2. Contents
What is a loyalty programme?
Loyalty Success Factors
Introduction to Retail Loyalty Programmes
Loyalty Programme Structure Secrets
Loyalty Programme Promotions - Driving Sales
Loyalty Market
Summary

4. What is a loyalty programme?
 The systematic collection of customer data in return for rewards or
benefits, often used to give customer additional privileges or services to
best/loyal customers
Opportunities
• Understand customers
• Give discounts to best customers only
• Adjust real price for certain customers
• Use data to negotiate with partners

5. Loyalty Programme Options
Points
Earn points and redeem
for rewards
Good
-Offers control
-Customer understands
-Lower cost
Bad
- Points cost are knowledge
- Accrued liability
Discount
Immediate discount for
presenting card
Good
-Easy and instant
- No liability
Bad
- Discount has to be large
(+10%)
- No control
Privilege
Rebate
Reward spend over
time
Good
-Easy to manage
Bad
- Little control
- Easy to copy e.g.
stampcard
- Little emotional connection
Krisflyer
Earn points and redeem for rewards plus tiers of privilege
Bad
Good
- Low spend customer disillusion
-Privileges lead to loyalty
- Competitors can match
-Offers control
-Customer understands

6. What is a privilege program?
Tiers of benefits over and
above points for miles.
(SpiceJET)

7. Loyalty Programme Options
Coalition Model
Hybrid Model
VIP Privileges and private
sales for spend over 60000
Rebates for spend
over 12000
Lucky Chances for spend
Up to 12000
Single Owner
Coalition

8. Bank
Data
Nets & Credit
Data entry
Application Form
name
NRIC
email
mobile
age
family
122132
Customer card
122132
Marketing Planning &
Promotion tactics
Analysis services
Transaction
Database
Customers

9. Considering a programme?
Steps to launch
Planning
1. Feasibility audit
2. Customer research
3. Financial planning
4. Develop programme model
Implementation
1. Implementation – develop systems/communications
2. Launch
Management (operations)

11. Balancing Loyalty Investment Against Return
Loyalty Programme is a cost
of learning about customers
Additional
Customer Profits
>
Loyalty Programme
Investment
+
Loyalty Promotions
Costs

12. Critical Success Factors for Customer Loyalty
Target
Audience
Degree of
Participation
Delivery of
rewards
Getting
Customers to
join
Brand
Positioning
Choice of
rewards
Liability
risk
Competitor
Strength
Customer
Loyalty
Drivers
Generosity
Investment
Cost
Sales
Focus

13. Redeem Program
Barcode card Hybred model
Instant privileges
Discounts for members
Birthday privileges
Points

14. How is it successful?
Getting
Customers to
Join
Easy – free
membership
Target
Audience
Regular shoppers
Degree of
Participation
High
Delivery of
Rewards –
rebate vouchers
(cash effectively)
Brand
Positioning
- for everyone
-Birthday treats
-Members only
Choice of
rewards
Choose from
whole store
Liability
Risk
High but also
High redemption
Competitor
Strength
n/a
Customer
Loyalty
Drivers
Use membership
To make offers
Generosity
Very generous
rebate up to 20%
Investment
Cost
High
Sales
Focus
Very High

16. Loyalty Programme Structure Secrets
Data Collection
FMCG
Partnerships
8
Brand Extension
1
Value
Proposition
2
3
7
6 5
Loyalty Programme
Mechanics
4
Clubs within
programme
Sales Promotion
Integration
Investment
Ratio

17. Loyalty Programme Structure Secrets
1
Strategy
 Capture all data relevant to the customer relationship
Data Collection
Lifestyle
Lifestage
RFM
Basket
Attitude
Shop
Habit
Geo
-Dem
Interest
Data Warehouse
Segmentation Engine
Segmented Promotion Marketing
Approach
 Use Loyalty cards to capture all customer transactions,
point redemptions, online transactions and calls to any
touch-point
 Segment the data according to shopping behavior,
lifestage, lifestyle and other differentiating factors
Advantages
 Understanding of customer behavior, identify valuable
customers and communicate one to one with customers
creating a more personal relationship

