Loyalty-Programs

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Proven Client Retention: Loyalty Programs that Work! : 

Proven Client Retention: Loyalty Programs that Work! ISPA Austin 2009 Lisa M. Starr

A Loyalty Program is: : 

A Loyalty Program is: The practice of finding, attracting and retaining customers who regularly purchase from you and refer new clients to you.

Loyalty/Reward Programs : 

Loyalty/Reward Programs Over 75% of consumers have at least one loyalty card American firms spend over $1B annually on loyalty programs June ISPA survey – 48% of respondents have loyalty program Loyalty cards account for 80% of all general purpose credit cards issued 77% growth in loyalty programs 2000-2009

Start With Internal Customer : 

Start With Internal Customer If they don’t believe your company deserves loyalty, they won’t convey that to customers Ethics start at the top Management team that inspires and motivates 70% of lost business can be traced to staff turnover

What is a client worth to you? Calculating client value: : 

What is a client worth to you? Calculating client value: Sally Sorta Good 7 annual visits @ $75 = $525 12% retail purchaser = $63 Gift cards purchased annually $150 Annual referrals value, 1 new clients @ $350 each = $350 $1088/yr x 4 years = $4,352

Calculating client value : 

Calculating client value Wanda Worthit 12 annual visits @ $130 = $1560 25% retail purchaser = $390 Gift cards purchased annually $350 Annual referrals value, 3 new clients @ $500 each = $1500 $3800/yr x 4 years = $15,200

Why will clients refer to you? : 

Why will clients refer to you? Customer believes company offers superior value (head) Customer feels valued by company (heart) Both rational and emotional

Gallup’s Metric of Customer Engagement : 

Gallup’s Metric of Customer Engagement 3 factors of loyalty PLUS 8 measures of emotional attachment Emotionally satisfied customers spend twice as much as either dissatisfied or rationally satisfied customers

“The Ultimate Question” – Fred Reichheld : 

“The Ultimate Question” – Fred Reichheld “How likely is it that you would recommend this company to a friend or colleague?”

Net Promoter Score - NPS : 

Net Promoter Score - NPS Create 0-10 customer scale based on feedback 9-10 score, promoters 7-8 score, passives 0-6, detractors % of promoters – detractors = NPS Average US company scores less than 10%

What’s your score? : 

What’s your score? If you don’t know how customers feel, ask them! Previous purchasing data is NOT a predictor of willingness to continue doing business with you

Customer Surveys : 

Customer Surveys Brief and focused Questions must pertain to behaviors that drive growth Timely (within a few days of transaction) Scores don’t link to economics; 60-80% of satisfied clients still defect

Value of Promoters : 

Value of Promoters Higher retention rate Better margins; promoters less price-sensitive Annual spend; promoters consolidate with one vendor Cost effectiveness Detractors carry higher customer svc costs Promoters cost less; longer duration & referrals

Value of Promoters : 

Value of Promoters WOM (word of mouth) activities – now have greater speed and scale Twitter Facebook You Tube Blogs

Develop a Segmentation Strategy : 

Develop a Segmentation Strategy 1. Create programs which encourage and incent a change in behavior Colloquy, 2009

Develop a Segmentation Strategy - cont’d : 

Develop a Segmentation Strategy - cont’d 2. Focus on 4 dimensions of behavior Time-based - time & day programs; early a.m. & late day or weekday appts Location or channel - internet; specific store or department Transactional - size and/or numbers of transaction Personal - demographics & groups

Develop a Segmentation Strategy - cont’d : 

Develop a Segmentation Strategy - cont’d 3. Employ segmentation strategy Identify profitable segments More frequent clients Higher average clients Recency effect – new clients Consider risk of attrition

Develop a Segmentation Strategy - cont’d : 

Develop a Segmentation Strategy - cont’d 4. Filter Require opting in – forces clients to “raise their hand” and indicate future intention Gather preference data – learn more about habits and help predict future behavior

Reward Programs should: : 

Reward Programs should: Combine categories Book an oxygenating facial on a Tuesday $125 or more in services before noon Nurses receive free upgrade with every pedicure on a weeknight Encourage maximum incremental behavior

Reward Program Elements : 

Reward Program Elements Easy to understand Automated and easy to administer Easy to participate in Promoted both externally and internally

Loyalty Program Tools : 

Loyalty Program Tools Software Card programs Points programs Newsletters and E-zines

What’s the “point”? : 

What’s the “point”? Find, attract and retain your target customer Move marketing dollars to internal rewards programs to keep them happy Loyalty becomes competitive advantage during economic downturns

Point system : 

Point system Easy to calculate Clients like big numbers - $1 equals 10 points or 100 points Print points on transaction receipts Let them see their points online

What do hotel clients want? Recent Cornell hotel study: : 

What do hotel clients want? Recent Cornell hotel study: Chief factors in brand loyalty were design, amenities, staff Room upgrades, quick check-in, late check-out, free internet, concierge level IHG – priority guests spend 57% more and cost less Marriott – Rewards members double stays after joining

Reward Program Elements : 

Reward Program Elements Prizes/rewards should be valued But, not too expensive (or they’ll think they’re paying) Attainable goals Range of prizes Prizes rotate or vary Cash rewards not valued

Rewarding Spa Clients : 

Rewarding Spa Clients Email reminders for gift occasions Unadvertised specials Express check-in or check-out Online order tracking Points toward future purchases Barter – gym, dry cleaner, restaurants

Rewarding Spa Clients – cont’d : 

Rewarding Spa Clients – cont’d Special sales Direct Mail offers Referral awards Birthday/anniversary recognition Extended shopping hours Third party/community

Unique to your business : 

Unique to your business Special promotions Double points days, times Double points services, providers, products Event attendance Service anomaly rewards Last minute services earn points, not discount

Current Loyalty Program Trends : 

Current Loyalty Program Trends Immediate rewards Targeted deals – birthday, previous purchase by genre Souped-up Membership – tied to credit card programs Manufacturer rewards Reward consortiums or partnerships

Successful Loyalty Programs : 

Successful Loyalty Programs Meet or exceed organizational KPI’s Communicate one-to-one, not one-to-many Deliver relevant, timely messages Updated consistently and frequently Recognize customer needs

Keep an eye on the bottom line : 

Keep an eye on the bottom line Program should be attracting and rewarding the “right” customer Design programs that inspire desired behaviors Expense of program cannot cut too deeply into profitability

Relevant Web Sites : 

Relevant Web Sites Chockstone.com Colloquy.com Points.com Rewardforloyalty.com Webloyalty.com Maritz.com Group3marketing.com Smartloyalty.com Loyaltymarketing.com Incentivelogic.com

Proven Client Retention – Loyalty Programs that Work! : 

Proven Client Retention – Loyalty Programs that Work! THANK YOU FOR YOUR ATTENTION! A copy of this presentation will be posted on www.wynnebusiness.com Sign up for our free e-newsletter for more best practice tips! lstarr@wynnebusiness.com

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