The world's first loyalty programs with a bonus reward system were developed by major Western airlines. The prerequisite for the creation of loyalty programs abroad, as in Russia, was the increasing price competition in the air transportation market, the emergence of discounter carriers offering air tickets at reduced prices due to the provision of minimal on-board service. The benefits of companies from low prices were extremely limited. Increased competition, price pressure, and reduced differentiation of offers forced air carriers to look for new ways to attract and retain customers. Many airlines have begun to develop bonus systems to reward frequent flyers. The world's first loyalty program, Advantage Frequent Flyer, was launched in the 1980s by American Airlines, and its successful implementation facilitated rapid distribution and replication new technology competitors. Soon, almost all airlines in the world began to offer such programs to their customers. British Airways launched the Executive Club program in 1985. In 1992, Canada's largest coalition loyalty program, Air Miles, was launched by The Loyalty Group. Lufthansa introduced the Miles & More program in 1993. Since 2001, one of the largest loyalty programs has been launched - Frequence Plus of Air France.

Speaking about the Russian market, it can be noted that today in Russia there are 10 loyalty programs for frequent flyers implemented by Russian airlines. The most popular loyalty program in terms of the number of participants is with Aeroflot: at the end of June 2012, a three millionth member was registered. S7 Airlines notes that since the launch of S7 Priority, more than 350,000 participants have registered in the program, more than 1 billion miles have been accrued and more than 5,000 award tickets have been issued. At the same time, Aeroflot and S7 are members of the global aviation alliances - SkyTeam and Oneworld, respectively, which favorably distinguishes them from their competitors, since their customers can also accumulate miles through flights with partner airlines. In general Russian companies in terms of the development of loyalty programs, they lose to Western competitors. Domestic companies are not open to their consumers, who do not really understand how much they need to save up and what they can really get for it. Therefore, foreign airlines are gaining customers in our country as well. For example, more than 400,000 customers from Russia have already joined Miles & More, the largest and most popular Western loyalty program in Russia and the CIS, which is comparable to S7.

Moving from aviation to a more massive retail segment of the Russian market, it can be noted that at present in Russia the most popular are discount and discount accumulative loyalty programs. So, almost any more or less large company offers its customers discount cards, the size of the discount for which depends on the buying activity. You can get a discount card by making a purchase for a certain amount or purchase at a set price.

Discount accumulative programs, in contrast to discount programs with a fixed discount, are much more widespread among enterprises retail, since, on the one hand, they have an economic benefit for customers that grows over time, on the other hand, they stimulate the consumer to make purchases more often, since the increase in the size of the discount directly depends on the amount spent.

The most tangible discounts for customers are provided by: L "Etoile", "Ile de beaute" perfume and cosmetics chain stores, Colin "s. Discount cards of Douglas Rivoli stores (a chain of perfumery and cosmetics stores), Econika (a chain of shoe stores) and Kangaroo (a chain of clothing stores for expectant mothers and children) can also "accumulate" a discount of 20% or more, but the threshold the cost after which this discount is granted is very high. However, discount accumulative programs also have a number of significant disadvantages. Firstly, because almost all companies give one or another discount, that is, the discount ceases to be a competitive advantage (large discounts are undoubtedly an advantage in the competitive struggle, but they are overhead for the company, and can also arouse customers' suspicions about the adequacy the level of prices for goods in the stores of the chain).

There are also a large number of loyalty bonus programs on the market in sectors such as food and non-food retail, catering... In addition, there are several large coalition projects, such as Malina, Mnogo.ru, Kukuruza, or Svyaznoy Club. All leading projects are discussed in detail in the research of the RBC.research agency. Recently, relatively new co-branding projects for the Russian market are gaining more and more popularity. Co-branding loyalty programs are a special type of loyalty programs based on the combined marketing efforts of two or more brands while managing customer loyalty in order to get the most out of collaboration.

