Feelings Are MaterialA Case for Loyalty Programs

by Alena Dziamidava

VSFS Marketing Communication

Presentation Skills 2

PhDr. Ladislava Knihová

Are you loyal?

• Show me your cards and I will tell you who you are…

• Did you know that…

Loyalty = loyalty program?

An average American belongs to 22 loyalty programs –

and is active in only 9!

≠ consumer promiscuity

Our game plan

Definition

Evolution of loyalty programs

Game changers

Gamification

Measuring the effectiveness

Controversies

A loyalty program…

• …is NOT only cards and points

• …is NOT about giving out free stuff

• …might NOT bring quick ROI

What is a loyalty program?A way to increase the customer lifetime value (LTV)

Desired behavior

Points Level

Amount of

purchases (during a

period)

Cross-category

purchases

Promo purchases

Compensations(in case of company’s

fault)

Discount

Gifts

Special events

Access to special

offers

Extended warranty

Personal info

provisioning

A

B

C

D

And many others…

A variety of custom

loyalty mechanisms

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

The most desired behavior

Frequent Flyer Programs• American Airlines

• Tier systems

• +70 FFPs worldwide

Card-based loyalty• Tesco, Visa

• Big Data & Analytics

• Personalized recommendations

Pay to be loyal• Closed club

• Upfront membership fees

• Costco, Amazon Prime

Cause-based loyalty• Patagonia's Common Threads

Initiative, Klíč k památkám

• Coalitions

• Built around customers’ values

Transitionfrom material exchange (hard benefits)

to emotional/status rewards (soft benefits)

Beyond discount

Gamificationthe use of game mechanics

in a non-game context to engage users

Loyalty program KPIs

• Customer retention rate

• Negative churn

– Cross-selling

– Upselling

• Net promoter score

• Customer effect score

What can go wrong?

... that’s not rewarding, that’s a

headache.

"Fourteen points equals one dollar,

and twenty dollars earns 50% off

your next purchase in April!"

What can go wrong?

So why bother?

• For clients

– Hard & soft benefits

– Exploration

– Feeling of inclusion = better

customer experience

– Easier decision-making

• For companies

– Leveraging data to inform

key decisions

– Brand building, recognition

and awareness

– Cross-selling and upselling

– Retention

TakeawayLoyalty marketing means recognizing that customers

are different and acting accordingly.

You Already Do This!

Your loyalty program is simply a structure that

allows these tactics to scale.

Any questions?

References

• Loyalty Programs, ww.crmtrends.com/loyalty.html

• Customer Loyalty Statistics: 2015 Edition, Brandon

Carter www.blog.accessdevelopment.com

• 7 Customer Loyalty Programs That Actually Add

Value, Lindsay Kolowich www.blog.hubspot.com

• The Power of Loyalty: 10 Essential Steps to Build a

Successful Customer Loyalty Strategy, Roger L.

Brooks

• The Starbucks Experience, Joseph A. Michelli