What is it?
According to Collinson Latitude, a web loyalty program provider, a Loyalty program is “the management process of identifying 'best customers' and utilising customer data and insight to create, retain and grow profitable relationships”
The idea is to create a relationship with the customer, learn what they truly want from your store, and give them benefits based on those wants. Hopefully those benefits will keep them coming back, thus creating a loyalty program.
Three categories for a Loyalty Program:
1. Routinized
Kroger
http://www.youtube.com/watch?v=bLpW8ISxu80
Kroger loyalty card program is unmatched in the industry, providing customers with savings on groceries, gasoline, general merchandise, pharmacy needs and Kroger brands. The reason they are so successful is that they use their data to give back savings to their customers. The savings speak directly to the customer trends, so the Kroger plus rewards always are relevant.
For bigger stores it is difficult to produce a unique substantive experience for cultivating loyalty. Kroger successfully uses Substantive types of loyalty by providing up to $1 off each gallon of gas. This is savings and an experience that customers don’t see very often at big chain stores, so they continue to come back.
Starbucks
1. Being Stingy With Payout
Notoriously stingy, members need to make 15 purchases to earn 15 stars, which then gets them just one free coffee (15 transactions, not actual cup purchases)
2. Changing the Program for the Worse
Starbucks re-launched its program to the version described above, whereby the key reward is one free drink for 15 purchases, an extremely weak reward.
3. Making Redemption Very Difficult
The reward for getting 15 stars (a free drink) is distributed via mail (that’s right, mail), in the form of a coupon for a free drink.
Other common mistakes in loyalty programs:
1. Not Rewarding the Right Behavior
2. Not Rewarding Every Purchase
3. Having Too Few Rewards Choices
4. Having Complex / Confusing Rules in Place
5. Offering Too Narrow a Rewards Earning Period
6. Pretending to Treat High Value Customers Differently
7. Not Treating High Value Customers Differently
Future of Loyalty Programs
1. Integration with Mobile
Scanning QR codes for loyalty cards
2. Rewarding Influencers
AHAlife
3. Encouraging Social Engagement
PunchTab
4. Comprehensive App Integration
Chatterfly
The goal of loyalty programs is Customer Retention!
Customer Retention is imperative to a companies success as 80% of most companies revenue comes from 20% of their customers. (The 80/20 Rule) Customer loyalty is weakened by this poor economy, so retention strategies are key.
By Implementing retention strategies properly your customers will have:
10 Best Customer Retention Strategies Proven to Increase Sales (Ron Dunne, Product-ivity):
And Remember: YOU GOTTA SERVE SOMEBODY!
Questions:
Have you ever experienced a small business that has some sort of loyalty program/benefit? Was it effective?
How effective do you think loyalty programs are? How loyal are you to the program you are apart of?
Do you think loyalty programs will be a growing trend in the future?
What is the best loyalty program that you have been apart of? What are the benefits?
Resources:
http://www.collinsonlatitude.com/loyalty-marketing-definition.aspx
http://www.hartman-group.com/hartbeat/loyalty-programs-what-works-what-doesn-t
http://forteconsultancy.wordpress.com/2011/02/28/loyalty-programs-gone-wrong-%E2%80%93-ten-common-mistakes-to-avoid/
http://www.thekrogerco.com/corpnews/corpnewsinfo_pressreleases_02122010.htm
http://product-ivity.com/customer-retention-strategies/
http://bewelldogood.wordpress.com/2011/09/18/four-examples-of-innovation-in-loyalty-programs/
http://www.dreamstime.com/stock-photo-customer-retention-image17628620
According to Collinson Latitude, a web loyalty program provider, a Loyalty program is “the management process of identifying 'best customers' and utilising customer data and insight to create, retain and grow profitable relationships”
The idea is to create a relationship with the customer, learn what they truly want from your store, and give them benefits based on those wants. Hopefully those benefits will keep them coming back, thus creating a loyalty program.
Three categories for a Loyalty Program:
1. Routinized
- Expected discounts based on commonly held consumer beliefs regarding the nature of economic transactions.
