MINOR PROJECT

What are loyalty programs?

Why are they relevant?
Comparative study of various
retailer.
 How to design loyalty programs?
 Relationship marketing programs to foster usage
loyalty and a commitment to their company’s products
and services.
 Aim is to create strong, lasting relationships with a core
group of customers.
 Set of actions devised so as to stimulate and keep up
with some customers, and so as to minimise loss,
namely the rate of lost customers, and increase the
amount of purchases
 Emphasis is on developing long-term bonds with
customer.
 A marketing initiative for :

 Developing long lasting relationships with most valuable

customers.
 Creating and delivering unique, consistent and
memorable engagements.
 Developing better business understanding for driving
footfalls and increasing ROI.
 Managing customer churn.
 Their use is widespread among:-
 retailers,
 airlines,
 car rental companies,
 film developers…
 That is to say in all the sectors that deliver a
good or a service in regular use and of a
relatively high unit value.
 Fostering ongoing communication with
customers
 Furnishing loyalty by building extras like
upgrades and other peaks
 Stimulating a sense of belonging by providing
a “club membership” format.
Within the field of retailing, most companies have
developed loyalty programs build around the concept
of loyalty cards.
 “It is easier and less expensive to make an additional
sale to an existing customer than to make a new
sale to a new customer”

The Firm provides The Customer provides

•Products/services •Repeat purchase

•Individualized attention Trust •“Extra” loyalty
•Continuous information •Goodwill
•Price offers And
•Positive word-of-mouth
•Customer services Promises •Lower cost for the firm
•Extras and peaks
 B
Internal behaviours
Caracteristics of Psychosocial states: - Buying frequency
loyalty programs: - Attitude - Buying regularity
- Contact frequency - Trust - Food rate
- Importance of - Attachment - Purchase diversity
- Commitment -Customer Retention
granted advantages C A
- Nature of the - Information research
rewards - Risk reduction External behaviours
- Information density - Positive word of mouth
- Advocate’s function

Environment:
- Consumer’s experience
- Competitive
environment
- Marketing pressure
 Keeping one’s customers and therefore preserving one’s market
shares, keeping up the purchase, margin and profit levels.
 Provide the firm with a stable turnover basis. Guarantee of
future profit; calculations of lifetime-values.
 Increasing the customer’s loyalty and value, notably through
additional sales or crossselling.
 Writing off the cost of investing in the customer’s acquisition.
 Cutting operational costs of subsequent transactional flows.
 Developing and recruiting customers at a lower cost.
 Liu, Yuping, (2007)- “Long-Term Impact of Loyalty Programs”
 Heavy buyers at the beginning of a loyalty program  claim their
qualified rewards  but the program did not prompt them to
change their purchase behavior.
 Consumers with low or moderate patronage level  gradually
purchased more  became more loyal to the firm.
 consumers with initial low patronage levels  gradually
purchased more  became more loyal to the firm.

Conclusion:-
Thus there is a need to consider patronage to decide rewards for
loyalty programmes.
 Meyer-Waarden, Lars; Benavent, Christophe. (2006)
“Impact of Loyalty Programmes on Repeat Purchase
Behaviour”

 The double jeopardy phenomenon was present and loyalty

programmes did not substantially change market
structures.

 When all companies had loyalty programs, the market was

characterized by an absence of change of the competitive
situation.
 They are intrinsic to most marketing
strategies, however?
 Proliferation of programs questions their
differentiating capability
 Value addition to customers is debatable?

 Is it the kind of product new marketers

should consider?
 India is a nascent market for loyalty
programs, holds tremendous potential.

 Consumer choices are being shaped

through unparalleled access to information
 Becoming increasing sophisticated
 Exposure to modern retail formats
 Increasing awareness of fashion and
brands
 Time of higher value than money
 Becoming more experiential
 Plethora of choices
 Want to be served when they want and
where they want
 76% of US retailers and 75% of US shoppers are
engaged in loyalty programs
 Shopper’s Stop claims more than 60% of sales
from loyalty members.
 Subhiksha claims 80% of sales comes from
loyalty members.
 Also a credit card research has shown that 75% of
college going student keep their first card for
15yrs and 60% keep that card for life.
First Citizen Card  
 Program type:
 Earn up to 3.5% every time you shop with your
First Citizen Citibank Credit Card - For every
Rs. 100 purchase, earn up to 5 Reward Points at
Shoppers Stop and 1 Reward Point anywhere else.

