Implementing a Successful Loyalty Program

Implementing a Successful Loyalty Program What Are They? What Works? How To Configure? October 2013 Ron Friedman VP - DAMOMICS Inc. Elmira New York 8...
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Implementing a Successful Loyalty Program What Are They? What Works? How To Configure? October 2013

Ron Friedman VP - DAMOMICS Inc. Elmira New York 888 – DAMOMICS [email protected]

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Agenda Definition & History Why Should We Have One What Should Be The Rewards What Results Are For The Business Steps & Timeframes

    



Counterpoint Specific

Conclusion



Why Should We Have A Loyalty Program? 

History –

First Loyalty Program 1896 

S & H Green Stamp



So popular in one year issued more stamps than USPS S & H was the worlds largest purchaser of consumer products





Airline Deregulation of 1978 

American Airlines Frequent Flyer

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Why Should We Have A Loyalty Program? 

More Than Points –

Status Platinum  Gold 

– – – – –

Special Deals Discounts First To Know Privileges Services

Why Should We Have A Loyalty Program? 

Very Popular & Desired –

Average Adult is a Member of 18 Airlines Hotels  Grocery Stores  Pharmacies  Department Stores  Specialty Stores  Credit Cards  Other  

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What Should Be The Rewards? Dollars (Dollars off @ POS Sale)  Dollars Back (Rebate Check – usually mailed – i.e.. Staples Rewards)  Gift Cards 

– –

Mailed At POS

What Should Be The Rewards? 

What to give 1% to 5% – –



Considered Advertising to Most A Great Loyalty Programs May Lead to Lower General Advertising Expenditures

We Recommend GiftCards –

Highlights of GiftCard webinar:

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What Do Retailer’s Want?   

More Referrals More Tickets (transactions) Raise Their Average Ticket

The Psychology of Giving & Receiving Gift Cards   

I Shop There I Recommend You Shop There Here’s Their (Gift) Card –

  

(I Think You Should Shop There)

Here’s Money to Shop There With Go Shop There Is This the Best Referral Possible?

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Do You Agree?  

Gift Cards is the Best Vehicle to Growing Customer Referrals Customers Want Free Gift Cards

Why Gift Cards   

Customer Becomes Price Insensitive When Using Typically Spends at Least Double Gift Card Value Gift Card Stays in Wallet or Purse

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Gift Cards - FYI 

Closed Loop –



Promotional – –



Branded – Given Away Accounting Promotional Expense

Reusable – –



Branded to Retailers

Most Cards Are Very Durable Closed Loop May Be Resold

Rechargeable –

Many Cards Can Have Dollars Added

Free Gift Cards?

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Free Gift Cards?

Free Gift Cards?

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Free Gift Cards?

Free Gift Cards?

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What Should Be The Rewards? Need to Determine Value of GiftCard  Will it be Valued By Your Customer 



Needs to be at least ¼ of Average Ticket 



Consider a $5 GiftCard would not be valued by a customer of a high average ticket business such as Ski, Bicycle or Furniture Store

Could it be Re-Gifted –

Should be similar to purchased GiftCard values 

Needs to have enough value to be used as a gift

What Should Be The Rewards? 

Typical Reward GiftCard Values –



$5, $10, $20 & $25

One or Multiple Award Levels –

One 



When You Earn 500 Points You Receive a $10

Multiple  

When You Earn 500 Points You Can Receive a $10 When Your Earn 750 Points You Can Receive a $20 – –

You Choose When to Redeem Wait For Great Value

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What Should Be The Rewards? 

One or Multiple Award Levels –

Why Utilize Each: 

One – – –



Puts more GiftCards in circulation May be re-gifted Simple to Administer

Multiple – – – –

Puts less GiftCards in circulation Higher value GiftCard usually saved by customer for their “special” purchase, and not re-gifted. May be best “of both worlds” Harder to explain to customer

What Should Be The Rewards? 

Options in Value of Points – Dollar Equals One Point – Dollar Equals Multiple Points One Dollar Earns 10 Points  One Dollar Earns 5 Points 





Our Favorite  Difficult to back calculate dollars spent  Awards goal seeming not to large

Dollar Equals Fractional Points 

Four Dollars Earns One Point – –

Awards goal seems easy to obtain To some customers “rounding” loses them points

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What Should Be The Rewards? 

