Loyalty Marketing & Loyal Customers

LOYALTY MARKETING & LOYAL CUSTOMERS

PREPARED BY: RACHIT, AAFAQUE &

SUSHIL

POINTS OF DISCUSSION 

Objectives of Loyalty Marketing



Principles of Loyalty Marketing

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Building a strategy

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Difficulty in Building true Loyalty

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Customer Recognition

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Economic Value Of a Loyal Customer

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Future of Loyalty Programs

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Conclusion

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THE BOTTOM LINE  "As

a customer's relationship with the company lengthens, profits rise. And not just by a little. Companies can boost profits by almost 100 percent by retaining just 5 percent more of their customers" F.P. Reichheld

AN OVERVIEW 

Loyalty marketing is an approach to marketing which is based on Strategic Management.

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It is a concept in which company focuses on growing and retaining existing customers through incentives.

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Branding, product marketing and loyalty marketing all form part of the customer proposition.

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American Airlines launched the first full-scale loyalty marketing program of the modern era with the Advantage Frequent Flier Program.

LOYALTY PROGRAMS 

A marketing process that generates rewards to customers based on their repeat purchasing .

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Consumers who enter a loyalty program are expected to transact more with the focal company, giving up the free choice they have otherwise.

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In exchange for concentrating their purchases with the focal firm, they accumulate assets (for example, ‘points’).

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Points are exchanged for products and services, typically but not necessarily associated with the focal firm.

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CRM tool used by marketers to identify, award, and retain profitable customers.

OBJECTIVES OF LOYALTY MARKETING Retain best, most profitable customers. Make good customers better. Acquire customers with potential to become best customers. Reconnect lapsed users with the brand. Revitalize the brand’s relationship with its core franchise.

PRINCIPLES OF LOYALTY MARKETING 

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Relevance is the key to Loyalty Marketing-The magnitude of the reward is less important that the perceived value of the reward. Special treatment, recognition.

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Loyalty Marketing reduces the consumer’s decision-making complexity.

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Loyalty Marketing reinforces the rightness or wrongness of the consumer’s choice.

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Loyalty Marketing is information-dependent.

TYPES OF CUSTOMERS 

Loyal Customers

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Discount Customers

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Impulse Customers

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Need- Based Customers

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Wandering Customers

BUILDING STRATEGY- GRAPHIC DEPICTION

Product Performance

Service Performance

Employee Performance

Customer Satisfactio n

Retention / Loyalty

Revenue / Profit

DIFFICULTY IN BUILDING TRUE LOYALTY 

According to a report from Mintel Research:  Only

15% of all grocery shoppers are completely loyal to the store where they do their main grocery shopping



 29%

use one other store

 22%

use two others

 Men

are more likely than women to be loyal to a single store

 46%

of men shop in just one or two main stores

This study helps us to understand that merely spending millions does not creates Loyalty. A continous approach is essential.

CUSTOMER LOYALTY CYCLE

ACTION OUTLINE 1. Select your market segment  

Identify most valuable customers (what criteria?) Identify customers who might become valuable

2. Design a relationship-building service culture –

Identify what type of treatment promotes customer loyalty

–

Identify what loyal customers want to give to you

–

Identify potential for the development of a brand community

3. Implement a loyalty treatment – – – –

4.

Design specific communication strategy and message Train staff to understand the importance and the process Create opportunities to invest and receive investments Generate a sense of community among your customers

Measure effects of program and redesign – –

Maintain constant communication with your loyal customers Monitor costs and results of your program

CUSTOMER RECOGNITION 

Customer Recognition is an important aspect of any business or for any Organization.

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With each loyalty programs Recognition aspect comes into pivotal role.

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Each customer wants an attention or recognition whom he/she enters into relation with.

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The recognition can be Tangible or Intangible.

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Don’t underestimate Customer recognition.

ECONOMIC VALUE OF A LOYAL CUSTOMER 

Understanding loyalty program economics is essential.

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A loyalty program incurs a cost to an organization which is of prime importance as running these programs is isn’t cheap.

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According to a study by Mckinsey & Company estimated for any Fortune 500 organization a program’s 1st year cost makes up for a large amount simultaneously costing in marketing and maintenance.

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Understanding the economic value of your customers, not just your loyal customers can save tremendous amounts of revenue and effort.

EXAMPLES OF LOYALTY PROGRAMS o

Star Alliance Frequent Flyer Program

oTaj

Innercircle Loyalty Program

FUTURE OF LOYALTY PROGRAMS 

Companies should look for ways to differentiate their loyalty programs while balancing the revenue and the costs.

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Focus should be made more specific or segmented like targeting life-style, or interests.

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Concentrating resources on high potential and high value customers.

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Organization's focus should be on broadening customer relationship rather than rewarding.

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Coalition programs a new trend will be seen as new concept in the loyalty programs.

CONCLUSIO N 

Thus we have seen that loyalty programs are of immense value to any organization irrespective of geographical distribution.

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Providing a better product an impeccable service should be the major objective for any organization.

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Recognizing the customer and his spending behavior can enable to make more specific rewarding structure.

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Loyalty programs should not be limited to Rewarding but to broaden relationship with the customer and offering them more liberty.