How to Improve Your Brand Loyalty Program

How to Improve Your Brand Loyalty Program

What is a brand loyalty program?

When consumers become committed to a particular brand, a behaviour pattern is observed which makes them make repeat purchases over a period of time.  Businesses use creative marketing strategies such as brand loyalty programs or reward programs, brand ambassadors, trials and free samples to build loyalty towards their brands.

Companies use different tactics to create brand loyalty in a highly competitive market, where there are a lot of established and new players.  They will study the buying and shopping patterns of their customers, build relationships through a robust and excellent customer service and engage brand spokespersons to attract new customers and retain old ones.  Consumers typically purchase from their favourite brands; and price and convenience will definitely not stop them from being loyal.

Brand loyalty addresses the most important requirements and needs of its customers.  Loyalty leads to retaining of old customers and an increase in profits.  When this happens, it is considered to be a successful program.

Consumer Trends and Brand Loyalty

Studying consumer habits and purchasing behaviour are trends that are studied regularly and over a period of time.  Some trends do not change, but there are others that evolve over a period of time. Companies collect and analyze data of their customers, in order to be able to understand how to market their products.  Marketers track changes and change their marketing and promotional campaigns accordingly, in order to be able to retain their brand loyal customers. Companies hire brand ambassadors to be spokespersons for their products, promote the brand’s image and stimulate interest in their products.  By this, the company hopes to influence purchasing behaviours of customers. Brand ambassadors can prove that word-of-mouth is an effective tool to disseminate information.

Companies need to continuously monitor and research their products and services to find out how effective they are in the long run and make suitable modifications that will add value to their customers, thereby increasing brand loyalty. When a company ignores consumer trends, it usually leads to a decline in market value, profits, market share and most importantly, they start losing loyal loyal customers. A classic example is Blockbuster, which once had a monopoly in the market but failed to capitalize on it simply because their product was not aligned with their customer’s growing needs, behaviours and environment. Responding too late to trends is as detrimental as coming second in the market. To assume that a product will always meet the needs of consumers is a sure recipe for disaster.

Keeping the customer happy and making them advocate for your brand involves more than great service.  How will you ensure that this customer keeps coming back to buy your product in the future?  One great way to ensure returning customers is to have a robust customer loyalty program.  In fact 76% of customers agree that a brand loyalty program is a great way to foster a bond between the customer and the brand.  A customer loyalty program is a marketing technique to retain loyal customers and to attract new ones.  It is a rewards program that rewards customers that frequently conduct business with a company.

Why a well established brand is worth billions

What does a good brand mean? How can a brand be valued at billions of dollars? After all, aren’t they simply the byproduct of clever marketing strategies and smart product positioning?

Brands bring in a sense of value to their customers, ensuring a promise that they will always deliver on quality and credibility.  For example, if you are looking for running shoes, you might not look beyond Nike or Adidas.  In case of cars, even if you have absolutely no inkling about them, you somehow have this subconscious   realization that Mercedes makes good vehicles.

If you walk through the doors of a McDonalds you know exactly what you will be getting. People associate their positive experiences and memories with a brand and develop loyalty to it – a loyal customer is often undeterred by price fluctuations or momentary lapses in quality or customer service.

Good brands do not try to be all things to all people

It is interesting to note that brands do not have to mean something to all the people, in order to be successful.  For example, Apple does not attempt to be appealing to all its customers and they are aware of people out there who hate the very brand and would not buy anything associated with it.  Similarly, there are customers who hate the very idea of shopping at WalMart, a value-for-money retailer.  On the other side, there are people who live on WalMart purchases throughout the month and stretch their paychecks as much as possible and have absolutely no problem with the no-frills, low-cost approach.

Brands  Matter

Brands definitely matter and they offer a certain amount of value to their customers, irrespective of how WPP estimates brand value.  There is not much difference in taste between Coca-Cola , Pepsi and other cola-flavoured beverages  to explain the discrepancy in valuation, but over a period of time, they post significantly higher returns on capital than their industry peers. With each passing year, these differences accumulate and companies with valuable brands generally produce better market returns.

The above thought does not mean that investors should ignore or avoid companies that do not or cannot build a brand around their business. They should not limit their thinking or analysis to trailing sales, book value and other easily quantifiable fundamentals. There might be some doubts about the valuation of companies and sometimes a prestigious brand is often all that stands between two products that cannot be distinguished; all that exists is a thin line between a super product and a run-of-the-mill outcome.