Several economic factors currently contribute to the active spread of co-branding loyalty programs in Russia. Firstly, the general increase in competition in the field of banking services... Banks are actively developing today, entering retail and regional markets, creating branched sales networks, developing and introducing new banking products. Another positive factor influencing the spread of co-branding in Russia is the rapid development of the plastic card market, which in recent years has shown high growth rates and retains significant potential. Thus, according to the Central Bank of the Russian Federation, the number of issued bank cards in 2011 amounted to more than 55 million, exceeding the number of cards issued in 2010 by 2 times. In 2011, 4,123.2 million transactions were performed with a total volume of 16,271.0 billion rubles. The overwhelming majority of cardholders are debit card holders, their share in the total number of issued cards is 80.4% (as of April 1, 2012). Note that the share of debit cards decreased by 7.1% in comparison with the previous year. The dynamic growth of the market of plastic cards in Russia is explained by the significant underdevelopment of the market compared to the West, the remaining potential, the growth of real incomes of the population, as well as the active proliferation of ATMs and retail outlets serving bank cards, and the expansion of the range of banking services using payment cards.

By the end of the first half of 2012, about 100 co-branding projects were registered in Russia, issued by banks together with partner companies. Among all co-branded projects, projects of banks with air carriers prevail. Coalition projects, in which banks participate, follow in terms of mass. Approximately the same number of projects in the field of retail and communication services, transport and charitable projects are also widespread. Taking into account the experience of the Western market, as well as the growth in the number of offers of banks for credit cards, we can expect that in some time there will be a fairly large number of co-branding programs.

However, the most successful and massive co-branding projects around the world are those in the air transportation sector. To date, 29 co-branding projects of banks with airlines have been implemented in Russia in the field of civil air transportation, including 3 of them with western ones (British Airways, Austrian Airlines, Lufthansa). In 2010, the number of co-branding projects of banks with airlines increased by 57% compared to 2006 - from 14 to 22. This is the maximum increase in co-branding projects by industry. In 2011, another 6 new joint projects appeared.

The largest program today is the Privilege program of Transaero Airlines, which cooperates with 9 banks (partners are VTB24, Gazprombank, MinB, Otkritie, Promsvyazbank, Rosbank, Rosgosstrakh Bank "," Russian Standard "," SMP Bank ").
Also a major program is the Aeroflot-Bonus program, partners of which are 7 banks - Alfa-Bank, Gazprombank, Russian Standard, Sberbank, Citibank, SMP BANK, URALSIB that issued joint co-branded cards with Aeroflot. One of the important advantages of the Aeroflot Bonus program is that bonuses (award miles) are awarded not only for flights operated by Aeroflot, but also for airlines participating in the Sky Team alliance.

In the study of the Russian market of loyalty programs, a web-survey of business readers of the portal http://www.rbc.ru was again conducted in order to study the prevalence of various types of loyalty programs in Russia, the attitude of Russian consumers to various incentive schemes and their impact on consumer behavior... In 2012, the results of an on-line survey were very similar to those obtained in 2011. The overwhelming majority of respondents still have discount and bonus cards from many shops, gas stations, pharmacies and other companies that provide discounts on the purchase of goods or services, and most of the cardholders use them quite often.

It should be noted that discount and bonus cards of the respondents are most often used by residents of St. Petersburg (63.1%), millionaire cities (except for the respondents from their two capitals) and other cities with a population of 500 thousand to 1 million people. In Moscow and the Moscow region, a little less than half of the total number of respondents constantly use discount / bonus cards. At the same time, about 43-46% use discount cards from time to time.

On average, respondents have 12 discount and bonus cards. Women read more of them - 14, men, respectively, less - 10-11. However, the share of maps used is significantly lower, about 30%, and practically does not depend on the gender characteristics of the respondents. Thus, it turns out that the vast majority of discount cards available to the surveyed Russians remain practically unclaimed.

Loyalty Programs - Business Driver!

Loyalty programs have taken over the world. Companies are massively launching customer incentive programs. And that makes economic sense. According to Rosetta Consulting research, loyal members are 90% more likely to shop and spend 2-3 times more than non-members. It's not for nothing that Amazon is investing billions of dollars in loyal customer programs. In a customer-driven world, a high level of customer focus is an indispensable element of a sales strategy. Regular customers are the main source of income for the company. In the early 2000s, researchers obtained a phenomenal result - an increase in customer loyalty by 5% leads to an increase in company profits by 25-95%!

The launch of the loyalty program is an investment in the long-term development of the company. Its impact on brand satisfaction is even higher than price and perceived value. Thanks to the recommendations of loyal customers, companies attract new customers and reduce marketing expenses to attract.

Fuck loyalty programs!

