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which is potentially of beneficial to the firm.
Various loyalty cards
In marketing generally and in retailing more specifically, a loyalty card, rewards card, points card, advantage card, or club card is a plastic or paper card, visually similar to a credit card or debit card, that identifies the card holder as a member in a loyalty program. Loyalty cards are a system of the loyalty business model. In the United Kingdom it is typically called a loyalty card, in Canada a rewards card or a points card, and in the United States either a discount card, a club card or a rewards card. Cards typically have a barcode or magstripe that can be easily scanned, and some are even chip cards. Smallkeyring cards (also known as keytags) which serve as key fobs are often used for convenience in carrying and ease of access. A retail establishment or a retail group may issue a loyalty card to a consumer who can then use it as a form of identification when dealing with that retailer. By presenting the card, the purchaser is typically entitled to either a discount on the current purchase, or an allotment of points that can be used for future purchases. Hence, the card is the visible means of implementing a type of what economists call a twopart tariff. The card issuer requests or requires customers seeking the issuance of a loyalty card to provide a usually minimal amount of identifying or demographic data, such as name and address. Application forms usually entail agreements by the store concerning customer privacy, typically non-disclosure (by the store) of non-aggregate data about customers. The store — one might expect — uses aggregate data internally (and sometimes externally) as part of its marketing research. These cards can be used to determine, for example, a given customer's favorite brand of beer, or whether he or she is a vegetarian.
say market analysts. heralded with mega malls dotting the landscape.' Bobba. admitted a customer loyalty progra . which in just three years has captured 55 percent of the households. Tata Group with SBI Card. we will be launching a third party reward programme I-Mint by month end with Airtel (telecom).' said Bobba.. With ICICI Ventures backing his maiden venture in India. Maruti Autocard in tie up with Citibank and oil marketing major Indian Oil Corporation (IndianOil). New Delhi. Bangalore. CEO of Bangalore based Loyalty Solutions and Research Limited (LSRL). Retail boom charters new customer loyalty schemes By Lola Nayar. Bobba felt Indian market is ripe for a rewards' programme that would cater to the needs of even a person whose monthly household budget is around Rs. 'We will be increasing the number of our coalition partners and expand in areas where the frequency of spend is very high. While loyalty to a branded shirt or watch may be influenced by personal choice after the first buy. apparel store Lifestyle.' said Bobba who is targeting enlistment of five million customers in the first year of launch in four cities including Hyderabad. The spate of reward programmes for customer loyalty shows the market is only just waking up to discover the mantra for winning customers for a long time relationship. Aug 27 (IANS) The retail boom in India. has not just changed the shopping experience but is also generating a whole host of incentives to woo customers and retain their loyalty. 2006 | 9:51:27 AM IST (+05:30 GMT) 0 Comment New Delhi. Hindustan Petroleum Corporation Ltd (HPCL). Pantaloons. a consultancy firm. heralded with mega malls dotting the landscape. has not just changed the shopping experience but is also generating a whole host of incentives to woo customers and retain their loyalty.2. an Indian American Vijay Bobba will be launching a mega multi-product and multi-services reward programme in India by month end. In return. told IANS. Only time will prove how successful the I-Mint programme is. Spencer's stores or Shopper's Stop . August 27. the loyalty card may also be used to access such information to expedite verification during receipt of cheques or dispensing of medical prescription preparations. access to a club lounge in airports. Indian Airlines and online travel portal makemytrip. in the case of a host of consumer goods and services the add-ons are known to win the game and business. thereby giving customers a chance to collect reward points whether shopping for monthly grocery in the neighbourhood store or buying medicine at a pharmacy.g. 'In addition we are signing up thousands of shopkeepers across India to join the programme. say market analysts. Our role model is UK's Nectar.' said Bobba. 'In less than six months on an average we hope to reward the first of many customers. Bobba is confident of the number of loyal customers growing to 15 million in just three to four years. 'Following the retail boom in India. Aug 27 (IANS) The retail boom in India. The main drawback with loyalty programmes in India has been the slow collection of reward points unless one runs up high bills or is a frequent traveller. Indo-Asian News Service | Sunday. Bobba assured that the customers too would benefit with a faster collection of reward points.all retail chains have on offer a loyalty card that helps you clock reward points on your purchases.Where a customer has provided sufficient identifying information. Inspired by the success of Britain's Nectar and Canada's 'Air Miles' loyalty programme besides experiences in the US and Europe. So whether it is Big Bazaar. While loyalty to a branded shirt or watch may be influenced by personal choice after the first buy. in the case of a host of consumer goods and services the add-ons are known to win the game and business.000. Some of the recent ones are the State Bank of India (SBI) joining hands with the Indian Railways to offer you incentives on ticket booking using the bank credit card. given that over the past few months several other loyalty programmes backed by credit or debit card institutions have been launched.com as coalition partners. using afrequent flyer card). co-founder and board member of US-based Loyalty Solutions Corporation. or for other membership privileges (e. Mumbai and Delhi.
