After a long time I am writing a post, the reason is due to lack of time these days and also I am now engaged in some other writing too 🙂 . Recently I went through many articles mentioning the importance of loyalty marketing and I see loyalty marketing going to be important driver for an organization to generate sales without additional cost. These days retail chains always struggle to keep up loyalty of customers because of the scale of business and lack of personalization. Wall-mart, Tesco have implemented amazing mode of loyalty program and Tesco benchmarked them by using club card loyalty program. Currently I’m in the process of reading the Tesco’s Club Card book, so I would be in a position to give some more insights once I complete reading it. Whenever companies develop their marketing mix, it is going to be an important factor to consider the loyalty.
So how a loyalty marketing mix can be built?
1 – Product – I feel this should remain unchanged from the traditional mix, but in the loyalty marketing model retailers have to use the data analytics to select proper merchandise, display of stock shelves, and create other additional services based on customers willingness to buy. It is doubtful to what extent supermarket chains in Sri Lanka make use the customer data for the above. I know getting their data offline is a pretty challenging job, but if Sri Lankan super market chains need to position themselves strongly the need of data is important.
2 – Place – It’s again a data game, retailers should use the data analysis to choose new store locations and to determine channels. It is not a matter of deciding the place based on competitors and places where organization doesn’t operate. It’s about where customers prefer to have the stores.
3 – Promotion – All marketing outputs such as brand building, WOM, loyalty activities belong here, but it is important that all the promotional activities should focus on building a strong relationship based on the loyalty drivers than just considering the frequency and sales. I believe instead of having price as a separate mix, it should belong to promotion.. The pricing strategy of firms should be based on targeted discounts, special pricing based on customer behavior and segment characteristics.
4 – People – So loyalty model is all about building strong relationship with the customers, in retail stores the relationship is built on the customer service and the in store experience. So it’s time to think about the proper training and development of employees to make use the CRM tools effectively. This is important to provide differentiate service to their customers based on their value.
I feel the above suggestions are my view point and at a glance it might not be visible to the customers, but it influences the behavior. For all these the retailers should have proper data base to use the insights of customers.
So where the firms can start-off with?
1 – The business should be built in the fundamental drivers of loyalty – It is very difficult to differentiate yourself by using the customer data, if the business is not built in the basic drivers of loyalty. Ray Kroc and his QSCVmantra (Quality , service, Clean and value) the store should be quality and the retailers should have talented front line staff, the environment should be pleasant and clean and it should have a value to visit.
2 – Stores need to think of building loyalty, not frequency – Stores should not think of just getting sales by charging them low prices.
3- The relationship should be built on value, not in sale prices.
4 – Use of customer data to drive the product selection – Tesco uses customer data very effectively to use the shelf space, such as storing health conscious products, quick fix meals etc.
5 – Using customer data to deliver differentiated service – Understanding the needs of the customers is the critical task for marketers. Use of customer driven data will help to influence the store design, training and new product launches.
6 – Find the brand champions in the customer file – Brand champions work as a recommender for firms products. They will always try to boost the brand name whenever they speak with friends, family and peer group.
7 – Loyalty is an art and a science
I’m not sure to what extent these are practical in Sri Lanka, because still Sri Lankan firms do not try to get the maximum out of the customer data, except firms who operate online. The above are some important steps to start the implementation of loyalty marketing mix.