Reference no: EM133095094

Article: Keep Them Coming Back: Three Innovative Customer Loyalty

Programs

More than 90% of companies have some type of customer loyalty program. Loyalty programs have proven themselves as one of the most effective tactics for increasing revenue and inspiring customer loyalty. As many as 84% of consumers say they're more apt to stick with a brand that offers a loyalty program. And 66% of customers say the ability to earn rewards actually changes their spending behavior.

We know that it costs a lot less to sell to repeat customers than acquire new ones-that's why brands invest in loyalty and rewards programs. While they can be effective, customer loyalty programs are nothing new. Most fall into one of four categories: points, tiers, social media, and paid programs. That's why some retailers are looking to shake things up and find innovative new ways to build rewards programs and inspire customer loyalty.

Here are the most customer loyalty programs examples:

1. DSW

Designer Shoe Warehouse (or DSW) has long run a traditional VIP loyalty program that rewards customers with points for each purchase and includes tiers of rewards that customers can unlock as they spend more. its program runs seamlessly. There's no loyalty card that customers have to remember-rather, DSW's online system recognizes customers by their name, phone number, or payment information.

The danger when rewards become automatic is that customers forget about the program.

Customers who forget about the loyalty program aren't enticed to spend more to earn more. DSW needed a way to keep customers engaged with their program and remind them where they stood and what they could earn by spending more at DSW stores.

In early 2017, DSW launched an email campaign aimed at reminding customers about their program. The campaign consisted of a personalized email detailing:

• How many points they needed to get their next $10-off certificate
• Deals they currently were eligible for
• A snapshot of their interactions with the brand, including how long they'd been a loyalty member, how many points they'd earned, and how much they'd saved in the past two years.

What made the campaign so successful was the level of personalization. A loyalty program like DSW's gives the brand access to tons of customer data. DSW used that to its advantage (along with some trusty email automation) to build emails that are hyper-personalized and relevant-a far cry from other generic marketing emails sitting in customers' inboxes.

2. Sephora Beauty Insider

Sephora's Beauty Insider rewards program is wildly popular. It boasts more than 25 million loyal members, and members make up as much as 80% of Sephora's annual sales. Customers earn rewards for each purchase based on a traditional point system. The innovative part is that members can choose how to use their reward points.

One of the biggest barriers for a large swath of Sephora customers is price-Sephora products aren't cheap. Beauty Insider members can redeem their rewards points for things like gift cards and discounts, helping to offset purchase prices without devaluing the products. Loyalty members can also redeem points for more exclusive things, like limited edition products or in-store beauty tutorials. Giving loyalty members the flexibility to choose enables Sephora to offer customers the deals and products they really want without cheapening the perceived value of their products.

3. Starbucks Rewards

It's common now for retailers to create a mobile app to manage loyalty programs, but when Starbucks first launched Starbucks Rewards through the Starbucks app, it was a new idea. Running the program through the app makes it radically easy for customers-no punch card to forget or lose, no sign-in required.

In order to earn loyalty points (or stars, in Starbucks' case), customers must order or pay with the Starbucks app. Centralizing customer transactions this way creates a goldmine of data on customer preferences and behavior. Go-to drink orders, customer lifetime value, frequently visited locations, seasonal favorites-by shepherding customers toward its app, Starbucks can gather information on all of these habits and more, empowering the brand to offer more relevant perks and communication to its customers.

If a loyalty app is doable for your store, it can be a great way to collect and centralize customer data. Otherwise, a capable point-of-sale system can help you collect most of the same information.

Question 2

(a) Based on above article on the customer retention strategy, explain THREE (3) advantages of the loyalty program presented by Sephora Beauty Insider?

(b) Based on above article, identify TWO (2) disadvantages of the traditional VIP loyalty program run by Designer Shoe Warehouse (DSW).

(c) Technology may assist in the process of customer retention program. Based on above article discuss FIVE (5) ways how technology is being used in Starbucks Rewards and Designer Shoe Warehouse (DSW) loyalty programs. Support your answers with examples.

(d) Based on above article, determine FOUR (4) other creative approaches that these three companies can offers in their loyalty program. Provide your own examples.

(e) Customer retention is the continual attempt to satisfy and maintain relationships with existing customers. Describe FOUR (4) values of existing internal and external customers in comparing to new cutomers.

(f) Based on your opinion, identify which company in above article provide the best customer's loyalty program. Justify your answer.