18. Application form is the single
most important point of data
capture
a)Gather all data in form
b)Gather data incrementally
using electronic channels
Key Information
-Contact
-Age/Gender
-Family/No family

19. Loyalty Programme Structure Secrets
Primary Retail Segmentation Approaches
 Recency, Frequency, Value (RFV): e.g High Value Frequent
1
Data Collection
Shoppers, Low Value Frequent Lapsed
 Lifestage: e.g. Young Adult, Young Family, Older Family, Empty
Nesters
 Lifestyle: e.g. Organic, Fast Food, Home Cooking, TV Diners, Ethnic
Dining based on basket
 Internet Shopping: e.g. Trial, Cautious Developing, Everything
Recency , Frequency, Value Segmentation
Frequency
Visit
Recency
Frequency
Visit
Visit
Time
Value $
Today

20. Loyalty Programme Structure Secrets
 Basket analysis to get shopper type
Price sensitive
Health Conscious
Low far milk
Natural
Yogurt
Eco-Washing
Powder
Basket <10
items
Lowest price
cola
Organic
Carrots
Brown Rice
Brown Bread
New organic
chocolate
Current
Basket
Lowest price
noodles
Uses 2-1
offers
New large value
biscuits
No fresh items
Cheapest
washing powder
large format
Recommended
46 other shopping types – tv dinners, daily divers, traditional,
ethnic explorers, meat feast, vegetarians etc

21. Loyalty Programme Structure Secrets
2
Value Proposition
Chance
Savings
Privileges
Strategy
 Develop a research proven value
proposition for the loyalty programme
underpinned by loyalty drivers
Approach
 Value proposition has emotional and practical
appeal and the Loyalty programme aims to
deliver the proposition in the customer
experience.
Advantage
 Customer benefit is clear and in-line with a
customer-focused organization
 Boots research showed that customers see
programme as ‘more indulgent, different,
generous and offers better rewards’

22. Loyalty Programme Structure Secrets
3
Loyalty Mechanics
Strategy
 Define the right loyalty programme mechanics to
minimize cost while driving customer loyalty.
Approach
 Points because it offers them greater control to
stimulate spend, but use in different ways.
 $1=1pts use points for rewards: voucher
redemption integrated with sales promotions.
Advantage
 Greater control while driving customer loyalty.

23. Lucky Chance Card
Easy to launch
No liability
Develop card mgt experience
Capture all details and transactions
Rebate Card
Reward only when customers hits
threshold spend . Tier rebates at
different reward levels
1200 get 60 (5%)
2400 get 240 (10%)
6000 get 900 (15%)
Rebate Card
& Privileges
& Target of 1
Layer on privileges for best
customers.
Target every customer with
individual statements.

24. Loyalty Programme Structure Secrets
4
Investment Ratio
Normally 1-3%
reward
Strategy
Understand investment margins to
determine reward investment and frequency
ratios for the market.
Approach
Average investment is between 1% - 3%.
Some retailers are offering under 1% to keep
cost down.
Advantage
Determining the right level of investment is
balanced against the rewards that motivate
loyalty drivers.

26. Loyalty Programme Structure Secrets
4
Investment Ratio
Spend for 1pt
Value of 1pt
Total Store Sales
Sales on Card (80%)
100
1
1,00000
80000
Points Earned
800
Value Points Earned
800
Points Redeemed
400
Value Points Redeemed
400
Investment Ratio
0.4%

27. Reliance – opportunity to earn at hundreds
of retailers
 Reliance card offers a chance to earn
with a large number of retailers in
India.
 Comes in smartcard form or keyring
 Reward rate can be chosen by
individual retailer .
A customer
consolidating their
spend across the
members could earn a
significant amount of
reward every month

28. Loyalty Programme Structure Secrets
5
Sales Promotion
Integration
Strategy
 Data collected drives ALL marketing activity – it is not
operated in isolation.
Approach
 Use data to target sales promotion activity
 Lifestage, Shopping Habits, Location
 Always offer loyal customers something extra!
 Target sales promotions by customer segment – mass
marketing costs have been greatly reduced.
Advantage
 Greater ROI from all marketing activities

