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Six Critical Factors in Designing a Successful Loyalty Program More CRM and Loyalty Marketing Resources Loyalty Blog: http://www.customerinsightgroup.com/loyaltyblog/ eBooks: http://www.customerinsightgroup.com/white-papers Loyalty Workshops: http://www.customerinsightgroup.com/custom-loyalty-workshops Systematic New Loyalty Program Development: http://www.customerinsightgroup.com/systematic-new-loyalty-program Pinterest: http://pinterest.com/engagekeepgrow/ Who is Customer Insight Group? Customer Insight Group, Inc. leads the way in the evolution of how companies engage their customers, positively motivate them and earn their long-term loyalty. Our extensive client work is testimony to our depth of knowledge and ability to apply strategic insight and solutions to a wide variety of business objectives. Our team’s client experience includes: NHFA, Thomasville Furniture, The Maxim Group Carpet Franchise, Ashro, A&P, The Bon Ton, Crate & Barrel, Dick’s Sporting Goods, Edwin Watts Golf, GE Consumer Finance, Monroe and Main, Swiss Colony, Midnight Velvet, MySwingle.com, The Great Indoors, G.H. Bass, Golf Galaxy, Helzberg Diamonds, HSBC, Kohl’s, La-z-boy Furniture Franchise, MCI, Payless ShoeSource, Pier 1 Imports, Petco, Proflowers.com, Regis University, Ruby Tuesday, S&K Menswear, Sierra Trading Post, Stein Mart, Tommy Hilfiger, Ulta, as well as various other leading companies.
Citation preview
Six Critical Factors in Designing a Successful Loyalty Program
November 30, 2010 2010 Customer Insight
Group, Inc. All rights reserved.
2010 Customer Insight Group, Inc. All rights reserved.
Many Loyalty Programs Fail to Deliver Positive ROI
−Fail to develop loyalty opportunity.
−Quality of data is not properly addressed.
−Lack clearly defined and measurable objectives.
−Little or no attention is paid to employee skill sets and abilities; not ongoing training about the program and the benefits to the organization.
−Customers don’t understand how to earn rewards.
−Data is not leveraged to communicate to customers.
−Program was launched and went into “auto” drive.
−Change behavior rather than just reinforce it.
−Each year program results are analyzed to optimize
customer enrollment, retention, redemption and ROI.
−Build in time for testing and learning.
−Over-invest in coordination with users and across
functions.
−Link technology implementation priorities to business
objectives.
−Advocacy by senior management.
−Segment and tailor the program and offers.
−Demonstrate innovation and regular re-invention.
−Develop robust multi-channel communications to engage,
keep and grow profitable customer relationships.
−Understand customers and how segments differ from one
another.
What do the winners do right?Where do they go wrong?
2010 Customer Insight Group, Inc. All rights reserved.
Six Critical Factors in Designing a Successful Loyalty Program
Successful loyalty programs are strategic
Trade-offs are required to realize financial goals
Objectives must drive program strategy
Leverage best practices of industry leaders
Identity how program design delivers value
1
2
3
4
5
6 Align Loyalty Program with CRM
2010 Customer Insight Group, Inc. All rights reserved.
What is the primary business objective goal for customer impact?
FrequencyAverage saleLime time value
Are potential benefits compelling enough to achieve required customer impact?
Do customers know what it takes to earn rewards?
Benefit mix (combination of hard and soft benefits).
Strategies to move customers up in tiers/spend?
Is the value message simple to understand?
How can you deliver and reinforce engagement over time?
POS technologyFrontline trainingSocial media,FulfillmentMarketing support
What distinctive assets can be leveraged?
AssortmentReceiptsCommunityAffinity programs
How will these assets reshape economics and expected returns?
