Topic: Loyalty Cards

Loyalty Cards
 Loyalty Program: In the efforts to attract new customers and keep existing
ones, companies offer free goods or services, price discounts or gifts
when the member of loyalty program reaches a certain purchase
threshold.

 Rewards can range from discounts off on your next purchase, to free
coffee, car washes, discount on airfare, or even new cars. It is even
possible to donate your points to charitable organizations.

 Loyalty programs are launched using a Loyalty card made of PVC plastic
that has a magnetic strip on the back. It looks similar to a debit or credit
card
 Customer Loyalty Card is one of the CRM strategy that helps
companies identify and analyze the customer buying patterns,
likings – disliking, preferences etc.
How does a loyalty card work
 Loyalty card is issued to a customer when he makes a purchase from
a particular shop.

 A loyalty card has a barcode or magnetic stripe on the back that's

scanned at the point of sale

 The card identifies the customer and sends information about what
the customer has purchases to a database

 As and when the card holder makes transactions his database in the
CRM gets updated

 The information in the database is used to help the retailer

understand and influence his customers' buying habits
Details Captured through a Loyalty
Card
 Customer Name
 Address
 E mail ID
 Contact Number
 Gender
 Age
 Nature of Employment (Not every time)
 Purchases made by him time to time
 How frequently he has taken the benefits he is entitled for through
loyalty card
 What all benefits he has taken till now through loyalty card
Some Facts about Loyalty Cards
 In India, 42% of Indians have at least one loyalty card

 Loyalty Program market is $4 billion a year in India

 20% of the Indians are loyal to one particular brand

 Pay Back is India’s Largest loyalty program with more than 12 million
members

 5% increase in customer retention increases organization’s

profitability by 25%

 Acquiring a new customer cost 5 time more than keeping the existing
customer
Types of Loyalty Programs
 Coalition: Tie up with a multiple companies to share customer data
to jointly target a customer demographic

 Affinity: Building a lifetime value relationship with a customer

based on mutual interest and not on the use of rewards

 Rewards: Giving customer rewards unrelated to a company’s

product or services

 Partnership: Marketing to another company's database and

allowing loyal customers to choose their rewards from either
company.

 Rebate: Giving customers money back when they buy more.

Benefits to Customers
 Save Money

 Make Money

 Special Offers, Discounts & Services to Loyalty Card Holders

 Feeling of belonging to the brand

 Possibility of receiving other financial services

 Membership magazines, free gifts – on festivals

 Receive notification of new collection & upcoming offers

Benefits to Company
 Huge customer database with their buying pattern & trends
 Attracts new customers

 Gives reasons to get in touch with customer

 Increased Sales Volume & Turnover

 A real threat to competitors (if the rewards are based on basic

requirements Ex: Discount in air fare)
 Cross Selling Opportunities (Ex: Financial Services)

 Positive Word of mouth (If it’s a very good deal)

 Customer Satisfaction
Loyalty Scheme Strategy
 Segregation of Customer: Companies can segregate the customer
observing their buying pattern basis Area, Purchasing Power, Age,
Liking towards a particular brand etc.

 Define each group: List attributes that defines a group, Study the
requirements of this group and accordingly design a Loyalty
Program. Ex: Younger generation like to carry trendy key holders,
Pen drives instead of a card (Loyalty/Membership card)

 Set Goals for each segment: The goals and targets should be a
measurable; Ex: higher average billing, more customer referrals,
and more frequent visits, growing the group or trying to bring
about a certain behaviour in the group.
Loyalty Scheme Strategy
 Develop loyalty strategies to accomplish each objective. The
strategy for each group could look very different, but don’t worry
about it as long as it does not dilute the brand image or your high
level strategy.

 Conclude: Once the internal support for the loyalty program is

built, evaluate potential partners’ expertise in loyalty program
implementation to see if it improves and justifies your loyalty
program and has a chance of survival

 Review: Have a proper research work on what worked for you and
what did not. See if you can accommodate majority of your loyal
customers in the program that has shows the maximum success.
Review it well and take inputs for future
Loyalty Profiling
 The growth and performance of the loyalty card holder is derived
from various data points captured.

 Ex: When the customer was registered, from where, how much did he
purchased initially, how much and what all he purchased recently etc.

 Most loyalty program managers see the database of loyalty card users
as potential high value customers

 Building and updating your customer’s database constantly, will help

companies communicate with the customer better resulting in a
satisfied and loyal customer
Company Disadvantages
 Huge cost of promotion & implementation
 More efforts/ resources removed from the other marketing
projects
 Difficult to get out of such schemes (When they don’t work)
 In case where the scale and customer satisfaction is not achieved,
the scheme could be an expensive failure
 May not give the true picture about customer loyalty (Customer
may switch the brand after retrieval of minimum accumulated
points)
 Customer information may be partial or misleading
 Company should not loose its profit to Bonus & Rewards
 Risk of falling foul on Consumer Privacy Act
Conclusion

 Loyalty Cards have good potential to give an accurate data through

CRM on customers buying behavior, which is useful for various
Researches, New Product/service development, Strategy &
Planning

 Loyalty cards alone cannot make consumers loyal towards a

particular brand –Many other factors like: Product/service quality,
Price, availability etc. also contributes in customer retention
Thank You.