A study by the Boston Consulting Group notes that loyalty programs often don't pay for themselves. The company counted to offset incentive costs and operational management program in the amount of 3% of revenues, sales should grow by 10%.

All over the world, traditional ways to stimulate shoppers with discounts and bonuses are becoming less effective. There are a number of explanations for this.

The number of loyalty programs is growing exponentially every year. The buyers' wallet no longer holds all the cards, some of them have moved to mobile applications, but this does not change the essence. In the USA, on average, a customer has 29 loyalty programs, of which he actively uses no more than 12. In Russia, the performance is not much better. According to research by RBC Research, 58% of loyalty cards remain practically unclaimed.

Decreased activity of participants. As a result of the growth in the number of programs, the average participation of participants is constantly falling. Clients are fed up with the same type of classic discount or bonus programs. To attract the attention of buyers, you need to increase the attractiveness of the reward. But this cannot be done without reducing the profitability of the program.

McKinsey conducted a survey among 55 of the world's largest retailers on the effectiveness of loyalty programs. The results of the study are sobering - the revenue growth in companies that invested in loyalty programs is similar or even slightly worse compared to companies that did not make such investments.

Are loyalty programs an effective investment or a waste of company resources?

Both positions are sides of the same coin. A loyalty program is one of the tools for building relationships with customers. Those companies that skillfully use it achieve impressive results. Loyalty programs “on average in a hospital” do not always meet expectations. The problem is not with the tool, but with the way it is used. The decline in customer interest is associated not only and not so much with external factors. The main reasons lie in the low quality of implementation and subsequent management.

Key mistakes when implementing a loyalty program

Uneconomical economy

Most of the problems associated with the incentive model are laid at the design stage. Sometimes companies think that developing a loyalty program is easy and simple. I added it there, I wrote it off here. Business then! The main thing is to buy the right software. Alas, this is far from the case. The seeming simplicity hides an elaborate mechanism. A well-designed program brings mathematical models, consumer psychology, and trade marketing all rolled into one.

Giving out discounts without understanding how a company will compensate for such an investment is a generosity attraction that has a negative impact on its bottom line. The launch of the program does not automatically lead to an increase in sales from the first months, but it certainly reduces the business marginality in the short term due to the budget for remuneration and program operation.

The most active participants are loyal customers who already regularly consume the company's products and are unlikely to spend more. Their share of wallet (the share of purchases from the total need in a category) is close to 100%. Customers who rarely make purchases receive few bonuses, which means that the loyalty program works for them rather weakly. What happens? The margins of regular customers increase slightly or even fall due to the cost of bonuses, and those customers who can potentially increase their consumption are not receiving the necessary incentives.

A well-designed program is a combination of mathematical models, consumer psychology, and trade marketing.

It is possible to improve the economy of the program and at the same time increase its attractiveness for various categories of consumers with the help of a system of levels and targeted campaigns for "growing" regular customers.

Cut seven times, measured one

At the design stage, it lays the foundation, but the main work begins after the launch of the program. Analyzing, testing, optimizing, evaluating are regular tasks that need to be done day in and day out. Which customer segments are the most sensitive to bonuses, what is the correlation between the amount of remuneration and the customer's consumer activity. This information is the basis for optimizing the incentive model.

A team of specialists is needed to manage the program. Many companies cannot afford to have a separate state for this, or do not see the need for it. This leads to the fact that the results of the program are not measured, there is no comprehensive approach to the assessment of indicators. And as the saying goes: "It is impossible to manage what cannot be measured." Decisions are made on a whim by trial and error. As a result, the loyalty program instead of retaining customers, on the contrary, becomes the cause of customer churn.

One size fits all

Behind the abstract participants are people who are unique and contradictory. They have different needs, decision-making models, and consumption habits. The main driving force behind the loyalty program is customer-centricity, which is formed on the basis of a deep understanding of the behavior of various segments of consumers.

Imagine if you offer your client not bonuses, but shoes as a gift. Moreover, there are only graceful shoes in size 38 or sports sneakers in size 45 in stock. Now estimate what proportion of customers the gift will be in size.

Likewise with loyalty programs. By offering a unified incentive model for participants, a company a priori loses a significant part of the target audience... It is either extremely difficult for clients to accumulate bonuses, or the reward is not attractive. Capgemini Consulting found that 44% of discussions in social networks revolve around irrelevant incentive models and unattractive rewards.

