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What we do
It can cost five to seven times more to acquire a new customer than it does to retain an existing one. “High loyalty” customers who demonstrate affinity for a brand buy more, buy more often and complain less than all other types of customers. However, many companies continue to make the common mistake of not taking steps to retain current customers.
Studies have indicated that Top 100 brands, on average, face a 46% reduction in customers with “high loyalty” potential over the course of a year. Generally, customers switch to competitor products for many reasons, including value perceptions, lack of service, novelty or price discounts. In this environment, loyalty and reward programs have become even more important. However, by creating traditional loyalty programs based upon typical mechanics of accruals and redeeming, retailers might lose up to 30-50% of net profit. Furthermore, so many retailers now offer loyalty programs, such as reward cards, that they no longer are a key factor in the selection of a particular brand. Many companies today could benefit significantly by taking more intelligent, original and personalized approaches to the design or re-engineering of their customer loyalty strategies.
Studies have indicated that Top 100 brands, on average, face a 46% reduction in customers with “high loyalty” potential over the course of a year. Generally, customers switch to competitor products for many reasons, including value perceptions, lack of service, novelty or price discounts. In this environment, loyalty and reward programs have become even more important. However, by creating traditional loyalty programs based upon typical mechanics of accruals and redeeming, retailers might lose up to 30-50% of net profit. Furthermore, so many retailers now offer loyalty programs, such as reward cards, that they no longer are a key factor in the selection of a particular brand. Many companies today could benefit significantly by taking more intelligent, original and personalized approaches to the design or re-engineering of their customer loyalty strategies.
Loyalty Program Strategy
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Loyalty Analitycs & Insights
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Outstanding Customer Experience
- Evaluate an entire customer journey based on big data, observations and surveys
- Determine the critical omnichannel touch points and interaction problems
- Develop "magic pills" and personalized offers in order to decrease or eliminate customer pains, including the utilization of loyalty program tools
- Develop social interaction tools with gamification, contests and other non-financial approaches
- Advise on the formation of social groups in social networks and bots to manage attitudes and change consumer behavior
What you get
Loyalty program strategy and effective basic reward mechanics
IT requirements for IT loyalty platform
Customer insights, microsegments and behavioral patterns
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Personalized campaigns for attracting and retaining customers
Outstanding customer experience
"Magic pill" and personalized offer ideas for decreasing or eliminating customer pains
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Our experts
Alexander ShubinDirector of Retail Practices, Eastern Europe and AsiaAlexander Shubin brings extensive expertise in the development and execution of retail strategy, expansion and international marketing. Founder and Principal of MyRetailStrategy Partners, Alexander holds a doctorate in Strategic Marketing and an EMBA in Strategic Market Development from the Stockholm School of Economics.
Alexander is a forward thinker in the spheres of FMCG (fast-moving consumer goods) and retail who has achieved industry recognition for supervising large projects which have delivered significant results. He is author of the book, “Business Models of Retail Companies: How to Compete with ‘Giants’”, about what it will take to compete in retail. |
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Impactful idea
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Why loyalty reward programs don't workThe problem with loyalty management is that companies can spend too much on their loyalty programs often at the expense of focusing on what business they do, what products they produce and what services they provide to their customers. Many loyalty programs are focused on retaining customers and increasing the number of repeat purchases but not on creating long-term mutually beneficial relationships that are the basis of loyalty.
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Consider loyalty programs that are developed on the basis of reward cards (essentially deferred discounts) so that, in order to receive discounts, the buyer must return to the store or company. Imagine such a reward system being established in family relationships. What kind of “loyalty” are we talking about here? True loyalty can be assessed with just one simple indicator, the recommendation index NPS, for which only one question must be answered: “Would you recommend …?” Try to conduct such a survey among bonus card holders and you will see a significant gap between the number of buyers who make repeat purchases and the number of truly loyal customers which are those who would recommend the brand.
Reward cards can bring great benefits in that they allow retailers to personalize information about a customer, including shopping basket and consumer behavior details, which is a positive foundation for the formation of “real” loyalty programs. The most effective of such programs first take into account key loyalty factors, proposed value, satisfaction and relationships. Constant analysis and adjustment of the proposed value for customers and the appropriate management of negative episodes may have a much greater effect on the level of loyalty than various bonuses, gifts and contests. One boorish treatment or unreasonable price increase can permanently ruin a client relationship and eliminate all your efforts and investments in it. Managing this is one of the key goals of a loyalty program.
Today, retailers have a lot of tools and capabilities, based on big data and AI, for analyzing customer behavior and reactions in order to turn bonus programs into genuinely loyal customers through a focus on developing relationships. Significant opportunities lie in social networks which can be utilized to monitor and respond to changes in customer behavior. One early example of the effective use of social media to promote customer loyalty was Starbucks’ blanket invitation to customers to volunteer their ideas about how the company could improve and to suggest other products and services they’d like to see introduced. The program, called MyStarbucksIdea, not only invited submissions but also encouraged thumbs-up or thumbs-down reactions to the ideas from other participants, really taking advantage of social interactivity.
Reward cards can bring great benefits in that they allow retailers to personalize information about a customer, including shopping basket and consumer behavior details, which is a positive foundation for the formation of “real” loyalty programs. The most effective of such programs first take into account key loyalty factors, proposed value, satisfaction and relationships. Constant analysis and adjustment of the proposed value for customers and the appropriate management of negative episodes may have a much greater effect on the level of loyalty than various bonuses, gifts and contests. One boorish treatment or unreasonable price increase can permanently ruin a client relationship and eliminate all your efforts and investments in it. Managing this is one of the key goals of a loyalty program.
Today, retailers have a lot of tools and capabilities, based on big data and AI, for analyzing customer behavior and reactions in order to turn bonus programs into genuinely loyal customers through a focus on developing relationships. Significant opportunities lie in social networks which can be utilized to monitor and respond to changes in customer behavior. One early example of the effective use of social media to promote customer loyalty was Starbucks’ blanket invitation to customers to volunteer their ideas about how the company could improve and to suggest other products and services they’d like to see introduced. The program, called MyStarbucksIdea, not only invited submissions but also encouraged thumbs-up or thumbs-down reactions to the ideas from other participants, really taking advantage of social interactivity.
Insights & Thoughts
Loyalty programs require creativityAnd while participation in loyalty programs has been growing over the past six years, usage of them hasn't. Most loyalty cards never actually get used at all...
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Walmart kicks off 3D online shopping Walmart is enhancing its new website with two new services that will streamline how customers browse and make purchases across its home furnishings offering
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Strategies To Maximize TPMTrade marketing is typically the single largest line item on a company’s income sheet, but how do you know if your trade marketing is effective?...
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