How can brands benefit from loyalty programs?

Businesses that operate in competitive markets constantly need to come up with innovative ideas to differentiate themselves from their competition and to stay close to their customers. The constant pressure of low margins and fixed costs hangs over their head. And the threat of low-price competitors cannot be done away with. When price remains more or less the same, companies have to look for other differentiators.

One such advantage that businesses can offer to their customers is through customer loyalty programs. They not only give an additional benefit to their customers during price wars, but they also prevent customers from switching loyalty to other brands.  When these programs are run well, they can contribute up to 20% to a company’s profit. It is no wonder then that US companies spend 25 Billion USD every year on loyalty programs.

What is the beginning of Loyalty Programs? Around the 1970s it was found that businesses that had a better relationship with their customers had better customers.  This in-turn generated better business.  It started off as a marketing strategy for small and medium businesses that used the information collected in their database about their customers, to monitor and manage their behaviour and spending habits.

There are plenty of brand loyalty programs in modern times, but most of these can be slotted into two different categories; Standalone and Partnership.

  • Standalone

The most common loyalty membership today is the standalone program where customers get rewarded for shopping with the company that offers the program. Points can be redeemed only within the range of products offered by the program owner.  For example, if I buy products from Bath and Body Works, I can redeem my points for products within the brand or store.

  • Partnership

Often brands partner with other brands to offer their customers new and unique shopping and experiences.  There is more than one company that participates in this program. Customers are rewarded for doing business with all the participating companies. Loyalty points can be redeemed within all the products offered by the participating companies.  For example, if I earn points with the Wyndham group of hotels, I can also redeem my points with the Casino group of hotels that is partnered with the Wyndham chain.

How do they compare against each other?

What do customers want? The problem with any good customer strategy is that every company wants to copy a successful loyalty program without giving much thought to whether this program would work for their customers.  Sadly, most of these fail miserably; not because of a fault with the concept, but because it isn’t based on careful analysis of customer behaviours. Every brand loyalty program should include :

  • Rewards that customers can relate to

The reward program should offer instant gratification, rather than saving the best for the last.  Customers are attracted to attainable reward programs.  But what matters in the long run is the relationship that the business cultivates with its customers.

  • Never forget the bottom line; that is to sustain brand loyalty

From a brand’s perspective, the ultimate motivate of a loyalty program should not simply rewarding customers; rather the focus should be on cultivating brand loyalty and discourage customers from switching brands or stores.

  • Program suited for different segments

When it comes to brand loyalty programs, there are no one-size-that-fits-all kind of a customer strategy.  The loyalty program should be designed in such a way that it addresses the needs of different segments of customers.  It should first identify the needs and requirements of its customers; then analyze the purchasing habits of their customers and so on.  If the business can partner with other like-minded companies to offer new and exciting shopping experiences, this would definitely work out to be a very successful marketing strategy.

Best brand loyalty programs

Sephora’s Beauty INSIDER

According to Sephora’s rewards program, customers earn 1 loyalty point for each dollar they spend at Sephora retail stores, on Sephora websites or Sephora stores that are present inside JC Penney Stores.

Sephora’s program has a mobile app, but customers need to use their email address when they check out, to accumulate points.The mobile loyalty program is divided into 3 tiers and features unique rewards like birthday gifts and a private hotline to exclusive events and free beauty classes.

Starbucks Rewards

Starbucks issues stars as a loyalty indicator. What differentiates it from many large-scale loyalty programs on the market is that it is simple and easy to use.  It has only 2 tiers – Green and Gold. The first tier works very well because it is convenient for both existing and potential customers. Perks include:

  • Free refills
  • Mobile payments/ordering
  • Exclusive member offers

Apart from enjoying personalized rewards, Gold-tier members also get a personalized card which they can use instead of the mobile app, if they want to.

Neiman Marcus’s In-Circle

Neiman Marcus’ loyalty program is a points-based rewards system, where customers earn 2 points for every dollar they spend.  This places a lot of emphasis on advancing to the next program tier.  The system has 5 regular tiers and 3 luxury-type tiers.