How to build the next generation loyalty program

Stop spending, start investing

As mentioned above, a common problem with loyalty programs is the lack of a clear strategy for working with different customer segments. The program becomes profitable when the company understands who gets bonuses, how and for what. Imagine that for each client, a profitability rate is set, on the basis of which an individual proposal package is formed. Segment goals should be reflected in the operating model for program management.

A good customer incentive model starts with assessing the customer's prospects for the company.

A good customer incentive model starts with assessing how promising a customer is for the company. CLV is a guiding star that indicates what level of remuneration is acceptable for a particular participant. CLV is not just an indicator, but an ideology of working with clients, which is based on a total analysis of all interactions between the consumer and the company. To understand customer value, it is not enough to measure financial indicators; consumption patterns, preferences and vital interests are important. According to research by Nielsen and McKinsey, the use of a value-based approach leads to increased consumption among the most profitable and loyal customers and a decrease in off-target spending to stimulate unprofitable and disloyal customers.

Personalize your participation in the program

Geolocation and transactional data, responses to promotions, activity on social networks, analysis of customer service calls are bits of information that together create the digital genome of the buyer. Data is the new fuel for loyalty programs. The current level of technology development allows implementing individual trajectories of a client's participation in the program based on an analysis of many factors - from purchase history to analytics from CCTV cameras.

Data from various sources of information forms the digital genome of the consumer.

Bond found that 2/3 of the programs did not use a reward relevance analysis for members. Nothing kills the interest in the program like uninteresting prizes. Personalization of the reward system affects the activity and satisfaction of participants without increasing incentive costs. For example, some clients do not use bonuses, their consumer behavior does not change after joining the program. This may be due to the unattractiveness of the rewards, or the method of motivation is inadequate. In this case, other mechanics are tested - special conditions of service or tools of intangible motivation - participation in a socially significant initiative or a charity event.

Combine different types of customer motivation

Unfortunately, the overwhelming majority of loyalty programs work on rational customer loyalty, built only on incentives for purchases and completely ignore the emotional component. The result is dull and uniform programs that do not generate any enthusiasm among consumers. They stimulate brand tolerance instead of really building long-term loyalty. Emotional involvement of participants is not a one-time creative, but a strategy thought out with engineering precision to retain the attention of customers and stimulate the required consumption pattern. Gamification, sweepstakes, initiatives not directly related to the purchase, educational projects, surprises and instant prizes, competitions, etc. The ingredients are known, all that remains is to properly prepare and serve.

Emotional involvement of participants is not a one-time creative, but a strategy thought out with engineering precision to retain the attention of customers and stimulate the required consumption pattern.

The sole purpose of most programs is to stimulate transactions; other aspects of the consumer's interaction with the company are overlooked. Encouraging any activity around the company, including reviews, participation in promotions, posting, creates an additional emotional connection between the brand and the buyer. At the same time, it is important to understand that this kind of activity cannot be stimulated by material bonuses, it corrupts customers and attracts prize hunters.

Cultivate an omnichannel business model

Cultivate an omnichannel model of interaction with the company Point of sale, website, mobile application, social networks, chat bots - this is not a complete list of ways to communicate with customers. The combination of different channels of interaction increases the reach of the audience, since the customer experience is not limited by the geographic location of the buyer or the time of day. Omnichannel consumption model is striding across the world following the proliferation of mobile devices.

The loyalty program is a great tool for forming new habits and consumption patterns. Let's give an example. Traditionally, offline retail has one channel of interaction with a customer - a point of sale. If a person installs an application that allows them to create a shopping list in a store, then their customer experience will expand beyond the point of sale. Why not stimulate such a consumption model with the help of a loyalty program - I made a list, bought it, received an increased accrual of bonuses.

Obviously, the loyalty program should be available through the channel that is available to the client at the moment. Someone prefers a beautiful card in their wallet, while someone is more convenient to use a mobile application or just give a phone number. Presence in various channels allows you to collect customer information and use it to optimize future interaction scenarios.

Actively manage customer experiences

Surprisingly enough, traditional loyalty programs don't deal with customer complaints and problems. Moreover, loyalty programs are on the balance of marketers, and complaints and suggestions go to the service and / or sales departments. According to statistics, 71% of customers leave a company because of poor service. The question is, why does the client need bonuses if the level of service is categorically not satisfied? Any company has problems. But leaders are good at accepting “feeds” from customers in a timely manner and smoothing out complaints. A description of approaches to dealing with negative customer experiences can be found in.

