Vendula Mrázová: successful loyalty programmes in practice
Loyal customers: we all want them but the ways to ‘get’ and retain them are changing as customers themselves are. Customer loyalty is about more than loyalty programmes and rebates but good loyalty programmes still matter a lot.
While discounts remain the cornerstone of a loyalty programme, it needs to be supplemented by other benefits says Vendula Mrázová in an interview with Czech publication Mediaguru.
Vendula, who is Group Business Director at the Wunderman Prague office, looks at what makes good loyalty programmes and shares examples and tips for customer loyalty programme success.
A loyalty programme must have the support of the entire company
What is important for setting up a successful loyalty programme?
Vendula Mrázová: First, it is definitely important to set the goals that I expect to achieve from the loyalty programme. I need to know why I’m doing it. You set these parameters and the KPIs before starting the programme as they will be used to evaluate success.
It is also necessary to gain support for the programme across the entire company. It cannot rely on only one department, which decided to initiate the programme. Well on the contrary: the whole company must be confident about the programme. Getting this support is really important as a loyalty programme is a long-term investment with multiple benefits, including customer intimacy.
A loyalty programme really is an essential communication platform for one-to-one communication with the customer. It allows me to get to know him perfectly, and to find out what things are relevant to him. At the same time, a loyalty programme allows the company to provide the customer with relevant offers. Loyalty programmes have to be perceived as an investment over the long term, not as a cost. Every loyalty programme should bring something to the company and we have to be able to measure that, so that we can tell how the investment is paying off and what is the benefit of the programme for the company. Therefore, the abovementioned expectations need to be set up correctly from the very beginning.
Discounts are the basis but not the programme
How do you expect loyalty programmes to develop?
Vendula Mrázová: I think that in general and in the Czech republic we are rather being directed towards the discount being the basis of the programme but not the programme as such. Discounts can be formulated in many ways – percentage discounts on a purchase as Tesco offers, or point collection for a specific behaviour, which we can see quite often at gas stations.
However, a loyalty programme must always offer something more than a mere turning of the price spiral which does not make much sense for anyone involved. The advantage of loyalty programmes is that the customer gives us some information about himself. And in order to attract the customer to us, we have to give him something special that truly appeals to him – different care or another benefit. This can be delivering goods for free, faster complaints handling, quicker support, warranty extension, the possibility to return goods over a longer than usual period of time and without stating the reason, and so on. There are a lot of such non-price benefits and a correct loyalty programme definitely needs to have them in balance. But certainly the loyalty programme cannot be based just on the discount.
Loyalty programmes: a matter of partnerships
Wunderman participated in the loyalty programme of retail chain Globus. Is there anything specific or different about the loyalty programme of a retailer?
Vendula Mrázová: Without a doubt, it is the fact that there are a lot of parties entering the entire ecosystem as suppliers. It would not be very financially profitable for hypermarkets if they would make the programme just for and by themselves, this would be unrealistic. Any retail chain must have partners on the supplier side. And when setting their loyalty programme they must also bear in mind that it needs to bring in certain benefits.
When we were preparing the programme for Globus, we were looking at each benefit and its components through the lens of three pillars:
1. it needs to bring something to the customers so that it will be motivating for them to go shopping there,
2. suppliers that participate in it need to see the advantage as well and
3. the programme needs to bring in benefits and a little extra to Globus too.
Of course, there are some benefits that are aiming more at creating benefits and value for the customers while others aim to benefit the participating suppliers. But you can never set aside or forget someone because then the programme would not work in the long term.
Being clear about your customer loyalty programme: explaining as a key to success
You were also preparing the loyalty programme for Dr. Max pharmacies that had more than a million registered customers in two months since the launch. What do you think is the key to this success?
Vendula Mrázová: Dr. Max already had a well-established former programme, which their customers were accustomed to. We levelled it up by a redesign. Previously, the programme was based on a price benefit, when the customers were waived the prescription fee.
Now, in addition to the price benefits that we also had to adjust because of the change in legislation, it includes a set of non-price benefits. These are other benefits for customers, who, thanks to them, have a feeling that it is a true loyalty and not a discount programme.
We have also invested quite heavily into an explanation of the programme and its benefits to the customers. We needed to get the pharmacies and their professional staff on our side. They were actually our first clients. If they would not “buy in” the programme, they would not sell it to their patients. The Dr. Max loyalty programme is probably successful because we managed to explain the benefits to the pharmacists.
Going contextual, personalised and closer to the customer
Do you see any added value in mobile marketing for loyalty programmes?
Vendula Mrázová: Definitely! Mobile marketing can be used in terms of loyalty programmes for direct contact with the customer because he will immediately receive the message. We also strive to use simple follow-up communication using text messages. We have evidence that people react better to SMS than to email, if it is, for example, about special offers. And applications work as well – thanks to them we know where a person is roughly spending time, or approximately where he is at what time.
Therefore, we are able to give him a relevant tailor-made offer, as we know that he passes by our shop, where we have something for him right now.
And this is definitely the future: contextual, personalized and closer to people while at the same time avoiding spam so that we do not provide the customer with irrelevant offers.
We must communicate with customers according to their individual emotions, needs and preferences and what is their interaction with the communications within the loyalty programme context.