Traditional Loyalty Programs – Business Requirement or Pure Hygiene or Customer Focus???

Does every loyalty program or solution necessarily revolve around Earn & Burn? Can we visualize a loyalty program without a reward catalogue or redemption??
A brain-storming session with a client led me to ask myself and all of you this question.
We would love to be a part of a Loyalty Program of a company purely for reasons known to us. There could be hundreds of different reasons for getting us enrolled in a program, with very little point calculations & redemption in our minds.
How many of us look at the rewards catalogue, choose a product and then get enrolled? Would this be very difficult? – Not really, let me explain this with a live & simple example – I was about 8 yrs old when a chocolate company came with a tactical (loyalty) program (will decide later whether this was a loyalty program in the 1st place). There were some very attractive gifts aimed at our age group by redeeming against wrappers. Looking at the ad, I knew what I wanted and saw how many points would I require to win this. This program lasted for approx 3 months. I followed it, purchased hell lot of chocolates and finally won (have purposely mentioned the word ‘won’) it. A program that enticed me to WIN a desirable gift primarily & an activity of purchases was positioned as a secondary factor.

It is strange that Marketeers have forgotten the very aspect of human tendency – to forget things / program will run out of fizz if you don’t excite customer today. I would want to question the very need of creating a loyalty program –
* Does it really impact business / should it only mean clinging cash registers (because if that is a case – than a healthy & wealthy competitor can cut in your pie, just anytime)
* Are customers coming to your store because of the program?
* Will the same profitable customers stop shopping at your store?
* Is it only because of points of a program that a customer feels like choosing your store compared to the competitor?
* Is it like the hygiene factor – just like a store should have a good layout and ambience, they should also have a loyalty program

Some points to ponder on what I am really trying to say –
# Can we look at Loyalty Programs not only for incentivising customers but for various other things (which are softer aspects of business) like appreciating the fact that they walked into the store, appreciating / rewarding / recognizing their feedbacks, rewarding spontaneously for just being with us
# In every case, we still treat a customer like a customer – why can’t we make him a part of our family?
# Why does he have to go on collecting points for ever?
# Is reward always have to be a tangible benefit?

An analogy to Motivation-Hygiene Theory

Herzberg’s Motivation-Hygiene theory was specifically focused at employees. I want to take this one step ahead and apply to customers.
There is a classic analogy between the two different groups (employees & customers). The factors could be slightly different but the underlying philosophy remains the same.
The two important elements – satisfaction and dissatisfaction are not opposites of each other. They could very well go parallel. Eg: I am not happy with the culture but the work role is something to die for or the challenge in my role is diminishing by the day but I have great boss whom I can trust and confide. The problem arises when factors affecting satisfaction are challenged and hygiene is compromised.
Similarly, by virtue of the above statement, hygiene factors can’t be compromised – from the customer viewpoint – rewards, bonus, discounts, etc are today a-must-to-have factors, apart from store layout, ambience, customer service, etc. Then what are Motivation factors – simply put, which can make the customer easily separate itself from a competitor in terms of the basic nature of the product or service and the execution of the same.
We are in that part of the rat race, where milestones are set, achieved and copied, probably at the same time. So it is of utmost importance to keep up the customer FIZZ all the time and that’s where the analogy would come in handy: to set companies priorities right.

What are you focusing on – keeping customers JUST satisfied or “giving customers a moment of magic, a moment of enjoying lifetime” – is a question each company should keep on asking them, all the time, every time?

If spending / shopping / dining was a experience, why not make it more interesting – even Magical at times

Can we create moments of magic for the customer at three distinctly different phases of purchases? and can these moments take the customer from one phase to another?
- At the time of decision to make a purchase
- At the time, money changes hands
- After the purchase is done and customer has left your premises or used your service or bought a product

All these could be times where we could create the FIZZ effect (Moment of Magic) for the customer. This goes beyond normal customer expectations and takes the experience to a different level.

Let me provide some examples vis-à-vis the normal processes –
1) X, is accompanied by a friend to a pizza chain, orders a large pizza, coke, is served by the waiter, is told that the coke is free, enjoys the meal, asks for the cheque, pays it, fills the feedback form – half-heartedly and leaves.

2) M walks into a store within a mall. Is a loyal customer of that store. Strolls around the stroll watching at different brands, labels, apparels. A loyal customer is unnoticed. Leaves without a trace.

