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How to implement Customer Loyalty Program
Q&A Session Between G-CEM Advisors And Members
Mr. Henry Winter, Chief Executive Officer, Groove / SmartClub
www.g-cem.org
Question: In view of the current market condition and economic development in China, I would like to ask how to launch Customer Loyalty Programs for Servicing and Retailing industries in Shanghai. What aspects should we pay attention on? Besides taking reference from TESCO and NECTAR, what else should we need to know / use?
I would suggest 7 key items for your consideration:
1.The key to any successful loyalty program is "recognition" - making your loyal customers feel special and appreciated. This largely comes down to staff training. This cannot be programmed into a computer, it requires total commitment from senior management, otherwise front-line staff will sense that this is just a "project" instead of a long-term commitment, and they won't really implement as they should.
2.Be very clear "why" you are setting up the program...just to reward repeat purchase, or also trying to capture data? If you are trying to capture data, you need to plan ahead for "how you will actually use that data to make business decisions"?
3. Make sure your points program is attractive to consumers, not just to your company! Remember what it feels like to be a consumer, and remember how you felt when you joined someone else's points program, then realized it would take you twenty years of spending to earn a nice prize!
4. Don't make the mistake of thinking you "own the customer". You don't own people, that's called "slavery"! Your customer is very likely also your competitors' customer, and they don't "own" the customer any more than you do. Don't even waste too much time thinking about your "relationship" with the customer...your customers have relationships with their families and friends, they don't have "relationships" with the telephone company, and probably not with you either.
5. So what does that mean? It means don't be afraid to partner with other companies to do co-promotions or joint loyalty programs. Every single company we've met, from banks to supermarkets to media owners, says "You don't understand! MY data is different than everyone else's! MY data is much more valuable! I couldn't possible consider working with a non-competing partner, what if they stole my valuable customers and somehow they got to my competitor?"....Time to wake up and smell the Starbucks! You do not own your customers! If your competitor offers a joint program that allows customers to earn rewards faster, and provides richer data than your stand-alone program...you will lose! The customer doesn't think that "Oh, this company doesn't have a shared program, that means they really care about 'our' relationship!" Get serious! The customer thinks "Hey, if I go to the competitor, I can get better value...Goodbye!"
6. So instead of reading incomprehensible books on CRM relationships, instead focus on making sure your program delivers true value to the customer. Imagine yourself as your own customer, at the point of making a purchase decision. You're hesitating between a few choices...what would it take to make you choose your own company's products/services?
7. Lastly, of course, my advice is to seek professional help. Running a loyalty program is a tremendous amount of work. It takes careful planning to set it up...and then it takes lots of execution to run. Are you planning on supplying your own electricity? What about building your own cash register system? Of course not. You buy those things from specialist suppliers, so that you can concentrate on your core business. Outsourcing your loyalty program will almost certainly bring you better results for the same cost, and eliminates a major operational headache for you.
About The Author
Henry Winter is the Chief Executive Officer of Groove Street, China's leading technology marketing company. In 2002, in partnership with the Shanghai Public Transportation Card Company, Groove Street launched "SmartClub", a large-scale coalition loyalty and database marketing program. In 2003, Groove Street will bring SmartClub to Hong Kong and other cities in Greater China. Groove Street specializes in helping clients integrate mobile, smart card, internet, and retail technologies into their traditional marketing. Clients include Danone, Evian, Ford, Heineken, Johnson & Johnson, Nautica, Nike, and Warner Brothers. Groove Street and its clients have won multiple awards from Media Magazine and other industry associations. Prior to founding Groove Street in 1997, Mr. Winter was a management consultant with Booz-Allen & Hamilton in Hong Kong. He holds an MBA from the Wharton School, an MA from the Lauder Institute, and an MIA from Columbia University's School of International Affairs. Mr. Winter is fluent in Cantonese, French, and Mandarin
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