Loyalty Programs - INDIA

CONTENTS

INTRODUCTION
Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behaviour Entitles either discount on current purchase or allotment of points for future use or special gift vouchers A way to collect data about the customers.

Why do we need Loyalty program?

To not just satisfy customers but delight them Retain best customers , make good customers better Reconnect lapsed users A primary way to interact with customers Research findings have also supported this realization that it costs up to five times more to acquire a new customer than to retain an existing customer and a 5% reduction in the customer defection rate can increase profits by 25% to 85% depending on the industry. If a brand sells 1,000 crore units a year, it needs to know who its loyal customers are and who are the new customers that are yet to develop loyalty towards the brand. May be, 20 per cent of the buyers have generated 80 per cent of the sales for the brand. So it becomes essential for the brand to reach out to its top 20 per cent customers.
4

Benefits to customers
Monetary Benefits
After earning certain points on the purchase customers can avail the discount which is being awarded in their points range Example:Planet Fashion loyalty program
Lifetime Purchase 0-4k Silver Gold Platinum 4-12k 12-20k >20k

Points
0% 2% 4% 6%

Cut off for first redemption : 200 Points A customer has to Migrate to Gold slab, i.e. spend 13k for accumulating

200 points and become eligible for

redemption

Benefits to customers
Non-Monetary Benefits
Special gift vouchers Example:Tommy Hilfiger Club
No entry barrier
More focussed on giving better shopping experience rather than monetary benefits No points program and no slabs Surprise gifts anytime to make the customer feel special First invitees during sales and brand parties This program helps in data enrichment and building customer base

Case Study:
Eligibility Criteria For Enrollment And Upgradation To Different Tiers

Tier Red
Blue Green

Cumulative Annual Purchase >=Rs.500 and <=Rs.5000 >=Rs.5000 and <=Rs.15000 >=Rs.15000 Rationale behind point distribution Blue Tier :- Lower than 2% does not remain an attractive incentive Green Tier :- Other benefits and rewards offset the need to increase points percentage linearly
7

Heads
Points

Red Tier
Offer no points

Blue Tier
Offer 2% points on sales Frequency :- Every purchase

Green Tier
Offer 4% points on sales Frequency :- Every purchase Collection, Sale, Brand and Promotion updates Regular updation of point status after transactions and before expiry Home delivery for altered garments Exclusive sale preview Stylist wardrobe makeovers

Benefits

Collection, Sale, Brand and Promotion updates

Collection, Sale, Brand and Promotion updates Regular updation of point status after transactions and before expiry Exclusive sale preview #

Rewards

Nil

Nil

Gift Vouchers of Rs.1500 on reaching milestone of Rs.30,000 Birthday Coupons Cross category coupons Notification about season launch 8-9 (2 EOSS, 2 Season launches. 2 Promotions, 1 Cross category#, 1 Birthday coupon, 1 Brand Update)

Campaigns

Welcome Back Coupons

Birthday Coupons Cross Category coupons

Annual Interactions

8 (2 EOSS,1 Welcome back#, 2 Seasons launches, 2 Promotions, 1 Brand Update)

8-9 (2 EOSS, 2 Season launches, 2 Promotions,1 Cross category#,1 Birthday coupon, 1 Brand Update )

Growth Opportunities

SWOT Analysis
S
Consistent flow of data Flexible and responsive to sales New technology integrating data and sales

W
Inaccuracy of data Resistance for technology in unorganized sector Vulnerable to competitive sector

O
Expansion of organized sector Viral marketing programs Focus spending on priority programs that drive revenue

T
Competitive giants with larger budgets

INTRODUCTION

11