the door is wide open for one retailer to change the nature of its loyalty scheme.g. says Belinda Neal of brand marketing agency Crazy Horse. Most loyalty schemes don't really work. they reduce the amount of profit per customer by discounting existing behaviour rather than rewarding increased positive behaviour (e. and ultimately deliver a far greater profit to the bottom line as well as enhanced brand and customer equity. But it does not recognise the differences among customers. those loyalty schemes become little more than discount programmes. Consequently. Maximising profit per customer. I would define these objectives as: Maximising retention of the most profitable customers. Define your objectives at the outset and judge the developing programme against them frequently. spending more or returning more often). These days.The trouble with loyalty schemes. particularly those devised by supermarkets. Segment your customer base The "one size fits all" approach doesn't work . High street loyalty schemes. By Belinda Neal (Client Services Director. it's the customers hold all the cards – literally! So many of these programmes fail to radically change customer behaviour over time or deliver a bottom line contribution to profit.. are not always smart.. So these are my six practical steps for establishing a successful loyalty scheme: 1. So what makes them fail . possibly for expedience. Customer behaviour could be influenced positively. Understand customer motivations With a broad spread of customers. Loyalty schemes need to concentrate on relevance to the people they are trying to influence. yet many retailers still seem to try it. What do they actually do to build loyalty? Most of the big players have their loyalty schemes already and. Bold but true. what makes them successful? So many big brands spend huge proportions of their budgets these days on ill-devised loyalty schemes. Many programmes assume that price is the key driver and common denominator. 2. and to deliver real relevance and perceived benefit to customers.it's been said hundreds of times by marketing experts around the world. I have a loyalty card for every major supermarket chain that offers one. The playing field is once again level. to get smarter in its loyalty offering. In fact. Crazy Horse) Published by The Wise Marketer in April 2005. the loyalty card has become a commodity. most of which I challenge to really deliver the goods in terms of contribution to the bottom line. Everything to play for Not just in the supermarket sector. ineffective marketing and leads to monolithic loyalty programmes. but in any other retail arena. Define your objectives Misunderstanding the principles of loyalty or setting vague objectives creates an opportunity for imprecise. yet none of them actually have my loyalty. in essence. .but more importantly. individual motivations will vary hugely. o o 3.
Arriving at your destination and having the pillows you like. even in unexpected places. Supermarkets can spot which customers shop weekly and establish how many weeks are missed each month. and recognition of customer value should all be considered when developing an effective loyalty programme. Supplementing this wealth of data with some quantitative research insights could fuel a whole new type of loyalty scheme that actively changes behaviour. and check-outs during other busier periods. effort and budget can be targeted toward the customers with potential to do more. lifestyles. over-delivery is key: an out-of-the-blue "thank you" reward for a customer's business does far more to drive loyalty than a planned or expected reward. and what could motivate and change their behaviour patterns in-store. delivers more profit. Is she truly motivated by £3 off her weekly basket of £200 worth of groceries? Or would she prefer less queuing? That's more likely to appeal. Use audience insights Most loyalty schemes have at their disposal huge amounts of transactional data that could. pay a few charges and then have their salary cheques paid in? This group is also highly lucrative. it's all about service. too. an invitation to take part in consumer panel will probably do more to drive loyalty than £5 off. The stereo-typed single adult male with his one basket may even prefer a "beer and spirits only" check-out to 50p off his shopping! Here's another idea: why not encourage pensioners to shop during quiet periods in exchange for a discount? That would not only reward them for their compliance but also free up space. 5. Better still. The act of encouraging dialogue and feedback from consumers (e. All that's needed is a bit of customer segmentation and a little imagination. Always watch for the most profitable customers. Would the stay-at-home mother prefer £2 off her bill or a crèche in which to deposit her three children while she works her way around the store? And to the customer who 'does lunch'. your favourite newspaper delivered. Linking behaviour at household level could save fortunes on the programme's communication budget and provide marketers with a clearer view of household spend and potential. provide invaluable insights into customers' buying patterns. special treatment at point of sale. and builds greater active loyalty to the brand. Special deals.For some customer segments. through the online channel for busy. Establish share of basket Do you know who your most valuable customers are right now? A bank might think that it's those with the most money invested (and certainly this group is important) but what about the customers who go into debt at the end of the month. convenience and added value. . and a bottle of your preferred wine or mineral water waiting for you appears to build genuine loyalty. Many hotels are running very successful loyalty programmes by encouraging guests to tell the hotel about themselves. with relatively little effort and cost.g. high-value segments) is even likely to drive loyalty in its own right. really. Using data to establish behaviour patterns allows retail loyalty operators to identify which customers are promiscuous and which ones spend all (or most) of their sector spend with their store. particularly the high-value ones. Does she really want to remember to take in time-bound money-off coupons every week? That's far less likely. baskets. trolleys. Preferential car parking is a probable favourite. Take the busy working mother with a relatively high level of disposable income. 4. Then. with the scale of the opportunity established.