Successful Loyalty Programs are Strategic
SET REALISTICAND TARGETED
PROGRAM OBJECTIVES
MAKE RIGOROUS DESIGN TRADE-
OFFS TO ACHIEVE OBJECTIVES
LEVERAGE DISTINCTIVE
ASSETS
EXECUTE SKILLFULLY AND PERSISTENTLY TO
SUSTAIN IMPACT
Successful Loyalty Program
2010 Customer Insight Group, Inc. All rights reserved.
Six Critical Factors in Designing a Successful Loyalty Program
Successful loyalty programs are strategic
Trade-offs are required to realize financial goals
Objectives must drive program strategy
Leverage best practices of industry leaders
Identity how program design delivers value
1
2
3
4
5
6 Align Loyalty Program with CRM
2010 Customer Insight Group, Inc. All rights reserved.
Which Customers are Targeted
How and When Customers Are Enrolled
Qualification & Re-qualification Criteria
Value and Structure of Rewards
How Program is Communicated
•Breadth of appeal and participation
•Level of participation over time
•Types of customers participating
•Degree of offer-tailoring
•Types and degrees of impact
•Depth and consistency of data capture
•Level of frontline involvement
•Culture to drive sales or margin
•System capabilities
•Cost of program
•Long- and short-term measurement
•Exit flexibility/cost
Six Critical Factors in Designing a Successful Loyalty Program
Program Elements
Design Trade-offs
2010 Customer Insight Group, Inc. All rights reserved.
Six Critical Factors in Designing a Successful Loyalty Program
Successful loyalty programs are strategic
Trade-offs are required to realize financial goals
Objectives must drive program strategy
Leverage best practices of industry leaders
Identity how program design delivers value
1
2
3
4
5
6 Align Loyalty Program with CRM
2010 Customer Insight Group, Inc. All rights reserved.
Objectives Must Drive Program Strategy
Expand marketing channel with
direct capabilities
Provide direct, targeted messages and offers across customer base
Target all segments, with limited ability to target and tailor between segments
Collect data to beus used as a corebusiness asset
Collect customer data to make better decisions across the business
Target all segments, significant ability to target & tailor between and within segments
No explicit
strategy
Build strong relationships with growth segments
Develop strong relationships with most valuable segment(s)
Target growth segments only, significant ability to target and tailor between and within segments
Continue to pursue defined initiatives
Depth of Customer InformationLow High
Bre
adth
of
Cu
sto
mer
In
form
atio
nL
ow
Hig
h
BUSINESS OBJECTIVES
2010 Customer Insight Group, Inc. All rights reserved.
Six Critical Factors in Designing a Successful Loyalty Program
Successful loyalty program are strategic
Trade-offs are required to realize financial goals
Objectives must drive program strategy
Leverage best practices of industry leaders
Identity how program design delivers value
1
2
3
4
5
6 Align Loyalty Program with CRM
2010 Customer Insight Group, Inc. All rights reserved.
Expand marketing channel with direct capabilities
KEY AREASOF BENEFIT
POTENTIAL TYPES
OF IMPACT
CUSTOMER SEGMENTS
FUNCTIONS
Growthsegments
Maintain segments
Marketing Only
• Improved efficiency of markdown spend through direct targeting and understanding of promo response
“BROAD AND SHALLOW”
• Limited customer insights to drive core function business decisions.
• Increased customer loyalty.• Enhanced customer perceptions.• Targeted levers (e.g., conversion,
frequency, UPT, and markdown)
“NARROW AND DEEP”
• Robust customer insights drive business decisions
• Strategic decision support.• Strategic choice evaluation (e.g.,
impact of merch. changes on core customer segments behavior)
• Increased customer loyalty
• Targeted levers
“BROAD AND DEEP”
Growthsegments
Maintain segments
Growthsegments
Maintain segments
Marketing
Distrib.Merch.
Planning
BuyingStore Ops.
Marketing
Distrib.
BuyingStore Ops.
Limiteddata for allcustomers
Robustdata for all customers
Deeperdata for select
segments
Identify How Program Design Delivers Value
Collect data to use as core business asset
Build strong relationships with growth segments
Merch. Planning
2010 Customer Insight Group, Inc. All rights reserved.
Six Critical Factors in Designing a Successful Loyalty Program
Successful loyalty program are strategic
Trade-offs are required to realize financial goals
Objectives must drive program strategy
Leverage best practices of industry leaders
Identity how program design delivers value
1
2
3
4
5
6 Align Loyalty Program with CRM
2010 Customer Insight Group, Inc. All rights reserved.
Leverage Best Practices of Industry Leaders
Industry Leaders
Strategy
Hallmarks
Leverage Best Practices of Industry Leaders
Deliver Superior Experience
Multiple touch points, channels
Build Platform for Relationship Extension
Customer embedded in business decision-making
Mass market acceptance/confidence as a ŅgatewayÓ to broader array of relevant products & services
Able to identify high value/high priority individuals and deliver superior experience across touch points
Engage Mass Market Provide every day extra value
Strong core brand alignment
Build ongoing connection point to encourage purchases, differentiate offers
Target Priority Segments Several important segments with differentiated needs
Tailored value proposition (e.g., pricing, service levels) based on behavioral insights to better meet needs
Embrace Top Spenders Small dominant spending group
Exclusive aspirational offers
Examples Hallmarks Strategies
2010 Customer Insight Group, Inc. All rights reserved.
2010 Customer Insight Group, Inc. All rights reserved.
Six Critical Factors in Designing a Successful Loyalty Program
Successful loyalty program are strategic
Trade-offs are required to realize financial goals
Objectives must drive program strategy
Leverage best practices of industry leaders
Identity how program design delivers value
Align Loyalty Program with CRM
1
2
3
4
5
6
Align Loyalty Program with CRM
2010 Customer Insight Group, Inc. All rights reserved.
Program Type
Execution Elements
Economic Considerations
2010 Customer Insight Group, Inc. All rights reserved.
Six Critical Factors in Designing a Successful Loyalty Program
Successful loyalty program are strategic
Trade-offs are required to realize financial goals
Objectives must drive program strategy
Leverage best practices of industry leaders
Identity how program design delivers value
Align Loyalty Program with CRM
1
2
3
4
5
6
Customer relationships – Engage. Keep. Grow.Customer Insight Group, Inc. leads the way in the evolution of how companies engage their customers, positively motivate them and earn their long-term loyalty. Our extensive client is testimony to our depth of knowledge and ability to apply strategic insight and solutions to a wide variety of business objectives. Our client experience includes: Ashro, A&P, The Bon Ton, Crate & Barrel, Dick’s Sporting Goods, Edwin Watts Golf, GE Consumer Finance, The Great Indoors, G.H. Bass, Golf Galaxy, Helzberg Diamonds, HSBC, Kohl’s, La-z-boy, MCI, Payless ShoeSource, Pier 1 Imports, Petco, Proflowers.com, Regis University, Ruby Tuesday, S&K Menswear, Sierra Trading Post, Spencer Gifts Tommy Hilfiger, Ulta, as well as various other leading companies.
Sallie Burnett, President
Customer Insight Group, Inc.
Email: [email protected]
Phone: 303.422.9758
2010 Customer Insight Group, Inc. All rights reserved.