What do an enterprise need to create a Loyalty Program?
“Trying is the first step forward failure” – Homer Simpson
To start to create a Loyalty Program is analysis your available data, including primary data (the data collected for the first time by the researcher) and secondary data (the data already collected or produced by others). The information about market, competitors, etc will help you visualize your company’s current correlation with the market, the potential development and the level of competition in the next time of your field. Meanwhile, the information of transaction history and customer behavior helps you better understand your customer so you can indetify potential customer group that your loyalty program will achieve the most effectively. Thereby, you can create or improve incentives that meet customer’s needs.
Marketers usually mention Pareto principle when they want to illustrate the importance of potential customers like “20% the most potential customer bring 80% revenue”. The sentence means you can not satisfy all customers so you should propose different strategies for each customer groups. They have different shopping habits as well as degree of stickiness to brands. You must rely on the data taken from the company’s transaction history, indentify your most potential and loyal customer base. Then you study their psychology and behavior in order to create incentives relating their needs and hobbies
If customers used your products/services, transaction history and customer information were recorded. This information is ideal data to perform quantitative research techniques like detemining the habits and accessing behavior, the flow of perchase of each type of product/service, the degress of influence of promotional campaigns to shopping habits, etc. In addition, to perform quantitative analysis, you can conduct a survey or a questionnaire to your customers. The survey and questionnaire should be designed in Likert scale form to implement comparative scaling analysis and sensitivity analysis of factors affecting the decision to purchase.
If you do not have historical data and still want to have primary data instead of depending on the secondary data, you can collect data by qualititative research such as interviewing 1-1 with customer, interviewing focus group to understand customer perceived value according to the models and incentitives you want to offer in your loyalty programs. Customer’s perception is defined as comparisons and perceptions of customers about value, benefit and cost of a product/service compared to another product/service. Sometimes, perception of customers are very different from the actual value, benefits and costs of product/services.
You can remember that you create a loyalty program to attract customers come back, use services or purchase products and bring profits for your company, not simply that they need your offers.