Compliance. Ensuring service excellence and relevance of offering not only encourages customers to remain loyal but gives your margins room for growth. Support. and offer a differentiated proposition. Information. The allocation of your marketing budget based on potential customer value rather than a flat allocation across the entire customer base will contribute significantly to your bottom line. Encouraging customers to use you as their supplier of preference. a promiscuous shopper with an average basket of £70 is likely to be enticed. Build the bottom line Receiving a £6 discount voucher that works when £60 or more is spent is not a good way of driving profitability if the customer you give it to already spends in excess of £190 each week. is worth your while! Or perhaps give 20% off to anyone who will spend at least £100 a week for a month. given to someone who usually spends £40 every second week. is fundamental to protecting your business. Your account • • Register now Log in Home > Sales and marketing > Keeping your customers > Manage your customer care Manage your customer care . Successful loyalty programmes should take the high ground. even going out of their way to choose you over your competitors.6... But £6 off each £60 spent. Run the promotion for three months and they're likely to start forming a new shopping habit that involves consolidating their sector spend with you. But the all too common 'me too' programmes do little or nothing to enhance consumer perceptions or differentiate the brand. And finally.
Customer loyalty schemes While good overall service is the best way of generating customer loyalty. There are a number of techniques you can employ. Keeping their custom costs far less than attracting new business. using customer loyalty schemes. You can decide to offer rewards on the basis of: • • • • • repeat custom cumulative spend orders for large quantities or with a high value prompt payment length of relationship For example. Use customer care to increase sales Your existing customers are among the most important assets of your business .they have already chosen you instead of your competitors. A mail-order company might seek to revive the interest of lapsed customers by offering a voucher redeemable against purchases . They can also be used to persuade customers to give you another try if you feel you have successfully tackled past problems with your customer service. You can also provide key customers with loyalty cards that entitle them to a discount on all their purchases. or old ones refreshed. a car wash might offer free cleaning every tenth visit or a free product if a customer opts for the deluxe service. Don't forget though that your customers' view of the overall service you provide will influence their loyalty much more than short-term rewards will. extra goods or prizes to reward customers for behaviour that benefits your business. including: • • • • • providing a free customer helpline answering frequently asked questions on your website following up sales with a courtesy call providing free products that will help customers look after or make the most of their purchases sending reminders when services or check-ups are due . so it's worth taking steps to make sure that they're satisfied with the service they receive. sometimes new relationships can be strengthened.response rates with such vouchers can be improved by setting an expiry date. These are programmes that use fixed or percentage discounts. Sometimes brochures and other marketing materials are the best way of getting word out about a new customer incentive. Employees who deal with customers' orders should be fully aware of current offers and keep customers informed.
whether by repair.even if you're convinced you're not at fault. To retain your customers' trust.by offering no-questions refunds.make sure your customers know about it. replacement or refund appropriate follow-up action.swiftly. Remember. such as a letter of apology or a phone call to make sure that the problem has been made good If you're proud of the way you rectify problems . Although it might seem contradictory. sympathetically and .your complaining customer may be alerting you to a problem had gone wrong experienced by many others who silently took their custom elsewhere Complaints should be handled courteously. At the very least it should involve: • • • • listening sympathetically to establish the details of the complaint recording the details together with relevant material. don't be dismissive of your customer's problem . Satisfied customers will contribute to your business for years.• offering preferential discounts to existing customers on further purchases Existing customer relationships are opportunities to increase sales because your customers will already have a degree of trust in your recommendations.above all . for example . however. . your aim is to build a solid long-term relationship with your customers rather than to make quick one-off profits. How to deal with customer complaints Every business has to deal with situations in which things go wrong from a customer's point of view.is one way of increasing sales. Your method of dealing with customer problems is one more way to stay ahead of your competitors. upgraded or complimentary products become available – perhaps through regular emails or newsletters . your customer is likely to prove more loyal than if nothing people willing to complain are rare . such as a sales receipt or damaged goods offering rectification . Make sure that your business has an established procedure for dealing with customer complaints and that it is known to all your employees. However you respond if this happens. Cross-selling and up-selling are ways of increasing either the range or the value of what you sell by pointing out new purchase possibilities to these customers. a customer with a complaint represents a genuine opportunity for your business: • • if you handle the complaint successfully. Alerting customers when new. never try to sell them something that clearly doesn't meet their needs. through their purchases and through recommendations and referrals of your business.
