Nine Point Checklist For Your Loyalty Programme

• Nuala is the Managing Director at Brandfire. • Having over 20 years’ experience in sales and marketing,

working in a number of industries including radio, telecommunications and online.

• She has held positions in Esat Telecom, DCC and, more

recently, Communicorp. • She has extensive international marketing experience,

having worked in Sweden, Finland, Jordan and

Central/Eastern Europe.

About the Author: Nuala Canning

Executive Summary 1 Introduction 1-2 9 Point Checklist For Loyalty Programme 2-5 Subsections 2.1 The objectives of a loyalty programme 2.2 Developing the Business Case 2.3 Ownership and responsibility 2.4 The Importance of Research 2.5 Rules and Rewards 2.6 A lottery Licence 2.7 Technology 2.8 Data Insights 2.9 Strategy and Communication Conclusion 5

Table of Contents

In this paper, Brandfire outlines 9 factors to consider when planning or launching a loyalty programme. These factors are as follows 1 The objectives of a loyalty programme 2. Developing the business case 3 Ownership and responsibility of the loyalty programme 4. The Importance of Research 5. The reward rules and rewards 6. A Lottery Licence 7. Technology 8. Data Insights 9. Marketing Strategy and Communication

Executive Summary

Before we identify the key considerations in more detail, let’s begin by defining a loyalty programme. Below are only some of those definitions: •Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behaviour — behaviour which is potentially beneficial to the firm. Source: Wikipedia •A rewards program offered by a company to customers who frequently make purchases. Source: Investopedia •A customer loyalty program is a structured and long-term marketing effort which provides incentives to repeat customers who demonstrate loyal buying behavior. Source: About.com

Introduction

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• A more precise definition is that provided by www.customersthatstick.com: “A loyalty program is a system of structured rewards given to customers, usually in exchange for desired behaviors, with the goals of increasing customer loyalty and collecting customer data.

• Loyalty programs use the psychological principles of

reciprocity, commitment and loss aversion to increase the likelihood of customer loyalty”.

• Despite all these definitions, the most important reason

for launching a loyalty programme is to capture data on your customers and to use that data to drive increases sales.

Introduction Continued

Objectives of a Loyalty Programme

• It is important to have a clear objective for a loyalty programme.

• Is your objective to improve retention by

rewarding existing customers? • Is the objective to win new customers, grow

revenue, and market share? Is your objective to both to improve retention and increase revenue?

• Be clear about these objectives and ensure

that they are aligned to the businesses.

Developing The Business Case

• Once the objectives have been defined, companies must build the business case around those objectives. The business case will help determine whether or not a loyalty programme justifies the investment into a project and provides that return on investment.

• It can also look at possible alternative solutions. Often overlooked, the business case provides a check to ensure that the project aligns with the organisation’s strategic plans.

Ownership and responsibility of a loyalty programme

• A loyalty programme should belong to the entire senior management team and must have everyone's buy-in. A loyalty programme involves all departments.

• Finance will run the numbers and ensure that the programme is on budget and delivering on the Return on Investment (ROI). Information Technology and Information Systems will manage the technology platform and integration into any of the relevant in -house technology platforms. Human Resources will educate and train staff.

• Marketing will be responsible for the communication and data insights. Very often, a loyalty programme will fail because of the lack of “buy-in’ within an organization.

The Importance of Research

• Market research helps businesses gather information that can be used for effective planning and implementation of business strategies.

• Research provides an insight into your customers and their

buying patterns. In addition, market research can also provide information on market trends and your competition.

• In the case of a loyalty, research will also help you know

your customers and what behavior you want to reward.

The Reward Rules and Rewards

• Reward rules determine what action a customer must take in order to qualify for a reward. Transactional loyalty programmes are very popular with supermarkets and retail brands. Customers earn points for every €/£/$ they spend.

• Many loyalty programmes reflect the importance of the digital world and social media. Companies will reward customer for sharing content, uploading photos and engaging with the brand in other ways beyond transactional.

• Other buying behaviours that reap rewards include payment by direct debit, accepting e-invoices, payment upfront and many more.

• Rewards can be anything from cash-back to cinema tickets to future discounts to exclusivity.

• They should reflect the type of business, frequency of purchase, the value of that purchase and the objectives set out for the programme.

• The success of a loyalty programme will be determined on the relevance and value of a reward and how easy it is to earn and redeem that reward.

Lottery Licence

• The specific reward that a company provides may require that that company applies for a lottery licence.

• This is particularly relevant when a company rewards a

customer with an entry into an exclusive competition. • If the customer must transact to participate in a

competition, for example: purchasing a product = entry to a competition, and the winner is picked at random, a lottery licence is required.

Technology

• What type of technology should be used to capture data and reward customers? Service stations and supermarkets tend to use points based technology, which requires integration into the company’s epos.

(ex Image recognition used by Kellogg’s for loyalty programme) • Customers earn points when they take a photo and

upload the receipt onto their loyalty platform Once uploaded, these can be exchanged for rewards.

• This technology provides a great opportunity for the

FMCG industry to consider a bespoke loyalty programme.

• Media companies have also employed gamification

and second screen technology which rewards customers for watching and sharing content.

Data Insights

• Loyalty programmes can provide great insights into your customers and how they transacted with your business. Examples of this data include average spend by loyalty customers vs. non-loyalty customers,

• average spend by the store; spend by age, gender

and location. Ironically, loyalty programme can often provide “data overload”. It is important to determine the most relevant data and why that data is important to the business.

Market Strategy and Communication

Companies need to tell their customers that they have launched a loyalty programme and communicate it regularly. The marketing strategy will determine how that communication is going to happen. The marketing strategy must include: • Naming the Programme • The Branding of the programme • The personality of the programme • The way it will be communicated internally and externally,

(email, social media, through the line etc.)

Companies need to consider that promotion of a programme both at launch and over the lifetime of the programme. Again, many programmes fail to achieve their overall objectives due to the a poor marketing and communication strategy.

Conclusion

• A loyalty programme can be a significant investment both in terms of the finances and the time required to plan, launch and manage.

• The success of any programme will be dependent

on effective planning and consideration for all elements as outlined in this paper.

• Once this has been completed, companies can reap

the commercial benefits associated with a successful loyalty programme