Muddle Points – Bonus (additional) Points for  Slow Days  Instead of Sales  Specific Product  Accumulate Goal in Timeframe  Redemption During Special Period  Other – Points for Referring a Friend to Join

What Should Be The Rewards? 

Mailed vs @ POS Mailed

Advantage

POS Disadvantage

Advantage

Disadvantage

Wow

Lead Time

Quick

Immediate Redemption

Extra visit

Expense

Immediate

Not Cosponsored No Planned Redemption Bump

Regift

Prep Time

Continuous

Lost

Lost

Extra Visit

Cosponsored

Low Cost

Planned Redemption Bump

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What Results Are For The Business?      

Raise In Customer Loyalty Price Insensitive Increased Purchase Frequency Positive Word Of Mouth Increased Profitability Possible Lowering Marketing Expenses

Timeframes 

Steps –

Create Sign-up Form  Customer Name  E-mail  Address  Phone Number  Profile Information – Birthday – Brand Preference – Other

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Timeframes 

Steps –

Create Sign-up Form (continued) Available Online  Legal – What they earn – Can points be transferred – Can points be sold – Do points expire – Program subject to termination at any time – Other  Benefits 

Timeframes 

Steps –

Form (continued) 

Form at POS Can Be Filled Out By Customer at POS – Can Be Taken Home By Customer & Returned  Customer Desires First Purchase Points  POS Records Customer Phone & Name  When Form Returned, Balance Entered in POS  This Minimally Slows POS “Line” –



Sign-up Bonus Points Encourages Customer Participation – Show Value & Appreciation for Customer Information –

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Timeframes 

Steps –

Create Brochure Describing Loyalty Program    

– – –

Promotions Cashiers Sign-up Incentives Customer Cards 



Hesitant Customers Can Read & Learn Participating Customers Can Confirm Program Clarifies Program to Staff & Customers Adds Professionalism to Program & Business

Card, Key Tag, Choice, or Nothing

Name of Loyalty Program

Timeframes 

Steps –

Conversion From An Existing Loyalty Program 



Dollars to Points – Convert Dollars Earned to Equivalent Points & Add Some Bonus Points – Or Issue Immediate GiftCard at a Rounded Up Basis for Dollars Earned Free Items – Explain that GiftCards are the Free Items – Gift Cards Can Be Redeemed Immediately

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Timeframes 

Steps –

NCR Counterpoint Specific 



Uses Specific Items For Ease of Reporting – Generic & Pre-Priced – Sold Gift Cards (liabilities) – Reward Gift Cards (advertising expense)  Separate Numbering Sequences  i.e.. GC999999 & RW999999 Earnings (for both versions) – Printed on Receipts, Reinforced By Cashier – Communicated via Customer Connect

Timeframes 

Steps –

Counterpoint Specific (continued) 

Activations (for SQL Version) – At POS  Button (Run Page)  Sells Pre-priced Reward Gift Card  Uses Points, Special Pay Code or Discount Item to “Pay”  Activated at End Of Sale or When Customer Comes In with e-mail Reward Notification

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Timeframes 

Steps –

Counterpoint Specific (continued) 

Activations (for SQL Version) – Mailed  Rewards Activated Using Customer Accounts  Notification mailed - Congratulatory Letter - Reward Gift Card - Optional Promotional Materials

Timeframes 

Steps –

Counterpoint Specific (continued) 

Redemptions (for SQL Version) –



Treated Same As Gift Card Pay Code

Reporting By – –

Gift Card (Reward Card) Code Gift Card Number Range (GC* or RW*)

Different Steps for Version 7  Different Steps for Donated Gift Cards 

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Timeframes

Timeframes

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Conclusion  



61% Believe That Loyalty Participants Are The Best and Most Profitable Customers 65% View Customer Loyalty Program Investments As A Very Essential Part Of Their Marketing Mix Loyalty Programs Are The Best Way To Obtain e-mail and Customer Information

Questions

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