These are two simple-real-life-day-to-day-experiences, we normally face. Can we build any moments of magic to achieve our Business Objective and to increase share of wallet and stickiness? Let us see. (Would really appreciate your inputs, on both counts, if you find them usable or completely absurd or unviable)

1) X, is accompanied by a friend to a pizza chain, (i*) orders a large pizza, coke, is served by the waiter, is told that the coke is free, enjoys the meal, asks for the cheque, pays it (ii*), fills the feedback form half-heartedly and leaves (iii*).

1st visit –
i* - updating customer’s mobile number as part of launching a loyalty program. Customer receives a SMS at real time, offering a free coke (irrespective of the order) for sharing details. A free coke comes on the table. Another chance to update name & important dates.

ii* or iii* - SMS showing gratitude for visiting and offer inducing them to come back.

Subsequent visit –
Asking for his / her mobile number. Checking that in records. Based on transactions, surprising the customer with an offer, every single time he visits.
Mobile number becomes the KEY.

2) M walks into a store within a mall. Is a loyal customer (a*) of that store. Strolls (b*) around the store watching at different brands, labels, apparels. A loyal customer is unnoticed. Leaves without a trace.

a* - Can the store ask the customer to swipe his loyalty card. The transactional history can throw an offer, which he is not even anticipating / expecting. It could be either a store offer or a cross promotional offer on a minimum purchase. There is a sense of recognition because this offer is only and only applicable to him.

b* - Give him a band to wear on his wrist (completely optional). This enables him to get preferential treatment in the store. Others seeing it would be enticed to follow.

c* - Assuming that he acts on the offer and purchases – another chance to communicate solely with him with some enticement of an offer for a repeat visit for purchases.

d* - SMS wishing him a good day and thanking him for the visit. This above communication in ‘c*’ can be in the form of SMS also.

Some things mentioned herein would be looked as overly-intimaditing the customer. All said and done, we all love surprises and pleasant shocks and recognition. Make the customers recognise a genuine effort and they will be genuine to you.

Can I convert 5% of walk-ins into incremental sales?

There are hundreds of customers (like you and me) walking into retail stores. How many of us actually buy? We all love Window shopping. A little push maybe enough for us to pick up that not-needed item.

Is there anything a store can do to attract these customers?

We spend huge monies on advertising our store and focusing on Walk-ins, but forget to attract customers while they are in our stores.

It is far easier to talk to a customer when he is in our house than to keep shooting in the dark!!!

I would be more than happy to take you through this.. write in to know more..

A Level Higher - time to move on from traditional practices

Very recently, have I got a chance to explore the payment card industry from close quarters. One of the developments that caught on my interests has been RFM.
The three letters have actually got the power to transform customer perceptions towards a company, store or a brand. Extremely easy to understand, yet I don’t see many companies using this for the kind of potential it holds.
The best part of this technology is the fact that there could be a full fledged Loyalty Solution around it or could be used as a Tactical Promotion.
Why is it that companies still prefer the normal earn-burn program? Everyone today offers a Loyalty Solution. Why?
Maybe because the competition has it.
So, do we have a Loyalty Solution for the customer or the Competitor.
My wild guess is – Competitor.
The same ol’ Earn & Burn. No changes. No innovation. No Fizz. How many of us visit stores for the program? How many of us would continue to buying from some retail stores, even if the program ceases to exist.
RFM, simply rewards a customer basis his transaction history and creates “What Next?” or “What is it this time?” curiosity in the minds of customer. This transactional history can also be a stepping stone to Analytical “data driven” marketing, based not only on demographic or socio-economic but also on the customer spending & behavioural patterns.
A day would come when everyone would join the RFM bandwagon in India. I am just waiting for the first one.

Beginning - the FIRST effect

Hello Everyone,Although this sounds like writing a letter, would like to be formal in my first-ever-blog-writing-experience. Henceforth it will never remain first.
All of us and i mean ALL have always remembered everything we have ever done ‘first’ – our first day at college, first day at work, first crush, first kiss, first punishment, first salary, first blog & the list could just go on. The best part is, however, the experience – first is never forgotten.
From the next time onwards, probably, I can take the liberty to be less formal or even casual, at times.
Let me keep this extra small and maybe sweet, this time, and do look forward for many more to come.

Regards
Tushar Rele

PS: My next blog will be on my own created Marketing Concept – "Customer Fizz". Do watch..