29. Loyalty Programme Structure Secrets
6
Clubs within
Programme
Strategy
 Develop Clubs within the loyalty program that use
knowledge gathered from grocery purchases
Approach
 Create Clubs for key interest groups where product
marketing efforts can be targeted and incremental
purchase is easy to stimulate
Advantages
 Create greater relevance for Club members and reduce
cost of generating incremental spend

30. 7
7
Brand Extension
Strategy
 Extend brand using new services
Approach
 Develop strong own-brand products new nongrocery services
 Leverage grocery database to offer re-branded
services
Advantages
 More reward earning/redeeming opportunities
 More data from partners and greater marketing
reach

32. Loyalty Programme Structure Secrets
8
FMCG Partnerships
Grocery Retailer
Customer
Strategy
Offer FMCG companies access to
customer knowledge.
Approach
Offer FMCG brands that pay a fee
access to customer knowledge that
allows the brand to plan promotions
that reach the correct target audience.
Advantages
Stronger offers to the right audience
create better returns.

33. Loyalty Programme Structure Secrets
Data Collection
FMCG
Partnerships
8
Brand Extension
1
Value
Proposition
2
3
7
6 5
Loyalty Programme
Mechanics
4
Clubs within
programme
Sales Promotion
Integration
Investment
Ratio

35. Promotions
1. Statements
2. Personal shopping lists
3. Geo-targeting
4. Events
5. Layered promotions
6. Regular communications

36. Loyalty Programme Promotions - Driving Sales
1. Statements - online/offline
Strategy
 Use data collected to personalize vouchers/coupon offers and upsell
Approach
 Statement types are personalized based on shopping habits





RFV
Lifestage
Shopper type
Lifestyle
Shopper Type models
Advantages
 Increased response rates compared to standard
 90% to vouchers
 30% to cross-sell/upsell

37. Loyalty Programme Promotions - Driving Sales
2. Shopping lists – online/kisoks
Strategy
 Use data collected to personalize basket when repeat shopping
Approach
 Can make recommendations based on basket
 Slip in the up-sell offers
Advantages
 Personalization offers a tested formula for increasing response/redemption rates

38. Loyalty Programme Promotions - Driving Sales
3. Geo-marketing
Strategy
• Store catchments areas in
overcrowded markets need to be
defended from competitors
Approach
• Use loyalty program data to run
targeted promotions on areas of
highest competition
Advantages
• Powerful threat defense only for
customers in risky areas
Store
Competitor Store
Store Catchments
Promotion Target Area

39. Loyalty Programme Promotions - Driving Sales
4. Events/Product Sampling
Noodle Sampling Events are a regular
features for Reliance One Members
Strategy
 Most valuable customers are invited for store
evenings, where specially hosted events are
put on around themes such as Noodle,Coffee
and cheese.
Approach
 High quality store presentation and grocery
expertise allow retailers to create a conducive
environment for offering high end grocery
products
Advantages
 Meet and reward the best customers in
person, while extending sense of privilege that
is popular in all markets.

40. Loyalty Programme Promotions - Driving Sales
5. Layered promotions
Strategy
• Offers attract interest and offer
incentives for immediate purchase
Approach
• Types of incentives
–
–
–
–
2.Personalised shopping list
3. Rebate type vouchers
4. member prices
5. Free gifts
Advantages
• Customers see lots of opportunity
to participate – right offer for right
person

41. Loyalty Programme Promotions - Driving Sales
6. Regular communications
Tips
• Weekly emails for grocery
but with different themes
each week
• Offers are rotated
• Messages are
personalized
• All Opt in email

42. Programmes offer opportunity to get to know
customer – that’s cost of knowledge that must be
recovered
Opportunity comes from using the data – to drive
more spend - personal shopping lists
Customers enjoy being part of programmes if they get
privileges of whatever value therefore work hard to
give them value