badges - How• Used to demonstrate customer status and progress. • Recognition • Awarded to people who stand out. • Generally helps to push customers to purchase or to perform actions

which they have not performed.

• Badges will be awarded as 1st, 2nd and 3rd place.

• Need not be a tangible award. • If Tangible - can become collectibles. • Badges will be a digital emblem awarded on

completion of specific task. • Pictures can be posted on loyalty web page. • Post pics in annual magazines (take permission) • Felicitate in functions.

For most Purchases For most referrals For most money spent For most diverse (properties in many

cities) For top-most flat For largest Bungalow For check-in at all sites For early birds

• For collecting 3 different badges • Can have alliance with some brands regarding

the same (in case of tangible badges).

Investment ratioIT IS MORE PROFIT THAN LOSS

Incremental Revenues Incremental costs

• Sign-up fee• Partner payments• Increased Purchase• Increase Repeat purchase• Reduction in customer churn rate• Willingness to pay premium• Increased referral.• Increased advocacy

• Cost of rewards (perks, discount, rebate)• Cost of events.• Advertising costs• Investment in IT and maintenance• Enterprise training and support.• Research and development

Buying more

Referring more

Promo

Reward cost

IT cost

Support staff

Clubs within Program

Kids club Youth Club

Entertainment club

Casino

Philanthropy Club

Adventure club

Sports club

Royal club Shopping club

Strategy• Develop clubs within loyalty program to

redeem all the points earned.

Approach• Clubs will be based on basic interest. • Membership to clubs will require a fee. • Different levels to have default open clubs. • Other customers may pay and join any club.4 • Or they can make personalized clubs (dish tv) • Clubs contain ample rewards, packages,

coupons which customer can redeem.

Advantage

• Customers find relevant content of their interest.

• A new business entity - generate profit

Coalition program

BETTER THAN STANDALONE PROGRAM

Benefits of Cross Branding

• Right offer, to the right customer, at the right time and place.• More rewards = more value of program; win - win for company and

customers.• Narrow down options and influence customer choice.• Collect valuable data.• Help understand customer's behavior, lifestyle and aspiration.• More customer referrals.• Accelerate time to earn reward.

What ?• It's a multi-company shopper rewards program.• Participating customers are rewarded a common currency.• Points can be redeems for variety of rewards at different coalition partners.

Strategy

• Aspirational • Rewards that motivate to change behavior.

• Analytics • Need to maintain a database and monitor KPI.

• Find opportunities.• Reachable • Make believe that rewards can be

earned fast.• Rewards worth the cost.

• Understanding • Benefits must be marketed to both partners and customers.

• Obtainable • Easy to collect & easy to redeem. • Affordable • Cost of reward < investment

Two choices for coalition Rewards

1. Building a complete marketplace where products from every possible

industry are available

2. Variety based on the behavioral data and spending pattern of target

customers - HNI/UHNI

Plenti Rewards - Program by American express

How to earn points

• ExxonMobil – whenever you buy a tank of fuel• AT&T – by paying for qualifying wireless services and eligible charges on bills• Nationwide – by making eligible property and auto insurance payments• Rite Aid – with purchases of beauty, health & wellness, and everyday products• Macys – most purchases with the store, excluding some luxury brands from select NYC and San Francisco stores• Hulu, Direct Energy – customers can earn Plenti points here by simply paying their bills

About

• A cross-brand loyalty rewards program• Points are earned when customers shop with any alliance partners.• Each participating members decide how to give points.• Points collected can be used with any of the participating members.

Leaderboard➔ Customers are ranked on

the basis of points.➔ Cultivate competition.➔ Recognition➔ Achievement➔ Display profile pic with

badges➔ Gamification - Share the

success

Chat➔ Opportunity for better

CRM.➔ 24/7 support

News center➔ Alerts➔ Updates➔ Audio➔ Video➔ Latest pictures➔ Part of social media.

Discussion groups➔ Project based groups after

possession.➔ Help society members to

interact

Push Notifications➔ Displayed in notification area and

lock screen.➔ Not to spam, Just one or two

notification per day.➔ Keep customers updated/aware.➔ Help CRM with notifications, alerts,

deadlines.➔ Great way of marketing.➔ Send campaign details➔ Promotions

Admin login➔ Add/delete users➔ Send personal invitations

for Events and promotions.➔ Update campaigns.➔ Surprise rewards/delights.➔ Handle database

connectivity.

Customer login➔ Sign up with facebook

connect, Linkedin Connect, email, Twitter.

More➔ News & weather➔ Calendar➔ Appointment➔ on site live feed➔ GPS for project

location➔ One touch calling

Mobile app -Features

Summary

Loyalty program offers opportunity to get to know customer. Data collected is the cost of knowledge that needs to be recovered. Through data, customers can be driven to spend more. Customers enjoy being part of the program if they get privileges. Key ingredients of a loyalty program - Data, Rewards, customer

engagement, surprise and delight and Marketing. Need good IT support.

THANK YOU

Friend pointsWhat

★ These are the points which a customer can transfer to his referred friend so that his friend gets discount on his purchase.

Strategy

★ In addition to Base point and Accrual points we give away Friend points.

★ Instead of directly giving away discounts, we spend on boosting the referrals.

★ Benefit of customer as well as the referral.

How

★ Say, initially everyone gets 100 referral points (Let 1 point = Rs 1K)

★ Validity of points is 1 year from the launch of program.

★ Friend points can also be given to customer as prize or at special events like Birthdays or Anniversary.

★ Need to have social media connect (FB, LinkedIn, twitter) to let customers share and let their friends know.