Creating a successful retail loyalty program
A new and exciting food hypermarket business is looking to convert the traditional trade into their very modern format in an emerging market. They asked us to create a loyalty system, which rewarded their best customers and gave them valuable intelligence in which to make good marketing decisions and spot trends at an early stage.
Having carefully studied the latest development in this controversial area (some strategists are suggesting retail loyalty programs are a burden, not a benefit), FRC made their proposal which was accepted and developed! Loyalty schemes which provide a real incentive for the customer to stay connected to the retailer, thus providing valuable insight into spending patterns, cost about 1% to 1.5% of turnover! In food retailing this is a lot! This cost can be alternatively invested in retail price, which is equally important in an emerging market.
However, when faced with the wildly different circumstances an emerging market has from city to city and considering the range of 40,000 differing SKU’s that you need to make a hypermarket attractive to a consumer in these circumstances, the valuable data a loyalty scheme can provide helps get the range right in every specific location.
The secret is to really reward the best customers and not just produce a discount scheme which any consumer, no matter how promiscuous they are benefits from!
The results were fascinating! The cost was as predicted 1.2% of sales but the increase in sales was far greater than expected as the scheme cleverly linked greater spend with greater rewards.