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
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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
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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
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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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