Customer loyalty programme Reliance Retail Limited

ContentsWhat is a loyalty programme?Loyalty Success FactorsIntroduction to Retail Loyalty

ProgrammesLoyalty Programme Structure SecretsLoyalty Programme Promotions - Driving

SalesLoyalty MarketSummary

What is a loyalty programme?The systematic collection of customer data in return for

rewards or benefits, often used to give customer additional privileges or services to best/loyal customers

Opportunities• Understand customers• Give discounts to best customers only• Adjust real price for certain customers• Use data to negotiate with partners

Loyalty Programme OptionsPoints Discount Rebate

Earn points and redeem for rewardsGood -Offers control-Customer understands-Lower costBad- Points cost are knowledge- Accrued liability

Immediate discount for presenting cardGood -Easy and instant- No liabilityBad- Discount has to be large (+10%)- No control

Reward spend over timeGood -Easy to manageBad- Little control- Easy to copy e.g. stampcard- Little emotional connection

KrisflyerPrivilege

Earn points and redeem for rewards plus tiers of privilegeGood -Privileges lead to loyalty-Offers control-Customer understands

Bad- Low spend customer disillusion- Competitors can match

What is a privilege program?Tiers of benefits over and above points for miles.(SpiceJET)

Loyalty Programme Options

CoalitionSingle Owner

Lucky Chances for spendUp to 12000

Rebates for spend over 12000

VIP Privileges and private sales for spend over 60000

Hybrid ModelCoalition Model

Nets & CreditBankData

122132

TransactionDatabase

Customers

Analysis services

Marketing Planning & Promotion tactics

Data entry

122132

name

emailmobile

Application Form

agefamily

NRIC

122132

name

emailmobileagefamily

NRIC

Customer card

Considering a programme?Steps to launchPlanning1.Feasibility audit2.Customer research3.Financial planning4.Develop programme modelImplementation1.Implementation – develop systems/communications2.LaunchManagement (operations)

Balancing Loyalty Investment Against Return

Loyalty Programme is a cost of learning about customers

Additional Customer Profits

Loyalty Programme Investment

+Loyalty Promotions

Costs

>

Critical Success Factors for Customer Loyalty

TargetAudience

BrandPositioning

CustomerLoyaltyDrivers

Degree ofParticipation

Choice of rewards

Generosity

Delivery of rewards

Liabilityrisk

InvestmentCost

Getting Customers to

join

CompetitorStrength

SalesFocus

Redeem Program

Barcode card Hybred modelInstant privilegesDiscounts for membersBirthday privilegesPoints

How is it successful?TargetAudienceRegular shoppers

BrandPositioning- for everyone-Birthday treats-Members only

CustomerLoyaltyDriversUse membershipTo make offers

Degree ofParticipationHigh

Choice of rewardsChoose from whole store

GenerosityVery generous rebate up to 20%

Delivery of Rewards –rebate vouchers(cash effectively)

LiabilityRiskHigh but alsoHigh redemption

InvestmentCostHigh

Getting Customers toJoinEasy – freemembership

CompetitorStrengthn/a

SalesFocusVery High

Loyalty Programme Structure Secrets

2

5 46

1

37

8

Data Collection

Sales PromotionIntegration

Loyalty Programme Mechanics

Brand Extension

Clubs withinprogramme

FMCGPartnerships

ValueProposition

InvestmentRatio


Strategy Capture all data relevant to the customer

relationship

Approach Use Loyalty cards to capture all customer

transactions, point redemptions, online transactions and calls to any touch-point

Segment the data according to shopping behavior, lifestage, lifestyle and other differentiating factors

Advantages Understanding of customer behavior, identify

valuable customers and communicate one to one with customers creating a more personal relationship

Data Collection

RFM

Lifestyle Lifestage

Basket

AttitudeShopHabit

Geo-Dem

Data Warehouse

Segmentation Engine

Segmented Promotion Marketing

Interest

1

Application form is the single most important point of data capturea)Gather all data in formb)Gather data incrementally using electronic channelsKey Information-Contact-Age/Gender-Family/No family

Today

Loyalty Programme Structure SecretsPrimary Retail Segmentation Approaches Recency, Frequency, Value (RFV): e.g High Value

Frequent Shoppers, Low Value Frequent Lapsed Lifestage: e.g. Young Adult, Young Family, Older Family,

Empty Nesters Lifestyle: e.g. Organic, Fast Food, Home Cooking, TV

Diners, Ethnic Dining based on basket Internet Shopping: e.g. Trial, Cautious Developing,

Everything

Data Collection

VisitVisitVisit

Frequency RecencyFrequency Value $

Recency , Frequency, Value Segmentation

1

Time

Loyalty Programme Structure SecretsBasket analysis to get shopper type

Health Conscious Price sensitive

Brown Rice

Brown Bread

NaturalYogurt

OrganicCarrots

Low far milk

Eco-WashingPowder

Lowest pricecola

No fresh itemsUses 2-1

offers

Basket <10 items

Lowest price noodles

Cheapest washing powder

large format

New organicchocolate New large value

biscuits

Current Basket

Recommended

46 other shopping types – tv dinners, daily divers, traditional, ethnic explorers, meat feast, vegetarians etc

Chance


Strategy Develop a research proven value

proposition for the loyalty programme underpinned by loyalty drivers

Approach Value proposition has emotional and

practical appeal and the Loyalty programme aims to deliver the proposition in the customer experience.