What we do now is not only be tidy but also highlight the perception of ourselves as tidy by using throwaway protective materials with our logo on. The whole system works like a big circle. It's important to help them introduce customer-feedback schemes and it also helps me again measure what we're achieving and therefore improve things further. "One question." Home in on specific issues "Any strong negative feedback is now immediately investigated. "Another common complaint discovered was about scaffolders leaving loose clips around.Here's how I set up and used a customer-feedback programme Joe Ibrahim is director of the painting and decorating division of Axis Europe PLC. really. KPIs and where the company is going. So we devised a questionnaire for clients and we kept it tightly focused on the areas we wanted to measure. "We also have monthly meetings with all the staff where we talk about customer satisfaction. "We had a brainstorming session with contract managers and supervisors and discovered that often poor feedback is often driven by a perception of a problem rather than a real one.either 'yes' or 'no' or a satisfaction-rating which ranged from one to ten and used faces going from scowls to smiles. a London-based construction company." Share the finding "I report back all the findings from my division to other divisional directors. was. performance. That figure should be almost zero so we really attacked that problem. 'Did the painters tidy up to your satisfaction?' The possible answers we offered clients were simple . "The results haven't always been what we've expected. Joe wanted to find a way of measuring how effectively the business was performing and devising a customer-feedback programme was one of a number of key performance indicators (KPIs) that the firm uses to measure its efficiency. at first a lot of our clients . What I did Started simply "We were looking for a proven way to measure our business performance and customer satisfaction seemed a good.were saying that the contractors were not tidying up enough after themselves." What I'd do differently .around 30 per cent . basic place to start. present the findings on piecharts and search for any trends. The scaffolders said they didn't do this but now for every clip found £5 is donated to charity. but otherwise we look at all the feedback from the jobs we've done half-yearly. for example. It's a way of exaggerating what we're doing. For example.
They usually work using ‘points’.g. but they provide a direct reason to remain loyal to one business. as they are finding it a large cost for little gain. as the costs can be large if unsuccessful. (e." (ii) Discounts For Loyalty One way to encourage loyalty is to offer discounts on future purchases. The cost of starting such a scheme is too large for most small businesses (e.g. (iii) Loyalty Schemes Many large businesses (mainly shops and stores) now have ‘loyalty schemes’ (e. discounts given). .g. A popular form of offer is ‘introduce a friend’ discounts.) These discounts encourage the customer to save money. We then tried hand-delivering them for the next three months and we found we had 30 per cent returns again so we've gone back to the post. The cards given out with most schemes also provide a reminder of the business. whereby if a customer introduces a friend.g.g. Air Miles) which use discounts to encourage people to buy from them. If you bought lots of dog food. with the ideal outcome being a satisfied customer who becomes loyal to your business. promotion of scheme. points can then be used to save money on some items. the more you spend with them. however. System to register points. but is probably of little use to smaller businesses. This could be money off the same item or related items (e. the more points you earn. A loyalty scheme will benefit a few small businesses. A discount off a TV stand when you buy a TV. they would send you offers related to dog owners) This type of information gathering is useful. allowing them to move products and send out discounts for the products those customers purchased often. Hand-delivering takes a lot of time and 30 per cent is not a bad result. For the first three months we sent questionnaires out to clients by post with an SAE and the return levels were about 30 per cent. and there is little evidence that they do increase loyalty (People often carry several cards for competing shops). The discounts are usually minimal (Often as little as 1-2%). The Nectar Card. Many larger companies are scaling back or ending their loyalty schemes. This not only encourages customers to return and be loyal. they both get a discount or special offer. but also provides a positive introduction for new customers. you should always take professional advice before starting such a scheme. E. staff time. It is also very expensive to start up and maintain. The main benefit to most stores was being able to monitor what their customers bought. Introduce a friend to our furniture and get £20 each on their first sale over £200.Not expect 100 per cent of clients to understand the importance of feedback "We're learning as we go along.
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