A loyalty programme is a method for the retailer to enhance the chances of continued patronage of customers. They allow marketers to gather data on customer behavior in order to understand the trends, appropriately reward loyalty, and understand what influences shopping behaviour. Loyalty programmes run by apparel retailers have a large reach. The customer service and loyalty programmes are the key touch points that the retailer has with the customer. They also offer competitive price, retailers introduce customer friendly returns or exchange policies, customer appreciation days, etc.
One of the major benefits of loyalty programmes has been that companies get large data base on customers. How useful is the data? Jagdeep Kapoor, MD, Samsika Marketing Consultants, said, “Data gathered through running loyalty schemes gives a very clear idea of the shopping pattern of consumers and allows more in-depth understanding of the of customer’s behavior than that of a particular range of product or store.”
When loyalty cards are scanned at the counter, the data about the time and day of purchase, products bought, prices paid and a variety of such information is made available to the marketer for analysis.
Uma Talreja, Head of Marketing, Westside said “Analyses of this data are very valuable and provide insights into consumer shopping patterns. We also get to learn about consumer reactions to marketing initiative for some specific clothes range and the data definitely is very important for us to understand the long term patterns of behaviour.”
This product-buyer profile can be built up by reflection on customer’s life cycles, age, and occupation. This can also help in evaluating promotion analysis & effectiveness.
Loyalty programmes have also been successful for Westside to reach customers they have lost. Talreja said, “Facebook’s Power Editor Tool proved very helpful. We extracted the contact details of lapsed members from the loyalty base and mapped them on Facebook. With the use of Power Editor, we sent the ad communication to these people. During the one month campaign, we reached out to more than 2.75 lakh people organically and more than 1.10 lakh through social platforms. We reached out to a total of 81.4 per cent of the target database.”
Srinivas Rao, Assistant Vice President, Marketing- Lifestyle International said, “Connecting with loyal customers and rewarding them is a good customer relationship management practice and The Inner Circle loyalty programme has provided us a well-defined mechanism to do so. By rewarding customers, we have been able to strengthen our relationship and our brand preference. These customers are also most receptive to any offers or communications we send out and are more likely to favorably react to these. Therefore, the importance of such a loyalty programme is immense for us.”
Talking about the relevance of the data, he added, “Our loyalty programme the Inner Circle has over five million members and growing. We have been mining this data to gather further insights on shopper behavior. This has helped us to create customized offers, accurately assess impact of our promotions and even create opportunities to cross sell our product categories looking at shopper history. This has further improved relevance of offers and shopping experience of our customers resulting in increase in the basket size, cross merchandise purchases and number of visits of the customers.”
The data is what has led to precision where the emails received by consumers are almost close to what the consumers wants. Harish Bijoor, CEO, Harish Bijoor Consults said, “The good loyalty programs connect with customers. The first is when they introduce to the customer and give them points. Secondly when after understanding the customer behavior send mails, offers tailored solutions to the customer's wants and needs. Third is when the customer starts reacting in the same way. Talk to the customer, listen, find out what they want, and get it for them."
Retailers can reach smaller towns also. What’s the relevance of the loyalty plans in tier three cities “The craze for loyalty cards is definitely little more in tier three cities as compared to tier one or tier two cities,” said Talreja.“In smaller cities often the retailer is the first or second to open shop. The younger generation is tapped by social media in these towns and is informed about the new store and also the loyalty programmes. The buzz created about the loyalty program really helps,” she added.
Kapoor further added, “In the smaller towns, the news spreads faster and hence the charm for such loyalty programmes spreads faster. In smaller towns definitely the loyalty programme features should be simple and should come across as very useful and profitable.”
During the sale season, features like sale preview attract customers but do these programs have direct effect on sales? Pratap T P ,Chief Marketing Officer, QwikCilver said that there have been more than 14 million transactions in top 40 brands handled by QwikCilver. One of the effects is that due to successful loyal programmes it’s easy for customers. One of the key important factors that measure the effectiveness of the loyalty programme is the 'Loyalty Customer Sales vs. Total Sales'. This is how a retailer can calculate how much of total sales come from loyalty programme user customers. At the same time it’s also very important to analyze how many loyalty customers are redeeming the points earned as it reflects their interest of the customer in the programme.
He said “The loyalty programme gives brands a chance to shake hand with the customer. With the data collected the brands get a chance for direct marketing. This effective direct marketing also reduces the cost of larger and bigger marketing.”
Pratap spoke about the significant changes that the brands have brought in loyalty programmes. He said, “The brands now have made it easier for the customers to redeem their points, so even we try and design the programmes accordingly and make the redemption process much easier for the customer. The customers now are fine with paying fees for loyalty programmes so the quality and facilities that can be provided are higher.”