getting the most from your loyalty/rewards program
TRANSCRIPT
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Getting the Most From Your Loyalty/Rewards Program
IECSC Las Vegas 2008Lisa M. Starr
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A Loyalty Program is:
The practice of finding, attracting and retaining customers who regularly purchase from you and refer new clients to you.
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Loyalty/Reward Programs
Over 75% of consumers have at least one loyalty cardAmerican firms spend over $1B annually on loyalty programs5% increase in client retention can result in 25-100% increase in profits
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Start With Internal Customer
If they don’t believe your company deserves loyalty, they won’t convey that to customersEthics start at the topManagement team that inspires and motivates
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Loyalty Program Tools
SoftwareCard programsPoints programsNewsletters and E-zines
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What is a client worth to you? Calculating client value;
Client Sorta Good7 annual visits @ $75 = $52512% retail purchaser = $63Gift cards purchased annually $150Annual referrals value, 1 new clients @ $350 each = $350$1088/yr x 4 years = $4,352
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Calculating client value
Client Really Worthit12 annual visits @ $130 = $156025% retail purchaser = $390Gift cards purchased annually $350Annual referrals value, 3 new clients @ $500 each = $1500$3800/yr x 4 years = $15,200
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Why will clients refer to you?
Customer believes company offers superior value (head)Customer feels valued by company (heart)Both rational and emotional
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“The Ultimate Question” –Fred Reichheld
“How likely is it that you would recommend this company to a friend or colleague?”
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Net Promoter Score - NPS
Create 0-10 customer scale based on feedback
9-10 score, promoters7-8 score, passives0-6, detractors
% of promoters – detractors = NPSAverage US company scores less than 10%
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What’s your score?
If you don’t know how customers feel, ask them!Previous purchasing data is NOT a predictor of willingness to continue doing business with you
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Value of PromotersHigher retention rateBetter margins; promoters less price-sensitiveAnnual spend; promoters consolidate with one vendorCost effectiveness
Detractors carry higher customer svc costsPromoters cost less; longer duration & referrals
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Customer Surveys
ShortQuestions must pertain to behaviors that drive growthTimely (within a few days of transaction)
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Top Reasons for Bad Surveys
Too many questionsLack of credibilityMarketing, not problem, orientedScores don’t link to economics; 60-80% of satisfied clients still defect
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Develop a plan
Target specific customer groupDevelop database, and reward them for sharing information80/20 rule
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What’s the “point”?
Find, attract and retain your target customerMove marketing dollars to internal rewards programs to keep them happyLoyalty becomes competitive advantage during economic downturns
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Point system
Easy to calculateClients like big numbers - $1 equals 10 points or 100 pointsPrint points on transaction receiptsLet them see their points online
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What do your clients want? Recent Cornell hotel study:Chief factors in brand loyalty were design, amenities, staffRoom upgrades, quick check-in, late check-out, free internet, concierge levelIHG – priority guests spend 57% more and cost lessMarriott – Rewards members double stays after joining
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Reward Program Elements
Easy to understandAutomated and easy to administerEasy to participate inPromoted both externally and internally
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Reward Program Elements
Prizes/rewards should be valuedBut, not too expensive (or they’ll think they’re paying)Attainable goalsRange of prizesPrizes rotate or vary
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Rewarding Clients
Email reminders for gift occasionsUnadvertised specialsExpress check-in or check-outOnline order trackingPoints toward future purchasesBarter – gym, dry cleaner, restaurants
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Rewarding Clients
Special salesDirect Mail offersReferral awardsBirthday/anniversary recognitionExtended shopping hours
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Unique to your business
Special promotionsDouble points days, timesDouble points services, providers, productsEvent attendanceService anomaly rewardsLast minute services earn points, not discount
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Recent Loyalty Program TrendsImmediate rewardsTargeted deals – birthday, previous purchase by genreSouped-up Membership – tied to credit card programsManufacturer rewardsReward Consortiums or partnerships
New York Times, April 2008
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Successful Loyalty Programs
Meet or exceed organizational KPI’sCommunicate one-to-one, not one-to-manyDeliver relevant, timely messagesUpdated consistently and frequentlyRecognize customer needs
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Keep an eye on the bottom line
Program should be attracting and rewarding the “right” customerDesign programs that inspire desired behaviorsExpense of program cannot cut too deeply into profitability
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Relevant Web Sites
Chockstone.comColloquy.comPoints.comRewardforloyalty.comWebloyalty.com
Maritz.comGroup3marketing.comSmartloyalty.comLoyaltymarketing.comIncentivelogic.com
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Getting the Most from your Loyalty Program
THANK YOU FOR YOUR ATTENTION!
A copy of this presentation will be posted on www.wynnebusiness.com
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