A Loyalty Based Online Merchant To Customer Platform

By Ahmed Elasra20th of April 2012

The Next Big Thing

Agenda

• Overview

• Online Customer Platforms – Today

• Loyalty Based Platforms

• Loyalty Based Platforms – Process Flow

• Process Flow – Details

• What do we have?

• Wrap up

Overview

Send targeted promotions.

Merchants have 4 basic needs

Get customers feedback & customer insights.

Reach customers online (web/mobile).

Identify different customer segments.

Problem is

do not engage online with

Because they don’tSee a real

Merchants use social platforms (human to human interaction) that engage fans & followers.

Value propositionContent/updatesEngagement rateLow or average

AudienceFans & followers

Value propositionHuge Discount

Engagement rateHigh - impulsive

AudienceDeal hunters

Merchants use daily deals websites that attract deal hunters.

Daily deals

Online Customer Platforms- Today

Most local merchants do not care much about creating a real value to their customers through social media

Value propositionRewards & discounts

Engagement rateHigh - ongoing

AudienceReal customers

FOUND IT!!! A LOYALTY BASED PLATFORM IT IS…

Online Loyalty

Is That All?.....NO

What does a successful loyalty based online platform look like?

Loyalty Based Platforms

To answer this question, we must understand the process flow

AwarenessCustomer becomes aware of the program.

EnrollmentCustomer enrolls and become a member in the program.

Offering Rewards

Validating Redemption

Sending Data

Customer – Purchase Association

1

2

3

5

6

4

While/after buying something, the customer data is associated with the purchase data.

Customer-purchase data is sent to the back-end.

Merchants offer rewards to customers who have enough balance.

Customers redeem their points for real rewards through a redemption process.

A Loyalty Based Platform Process Flow

AwarenessCustomer becomes aware of the program.

1

How will customers become aware of the program?

How much money does the merchant need to pay to market the program?

Does the program advertise itself (self-serve)?

A successful loyalty based platform is a self-serve platform that starts marketing for itself and anything else that the merchant or the loyalty operator (if it is managed by a third party) does is considered an extra effort.If the platform is owned by a third party (an operator )it must be self-serve that starts advertising for itself inside the store if the operator wants to break the geographical boundaries and go global.

Process Flow - Awareness

EnrollmentCustomer enrolls and become a member in the program.

2

What are the steps that customers will pass through to enroll in the program?

Will an average customer feel that it is a complex process to enroll and give it up?

How big is the customer segment that is eligible to enroll?

A successful loyalty based platform is easy for an average customer to enroll into, it does not require multiple steps, it takes a very short time to complete the enrollment and it is all done at once.

Process Flow - Enrollment

Process Flow – Customer – PurchaseAssociation

3While/after buying something, the customer data is associated with the purchase data.

Who makes the first move – the waiter/cashier or the customer?

Is the program transactional, based on location based check-ins or QR code check-ins?

Is mobile payment or credit card payment a must to use the program?

Does it require the customer to have a smartphone?

Customer – Purchase Association

(1 of 2)

A successful loyalty based platform does not depend on customers to make the first move once they become members, customers are naturally shy to break the ice.The customer-purchase association must not require the customer to pay with credit card or use a mobile payment app in order to cover a large customer segment.A successful loyalty based platform is able to distinguish between customers based on their purchases & visits and it can calculate the customer lifetime value (CLTV). Counting visits only using location based or QR code check-ins is useless, it should take into consideration each transaction’s time, value and location (in case the merchant has multiple branches).

What are the security measures in place that guarantee a fraud-free operations?

How much manual effort is involved? How much delay will it cause in the queue?

How complex is the technical activity required from the cashier/waiter and the customer?

3While/after buying something, the customer data is associated with the purchase data.

Customer – Purchase Association

A successful loyalty based platform must be secure and guarantees that customers will not be able to defraud the system whether by claiming rewards they don’t deserve or earning fake points (Hello location based check-ins!).A successful loyalty based platform must not involve a lot of manual or technical efforts when the customer or the cashier/waiter is in the process of associating the customer and purchase data, it will either keep a long queue of customers waiting or will alienate customers from using it.

Process Flow – Customer – PurchaseAssociation (2 of 2)

Sending Data4Customer-purchase data is sent to the back-end.

When customer-purchase data is associated, does it instantly reflect in the back-end or the data is delayed and sent in bulks?

Does the merchant need to have an internet connection in the store?

Who is in charge of sending this data to the back-end? The cashier or the customer?

Customers do not like to wait until they receive points for their purchase, they might want to redeem their points instantly once they get them. A successful loyalty based platform sends the customer-purchase data instantly to the back-end once associated.A successful loyalty based platform must not depend on having internet at the store in order to send the customer-purchase data to the back-end, in some parts of the world having in-store internet is not as easy as it seems to be (if you are in a modern country and not planning to go global you can ignore this point).When the cashier is responsible for sending the data to the back-end, it saves time for the customer but it may delay the queue for a while and when customers are responsible for that, they get the chance to see their balance instantly which is kind of engagement itself but it might be boring for some customers, so there is no right or wrong here although I personally prefer the second option.

Process Flow – Sending Data

Offering Rewards5Merchants offer rewards to customers who have enough balance.

Is it a coalition or a merchant-specific program?

Does it create loyalty to the program or to the brand (merchant)?

What is the value proposition in the customer's mind? who is in charge of setting the rewards/coupons?

Is it personalized to the customer needs or generic to everyone?

Does the customer feel that getting a reward is feasible or it is too far to collect points for?

Yes in coalition loyalty there are variety of rewards and customers have fun but it builds loyalty towards the program – the loyalty operator (a third party) not towards the merchant (the brand), do you want program loyalty or brand loyalty? Period.In a successful loyalty based platform, rewards are managed by the merchant or an account manager from the operator who is always aligned with the merchant’s business and the rewards are typically discounts and items from the same merchant to increase the perceptional value in the customer’s mind.Customers should be given a wide range of rewards to match their different tastes and most importantly customers should never get the feeling that it is too hard to get a reward otherwise the program will fail.

Process Flow – Offering Rewards

Validating Redemption6

Customers redeem their rewards through a redemption process.

When a customer claims a reward, how can merchants validate that this customer is eligible? showing an app screen (Hello Fraud!)? handing the cashier a reward/coupon code?

If it is a code, is it secure? is it possible that customers use it multiple times or in multiple branches?

To avoid the hustle of validating redemption, most loyalty based platforms use the online store model for redemption where customers can claim their rewards online and the reward is sent to their address, but what if a merchant would like to reward their customers with a special treat and a warm welcome along with a free cup of coffee? That cannot be delivered!, hence, in a successful loyalty based platform validating redemption must also be doable in-store as well.You may ask how could it be validated in-store if there is no internet at the store , well… there are ways! , see the next slides.

Process Flow – Validating Redemption

What do we have?

AgeGenderLocation

Customer’s Qhat profile

Demographics Purchase data

Once we have a successful loyalty based platform Merchants will be able to: Segment their customer base Reach customers online Get their feedback Send them targeted promotion And much more!

Wrap upSo which loyalty based online merchant to customer platform has it all?

Self-serve Transactional No credit card

No smartphone

Brand loyaltyIn-store

redemption validation

No internet at the store

SecureEasy to useNo queue delay

And merchants can install at their stores & use instantly in any part of the world?

S C A L A B L ESay Hello to ….

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By Ahmed Elasra20th of April 2012