Customer

Loyalty &
Loyalty
Programs
Presented by – Group 3
Namendu Shubam (23XPGDM12)
Sankalp Mukherjee (23XPGDM19)
Saurabh Kumar (23XPGDM20)
Shubham Tiwari (23XPGDM22)
Varishth Trivedi (23XPGDM23)
What is Customer loyalty?

Customer loyalty is a measure of a customer's likeliness to do repeat

business with a company or brand.

Factors influencing customer loyalty –

• Customer satisfaction
• Positive customer experiences
• The overall value of the goods or services a customer receives from a
business.
 Customer loyalty infographics

Committed customer
1 Loyal to brand, product and services. Repeat purchases and promotes
Levels for customer loyalty
the brand.
Satisfied customer
2 Happy with the products or services that they have received from a
company. More likely to repeat services.
Passively loyal
3 Satisfied with a company's products or services, but they are not
particularly passionate about the brand.
Regular buyer
4 Makes repeat purchases from a business. They may be passively loyal,
not passionate about the brand.
No loyalty
5 Does not have a strong relationship with a brand or business. They
may purchase from the business on occasion.
 Customer loyalty Approaches

Customer Loyalty

Behavioral Loyalty Attitudinal Loyalty

Measured by reference to Measured by reference to
customer purchasing behavior. components of attitude such
Two aspects to this approach - as beliefs, feelings and
1. Customer activity purchasing intention.
2. Spending on such activity
RFM Metrics

Used by companies to measure the

behavior loyalty.
Higher the score on this metric, the
customer is expected to be more
loyal.
Depending on the nature of your
businesses, one might increase or
decrease the relative importance
of each RFM variable to arrive at
the final score. E.g.
In a consumer durables business,
the monetary value per transaction
is normally high but frequency and
recency is low. In this case, more
weight is given to monetary and
recency aspects rather than the
frequency aspect.
Customer loyalty model
Two-dimensional model
 Customer loyalty cycle
Customer
acquisition
Satisfaction Satisfaction

Customer
Customer Retention
Development

Satisfaction Satisfaction

Customer
commitment
 Building Customer loyalty Programs

Asking the ultimate Aim for higher

question response rate

Selecting the Report and Discuss

adequate to measure NPS Data

Avoiding the
Learn and
confusion between Improve with
scores data
Ensure accuracy and Validate scores that
measure link to behavior
Metrics to measure Customer Loyalty

NPS score, was developed in 2003 as a way to

measure how well a business or an
organization treats its clients or customers.
Net Promoter Score (NPS)

Measuring your Net Promoter

Score gives you a number
you can compile and track
regularly, not only for a whole
company but also for each
business, product, store or
customer-service team. You
can also track it for customer
segments, geographic units or
functional groups. It helps
everyone focus on the twin
goals of creating more
promoters and fewer
detractors. It is, quite simply,
your Customer balance
sheet.
 Customer segment based on NPS score
Score of 9-10.
Loyal, enthusiastic customers and
1 Promoters account for more than 80% of the
business.

Score of 7-8.
2 Passives Currently satisfied with the service and
account for about 30% of the business.

Score of 0-6.
Unhappy customers.
3 Detractors They lead to high churn rate and
diminish company reputation.
 NPS advantages

1 Simplicity Adaptability 2
Keeps the burden on easily be put to work
customer low. in a wide variety of
business settings
Link with
3 Ease of Use financial 4
Easy to conduct and
outcomes
Higher score, higher
interpret the result satisfaction, more
growth

Quick Follow
5 Growing use 6
Up
"close the loop" by Major companies have
identifying the adopted and developed
customer's concern various models.
Feedbacks using NPS
 NPS and Growth

NPS Prism Result

Benchmarking system NPS explained roughly
revealing the”Why” 20% to 60% of the
behind the NPS score. variation in organic
growth rates among
competitors

Correlation Conclusion
Higher growth for
Correlated with growth
companies that have
measure, such as revenue
widespread adoption of
service and product
 Customer loyalty Program Types

Points Program Membership Cashback Subscription

Divide customers into Reward customers with Offer customers exclusive
One of the most common different tiers based a percentage of their discounts and benefits in
types of customer loyalty on their spending or spending back in the exchange for a monthly or
programs. Customers earn engagement. form of cash or credits. annual fee. This type of
points for making Customers in higher This type of program is program is popular with
purchases, redeeming tiers receive more popular with consumers businesses that offer
them for rewards such as exclusive rewards and who are looking to save recurring services, such as
free products, discounts, benefits. money on their everyday streaming services, meal
or exclusive offers. purchases. kits, and delivery services.
 Cost of Customer Loyalty
Setup Cost
Involves initial costs, such as
developing a program
structure, creating marketing
materials, and setting up the
necessary technology
infrastructure.
Marketing &
Promotion
Promoting the loyalty
program and acquiring new
members requires a
marketing budget.
Technology &
Software
Maintaining digital platforms,
mobile apps, or online portals
for customers to access their
loyalty accounts and rewards
can be costly.
Rewards &
Discounts
The cost of providing
rewards, discounts, and
other incentives to
customers is a significant
ongoing expense for loyalty
programs.
 Customer loyalty Programs Value
Encourages customers to keep coming
back by rewarding them for their
purchases. This can help businesses to
reduce customer churn and increase
customer lifetime value.
Encourage customers to spend
more money by offering them
rewards such as discounts, free
products, and exclusive offers.

Increased customer retention Increased Revenue

Increased Customer
Satisfaction
Better customer insights
Make customers feel valued The collected data can be
and appreciated. This can lead used to improve marketing
to improved customer campaigns, product
satisfaction and increased development, and customer
brand loyalty. service.