Customers can earn double loyalty points through exclusive private offers, events and perks. Members placed on a higher are offered rewards such as personalized travel services, sartorial consultation and high-end restaurant reservations.

The program’s highlight is its Perk Card which offers numerous privileges.  Moreover, when members accumulate 10,000 loyalty points, they also get a $100 Points Card.

Kohl’s Yes2You Rewards Program

Consumers who sign up for Kohl’s program are enrolled on a cash back points-based system, where they earn 1 point for each dollar they spend (no matter how they pay). Once they reach 100 points, they get a $5 reward.

Also, every year, program members  receive a birthday present along with 8 extra savings offers. In addition, members can also earn bonus points on various occasions, and other surprises too.

The program is available on both iOS and Android devices on their app.

Bulletproof’s Bulletproof Rewards

Bulletproof is known both for its coffee shops and also for its online store where people can buy products that are coffee-related, as well as plenty of food items and drinks. Their loyalty program is mostly built around online purchases, which is a strategy that one does not see enough of, nowadays.

The program itself is a points-based system, and customers can earn points by:

  • Making purchases
  • Sending out invitations
  • Subscribing to a newsletter
  • Submitting product reviews
  • Adding product tags
  • Registering on Bulletproof’s website
5 Ways to up your Customer Loyalty with Order Fulfillment

5 Ways to up your Customer Loyalty with Order Fulfillment

It is the small things that really matter in any relationship; including the brand-customer relationship.  As eCommerce websites, it is our job to assure our customer experience even after the shipping lands in the hands of the customer. A little effort on your part before shipping can turn first-time customers into your brand ambassadors. As Maya Angelou said, “people will forget what you said, people will forget what you did, but people will never forget how you made them feel”. Make your experience such that they don’t forget – here are five examples of ways you can woo your customers with order fulfillment.:-

 

Personalized Notes

This is one of the easiest ways to personalize your sale. Write a small handwritten “thank you” note for the sale to your customer. Address them by their name, thank them for their purchase and say that you hope they will enjoy their purchase. Is the customer a returning customer? Add that you value them being loyal customers. Did you help them with their purchase? Refer to that in your letter. End the letter by informing them that you are there to answer their queries at any point of time. This feel-good letter will encourage them to leave a review on your website / social media. Let them know that you genuinely care about them and want to open room for dialogue between the two of you.

Thank you letter from a store

Free Goodies

Want your customers coming back to you? Occasionally offer them a special discount coupon or gift vouchers to keep them happy and returning.

If there are any customers who have had a bad experience with your brand, you can turn it around by including something extra with their order. Make amends by including a free gift, sample or vouchers or coupons along with an apology letter in the shipment. This would make the experience positive rather than negative.

Special Coupons

Promotional information

Include your product brochure and flyers along with the shipment. After all, they bought a product from your store and are likely to buy another if reminded about them. Upcoming sale and collection updates should also be included in the shipment to build up anticipation for your promotions.

Promotional Information – Product Catalogue

Special packing

Create unique packaging material for your brand. This will make your brand easily identifiable and definitely impress your customers. To look at the numbers, it was found in a study that 52% of customers are likely to repeat purchase from online merchants with exclusive packing and moreover, 1 in 2 customers expect their shipment packing to be branded if the retailers provide branded packing in-store. Here is an online brand which is doing it right.- Bonobos, a popular men’s apparel retailer from New York City has distinct packaging that makes it instantly recognizable. The added handle to make the box look like a briefcase is a great creative way of creating a buzz.

Bonobos Packaging

Segmentation for Personalization

Personalization takes time and money. Hence, spending time personalizing all shipping your company makes is taxing. The smart way to go around personalization is through segmentation. Personalize where it is more likely to give you a better return on your effort. Segment customers on criteria such as how much they spend, when their last purchase was, their purchase history and when they were last active. Then choose and invest in building relations with your best customers.

 

3 Big Data Methodologies Every Superstore Must Deploy – Customer Profiling

3 Big Data Methodologies Every Superstore Must Deploy – Customer Profiling

Superstores are a complex set of stores to operate; they are a combination of a supermarket and a department store. Not only are hypermarkets massive with thousands of square feet in area, but they also have thousands of different products and are visited by hundreds of thousands of customers. With electronic POS software in nearly all superstores, they are now able to collect huge amounts of customer and transaction data, that’s truly big data! While maintaining the optimum supply chain logistics to optimize their operation, they also need to focus on the analysis of this data, which can help in increasing customer loyalty, optimizing their inventory and propping up their margin.

