1. Why loyalty? 3
2. 10 steps to building
your business case 5
3. Overcoming obstacles
and objections 6
4. Pilot programmes 7
5. The cost of a
loyalty programme 8
6. In Summary: Your quick pitch
to the CEO and SMT 9
The customer landscape is changing; and as a result it is becoming
increasingly difficult to keep your customers loyal. But that’s just half of
the problem, if on top of that you need to convince your CEO and Senior
Management Team (SMT) why your customer experience and loyalty
need to be invested in.
With so many options available to customers, it’s becoming harder for
them to differentiate between you and your competitors – especially if
you’re all offering similar products at similar prices. And as their options
increase, customers are becoming very savvy, with higher demands
There’s increasing competition coming from angles you wouldn’t expect;
more and more brands are diversifying into new services and products,
think Homebase – a DIY store - selling bikes, and supermarkets selling
homeware. Simply offering efficient service is no longer enough.
The importance of customer loyalty
Loyal customers (those who visited
stores at least 10 times) account for
about 20% of a company’s customers.
That 20% drives 80% of
your business’s total revenue, and 72%
of total visits to your business.
(Source: Five Stars)
46% of customers
admit to spending more due
to a loyalty programme.
(Source: Total Research Corp & Custom
It is six to seven
times more expensive to
acquire a new customer
than to keep a current one.
(Source: Bain & Company analysis)
When you think of it like that, why
wouldn’t you need a loyalty strategy?
There are countless benefits to investing in a loyalty programme and
it is important that you focus on those that your CEO and SMT will
· Keep coming back, and will spend more over their ‘lifetime’ with
· Are likely to purchase more expensive products. Research states
loyal customers spend 13% more during each transaction.
(Source: Forrester Research)
· Are the best advocates for your brand - your ‘Superfans’ will
recommend you to their friends and families. Word of Mouth is one
of the most powerful marketing tools.
· Shop more often. There are 20% more transactions from members
of a loyalty programme. (Source: Forrester Research)
· Are more likely to embrace new initiatives.
· Are more likely to attract new customers (as well as the referrals from
your existing loyal customers), and so contribute significantly to your
customer acquisition strategy.
· Encourage customers to purchase in order to be rewarded, rather
than expect discounts.
· Provide you with valuable customer data which can be turned into
actionable insight. You can track their engagement with you across
multiple touch-points, which then allows you to refine and target your
marketing efforts; for example creates relevant content that makes
your brand more ‘sticky’ to the customer.
· Help you track customer patterns and behaviours. For example you
may be able to identify when a customer is about to leave you and
take action to retain them.
· Enable you to identify where improvements are needed, either to
your service or products.It takes 12-20 customers to
replace the value of a loyal one
Get to know your customer base. Some
of our partners’ loyalty programmes
have up to an 80% penetration rate!
Imagine being able to recognise and
understand 80% of your customers and
the impact this could have on all areas
of your business?
10 steps to building
your business case
It’s clear how important loyal customers are, and in turn how rewarding this loyalty benefits your business.
Now we’ll explore how to build a business case to convince your CEO and SMT.
What are your objectives? Be clear on exactly what you aim to
achieve, how you will achieve it and why now? Continually refer
back to what success looks like for your brand.
Prove the effect the programme is expected to have on profitability
and the customer base. Ensure that any claims you make are well
supported with evidence- we’ll explore this further below.
Take your existing customer data and show how a loyalty
programme can grow your business. For example, if you find you
have customers who repeat purchase the same products, a loyalty
programme could stretch their spend to buy new items. Or, if you
have lots of one-off customers, loyalty rewards could keep them
Demonstrate that what you’re proposing has been fully researched.
Show how you’re responding to your customers feedback and
therefore needs. You could conduct a survey of customers to gain
insight on what they want out of a loyalty programme and how they
are likely to respond to it. If your customers are expressing a huge
desire for a programme, it can only strengthen your case.
Use case studies and examples from others in your industry to show
how well loyalty works for them.
Work with colleagues from all areas of the business (finance,
marketing, merchandising etc.) to get input and support across the
organisation. They can act as a sounding-board for your initial
ideas, and you can also highlight your collaboration with other
departments when presenting your business case.
Clearly explain the programme structure and how it will work, but
keep this on a high level. Explain who will need to be involved and
what it may cost, but show what the ROI will be.
Reassure your SMT by committing to reporting back on the
programme at all stages. Agree how this will be done, at what
stages, how often and in what format. Don’t forget to discuss the
risks, and how you will overcome any potential negative results. If
you can show you have a plan to tackle any potential issues you are
much more likely to get the SMT’s buy in.
Be prepared to answer difficult questions and justify how a loyalty
programme would work for your business - see the next section for
Keep it simple! Whilst supporting your business case with data and
examples is vital, don’t overcomplicate things. Don’t use jargon,
the SMT will not understand or engage with marketing speak; they
want to see numbers and ROI projected in plain English.
particularly the age-old argument that a loyalty programme is often
unnecessary because it’s just a way of spending money to reward
customers who would probably have spent anyway.
We often find that when we keep a control
cell of highly engaged customers from a
campaign – guess what, they don’t spend!
