Purpose
The purpose of this memo is to provide the Management Team at Tech Garden with insight into the new customer loyalty program. This memo will explain why a customer loyalty program is desirable at Tech Garden. This memo will also provide successful customer loyalty program implementation techniques for Tech Garden. This memo will outline key company and customer benefits with the development and application of a customer loyalty program.
Why Development a Customer Loyalty Program
Loyalty programs are developed to create returning customers, thus reducing competition. A customer loyalty card provides identification, memory, and reward to customers. With the use of a points system, Tech Garden is encouraging customers to purchase more in order to gain points to redeem and receive a reward. By providing a reward or incentive to the customer, you would be creating a reason for the customer to make future purchases at Tech Garden. With the reward, customers would not consider other retailers as they would not gain the additional benefit with their purchase that they would at Tech Garden.
Successful Implementation Techniques
Referring to the attached article, Jason Bertellotti outlines five key elements to implementing a successful customer loyalty program. First, commitment to the customer loyalty program is key. In order to be successful Tech Garden must fully commit to inserting the customer loyalty program into the company’s culture and daily work routine. With the implementation of a “points” loyalty program, data collection is essential. Tech Garden must obtain a reliable and consistent system to record and monitor customer purchases and points in order to allow for customer’s to properly redeem points. Next, integra...
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...mprove loyalty cards will be needed in order to continue to see results from the loyalty card.
Ha, S., & Winters, E. (2012). Consumer evaluation of customer loyalty programs: The role of customization in customer loyalty program involvement. Journal of Global Scholars of Marketing Science, 22(4), 370-385. doi:10.1080/21639159.
2012.720752
Ha and Winters talk about the customization of customer loyalty programs. The article examines customer response to the perceived value, cash and emotion, of the reward they receive. Customization allows companies to specifically target customer preferences based on the rewards they can redeem points for. Providing the customer with choices will allow the customer to feel in control resulting in loyalty. The article provides techniques to implement and improve loyalty program customization in order to improve customer loyalty.
“This is achieved by either adding value to existing customers or by identifying the value expectations of new customers and coordinating the value chain assets, processes, and capabilities to meet these expectations” (Walter & Rainbird, 2007). In order for customer delight to be made into a core value, the organization would need to take the necessary actions to add it. Moreover, the organization should support the added core value from top down. The organization should communicate this value throughout, provide guidelines and create or implement a system to evaluate its
Having promotional activities such as discounts, free-shipping on online purchases, and bold advertisements are not sufficient to put A&F at the top of the iceberg. Several improvements to the brand as well as customer service have to be done. As keeping existing customers is cheaper than getting a new one, A&F needs to build brand resonance with its customers, whereby consumers can engage actively by investing time, money, and other resources, feel a sense of community as customers are made to feel affiliated with the brand, express attachment to the brand whereby consumers “love” A&F, and last but not least, convey behavioral loyalty through repeat purchases. Loyalty programs can be added to A&F’s plan in rebuilding its brand image, and
Duhigg evokes that “Target began building a vast data warehouse that assigned every shopper an identification code-known internally as the ‘Guest ID number’-that kept tabs of how each person shopped” (187). Every time one goes shopping, they share intimate details about their consumption patterns with retailers. Many of those retailers are studying those details to figure out what consumers like, what they need, and which coupons are most likely to make them happy. Sports Authority provides this “Guest ID” method by offering their consumers to join free rewards program called “The League”. They encourage them to create this membership and give them benefits such as coupons and update them on the newest discounts. Also, the rewards program is based off a point system and when one has earned a certain amount of points they send them a gift card to spend however they wish. Though, what the consumers don’t know is that by applying for their free rewards program is that their collecting data and constructing analysis to make them into loyal
It is difficult for Rosewood to find empirical evidence that the frequent program will work effectively because very few hotels have adopted the point-based stay program, and marketing research had showed that customer loyalty was rather cultivated by providing customers with benefits including room upgrades, flexibility to specify room type, accommodation to preferences, etc. Secondly, it is not easy for customers to redeem their rewards,
Loyalty is moving beyond simply branding a card and throwing some enticements or entitlements together. Web 2.0 is not only changing the way consumers communicate but also the way brands communicate.
...rs since the reward is tangible. Since 80 percent of profit comes from a small percentage of customers, programs should be developed to retain them. Companies will use resources that aren’t available to the entire customer base to ensure they are retaining their most valuable customers and offering incentives to encourage others to move up.
Soman,D & Marand, S (2009). Managing Customer Value: One Stage at a Time.: World Scientific Publishing. p9-14.
Marketers have recently realized the importance of thinking about their customers in terms of relationships rather than transactions. To build relationships, companies use Customer Relationship Management (CRM) to encourage loyalty from their most valued customers. CRM refers to the practices, strategies, and technologies that companies use to organize and evaluate customer interactions and data. Companies gather data from customers using frequent shopper or shopper loyalty cards and store credit cards to understand their individual purchasing behaviors. In addition to strengthening business relationships, the overall goal of CRM is to increase customer retention while encouraging the growth of sales. To meet the customer’s needs, retailers
Brand Loyalty: By keeping long term vision in mind to regain customer loyalty and overall brand image by retaining current customer...
Ninety percent of Canadians are enrolled in at least one loyalty program. Market research has shown that loyalty programs are growing to be very popular in today’s market. A loyalty program is a program offered by a company to customers, who make frequent purchases. Loyalty programs are of benefit to both the consumers and the business. The consumers benefit by receiving coupons, special access to sales and new products whereas the company benefits by gaining an abundance of knowledge about the consumers, through their purchasing habits. Loyalty programs have proven to be very successful for several companies such as Target, Starbucks, and Shoppers Drug Mart. The senior management in sales and marketing believe that initiating a loyalty program
Loyalty programmes are synchronized, membership based, marketing activities that use targeted communications and customize the delivery of branded goods and services and build a powerful bond with the sponsoring firms. These factors are used as marketing tools by organizations to maintain their Customer Relationship Management strategies by making use of loyalty cards, club cards and advantage cards.
customer value through not only their great menu items and service, but in the elaborate rewards
Our aim is to save ourselves a few pennies on our shopping and the goal of the loyalty card is to reap the optimum financial benefit from us by using their armoury of data to keep us shopping with them without checking out their competitors’ prices.
While some companies aim to grow their customer base, the successful ones recognize the importance of increasing customer lifetime value. Repeat loyal customers offer more value to your business--generating over 10x more revenue.
Task 1: Critically evaluate the key concepts/theories on the topic of the effectiveness of loyalty programmes on customer loyalty