There are a lot of methodologies which can be deployed in the case of hypermarkets. Here I will be identifying the top 3 that are an absolute must for maximum benefits.

Customer Profiling

The customer is always King. The trick is treating all of them as kings, when you have hundreds of thousands or even millions of customers. Every customer is unique and has their own preference, schedule and history. The key to success is to identify each customer’s preference, figure out who your best customers are and which customers are the most likely to grow to become your most profitable customers. Other questions that should be asked are; what products attract your customers, which customers come frequently but spend less, and what are the key drivers that pull a customer into the store. This magnitude of data is hard to organize and analyze with only hundreds of customers, but in the case of bigger mid-sized retail chains, the customer counts run into hundreds of thousand to millions. Analyzing them as individuals per the business goals becomes a major challenge for all retailers.

Why this is needed: “Collecting data through loyalty programs will not increase your sales. Using that data to understand your customers and building engagement strategies around it will”. Once the retailer profiles his/her customer groups to a level where they can distinguish between ‘high loyal’, ‘deal seekers’, ‘value buyers’ and further narrow down the behavior to ‘female customers between 20 to 30 years of age’ or ‘people living in suburbs shopping primarily on weekends only’, they will be able to customize their merchandise and promotions to cater to each customer group’s specific needs.

How this can be done: Segmentation is the key to figure out who your customers are. The basic methodology uses a 3-axis segmentation, grouping customers by most recent visit, frequency of visits and spending habits. The more advanced methodologies use as many as 8-10 different parameters to cluster the customers, and create distinct groups that outline key behaviors for a customer. The more information the retailer has, the better the segmentation will be. Merging attitude and behavior with demographics can create micro-segments, which can also pinpoint and predict a customer’s behavior.

Benefits to the retailer: Creating the segments or the micro-segments is not enough. Only after each micro-segment is analyzed in detail and their KPIs studied, along with product purchasing behavior, spending pattern, etc the retailer will be able to a make an informed decision. Promotions can then be specifically created to reward specific customers. This will simultaneously reduce the cost of promotions significantly while increasing the customer’s response to promotions. Customer segmenting can also be used to push specific products to a specific group of customers, based on their micro-segment, purchase behavior and product affinity. The net result of all this is an increase in customer loyalty, a reduction in promotion cost, an increase in customer’s response to promotions and an increase in customer satisfaction with the retailer. Win. Win. Win.

How do you use customer profiling to improve margins and increase purchase behavior?

 

Top customer engagement takeaways from NRF 2013

Top customer engagement takeaways from NRF 2013

27,000 delegates from across the world gathered in New York this January at NRF 2013, making it the largest platform for discussing the future of global retail industry. Team Capillary brings to you the three most talked about customer engagement trends at the show.

1. “The Great Convergence” : Deloitte

In a keynote addressed delivered at NRF’s BIG Show 2013, Alison Paul, compared the impact of the digital revolution to the Industrial Revolution and how it caused a massive reconstruction of the industry. Rather than change in retail technology, he said it is consumer technology that is changing and retailers need to take notice.

2. Mobile continues to dominate customer engagement!

For a second year running, after 2012, NRF 2013 was dominated by mobile. While leading retailers such as Macy’s and Sephora are testing a range of mobile technologies, mid-segment retailers were also curious to know how to ‘Go Mobile!’

3. Smarter Analytics for Personalization

In one of the key NRF Educational Sessions, leading specialty children’s apparel retailer, The Children’s Place discussed how analytics is helping them improve business strategy. They are building brand loyalty through personalized and targeted communication.

Also at NRF’s BIG Show ‘13 Jeff Bezos was awarded the Gold Medal Award for the company’s excellence in retail and his inspiring leadership. Crocs, Inc., President and CEO, John McCarvel was named Retail Innovator of the Year while Lululemon Athletica CEO, Christine Day was awarded International Retailer of the Year at NRF’13.

