Customer Loyalty

“Beyond Click to edit customer Master subtitle satisfaction” style

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Customer loyalty

It isn’t just about customer satisfaction, its about building loyal customers.

The Harley Davidson motorcycle owner won’t switch even if convinced that another brand performs better.
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Customer Satisfaction Vs. Customer loyalty 3/1/13 .

Why Build Customer loyalty? More predictable revenue Command premium prices Lower cost of sales Higher margins Word of mouth promotion More open and honest feed back Willingness to test new ideas satisfying work         More 3/1/13 .

What drives customer loyalty? Emotional dependence Structural dependence Business dependence Satisfaction Performance Economic value proposition Alignment and fit        3/1/13 .

3/1/13 . increase customer share of wallet and ensure repeat purchases.? A Typical loyalty program aims at creating a competitive advantage while maintaining a healthy profit margin. A loyalty program aims to increase switching cost.A Loyalty program is….

Customer Loyalty Models (Retail Industry)      The Proprietary model The Partnership model The Player model Coalition model Merchant funded networks 3/1/13 .

Begun and operated by a single company which takes on all program risks and rewards of the program  Example – Inner circle loyalty card 3/1/13 .1. Proprietary model  A stand-alone program with the key objective of rewarding customers with a single value proposition.

Advantages   Program and company branding Complete control of structure.By allowing non competing partners to join the program Addition revenue opportunity Cash outlay for points   3/1/13 .

 When Jet Miles was introduced.3. also known as licensed currency programmes. it offered tie-ins with 3/1/13 . and extendable to recruiting partners. This model develops value proposition currency that others can use—a single programme that is extended by. The Partner Model  Partner programmes.

they issue the points/miles/currency of another programme. a brand launches a loyalty programme but doesn't launch the currency.The player Model  In the player model.  3/1/13 Jet airways as an example. The player model allows you to simply play in someone else's programme. the airlines is the partner. and .

Advantages   Inexpensive Immediate recognition of the sponsor's programme Can drive acquisition (from sponsors' customers) Can be effective with competitive exclusivity   3/1/13 .

The Coalition Model  It is almost always run by an entirely independent third entity not connected to the brand. the third entity —an independent. telecom providers and financial services firms   3/1/13 . It can be defined as collective loyalty programmes in which multiple retailers share both costs and a common currency. Under this model. petrol stations. individual organization—typically connects the end customers across a series of brands they interact with in their day-to-day lives such as grocery stores.

Advantages        Higher Return on Investment Greater Earning Potential for Members Easy to Keep Dynamic & Vital Share Best Practices Customer Acquisition Brand Acceleration. Shared Costs 3/1/13 .

Case : Proprietary Model 3/1/13 .

which lacked flexibility.Summary: Starbucks is the largest coffee house company in the world with over 9000 stores in the US and over 16000 stores. world-over in 55 countries. Starbucks decided to launch a loyalty program to reward. Starbucks ran its loyalty program on a hosted system (First Data). Business Challenge Starbucks market dominance was challenged with entry of Dunkin Donuts and McDonalds in coffee beverages market. scalability and functional capabilities. In order to retain its loyal customers. 3/1/13 . recognize and deliver great instore experiences.

customer-centric loyalty program • Enable personalized experiences across channels through real-time integration with PoS. scalable and integration ready to: • Drive a highly innovative and dynamic. starbucks. Starbucks decided to bring customer data in-house and migrate to a next-generation loyalty platform that is functionally rich.000 stores North America) 3/1/13 Starbucks chose Siebel Loyalty and Siebel .com and mobile • Manage huge transaction volumes (over 11.Solution In order to deliver on it’s customer experience strategy.

Free Drink or Food Reward Every 12 Stars. As you collect Stars.     3/1/13 . you move up to bigger benefits. Get a little extra birthday love with a free drink or food reward on your birthday. Collect 30 Stars within 12 months and you’re Gold.How is it used?  Earn 1 Star every time you pay with your registered Starbucks Card or Starbucks mobile app at a participating Starbucks or our online store. Five Stars puts you at Green.

etc. birthday drink.. • Starbucks customers earn stars for their visits and redeem their free beverage loyalty coupons in realtime at the PoS and earn recognition status to enjoy exciting privileges (free Wi-Fi. • 3/1/13 .). 2011.Results Starbucks went live on Siebel Loyalty in February. • Starbucks has 150 Million cardholders and 10 Million My Starbucks Reward members With its new loyalty . • All 9000 stores in the US and 1500 stores in Canada are integrated to Siebel Loyalty. • Enabling customers to recognize themselves and redeem their coupons at the PoS using their mobile phones.

Case study : Coalition Model 3/1/13 .

the client wanted to create a transactional bridge between the two divisions via single loyalty program in which the entire base of customers could accrue and redeem points seamlessly across both divisions thereby bringing 3/1/13 in enhanced thru put.ITC Limited  Company: One of India's foremost private sector companies with a market capitalization of nearly US $ 19 billion and a turnover of over US $ 5. .1 Billion  Business need: Having a strong presence in premium hotels and high-end fashion retail businesses.

• Making two exclusive systems to work in tandem. .Challenges • The Hotels and retail divisions have distinct personalities. • Phasing out existing loyalty programs/relationships or merging them with the unified program. • Created a single loyalty bridge mutually operable set of rules 3/1/13 by creating a for enrolment. • They also had their own loyalty program with own enrollment and accrual and redemption rules. by creating a for enrolment. • The hotels division predominantly work on legacy system. Solution • Created a single loyalty bridge mutually operable set of rules accrual & redemption.

Complimentary subscription to Namaste and WelcomZest Magazines.Club ITC • • • • • Each time you stay at over 45 participating ITC Hotels or shop at over 75 Wills Lifestyle Stores. Gurgaon (Tue-Fri). redeemable against a host of rewards. you will earn ‘Green Points’ on all eligible spends*. Complimentary Membership to King Club Gold Green Fee Waiver on weekdays at Classic Golf Resort. Complimentary subscription to Namaste and WelcomZest Magazines 3/1/13 .

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