Loyalty Basics

Nine Laws of Loyalty Marketing

According to a Survey by EIU, Customer Loyalty is According to a Survey by EIU, Customer Loyalty is

One of the Top 10 Business Issues of Corporate One of the Top 10 Business Issues of Corporate

CEOsCEOs

What Is Loyalty Marketing?What Is Loyalty Marketing?

According to Colloquy, loyalty marketing is the effort to

identify, maintain and increase yield from best customers

through long-term, interactive & value-added relationships

There Are Nine Cardinal Laws To Be FollowedThere Are Nine Cardinal Laws To Be Followed

1. Focus On

Acquiring Data

2. Targeted

Member Acquisition

3. Calculate CLTV

4. Build Relationships

5. Develop Offer

6. Build Dynamic

Programme Structure

7. Build Emotional

Bond

8. Align Organisation

9. Involve Sr. Mgmt.

1. Focus on

acquiring data

• Collect relevant info

• Make better use of info

Harrah’s Total Rewards

has developed a centralised

& award winning

data warehousing system

that allows

them to better understand

their customers

2. Target Member

acquisition accurately

•

• Establish best customer profiles

• Go for quality over quantity

Harrah’s Total Rewards

Has built predictive tools

that reveal which customers

should be targeted for

loyalty incentive programmes

-

3. Calculate & increase

customer LTV

•

Estimate value of customers

over years

Tesco Clubcard

has developed models that

estimates the life time value

and profitability of each

customer. This allows them

to target effectively and

personalise communications

4. Build relationships

based on relevance

•

• Trust, excellent service

• Design products around

customer needs

Tesco

has leveraged customer data

from its loyalty programme

to move into offering banking

and financial services

5. Develop an irrefutable

core offer

•

• Plan for a differentiated offers

• Conduct research at regular

intervals

6. Build dynamic programme

structure

Vary the programme

benefits

Hilton HHonours

programme members earn

points for hotel stay and

airline miles for hotel stay

too. Members can choose to

earn in either currencies

or both. They call it

‘Double Dipping’

Types of Loyalty Programme StructuresTypes of Loyalty Programme Structures

Affinity

Programmes

Bonus &

Frequency

Programmes

Discount

Programmes

Coalition

Programmes

User

Communities

Affinity ProgrammesAffinity Programmes

Characterised by

recognition

Strong emphasis

on recognition

& privileges

Bonus & Frequency ProgrammesBonus & Frequency Programmes

Characterised by

reward currencies

viz. points

Encourages repeat

usage behaviour

Discount ProgrammesDiscount Programmes

Characterised by

discounts

Encourages volume

purchase behaviour

Coalition ProgrammesCoalition Programmes

Enables customers

to collect rewards which

otherwise may take

longer time

Characterised by

organisations offering rewards

under single banner

User CommunitiesUser Communities

Characterised by

dialogue & information

dissemination

Enables customers

to network and learn

about new happenings

-’

7. Build emotional

bond with customers

There should be greater stress on

‘moments of truth experiences

Via Rail of Canada

is using loyalty data to decide

- which type of wine to be

served on certain routes

and cabins which routes

needed stations

for nursing mothers

8. Align the

organisation to create true

loyalty

Overly focus on profits

and growth may destroy

customer loyalty

9. Involve senior mgmt. in

understanding customer

behaviour

Understand relationship

dynamics between acquisition,

retention, penetration & cost to serve

These Nine Laws will decide the success

of any loyalty marketing initiative

For further information please call:

Rajeev at (6)012-6301137 or e-mail: rajeev@loyalty-matrix.com

http://twitter.com/rajinkl

http://loyaltymarketingblog.blogspot.com/