 Benefits:
a)Reward Points for every time you shop at Shoppers Stop stores or
[Link]
b) Exclusive benefits & privileges
c) Exclusive offers ever so often
d) Updates on what you can look forward to shop for at Shoppers Stop
e) Exclusive cash counters at Shoppers Stop so you can spend more time shopping
than waiting in a line
 Green Cards
 Program type:
Membership & 12 month Purchase-based Upgrading System
 Three Star Card - Upgrade to a 3 star status by shopping for Rs. 8000/-
immediately preceding 12 months of current shopping date.
 Five Star card - Upgrade to a 5 star status by shopping for Rs. 20000/-
immediately preceding 12 months of current shopping date.
 Seven Star - Upgrade to a 7 star status by shopping for Rs. 40000/-
immediately preceding 12 months of current shopping date.
 Benefits:
 Instant discounts for every time you shop at pantaloons.
 Exclusive shopping days to get hold of latest merchandise
 Regular updates on collections and promos via catalogues, sms and email
 Special invites to the most happening events
 Extended exchange periods and complimentary drops for alterations
 Exclusive billing counters and much more
 Privilege club
  
 Program type: The Globus Privilege Club card, based on the concept of instant
gratification has ensured 100% card to benefit ratio. Members are immediately
rewarded for purchases at any of the Globus stores, in addition to a host of other
privileges such as exclusive tie ups, promotions and special shopping hours.
Globus offers two different card categories, each with it own benefits.
 Member ship criteria:
 Benefits:
 Privilege points accumulated on the membership card translates into gift
vouchers for a host of items as also value adds like special offers, discounts,
exclusive movie screenings, special invites, get together events, and more. Some
of the pleasant surprises included special screening of the movies Kyun Ho Gaya
Na and Spiderman. Tie-ups with Pizza Hut, Water Kingdom, etc. bring in their
own set of benefits. Sometimes just stepping into a Lifestyle store can fetch one
a free cup of cappuchino coffee at Qwiky's who have a presence within the store.
 Club west
 Program type: CLUBWEST is a two-tier program, which comprises
Clubwest Classic and Clubwest Gold.
 classic
 A purchase of Rs 2000 on the same day entitles you to a complimentary
membership into Clubwest Classic. Alternately, you can enroll by paying
a nominal one-time fee of Rs 150.
 Gold
 A purchase of Rs 5000 on the same
day entitles you to a complimentary membership into Clubwest Gold.
 Member ship criteria:
 Benefits:
Store Name Pantaloons Lifestyle Westside Max
Format Type Multi brand Multi brand Trent group Multi brand Landmark
group
Positioning Family store Style & affordability Family shopping
destination & value
pricing store

Categories Apparel &accessories Apparel & accessories Stylized clothes, Foot wear, accessories,
for men, women & for men, footwear & accessories home furnishing
children women

Average Rs.1800 Rs 800 Rs199-1999 Rs750 to 1450

billing per
customer
Average footfalls 1000on weekday & 1200 in week days & 25-45 per hour 450 per day &
1500 to 2000 on 6000 during week end Weekend 1200
weekends, holidays

Loyalty card Yes Yes Yes Yes

Programme
Media used Hoardings, print , Hoardings, In store Print, electronic, In store
electronic (SMS, E- hoardings, In store
mail),POP

Promotion Price off, free gifts, Lucky draw, discounts, Cause related, gift Lucky draw, free
type exchange offer contests, free gifts vouchers, discount, coupons, discounts
contest , combo,
coupons

Evaluation Sales, Quarterly profit Sales Sales, Sales, average bill size,
of promotion Quarterly profit conversion (footfall)
 Usage of sales promotion activities has direct
impact on behavior.
 It motivates a consumer to:
 buy now rather than in future;
 reinforce or reward loyalty etc.
Broadly, objectives set for these activities are
 i)to generate store traffic
 ii)to enhance store image and
 iii)to create a price image( high or low).
 Setting the expectations from the
program.
 Determining what customer
information and buying behavior data
to gather.
 How to gather data, analyze, run
campaigns and monitor ROI?
 Identifying your loyal customer and their
buying behavior.
 Using customer data for new product
campaign and new outlet identification.
 Improving margins and revenue through
direct marketing campaigns.
 Why do customers buy this brand?
 Why are customers dissatisfied?
 What is the current buying behavior?
 By time, day, season etc.
 Existing customer segment.
 Brand or price conscious.
 Product and/or service.
 Designing a comprehensive loyalty
management tool which provides:
 Data gathering
 Data analysis
 Direct marketing campaigns
 Information access for customer and brand
 Monitoring ROI from campaigns
 Outlets

Customer Purchase
Customers Gather
Customer
Purchase
Data
Direct
Marketing
Programs Data Base

Direct Analyze
Marketing Data

Profile
Customer Consumers
Campaign
 Enrollment: Design custom forms and
enroll on live database, issue cards,
manage member grades.

 Data Gathering: Online (over GPRS)

rewards, redemption, query.

 Analysis: Value, frequency, recent visits,

customer personal data correlation.
 Marketing Campaigns: Email, SMS,
Mailers, Events to customers selected from
analysis.

 Monitoring ROI: Correlating campaign to

customer repeat buying.

 Support: Customer and outlet support for

program management.