Loyalty and voucher program
Presentation structure:
Loyalty and voucher program: what is it, why do we need it? (below data) What type should we do and why? Technical analysis, pros and cons about types (cashback, discounts, point program, private labels for customer levels) – how can we combine them and why we should? Perceived value for customer, interactions, experience based programs – why we should forget about "bigger," "better," "faster," "easier" approach and stick to the basics. Basics that is: immediate discounts, clear, easy to use structure. Long term profit for customers (cleverly defined expiration and rebate deadlines, etc.) What can we do? See technical limitations analysis – IVO possibilities focus on free shipping – means we can create customer tiers (bronze, silver, gold) and mail campaigns for free shipping/ period (perhaps by product type).
Important question: should we look at the development possibilities of IVO in this regard or we use what we’ve got and concentrate on future options in PMS?
A possible solution apart from our current system (microsite structure with Samsung Nation as a possible example) Loyalty programs – data
a free shipping based system that uses only the capabilities of IVO. (see 4 charts at the end)
Effect on earnings: Customer retention rate among companies with a robust rewards program vs. those without: 300% (Aberdeen Research, 2014) The amount more customers spend with companies that have robust rewards programs: 280% (Aberdeen Research, 2014) In 2013, US households participated in 21.9 loyalty programs on average. 56% of these memberships were inactive in the past 12 months (Colloquy) How much more likely VIP and loyalty program members are to spread the word about a business: 70% (Surprising Facts about Customer Loyalty, 2013) 63% of people would be willing to share more personal details with a company in return for relevant offers (LoyaltyOne, 2013) 67% of people say surprise gifts are important in loyalty programs (Citrus-Directivity, 2013) 69% of consumers say their choice of retailer is influenced by where they can earn rewards program points, and 70% say that these programs are part of their relationship with the company (Merchant Warehouse, 2014)
84% of consumers say they are more likely to visit the webpage of a retailer with a loyalty program Returning customers spend on average 67% more than first-time customers 75% of consumers would switch brands if promotions and account information were sent directly to their smartphones 80% of respondents said they prefer brands that "do more to interact" with them over those that "just advertise" to them (Crossmark, 2014) A 2013 survey by the National Restaurant Association shows 38% would participate in restaurant loyalty programs for extra services (guaranteed reservations on busy days, discounts on certain menu items, and skip-the-line privileges). That percentage grows to 51% when millennials are asked Individual Programs – examples for market trends and strategies The Tesco Clubcard Bonus Coupon Mailer sending personnalised coupons to customers according to their previous shopping is increasing store spending by 5 GBP on average/customer mailed. 85% of U.S. consumers prefer personalized offers reflecting previously purchased shopping habits (Synqera, 2014) This April, Safeway Canada discontinued its lovalty card program claiming its shoppers said they already have a lot of cards in their wallets. Insteady, they lead a „Card Free Savings” program that does not need a registration or card, just the receipts. See „What’s important for customers” screen shot above GM’s card program running since 1992 offers consumers 5% earnings on their first $5,000 worth of net card purchases each year, plus an unlimited two percent on all other purchases. There’s no limit on rewards and they never expire. GM issued the 7 millionth card this March. In January, 2014, six Washington DC coffee shops created a disloyalty card program against Starbucks. While Amazon introduced Prime meaning free 2-day shipping for fixed fee,
On the 30th January, Amazon announced it increases the Prime fee by 20 USD as quarterly earnings missed expectations. Prime fee is now 99 USD/year Ebay has scaled back its Bucks program: they introduced a 250 USD minimum for spending, introduced an expiration date and eliminated Motors and Parts from the eligible categories. Technology Assessment Checklist (Ogily &Mather) - Limitations – built in capabilities for free shipping only - Effect on transaction time at retail –no effect if the IVO functions really work - Where will the data be stored? – Connected to the IVO database and/or in a separate data bank - How will the data be accessed? – Through the sites and/or through a microsite prepared for this - Effect on channel partners - Nothing if IVO only, maybe later with another structure - What types of statistical analysis will be required? – users’ willingness to participate, willingness to spend more, breakage, data handling costs, effect of potential discounts on profits - Will the data be delayed (for how long) or will it be real time at head office? – Have to test IVO for real time free shipping voucher handling - Building an actionable database(s) – Database has to be efficiently filterable to create special promotions for buyers of certain categories/products/sums. If we create something other than IVO, it has to be highly automatized, with simple relationship between buyer’s action and point accumulation/discount. - Integration with web site – We should test how the IVO features look like, the best possibility: free shipping discounts can be totally integrated in the site. If so, that might be enough or we can create a separate microsite for the extras (see Samsung Nation) Two successful loyalty programs: VIPix Club - PIXMANIA.co.uk voucher system 1 year prepaid loyalty program with physical card For 21 GBP, free delivery on all items but only for 170 GBP max/year, discount, private sales, priority treatment at customer’s department and 10-15 off from certain extended guarantees. How to become a member: put the card in the basket at checkout Pros: fee seems OK, offers discounts and comfort/care options, elegantly shown on page Cons: free shipping is very limited and this fact is „hidden” in small typeface below. The only predefined discount is for extended warranties, not products. Shell Driver’s Club - https://www.shellsmart.com Physical card and point collecting system with a mandatory online account Pros: Very easy to see and understand (gas stations and on the web as well), immediate discount and more indirect experience offerings at the same time, user friendly website created only for the program. Can be immediately replaced for free if lost. Point can be Waitrose vouchers, giftcard vouchers, British Airways, etc.
