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Loyalty Programs – From Transactions to Transformation! Kartikeya Kompella – Lowe Lintas
The Era Of AcquisitionA growing economy with a large populationConsumption oriented growth boomingAcquisition the name of the gameRetention / loyalty – not a focus area for most But Loyalty Programs Are Important !
How Do Loyalty Programs Help ?If 80:20 is true and it is, then it’s too much of a risk to takeCompetition is eyeing your customers and vice versaCustomers can defer purchasesHappy customers – give good referrals
A Rash Of Loyalty ProgramsLoyalty programs - sprouting up at every cornerThe energy and focus required for loyalty programs - seem to be lackingLeading to largely undifferentiated programsAn evolutionary phase ?
Loyalty Programs Are StrugglingColloquy Loyalty Census : The average U.S. household has signed up for 14.1 loyalty programs, but only participates in 6.2 of them (44%).Low awareness - Lintas survey
Why Are Loyalty Programs Struggling ?They just don’t touch customers Transactional Predictable Lack relevance
Loyalty Programs DefinedLoyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially of benefit to the firmRepeat purchase – the proof of loyaltyHypothesis: The greater the joy a program provides, the greater consumers’ willingness to repeat purchases
Two Ways Of Running ProgramsThe transactional approach – build your programs around a set of transactions – points, birthday cardsThe transformational approach – build your program around the customer
If you ran a program for your most important customers …. ‘You’d want to enhance the relationship’
But Most Programs Are Scratching At The Surface
Transactional ProgramsMost programs in India are points basedA ready model can lead to incrementalism / lack of imaginationLends itself easily to transactions
Driving A Program Through PointsPoints – a welcome freebie but not a relationship enhancer in any mannerYou can spoil the best relationship by making it purely transactionalDriving a program only through points takes away the magic
Key QuestionIs the customer at the centre of this program ?
Build AppreciationCrossword does book readingsLevis runs a special edition clothes and accessories that money can’t buyTanishq factory visits help customers know more about the product and the craft
Help CustomersAdd a product to a service and vice versa An apparel brand can offer fashion stylist services An airlines can offer airport bookstore coupons
Random Acts of KindnessEveryone loves a pleasant surprisePredictability leads to expectationsNeed to be spontaneousHyatt’s Gold Passport – free breakfast or drinks on the house
Reward DisproportionatelyRedemption gives some joyMost points go unredeemedThe toss up - give points to all your customers and have a majority unredeemed or reward your main customers disproportionately
Keep Rewards AttainableIsta Hotels After the 4th visit, free upgrade to a suite After the 6th visit, free two day stay
Customer KnowledgeKnowing what a customer wants to buy and when can convert a sale into a serviceMake conversion or sale become more fun or rewarding
Pokisham –The Touchtel STD PCO Loyalty Program
The BackgroundThe STD PCO business in the early-to-mid 2000s was largely a BSNL monopolyTouchtel, an unknown private player had a tough challengeEven in booths where Touchtel managed to get a presence, loyalties – and revenues – were dividedWith margins more or less at par (with BSNL), a stronger differentiator was neededPokisham, a loyalty program for STD PCO customers was launched in this backdrop
Program ConstructPoints based program 1 basic point for a net billing of Rs.100 Greater reward for greater loyalty – 1.2 points for ‘exclusive’ STD PCOs Additional rewards for length of association – tenure bonus points in line with no. of years with Touchtel Bonus points for meeting specific targets/ achieving milestonesGreen token lucky draw – tactical promotions – win consumer durablesRed token lucky draw – win a carPrograms for the family – movies, drawing competition
Redemption and RewardsCustomers could redeem their points against a host of merchandise – jewellery gift vouchers, white goods, holiday packages etc.Additionally lucky draws conducted monthly and quarterlyProgram culminated with a gala ceremony where customers were invited with their families Rewards and prize distribution Lucky draw for one mega bumper prize Variety entertainment, food and beverage
What Made It Special ?Excitement, spontaneity was a part of the program designCompletely customer centricInvolvement across the team starting with Senior MgtFamily involvement brought in pride
Transactions To TransformationTwo step process Intent Customer knowledge
The FuturePrograms will continue to proliferateWhile companies will analyse data better – this may not help consumersAs more brands question their loyalty programs – programs will become more customer centric