LOYALTY MARKETING &

LOYAL CUSTOMERS

PREPARED BY: RACHIT, AAFAQUE &

SUSHIL
 POINTS OF
DISCUSSION
 Objectives of Loyalty Marketing

 Principles of Loyalty Marketing

 Building a strategy

 Difficulty in Building true Loyalty

 Customer Recognition

 Economic Value Of a Loyal Customer

 Future of Loyalty Programs

 Conclusion


 THE BOTTOM
LINE

 "As a customer's relationship with the

company lengthens, profits rise. And not
just by a little. Companies can boost
profits by almost 100 percent by retaining
just 5 percent more of their customers" -
F.P. Reichheld
 AN
OVERVIEW

 Loyalty marketing is an approach to marketing which is

based on Strategic Management.

 It is a concept in which company focuses on growing

and retaining existing customers through incentives.

 Branding, product marketing and loyalty marketing all

form part of the customer proposition.

 American Airlines launched the first full-scale loyalty

marketing program of the modern era with the
Advantage Frequent Flier Program.
 LOYALTY
PROGRAMS
 A marketing process that generates rewards to
customers based on their repeat purchasing .

 Consumers who enter a loyalty program are expected to

transact more with the focal company, giving up the free
choice they have otherwise.

 In exchange for concentrating their purchases with the focal

firm, they accumulate assets (for example, ‘points’).

 Points are exchanged for products and services, typically

but not necessarily associated with the focal firm.

 CRM tool used by marketers to identify, award, and retain

profitable customers.
 OBJECTIVES OF LOYALTY
MARKETING

Retain best, most profitable customers.

Make good customers better.

Acquire customers with potential to become best

customers.

Reconnect lapsed users with the brand.

Revitalize the brand’s relationship with its core

franchise.
 PRINCIPLES OF LOYALTY
MARKETING

 Relevance is the key to Loyalty Marketing-The magnitude of

the reward is less important that the perceived value of the
reward.

 Special treatment, recognition.

 Loyalty Marketing reduces the consumer’s decision-making

complexity.

 Loyalty Marketing reinforces the rightness or wrongness of

the consumer’s choice.

 Loyalty Marketing is information-dependent.

 TYPES OF
CUSTOMERS

 Loyal Customers

 Discount Customers

 Impulse Customers

 Need- Based Customers

 Wandering Customers
BUILDING STRATEGY- GRAPHIC
DEPICTION

Product
Performance

Customer Retention / Revenue /

Service Satisfactio Loyalty Profit
Performance n

Employee
Performance
 DIFFICULTY IN BUILDING TRUE
LOYALTY
 According to a report from Mintel Research:
 Only 15% of all grocery shoppers are completely loyal to the
store where they do their main grocery shopping

 29% use one other store

 22% use two others

 Men are more likely than women to be loyal to a single store

 46% of men shop in just one or two main stores

 This study helps us to understand that merely spending

millions does not creates Loyalty. A continous approach is
essential.
CUSTOMER LOYALTY
CYCLE
 ACTION
OUTLINE
1. Select your market segment
 Identify most valuable customers (what criteria?)
 Identify customers who might become valuable

2. Design a relationship-building service culture

– Identify what type of treatment promotes customer loyalty
– Identify what loyal customers want to give to you
– Identify potential for the development of a brand community
3. Implement a loyalty treatment
– Design specific communication strategy and message
– Train staff to understand the importance and the process
– Create opportunities to invest and receive investments
– Generate a sense of community among your customers
4. Measure effects of program and redesign
– Maintain constant communication with your loyal customers
– Monitor costs and results of your program
 CUSTOMER
RECOGNITION

 Customer Recognition is an important aspect of any

business or for any Organization.

 With each loyalty programs Recognition aspect comes into

pivotal role.

 Each customer wants an attention or recognition whom

he/she enters into relation with.

 The recognition can be Tangible or Intangible.

 Don’t underestimate Customer recognition.

 ECONOMIC VALUE OF A LOYAL
CUSTOMER
 Understanding loyalty program economics is essential.

 A loyalty program incurs a cost to an organization which is of prime

importance as running these programs is isn’t cheap.

 According to a study by Mckinsey & Company estimated for any

Fortune 500 organization a program’s 1st year cost makes up for a
large amount simultaneously costing in marketing and maintenance.

 Understanding the economic value of your customers, not just your

loyal customers can save tremendous amounts of revenue and effort.
 EXAMPLES OF LOYALTY
PROGRAMS
o
Star Alliance Frequent Flyer Program

oTaj Innercircle Loyalty Program

 FUTURE OF LOYALTY
PROGRAMS
 Companies should look for ways to differentiate their
loyalty programs while balancing the revenue and the
costs.

 Focus should be made more specific or segmented like

targeting life-style, or interests.

 Concentrating resources on high potential and high

value customers.

 Organization's focus should be on broadening customer

relationship rather than rewarding.

 Coalition programs a new trend will be seen as new

concept in the loyalty programs.
 CONCLUSIO
N

 Thus we have seen that loyalty programs are of

immense value to any organization irrespective of
geographical distribution.

 Providing a better product an impeccable service

should be the major objective for any organization.

 Recognizing the customer and his spending behavior

can enable to make more specific rewarding structure.

 Loyalty programs should not be limited to Rewarding

but to broaden relationship with the customer and
offering them more liberty.