Customer Loyalty

Beyond Click to edit customer Master subtitle satisfaction style

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Customer loyalty

It isnt just about customer satisfaction, its about building loyal customers.

The Harley Davidson motorcycle owner wont switch even if convinced that another brand performs better.
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Customer Satisfaction Vs. Customer loyalty

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Why Build Customer loyalty?

More predictable revenue Command premium prices Lower cost of sales Higher margins Word of mouth promotion More open and honest feed back Willingness to test new ideas satisfying work

More 3/1/13

What drives customer loyalty? Emotional dependence Structural dependence Business dependence Satisfaction Performance Economic value proposition Alignment and fit

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A Loyalty program is.?

A Typical loyalty program aims at creating a competitive advantage while maintaining a healthy profit margin. A loyalty program aims to increase switching cost, increase customer share of wallet and ensure repeat purchases.

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Customer Loyalty Models (Retail Industry)

The Proprietary model The Partnership model The Player model Coalition model Merchant funded networks

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1. Proprietary model

A stand-alone program with the key objective of rewarding customers with a single value proposition. Begun and operated by a single company which takes on all program risks and rewards of the program

Example Inner circle loyalty card

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Advantages

Program and company branding Complete control of structure- By allowing non competing partners to join the program Addition revenue opportunity Cash outlay for points

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3. The Partner Model

Partner programmes, also known as licensed currency programmes. This model develops value proposition currency that others can usea single programme that is extended by, and extendable to recruiting partners.

When Jet Miles was introduced, it offered tie-ins with 3/1/13

The player Model

In the player model, a brand launches a loyalty programme but doesn't launch the currency; they issue the points/miles/currency of another programme. The player model allows you to simply play in someone else's programme.

3/1/13 Jet airways as an example, the airlines is the partner, and

Advantages

Inexpensive Immediate recognition of the sponsor's programme Can drive acquisition (from sponsors' customers) Can be effective with competitive exclusivity

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The Coalition Model

It is almost always run by an entirely independent third entity not connected to the brand. It can be defined as collective loyalty programmes in which multiple retailers share both costs and a common currency. Under this model, the third entity an independent, individual organizationtypically connects the end customers across a series of brands they interact with in their day-to-day lives such as grocery stores, petrol stations, telecom providers and financial services firms

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Advantages

Higher Return on Investment Greater Earning Potential for Members Easy to Keep Dynamic & Vital Share Best Practices Customer Acquisition Brand Acceleration. Shared Costs

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Case : Proprietary Model 3/1/13

Summary: Starbucks is the largest coffee house company in the world with over 9000 stores in the US and over 16000 stores, world-over in 55 countries. Business Challenge Starbucks market dominance was challenged with entry of Dunkin Donuts and McDonalds in coffee beverages market. In order to retain its loyal customers, Starbucks decided to launch a loyalty program to reward, recognize and deliver great instore experiences. Starbucks ran its loyalty program on a hosted system (First Data), which lacked flexibility, scalability and functional capabilities.
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Solution In order to deliver on its customer experience strategy, Starbucks decided to bring customer data in-house and migrate to a next-generation loyalty platform that is functionally rich, scalable and integration ready to: Drive a highly innovative and dynamic, customer-centric loyalty program Enable personalized experiences across channels through real-time integration with PoS, starbucks.com and mobile Manage huge transaction volumes (over 11,000 stores North America)
3/1/13 Starbucks

chose Siebel Loyalty and Siebel

How is it used?

Earn 1 Star every time you pay with your registered Starbucks Card or Starbucks mobile app at a participating Starbucks or our online store. As you collect Stars, you move up to bigger benefits. Get a little extra birthday love with a free drink or food reward on your birthday. Five Stars puts you at Green. Collect 30 Stars within 12 months and youre Gold. Free Drink or Food Reward Every 12 Stars.

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Results Starbucks went live on Siebel Loyalty in February, 2011.. All 9000 stores in the US and 1500 stores in Canada are integrated to Siebel Loyalty. Starbucks has 150 Million cardholders and 10 Million My Starbucks Reward members With its new loyalty . Starbucks customers earn stars for their visits and redeem their free beverage loyalty coupons in realtime at the PoS and earn recognition status to enjoy exciting privileges (free Wi-Fi, birthday drink, etc.). Enabling customers to recognize themselves and redeem their coupons at the PoS using their mobile phones.

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Case study : Coalition Model

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ITC Limited

Company: One of India's foremost private sector companies with a market capitalization of nearly US $ 19 billion and a turnover of over US $ 5.1 Billion

Business need: Having a strong presence in premium hotels and high-end fashion retail businesses, the client wanted to create a transactional bridge between the two divisions via single loyalty program in which the entire base of customers could accrue and redeem points seamlessly across both divisions thereby bringing 3/1/13 in enhanced thru put.

Challenges The Hotels and retail divisions have distinct personalities. They also had their own loyalty program with own enrollment and accrual and redemption rules. The hotels division predominantly work on legacy system. Making two exclusive systems to work in tandem. Phasing out existing loyalty programs/relationships or merging them with the unified program. Solution Created a single loyalty bridge mutually operable set of rules accrual & redemption. Created a single loyalty bridge mutually operable set of rules 3/1/13 by creating a for enrolment, by creating a for enrolment,

Club ITC

Each time you stay at over 45 participating ITC Hotels or shop at over 75 Wills Lifestyle Stores, you will earn Green Points on all eligible spends*, redeemable against a host of rewards. Complimentary Membership to King Club Gold Green Fee Waiver on weekdays at Classic Golf Resort, Gurgaon (Tue-Fri). Complimentary subscription to Namaste and WelcomZest Magazines. Complimentary subscription to Namaste and WelcomZest Magazines
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