Capillary Congratulates Raymond on Winning ‘Asia’s Best Customer Loyalty Program’

Capillary Congratulates Raymond on Winning ‘Asia’s Best Customer Loyalty Program’

Raymond’s Premium Loyalty and Rewards Program – Raymond Rewards – powered by Capillary now benefits over 1.3 Million Shoppers

Capillary Technologies, a leading provider of cloud-based software solutions that help retailers to intelligently engage with customers through mobile, social and in-store channels, congratulates Raymond Retail for being named as the winner of  Asia’s Best Customer Loyalty Program at the Asian Retail Leadership Awards held recently in Dubai. The Awards recognize the achievements of Asia’s leading business visionaries across the retail industry and honor their contributions toward the region’s economic development.

The Raymond Shop is a premium retail store offering complete wardrobe solutions for men which includes top-of-the-line brands – Raymond, Raymond Premium Apparel, Park Avenue, ColorPlus, and Parx. The Raymond Shop has been a pioneer in organized retailing in the country starting around five decades ago. Their wide reach and range of products makes it the largest one stop retail network in the country.

Through the Raymond Shop network, Raymond Retail drives and manages a powerful customer engagement program to delight its customers at every interaction—from registration to rewards. Raymond’s “Premium Circle” customer loyalty and rewards program runs across its 650 stores—90% of which are franchise owned – engaging 1.3 million consumers in total. Premium Circle members benefit from preferential customer service, great rewards, cross-industry partnerships and real-time relevant & personalized offers. With simple signup, low entry level thresholds and a superior brand experience, more than 60% of customers every month get signed up for the Raymond Rewards program. Raymond’s Premium Circle program leverages cloud, mobile and real-time analytics of Capillary’s InTouch solution to deliver accelerated value to its customers and to close the loop on customer loyalty and business growth.

Our rewards program has been purpose-built completely from the consumer perspective,” said Mrinmoy Mukherjee, Director, India Marketing & Global Business Head for The Raymond Shops network. “In the highly competitive apparel industry, we have significantly increased bonding with our customers by establishing one-to-one relationships.  Our Premium Circle loyalty program is at the core of this strategy and our customers are delighted with the focused attention on their purchase needs, likes and tastes.” Raymond continues to operate one of the largest specialty retail networks in the textile and apparel space with over 700 retail stores covering over 1.5 million square feet of retail space including over 40 stores in the Middle East and SAARC region. “We will continue to increase our retail foray to cater to the buoyant consumer sentiment.” concludes Mrinmoy.

Raymond has been successful in transforming and taking customer loyalty and engagement to a level where a majority of their customers have embraced their Premium Circle program,” said Aneesh Reddy, CEO at Capillary Technologies.  “Raymond has proved itself to be a visionary and customer focused leader in the retail industry and we extend our sincere congratulations to them on being selected for the Best Customer Loyalty program at the Asian Retail Leadership Awards.”

Capillary Technologies selected for 2012 Red Herring Top 100 Asia Award

Capillary Technologies announced today it has been selected as a Finalist for Red Herring’s Top 100 Asia award, a prestigious list honoring the year’s most promising private technology ventures from the Asian business region. Capillary Technologies was recognized as a leader in intelligent retailing solutions, catering to 120+ brands worldwide, reaching over 40 million consumers across 10,000+ stores.

The Red Herring editorial team selected the most innovative companies from a pool of hundreds from across Asia. The nominees are evaluated on both quantitative and qualitative criteria, such as financial performance, technology innovation, quality of management, execution of strategy, and integration into their respective industries.

“Our journey so far has been really exciting. In last four years, we have grown from a garage startup to a multinational entity with global presence.” said Aneesh Reddy, Co-founder & CEO, Capillary Technologies, “Capillary today is a global leader in the intelligent customer engagement space and has achieved phenomenal success in helping retailers in discovering more value from their customers and enhancing the customer’s experience with the brand. We are very proud that our achievements have been recognized by Red Herring through this nomination.”

This unique assessment of potential is complemented by a review of the actual track record and standing of a company, which allows Red Herring to see past the “buzz” and make the list a valuable instrument for discovering and advocating the greatest business opportunities in the industry.

“This year was very rewarding,” said Alex Vieux, publisher and CEO of Red Herring. “The global economic situation has abated and there are many great companies producing really innovative and amazing products. We had a very difficult time narrowing the pool and selecting the finalists. Capillary Technologies shows great promise therefore deserves to be among the finalists. Now we’re faced with the difficult task of selecting the Top 100 winners of Red Herring Asia. We know that the 2012 crop will grow into some amazing companies that are sure to make an impact.”