The benefits of a loyalty programme can initially be felt by you as
you begin to gather vital information about your customers that will
feed into everything your business does: from how your marketing
budget is spent; to the products/services you offer; right through to
merchandising or how your front-line staff communicate with customers.
As we mentioned in the building a business case section, the key to
avoiding sceptics in the first place is to work with all departments.
Make sure you educate everyone from the beginning on how
important customer loyalty is and the benefits it will bring to your
business. Your colleagues won’t want to find out about the new
programme once it’s all in place, and plus they might have valuable
ideas to input!
Here’s three key ways to overcome
the tricky questions:
As they say, prevention is better than cure. Identify the potential
sceptics in your organisation – find out their concerns and address
them, talk them through your plan and how it will benefit the
organisation. This way you’ll hopefully have tackled (and have
answers for) the toughest questions before making your pitch.
Be prepared to use your data, research and examples of successful
loyalty programmes – these are brilliant tools for proving the value of
Run a pilot programme to test and learn.
Pilot programmes are a great way to test your idea without the cost of
a full-scale programme, and allow you to present your CEO and SMT
with real results. We often work with retailers on pilots to explore the
value of their customer data. Here are our top tips for running a pilot:
· You don’t need to launch a full blown customer loyalty programme.
Budget supermarket Lidl recently trialled a customer loyalty
programme in just one region (Scotland), enabling them to explore
whether loyalty works for them before they make a decision to roll it
out to the rest of the UK.
· Pick something that requires the least amount of resource and
Regularly report on how the pilot is going
· Test and refine the results to improve performance.
· Ensure the data is simple and outlines exactly what the findings are,
and highlight the key points.
· To convince your SMT or CEO you need to prove the ROI for the time
and resources spent on the pilot.
Demonstrate the outcomes of the pilot by
comparing the before and after results
· Highlight how it affected customer engagement and sentiment; e.g.
run a brief feedback survey or undertake social media listening.
Recognise any pitfalls
· What were they?
· Why did they happen?
· How can they be overcome?
Think beyond the pilot
· You’ve demonstrated that this works, but what would you do next?
Consider how you would evolve the programme and provide a plan
of how you plan to do it along with costs and the expected ROI.
The cost of a
Customer loyalty should be viewed as an investment, not a cost. We
have found for some partners that for every £1 invested they get £6
return- quote us on this if you like! Does this seem a lot to invest given
the amount of data you will now be able to collect to start driving the
desired behaviours of stretching spend, increasing frequency and
consistency of spend and to deliver a retention strategy?
Develop a comprehensive financial plan to cost up your proposal
with potential expenses and expected sources of revenue, including
increased physical and online visits, increased spend, referrals and
other behaviour changes likely to increase profit. Customer insight and
loyalty programme providers like Ikano Bank can package this all up
for you to show the costs vs. projected ROI.
Here are some of the costs associated
with creating a loyalty programme:
The platform to used design, manage and report on your loyalty
programme. You could choose to purchase an off the shelf solution,
which could require training investment and staff resource; or you
could opt to work with specialist loyalty and insight providers such
Promoting your loyalty programme is key to its success. You need a
clear strategy as to how you will consistently talk about your loyaty
programme as well as considering your ‘Welcome’ and retention
These will vary in cost, and can be selected based on your budget.
For example, will you offer limited-time discounts for customers
who hit a certain spend threshold; free gifts; or different rewards
for different tiers of customers? Our clients all operate their
programmes differently, but using their customer insight we have
helped them to identify the most suitable rewards.
Your quick pitch to the CEO and SMT
· On the back of the data-driven activity you can measure how
successful a campaign/loyalty programme has been.
· Data lets you determine for every £1 invested what the ROI’s going
to be - remember that we find on some accounts that for every £1
invested, some of our partners are getting a £6 return - these are
the numbers you need to present.
Show them examples of success
· Give them an idea of what could be achieved and what success
could look like. For example, show case studies of campaigns who
have achieved similar goals to those you are setting; whether this is
to gain new customers, retain existing ones, or stretch spend.
Browse online for examples, or take a look at our website for case
studies on our partners’ success.
If they’re still sceptical suggest a pilot
· A small scale project that can be evaluated to prove its
worth and that can be scaled up.
Help them understand why they’re in
business (to deliver shareholder value)
· In order to deliver shareholder value (i.e. profit) they must put
the customer at the heart of everything.
· Loyalty programmes give the customer a value exchange -
you receive their data to better inform your business decisions,
they receive relevant benefits.
The benefits of a loyalty programme
· Increased data collection.
· Satisfied, long term customers who refer others to the
business they love
· Regular customers stay longer, buy more and more often
= increased profit.
Ikano Bank is awesome with data,
but even better at relationships.
And that, ultimately, is what
turns customer loyalty into
a business’s success.
? Do you want to build a new loyalty or
customer engagement programme?
? Do you want to improve an existing one?
? Or, do you simply want to turn customer
data into actionable insight?
No matter what stage you are at with your customer
engagement we have the intelligent, intuitive insight to
help you achieve ROI and drive incremental revenue:
Wherever you are with customer
engagement, we have the
intelligent, intuitive insight to help
you achieve greater ROI and
drive incremental revenue.
For more information please contact:
07551 671 825
0115 850 3644