Advantage Customer benefit is clear and in-line

with a customer-focused organization Boots research showed that customers

see programme as ‘more indulgent, different, generous and offers better rewards’

Value Proposition

2

Savings

Privileges


Strategy Define the right loyalty programme mechanics

to minimize cost while driving customer loyalty.

Approach Points because it offers them greater control to

stimulate spend, but use in different ways. $1=1pts use points for rewards: voucher

redemption integrated with sales promotions.

Advantage Greater control while driving customer loyalty.

Loyalty Mechanics

3

Lucky Chance Card Rebate Card

Rebate Card& Privileges& Target of 1

Easy to launchNo liabilityDevelop card mgt experienceCapture all details and transactions

Reward only when customers hits threshold spend . Tier rebates at different reward levels1200 get 60 (5%)2400 get 240 (10%)6000 get 900 (15%)

Layer on privileges for best customers.Target every customer with individual statements.


StrategyUnderstand investment margins to

determine reward investment and frequency ratios for the market.

ApproachAverage investment is between 1% -

3%. Some retailers are offering under 1% to keep cost down.

AdvantageDetermining the right level of

investment is balanced against the rewards that motivate loyalty drivers.

Investment Ratio

4

Normally 1-3% reward


4

Investment Ratio

100Spend for 1pt

1Value of 1pt

1,00000Total Store Sales

80000Sales on Card (80%)

800Points Earned

800Value Points Earned

400Points Redeemed

400Value Points Redeemed

0.4%Investment Ratio

Reliance – opportunity to earn at hundreds of retailers

Reliance card offers a chance to earn with a large number of retailers in India.

Comes in smartcard form or keyring

Reward rate can be chosen by individual retailer .

A customer consolidating their spend across the members could earn a significant amount of reward every month


Strategy Data collected drives ALL marketing activity –

it is not operated in isolation.

Approach Use data to target sales promotion activity

Lifestage, Shopping Habits, Location Always offer loyal customers something extra! Target sales promotions by customer segment

– mass marketing costs have been greatly reduced.

Advantage Greater ROI from all marketing activities

Sales Promotion Integration

5


Strategy Develop Clubs within the loyalty program that

use knowledge gathered from grocery purchases

Approach Create Clubs for key interest groups where

product marketing efforts can be targeted and incremental purchase is easy to stimulate

Advantages Create greater relevance for Club members

and reduce cost of generating incremental spend

Clubs within Programme

6

Strategy Extend brand using new services

Approach Develop strong own-brand products new

non-grocery services Leverage grocery database to offer re-

branded services

Advantages More reward earning/redeeming

opportunities More data from partners and greater

marketing reach

7

Brand Extension

7


StrategyOffer FMCG companies access to

customer knowledge.ApproachOffer FMCG brands that pay a fee

access to customer knowledge that allows the brand to plan promotions that reach the correct target audience.

AdvantagesStronger offers to the right

audience create better returns.

FMCG Partnerships

8

Customer

Grocery Retailer


2

5 46

1

37

8

Data Collection

Sales PromotionIntegration

Loyalty Programme Mechanics

Brand Extension

Clubs withinprogramme

FMCGPartnerships

ValueProposition

InvestmentRatio

Promotions1. Statements2. Personal shopping lists3. Geo-targeting4. Events5. Layered promotions6. Regular communications

Loyalty Programme Promotions - Driving Sales

Strategy Use data collected to personalize vouchers/coupon offers and upsell

Approach Statement types are personalized based on shopping habits

RFV Lifestage Shopper type Lifestyle Shopper Type models

Advantages Increased response rates compared to standard

90% to vouchers 30% to cross-sell/upsell

1. Statements - online/offline


Strategy Use data collected to personalize basket when repeat shoppingApproach Can make recommendations based on basket Slip in the up-sell offersAdvantages Personalization offers a tested formula for increasing

response/redemption rates

2. Shopping lists – online/kisoks


Store Catchments

Store Competitor Store

Promotion Target Area

Strategy

• Store catchments areas in overcrowded markets need to be defended from competitors

Approach

• Use loyalty program data to run targeted promotions on areas of highest competition

Advantages

• Powerful threat defense only for customers in risky areas

3. Geo-marketing

Loyalty Programme Promotions - Driving SalesStrategy Most valuable customers are invited

for store evenings, where specially hosted events are put on around themes such as Noodle,Coffee and cheese.

Approach High quality store presentation and

grocery expertise allow retailers to create a conducive environment for offering high end grocery products

Advantages Meet and reward the best customers

in person, while extending sense of privilege that is popular in all markets.

Noodle Sampling Events are a regular features for Reliance One Members

4. Events/Product Sampling

Strategy

• Offers attract interest and offer incentives for immediate purchase

Approach

• Types of incentives– 2.Personalised shopping list– 3. Rebate type vouchers– 4. member prices– 5. Free gifts

Advantages

• Customers see lots of opportunity to participate – right offer for right person


5. Layered promotions

Tips

• Weekly emails for grocery but with different themes each week

• Offers are rotated

• Messages are personalized

• All Opt in email


6. Regular communications

Programmes offer opportunity to get to know customer – that’s cost of knowledge that must be recoveredOpportunity comes from using the data – to drive more spend - personal shopping listsCustomers enjoy being part of programmes if they get privileges of whatever value therefore work hard to give them value

Customer loyalty programme Reliance Retail Limited

Education

Transcript of Customer loyalty programme Reliance Retail Limited