Cons: Card is automatically cancelled if: not registered for 6 months or registered, but no point collected for 12 months. Shell insists on registration but the only explanation it gives is „user can stay up to date” 500 points are worth 2.50 GBP in fuel vouchers. (The average car uses 103 litres a month, which means you’d have to wait almost 2 years to get your 10 GBP reward. A 10 GBP discount could cost around 2,800 GBP) Sources: http://www.crmtrends.com/loyalty.html http://www.colloquy.com/breaking_view.asp?xd=11091 http://colloquy.uberflip.com/i/280846/1 http://www.nielsen.com/us/en/press-room/2013/nielsen-survey-84-percent-of-global-respondentsmore-likely-to.html Shipping and loyalty
http://www.marketingcharts.com/wp/traditional/consumers-favorite-loyalty-program-benefits-andbiggest-turn-offs-38126/attachment/nielsen-top-loyalty-program-benefits-nov2013/ http://www.marketingcharts.com/wp/interactive/top-5-creepy-and-weird-loyalty-program-uses-ofmember-information-29416/attachment/maritz-top-creepy-uses-loyalty-member-info-may2013/ http://www.marketingcharts.com/wp/online/the-influence-of-shipping-costs-on-online-shoppers30067/ http://www.marketingcharts.com/wp/topics/e-commerce/consumers-say-free-not-same-daydelivery-option-would-spur-increased-online-shopping-27595/attachment/bcg-top-online-shoppingmotivators-mar2013/
Loyalty and voucher program: what is it, why do we need it? (below data) What type should we do and why? Technical analysis, pros and cons about types (cashback, discounts, point program, private labels for customer levels) – how can we combine them and why we should? Perceived value for customer, interactions, experience based programs – why we should forget about "bigger," "better," "faster," "easier" approach and stick to the basics. Basics that is: immediate discounts, clear, easy to use structure. Long term profit for customers (cleverly defined expiration and rebate deadlines, etc.) What can we do? See technical limitations analysis – IVO possibilities focus on free shipping – means we can create customer tiers (bronze, silver, gold) and mail campaigns for free shipping/ period (perhaps by product type).
Important question: should we look at the development possibilities of IVO in this regard or we use what we’ve got and concentrate on future options in PMS?
A possible solution apart from our current system (microsite structure with Samsung Nation as a possible example) Loyalty programs – data
a free shipping based system that uses only the capabilities of IVO. (see 4 charts at the end)
Effect on earnings: Customer retention rate among companies with a robust rewards program vs. those without: 300% (Aberdeen Research, 2014) The amount more customers spend with companies that have robust rewards programs: 280% (Aberdeen Research, 2014) In 2013, US households participated in 21.9 loyalty programs on average. 56% of these memberships were inactive in the past 12 months (Colloquy) How much more likely VIP and loyalty program members are to spread the word about a business: 70% (Surprising Facts about Customer Loyalty, 2013) 63% of people would be willing to share more personal details with a company in return for relevant offers (LoyaltyOne, 2013) 67% of people say surprise gifts are important in loyalty programs (Citrus-Directivity, 2013) 69% of consumers say their choice of retailer is influenced by where they can earn rewards program points, and 70% say that these programs are part of their relationship with the company (Merchant Warehouse, 2014)
84% of consumers say they are more likely to visit the webpage of a retailer with a loyalty program Returning customers spend on average 67% more than first-time customers 75% of consumers would switch brands if promotions and account information were sent directly to their smartphones 80% of respondents said they prefer brands that "do more to interact" with them over those that "just advertise" to them (Crossmark, 2014) A 2013 survey by the National Restaurant Association shows 38% would participate in restaurant loyalty programs for extra services (guaranteed reservations on busy days, discounts on certain menu items, and skip-the-line privileges). That percentage grows to 51% when millennials are asked Individual Programs – examples for market trends and strategies The Tesco Clubcard Bonus Coupon Mailer sending personnalised coupons to customers according to their previous shopping is increasing store spending by 5 GBP on average/customer mailed. 85% of U.S. consumers prefer personalized offers reflecting previously purchased shopping habits (Synqera, 2014) This April, Safeway Canada discontinued its lovalty card program claiming its shoppers said they already have a lot of cards in their wallets. Insteady, they lead a „Card Free Savings” program that does not need a registration or card, just the receipts. See „What’s important for customers” screen shot above GM’s card program running since 1992 offers consumers 5% earnings on their first $5,000 worth of net card purchases each year, plus an unlimited two percent on all other purchases. There’s no limit on rewards and they never expire. GM issued the 7 millionth card this March. In January, 2014, six Washington DC coffee shops created a disloyalty card program against Starbucks. While Amazon introduced Prime meaning free 2-day shipping for fixed fee,
