Loyalty programmes
Loyalty programmes as a tool to bond customers to the brand. Loyalty programmes are actions that target final purchasers, offering attractive prizes in exchange for purchasing the same products.
Modern loyalty programmes target final purchasers who buy items traditionally or online. In the case of some products (such as ice cream), final purchasers are also consumers, whereas in other situations, these categories are separate (e.g., in the case of dog food, the dog’s owner is the purchaser, whereas the animal is the consumer). B2C loyalty programmes are organised in many segments of the market, particularly by petrol stations, online shops, retail and dozens of other market categories.
Which loyalty programmes are the most effective?
Effectiveness, as the measure of goal achievement, enables us to assess to what extent loyalty programmes fulfil their objectives.
It does not apply solely to an increase in sales. The objectives of loyalty programmes are also related to company image.
Loyalty programmes
Loyalty programmes for customers are based on points. When customers do the shopping, they are awarded points which can then be exchanged for non-cash prizes from the catalogue.
Actions based on points and discounts
The second type of loyalty programme is those based on discounts. Instead of points, the customer is given a discount on retail prices. A special type of loyalty programme is actions based on both points and discounts, in which the customer is awarded points for shopping and can exchange them for discounts.
Money-Back
The last two types are programmes with multiple partners and money-back actions. In the latter, customers get a part of the paid price back in exchange for meeting the requirements outlined in the terms and conditions.
In Poland, loyalty programmes have been developed since 1999.
The first loyalty programmes were based solely on points. Then, companies started to offer discount programmes. The last two categories involve the most recent techniques, with money-back actions seen as the most dynamically growing type of loyalty programme. Since the level of affluence in Polish society is relatively low compared to Western European countries or the USA, programmes based on discounts or points and discounts are the most popular.
Watch an interview on the YouTube Channel “About Loyalty Programmes at Night” about managing a global loyalty programme at Shell.
What are the main advantages of loyalty programmes?
For companies, the main advantage of loyalty programmes is the fact that they are a platform for long-term communication with participants and provide access to information on purchases made by a given target group. The loyalty of customers, measured by repeated purchases of products covered by the loyalty programme, is fully measurable and makes it possible to design specific actions to boost sales.
Contrary to short-term promotional techniques (e.g., lotteries in which the main determinant of demand is encouraging participants to choose the promoted brand and no other, in the case of loyalty programmes), sales grow due to an increase in cart value and how often participants do the shopping.
How does a loyalty programme work?
The aim of a loyalty programme is to encourage final purchasers to keep buying the same products and recommend them to their friends and family. In practice, profits from a loyalty programme are generated due to an additional margin on the sales of products, achieved thanks to the loyalty programme.
People who participate in a loyalty programme provide their data and give their consent to communicate with them, which leads to dialogue. In this way, you can communicate with participants in line with the GDPR, and the cost of reaching an individual participant is low. Participants are usually identified at the counter by presenting a bar code in their mobile application (or a plastic card), so the organiser has full access to key information on the structure of their shopping.
When we know what the purchaser buys, we can prepare special offers that encourage participants to increase sales volume. Also, this is not to mention the fact that manufacturers are willing to pay for access to such data because, for them, it is invaluable knowledge on the structure of shopping, which serves as the basis for determining sales support activities.
Loyalty program – an example
Loyalty programs work very effectively. It is enough to adjust the program rules to the individual expectations and defined customer needs, but this should be seen as only the first step. What matters is strategy, and the way loyalty programs are handled. Our track record includes dozens of implementations of such programs. At i360, we organize and support B2B and B2C loyalty programs. A perfect example is the Generali Discount Program. This loyalty program is a non-standard solution. It shows the possibility of using the loyalty program technique in a market segment which does not usually carry out such actions.
Generali policyholders have access to discount offers that they can take advantage of every day. Participants are provided with promotions such as cheaper fuel, use of car washing, purchase of car parts, as well as discounts on vacations, airline tickets or many other prizes. i360 provides integration of the IT system with the Generali policy database as well as preparation and maintenance of the website.
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