The new generation loyalty program is aimed at creating a positive customer experience and smoothing out difficult situations (complaints, disruptions in work, bad mood of the client). Another direction in the evolution of loyalty programs is the increase in the value of a product or service. The program should create tangible benefits, solve the buyer's problem. Amazon is a great example. Members of the program do not pay for delivery each time they place an order.

Output

Loyalty program is an asset of the company and an additional competitive advantage... At the same time, it is no longer enough to distribute bonuses to customers. The classic discount and bonus mechanics are being replaced by complex programs of a new generation, which solve a wider range of tasks than just incentives for repeat purchases.

Managing Director of NGM Mikhail Fokin

Flexible systems of discounts and incentives for regular customers are ideal for building a long-term relationship between the store and the customer. Using the example of American companies, we can consider the best results of the implementation of loyalty systems in the service sector.

Star system at Starbucks

One of best examples motivation of customers is demonstrated by the chain of the most popular coffee houses in the world. By introducing the “My Starbucks Rewards” reward system in the form of bonus stars that each visitor can receive when paying for an order with a card. Bonus stars can be exchanged for coffee, syrup, or delicious toppings. This system replaced the "loyalty for the elite" Gold, when a client had to buy a gold card for $ 25 and received only a 10% discount on the purchase.

Premium status from Best Buy

The largest electronics retailer, Best Buy, has introduced personal cards that accumulate points from purchases. As a result, customers can get back about $ 50 for a $ 250 purchase. However, this is not even the goal itself. The goal is to accumulate 2,500 thousand points that will help you to upgrade to premium status and receive a unique newsletter about discounts, access to the online magazine and the opportunity to participate in closed sweepstakes.

Loyalty for the elite at Neiman Marcus "

The largest premium goods store in America - Neiman Marcus "has developed its loyalty system in accordance with the characteristics of the target audience. The customer motivation system was introduced back in 1984. Its peculiarity is that club cards are issued only for purchases of 3,000 thousand dollars or more. Customers can accumulate bonus points and exchange them for services and purchases in stores and partner companies: American Airlines, United Airlines, Samsung Electronics.In addition, among cardholders, they regularly hold raffles with valuable gifts and big discounts.

Bonus car rental from National Car Rental

One of the largest car rental companies in America - National Car Rental, the first in its segment, introduced a loyalty system back in 1987. Improving and modernizing it every year, it has achieved an absolute monopoly in its field. There are many benefits for loyalty card holders. From free car rental on certain days to cancellation of co-driver surcharges and expedited service.

Free Holidays at Intercontinental

Many hotels introduce bonus program for regular visitors. The Intercontinental is no exception, with a loyalty system of over 40 million members, but only 30% of them actively enjoy the benefits of the loyalty program. The essence of the program is the accumulation of bonus points, which can later be exchanged for free accommodation in Intercontinental hotels in any country in the world. In order to become a member of the loyal program, it is enough to actively use the services of the hotel for 12 months and access to the hotel's service privileges will be open.

The success results of these loyalty programs can be easily determined by the leadership of these companies in their segment. Customers want to feel empowered and important, and companies that make extraordinary service decisions are absolute leaders in their industry.

* Calculations use average data for Russia

INTRODUCTION

Loyalty program is a modern customer-oriented method of increasing sales, which is most typical for retail. Within the framework of loyalty programs, the selling party provides favorable conditions for making repeat purchases.

MARKET ANALYSIS

Today the most popular loyalty programs in Russia are discount and discount accumulative programs. Their advantages are the greatest clarity for the consumer and ease of support by the issuer (seller). According to Russian retailers (RBC.research analytics), loyalty program support costs on average about 4% of the chain's turnover, while the average check of a loyal customer (discount card holder) is, on average, 20-25% higher than that of an ordinary customer.

There are two main types of discount cards:

a simple plastic card with a specified value of the discount (for all products or a specific group)

a card with a chip or magnetic stripe (usually provides for the accumulation of bonus points for purchases made)

The most common discount cards are in chains selling clothes and shoes. It is there that they give the maximum results in increasing revenue. Loyalty program cards are usually issued when making purchases for a certain amount; however, some issuers issue cards for any purchase.