Automatic cash back savings
x % savings for the use of the retailer’s credit card.
2. Incremental/Deferred- Does not necessarily drive true loyalty
- These programs might encourage continued patronage over time, they do not drive permanent patronage
Travel rewards programs
Every X meal free cards
3. Substantive- The most effective loyalty strategies
- Drive loyalty through innovative methods of surprise and delight, as well as more general methods of making their customers lives noticeably better
- Surprise and delight is used when giving gifts of meaning and significance.
i.e chocolates and champagne at a hotel
Kroger
Kroger loyalty card program is unmatched in the industry, providing customers with savings on groceries, gasoline, general merchandise, pharmacy needs and Kroger brands. The reason they are so successful is that they use their data to give back savings to their customers. The savings speak directly to the customer trends, so the Kroger plus rewards always are relevant.
For bigger stores it is difficult to produce a unique substantive experience for cultivating loyalty. Kroger successfully uses Substantive types of loyalty by providing up to $1 off each gallon of gas. This is savings and an experience that customers don’t see very often at big chain stores, so they continue to come back.
Starbucks
1. Being Stingy With Payout
Notoriously stingy, members need to make 15 purchases to earn 15 stars, which then gets them just one free coffee (15 transactions, not actual cup purchases)
2. Changing the Program for the Worse
Starbucks re-launched its program to the version described above, whereby the key reward is one free drink for 15 purchases, an extremely weak reward.
3. Making Redemption Very Difficult
The reward for getting 15 stars (a free drink) is distributed via mail (that’s right, mail), in the form of a coupon for a free drink.
Other common mistakes in loyalty programs:
1. Not Rewarding the Right Behavior
2. Not Rewarding Every Purchase
3. Having Too Few Rewards Choices
4. Having Complex / Confusing Rules in Place
5. Offering Too Narrow a Rewards Earning Period
6. Pretending to Treat High Value Customers Differently
7. Not Treating High Value Customers Differently
Future of Loyalty Programs
1. Integration with Mobile
Scanning QR codes for loyalty cards
2. Rewarding Influencers
AHAlife
3. Encouraging Social Engagement
PunchTab
4. Comprehensive App Integration
Chatterfly
The goal of loyalty programs is Customer Retention!
Customer Retention is imperative to a companies success as 80% of most companies revenue comes from 20% of their customers. (The 80/20 Rule) Customer loyalty is weakened by this poor economy, so retention strategies are key.
By Implementing retention strategies properly your customers will have:
10 Best Customer Retention Strategies Proven to Increase Sales (Ron Dunne, Product-ivity):
- Welcome the complaints you receive
- Instigate loyalty programs
- Send out questionnaires and surveys to existing customers
- Check for repeat sales often to instill your company’s brand
- Reactivate dormant customers
- Have you scheduled a frequent communications plan to your customer base?
- Provide exceptional customer service This one is easy!
- Make a good first impression
- Make courtesy top priority with all customer-facing staff
- Do regular reviews of your loyalty programs and strategies
And Remember: YOU GOTTA SERVE SOMEBODY!
Questions:
Have you ever experienced a small business that has some sort of loyalty program/benefit? Was it effective?
How effective do you think loyalty programs are? How loyal are you to the program you are apart of?
Do you think loyalty programs will be a growing trend in the future?
What is the best loyalty program that you have been apart of? What are the benefits?
Resources:
http://www.collinsonlatitude.com/loyalty-marketing-definition.aspx
http://www.hartman-group.com/hartbeat/loyalty-programs-what-works-what-doesn-t
http://forteconsultancy.wordpress.com/2011/02/28/loyalty-programs-gone-wrong-%E2%80%93-ten-common-mistakes-to-avoid/
http://www.thekrogerco.com/corpnews/corpnewsinfo_pressreleases_02122010.htm
http://product-ivity.com/customer-retention-strategies/
http://bewelldogood.wordpress.com/2011/09/18/four-examples-of-innovation-in-loyalty-programs/
http://www.dreamstime.com/stock-photo-customer-retention-image17628620