On the 30th January, Amazon announced it increases the Prime fee by 20 USD as quarterly earnings missed expectations. Prime fee is now 99 USD/year Ebay has scaled back its Bucks program: they introduced a 250 USD minimum for spending, introduced an expiration date and eliminated Motors and Parts from the eligible categories. Technology Assessment Checklist (Ogily &Mather) - Limitations – built in capabilities for free shipping only - Effect on transaction time at retail –no effect if the IVO functions really work - Where will the data be stored? – Connected to the IVO database and/or in a separate data bank - How will the data be accessed? – Through the sites and/or through a microsite prepared for this - Effect on channel partners - Nothing if IVO only, maybe later with another structure - What types of statistical analysis will be required? – users’ willingness to participate, willingness to spend more, breakage, data handling costs, effect of potential discounts on profits - Will the data be delayed (for how long) or will it be real time at head office? – Have to test IVO for real time free shipping voucher handling - Building an actionable database(s) – Database has to be efficiently filterable to create special promotions for buyers of certain categories/products/sums. If we create something other than IVO, it has to be highly automatized, with simple relationship between buyer’s action and point accumulation/discount. - Integration with web site – We should test how the IVO features look like, the best possibility: free shipping discounts can be totally integrated in the site. If so, that might be enough or we can create a separate microsite for the extras (see Samsung Nation) Two successful loyalty programs: VIPix Club - PIXMANIA.co.uk voucher system 1 year prepaid loyalty program with physical card For 21 GBP, free delivery on all items but only for 170 GBP max/year, discount, private sales, priority treatment at customer’s department and 10-15 off from certain extended guarantees. How to become a member: put the card in the basket at checkout Pros: fee seems OK, offers discounts and comfort/care options, elegantly shown on page Cons: free shipping is very limited and this fact is „hidden” in small typeface below. The only predefined discount is for extended warranties, not products. Shell Driver’s Club - https://www.shellsmart.com Physical card and point collecting system with a mandatory online account Pros: Very easy to see and understand (gas stations and on the web as well), immediate discount and more indirect experience offerings at the same time, user friendly website created only for the program. Can be immediately replaced for free if lost. Point can be Waitrose vouchers, giftcard vouchers, British Airways, etc.
Cons: Card is automatically cancelled if: not registered for 6 months or registered, but no point collected for 12 months. Shell insists on registration but the only explanation it gives is „user can stay up to date” 500 points are worth 2.50 GBP in fuel vouchers. (The average car uses 103 litres a month, which means you’d have to wait almost 2 years to get your 10 GBP reward. A 10 GBP discount could cost around 2,800 GBP) Sources: http://www.crmtrends.com/loyalty.html http://www.colloquy.com/breaking_view.asp?xd=11091 http://colloquy.uberflip.com/i/280846/1 http://www.nielsen.com/us/en/press-room/2013/nielsen-survey-84-percent-of-global-respondentsmore-likely-to.html Shipping and loyalty
http://www.marketingcharts.com/wp/traditional/consumers-favorite-loyalty-program-benefits-andbiggest-turn-offs-38126/attachment/nielsen-top-loyalty-program-benefits-nov2013/ http://www.marketingcharts.com/wp/interactive/top-5-creepy-and-weird-loyalty-program-uses-ofmember-information-29416/attachment/maritz-top-creepy-uses-loyalty-member-info-may2013/ http://www.marketingcharts.com/wp/online/the-influence-of-shipping-costs-on-online-shoppers30067/ http://www.marketingcharts.com/wp/topics/e-commerce/consumers-say-free-not-same-daydelivery-option-would-spur-increased-online-shopping-27595/attachment/bcg-top-online-shoppingmotivators-mar2013/
