Find out how senior management views loyalty and incentive schemes. Discover ways to implement them in your company!
Loyal customers are an extremely valuable asset for any business. For this reason loyalty schemes are particularly important not only as a tool for strengthening brand loyalty itself, but also for understanding consumers’ needs, preferences and behaviours.
The impact of incentive schemes on senior management
Loyalty schemes make it possible to define a customer’s profile with precision. This makes it easy to gather information on, amongst other things, the most frequently chosen products, lifestyle, shopping frequency, and the times at which customers go shopping. With access to such data, you can develop targeted advertising campaigns more effectively, which will ultimately be far more successful. Nowadays, there is a move away from treating consumers as the „average Pole”. Modern technology, particularly analytical software, enables a „one-to-one” approach, allowing offers to be tailored to the individual needs of each customer. Marketing activities prepared in this way prove to be incredibly effective and deliver tangible benefits.
The role of a loyalty programme in a company’s management structure
To begin with, it is worth defining the role and objectives of the loyalty programme itself, in order to understand its role within the company’s management structure. An initiative of this kind should not be treated solely as a marketing tool. Ideally, it should become an integral part of the company’s overall concept, within its structure.
First and foremost, a loyalty programme helps to gather vast amounts of valuable data. Customers taking part in the scheme account for a growing share of turnover, so the more of them there are, the more confidently the company can make important decisions. It might seem that loyalty programmes are the sole responsibility of marketing departments. In reality, however, the sales department can also derive significant benefits from the information provided by a loyalty programme, for example during commercial negotiations with partners. Details concerning, amongst other things, customer behaviour, consumption of specific products, attitudes towards the brand and purchase frequency are vital for sales representatives and retail chain buyers. For this reason, it is certainly worthwhile for both departments to join forces to implement the campaign together.
The most important business decisions are usually made on the basis of an analysis of hard data. A loyalty programme that provides access to precisely this kind of information should be a shared focus for the marketing, sales, logistics and management departments. The insights gained in this way can, in fact, be effectively used to shape the company’s overall strategy and implement the most promising changes.
The role of loyalty schemes in a marketing plan
From a marketing director’s perspective, a loyalty programme is an excellent tool for assessing the effectiveness of promotional campaigns. It allows for a precise assessment of how many customers were encouraged to make a purchase, what results the campaign yielded, and what differences exist between participants and customers not taking part in the programme, etc. In this way, it is possible to carry out a sound evaluation of the measures implemented to date and their impact on the achievement of business objectives. Furthermore, a loyalty programme provides excellent support for communication with customers, as it helps to personalise it appropriately.
The costs of running a loyalty programme. Methods for estimating ROI
A loyalty programme is not a one-off initiative, but a long-term undertaking and investment, the costs of which are borne over the long term. When discussing the costs of organising and running a loyalty programme, a number of factors must be taken into account. It is not only necessary to fund rewards or cashback, but also to cover a range of other costs. These include, amongst other things, expenditure related to: communication with participants, logistics, the purchase and maintenance of IT infrastructure, and the employment of specialists to manage the programme.
But how do you calculate ROI (. return on investment – return on investment) of a loyalty programme? It is linked to increased sales and the acquisition of new customers who previously chose competitors. The return on investment in organising the campaign is therefore the additional margin, less the costs of running the programme.
Management’s perception of loyalty schemes
The choice of a loyalty programme depends largely on how one understands its essence and role. This factor is more important than the position of the person conducting the internal review, regardless of their specific position in the hierarchy. Typically, the marketing director is primarily responsible for the loyalty programme, overseeing its organisation, management and development. Consequently, they disseminate the information and insights gained through the programme. How this knowledge is utilised depends on the individual decisions of the sales director or managing director. In practice, this boils down to a choice: whether the loyalty programme should serve as an aid to the strategic management of the company, or whether it should merely be a marketing tool.
Planning loyalty schemes
The first stage in planning activities as part of a loyalty programme must be to analyse the data obtained through the measures implemented to date. This data should be summarised, and it is important to determine which of these measures have yielded the best results in terms of implementing the company’s strategy.
Next, it is best to address the issue of the programme’s appeal. A marketer or sales director must consider what they should do next year to make the loyalty programme even more interesting, more profitable and more appealing to customers. The business environment is changing very rapidly, so it is worth thinking on an ongoing basis about how to encourage consumers to make purchases. Customer behaviour is gradually evolving, competitors are introducing new technological solutions, and there are an increasing number of new promotional and loyalty campaigns, etc. Keeping a close eye on the market is key to developing an effective strategy.
Key tips for those planning to launch a B2C or B2B loyalty programme
A useful piece of advice for future organisers of such campaigns is to ensure the programme is properly integrated within the wider organisation. It should not be merely a marketing tool, but a broader component of the company’s strategy. It is also very important to ensure sufficient flexibility. A loyalty programme must adapt to a changing reality. As a long-term investment, it cannot remain static. For this reason, it is essential to continuously monitor and analyse the programme itself, as well as the market and customer expectations. In this way, participants can be provided with what they actually need on an ongoing basis.
This article is based on the conversation „On loyalty schemes at night”, available on YouTube.