Finalists for the 2012 edition of the Red Herring 100 Asia award are selected based upon their technological innovation, management strength, market size, investor record, customer acquisition, and financial health. During the several months leading up to the announcement, hundreds of companies in the telecommunications, security, Web 2.0, software, hardware, biotech, mobile and other industries completed their submissions to qualify for the award.

Check out the finalists here

Capillary among India’s Top 10 emerging companies at Techcircle SaaS Forum 2012

Capillary Technologies, the market leader in cloud-based retail customer engagement and loyalty solutions, today announced that it was named as one of India’s Top 10 emerging SaaS Companies at Techcirlce.in’s SaaS Forum 2012, honoring the year’s most promising SaaS technology ventures from India.

Techcircle.in has come up with a listing of India’s top 10 emerging SaaS companies who have shown significant market traction, created unique products or services that can disrupt existing markets and most importantly, have a very high potential to make it big in the coming years. The listing has been compiled by a distinguished jury comprising Shailendra Singh, MD, Sequoia Capital; Manik Arora, MD, IDG Ventures and Mukund Mohan, an active angel investor. These 10 companies have also showcased their products during Techcircle Runway at Techcircle SaaS Forum 2012, in Bangalore on Aug 31.

Powered by cloud, mobile, business analytics and social technologies, Capillary’s solutions are completely customizable as per retailers’ need and can run on any Point of Sale (POS) system without any additional capital expenditure. Its flagship program, !nTouch is built for large enterprises and is successfully delivering customer delight in over 10,000 retail stores across the world. The company also offers a self-serve solution called TruTouch that services emerging mid-market retailers. As of May 2012, Capillary was processing around 8.5 million transactions a month, catering to as many as 140 brands and 30 million consumers.

“Capillary’s key differentiator has always been its Patent Pending SaaS and Cloud based technology. Capillary is the only player to provide an end to end intelligent customer engagement solution to retailers – from data capture, retail analytics and business intelligence to multichannel campaign management and social + tablet + digital customer experience” remarks Aneesh Reddy, CEO at Capillary Technologies. “We are pleased to be recognized by Techcircle with the India’s Top 10 emerging SaaS businesses award for delivering superior business value to our customers.”

Techcircle.in recognizes Software-as-a-Service (SaaS) as a red hot technology in the Indian software products ecosystem – both in terms of startup activity and as a tool for entrepreneurs to build a low-cost business from scratch, that is making significant progress to replace conventional enterprise architectures. Although the buyer maturity and technology adoption remain hurdles for SaaS growth in India, forward looking businesses like Capillary are creating transformational solutions that deliver accelerated ROI to customers in secure environments without any upfront commitments.

Over the years, Capillary has won many laurels, including the prestigious Prize 2009, a global business plan contest conducted by Qualcomm Inc. and the NASSCOM Emerge50 – League of Ten 2011. Capillary has also won Techcircle’s Fastrack 2012 and TechSparks 2011, India’s biggest discovery platform for product technology start-ups where it was selected as one of India’s top five most innovative technology companies.

Read more about the winners at here

Capillary Wins Entrepreneurial Excellence Award at TiECon Delhi 2011

Capillary Wins Entrepreneurial Excellence Award at TiECon Delhi 2011

Continuing with our winning streak, Capillary was selected as the winner of the TiE-Lumis Entrepreneurial Excellence Awards at The Indus Entrepreneurs (TiE) Delhi chapter’s annual event TiECon Delhi 2011 on 30 September 2011. Each year, TiE Delhi recognizes early stage entrepreneurs who started and have achieved a certain degree of success. A strong panel of experts choose the best, who get the opportunity to present to the TiEcon audience.

Delhi Chapter is among the largest and most vibrant across the vast TiE network. In the last 10 years, it has emerged as the forum of choice for startups, serial entrepreneurs, VC and angel investors, policy makers and academia. The jury panel was headed by TiE Delhi NCR President Sanjeev Bikhchanani, Yo China’s Ashish Kapoor and Lumis Partners’ MD Sandeep Sinha. Three startups, including Capillary were chosen from a pool of over 150 startups in India for the top three slots.