building customer loyalty programs

Copyright © 2007 Cartesian Consulting 1Copyright © 2007 Cartesian Consulting, www.cartesianconsulting.com

Building Customer Loyalty

A tale in 7 steps


1. The Shape Shifter

• Lawrence of Arabia didn’t always ride a camel!• Your customers will constantly surprise you

• Customer Knowledge is competitive advantage


Scoring and segmentation, propensity models, churn analysis, satisfaction scores, lifetime value metrics,

Store scoring, market basket, exceptions…

Leveraging Customer Knowledge

Notes:• There’s a load of

analytical approaches beyond RFM for retailers wishing to leverage customer knowledge. Not all of these appear to be easy to adopt and marketers shun analytics more out of a lack of understanding of what it can do for them. Get the experts in, listen to them – you’ll find that there’s ROI in it for you.


2. The Painter

• Customer flight is inevitable unless you can paint yourself into their picture

• Build fences, increase their switching cost• Bottomline: Get your concept right


Objectives, metrics, software, membership, tiers, rules & processes, earn-burn, rewards, benefits, communication, helpdesk, partners, ROI, budgets…

Getting the concept right

Notes• Building a loyalty

program concept requires not just sound strategic thinking, but loads of rigor. The success lies in being able to detail out solutions to over 100 decision points that a loyalty program concept needs to cover. You cannot be reacting to situations as they happen!


3. The Card Magician

• It’s more than a card trick• Loyalty programs are a proven way to capture

customer data and prevent customer flight• It’s about building relationships and increasing LTV,

not just launching a card


Smart card, RFID, Mag stripe, bar code card, affinity cards, card variants, co-branded cards, card readers, carding…

The Loyalty Card

Notes• The loyalty card is the

most familiar face of a loyalty program. There are many options here as well, but the key point is that launching a card does not a loyalty program make. This space is littered with failed programs that were launched as a card and little else.


4. The Neuromancer

• If marketing and IT don’t shake hands, you might as well hang up your loyalty boots

• Technology integration is crucial to success


Loyalty software, CRM software, analytical CRM software, marketing database, POS integration, liability tracking, points banking, campaign mgmt…

IT and the Prorgam

Notes• The software on which

your program depends needs to be designed carefully, and should handle all aspects of your program. Retail POS solutions often offer a basic loyalty module – these are usually inadequate! The point: Don’t design your program to fit the software.


5. The Band

• You need superheroes skilled in marketing, technology, and analytics

• It takes teams that are nurtured and last• It takes patience and top management buy in


Loyalty manager, loyalty agency, CRM consultant, IT team, Software developer, events & promotions team, rewards team, creative agency...

The Loyalty manager

Notes• The team that drives the

program internally needs to be composed of skills that are difficult to find in any market. Direct marketing, CRM and Loyalty skills need to be nurtured and the team needs top management support. Importantly, you will need to rely on the right partners to come in with specific skills.


6. The Campaigner

• Loyalty programs throw up a wealth of data driven campaigns

• Good campaign management allows you to handle hundreds of segments and communications

simultaneously


Campaign calendar, welcome kit, statements, coupons, day-part based, cross sell, activation, churn prevention, win-back, relationship building…

Campaign Management

Notes• Campaign management

practices are better established amongst the banks than retailers, but here is where the real pay-off is. Leverage campaign management tools as they will allow you to run hundreds of targeted campaigns which really do pay off, as compared to a few festival offers and generic promotions.


7. The Timekeeper

• Building loyalty takes money, time and patience• Assume it will take you 2-3 years to truly reap

benefits• You’re in it for the long run, aren’t you?


Points liability, breakage, ROI, enrolment, member base, activity levels, satisfaction scores, incremental revenues, wallet share, referrals

A matter of patience

Notes• Set expectations right.

To launch a program AND expect a jump in sales within 6 months is pushing it. Building up a quality member base (no mass enrolments), setting up the back end, campaign management – these all take time and effort, and the metrics to measure success take time to show the returns.


To Summarize

1. Customers shape-shift

2. You need to paint yourself into their world with a good concept

3. Loyalty programs are more than card magic

4. You need to get marketing and IT in sync

5. The team needs top management buy in

6. The pay off is in the data led campaigns

7. The pay off comes with patience


Cartesian Consultingwww.cartesianconsulting.com

Sandeep Mittal (BE - Pune Univ, IIM-Cal): The Business Head of Cartesian, Sandeep has 7 years of

varied experience spanning CRM, analytics, loyalty program management, direct marketing and website development. With past stints as an entrepreneur heading a technology

startup and a music portal, Sandeep spearheads the Cartesian practice.

Sandeep can be reached at [email protected]