Figure 1. Conditions for providing a discount card depending on the purchase amount in Russian retail chains, 2016,% (according to RBC MARKET RESEARCH)

In addition to the positive effect in the form of revenue growth, there are also negative aspects of loyalty programs for the issuer. Firstly, almost every retail chain provides customers with discounts in one way or another. Thus, they cease to be an instrument of competition. In addition, discounts reduce your ROI. Secondly, discount cards are usually not personalized, and an unlimited number of people can use one card, which also leads to a decrease in profitability. However, some companies, on the contrary, recommend that customers transfer the card to friends and family, thereby offsetting the decline in profitability by increasing sales.

Within the framework of loyalty programs, the client is usually actively informed about new products, discounts and promotions using various channels: SMS, e-mail, etc. Contact information is collected, as a rule, when a discount card is issued. Distributed also mailings on other informational reasons - congratulations on birthday and other holidays, as well as the provision of discounts in connection with personal holidays.

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Recently, in some companies, there has also been a trend towards the implementation of social programs - for example, the provision of discounts on a pension or student card, a certificate of a disabled person, and so on.

According to a study by RBC MARKET RESEARCH, for a one-time purchase of 5,000 rubles, most loyalty programs guarantee a discount of 250 rubles, and for purchases of 10,000 rubles, a discount of 500 rubles.

Figure 2. Discounts when making a one-time purchase for 5,000 rubles. in retail chains, 2016,%

Figure 3. Discounts when making a one-time purchase for 10,000 rubles. in retail chains, 2016,%

Another trend in loyalty programs in Russia is co-branding - emission retail chains discount (in some cases debit) cards together with banks. Such programs are prevalent in the retail sector as well as in the air transportation sector.

Figure 4. Number of co-branding projects by industry in Russia, 2016

As shows world practice, co-branding programs usually gain popularity after the successful implementation of their own loyalty program. This fully corresponds to the state of the loyalty programs market in Russia. Experts predict the continuation of the development of this segment with some redistribution of the shares of industries. If in recent years co-branding travel loyalty programs and coalition programs have been most actively developed, in the future they will be used more by retail and e-commerce. According to RBC.research, as of August 2016, 58 co-branded banking projects with a bonus accumulation system were being implemented.

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Figure 5. Dynamics of implementation of bonus accumulative co-branding projects in Russia, 2002-2016

Figure 6. Availability of co-branding cards and awareness of co-branding projects among Russians, 2015,% (depending on the average monthly family income)

Denis Miroshnichenko
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In recent years, Russia has seen a significant increase in sales of duck meat, which is associated with the emergence of large-scale industries, the development of forms of retail trade and a change in consumer preferences.

In 2015, domestic tourism destinations were in even greater demand than in previous years; and in 2016 we should expect unprecedented growth in the industry.

The estimated capacity of the quail meat market in the Rostov region in physical terms amounted to 21.22 tons / year. Consequently, the capacity of the quail meat market in price terms is ...

Everyone views marketing as customer acquisition. Something like an advertisement. Marketing = advertising. They attracted customers, they bought it.

Everyone is happy: the head of the company, the clients themselves. The only thing is that it has long been proven that selling to a regular customer is 5 times cheaper than to a new one. And this is the problem for most managers.

They don't think about how to retain a customer, although there are simple and unobtrusive marketing tools for this. For example, a customer loyalty program.

Marketing and discounts

Although no, I'm wrong. Executives and marketers think like. But usually, the maximum they think of is discounts.

Those very banal discounts and, moreover, the greater the discount in their opinion, the higher the likelihood of retaining the client.

This is definitely true. Only now they forget what discounts mean in business and how much it affects their markup. And all this as a result is very far from a working system of customer retention.

And how can you keep ...

Let's take as an example a classic situation in any business, when a client asks you for a discount and at the same time subtly hints that if you do not give, then the consequences may be irreversible.

Bad option:

- Will you give me a discount?
- We have no discounts.
- Then I'll go buy from competitors!
- Okay, I'll give you my personal 5% discount, but just about it to anyone.

A good option :

- Will you give me a discount?
- Yes, for purchases over 10,000 rubles, you get a 5% discount.
- Okay, then I'll buy it.

The best way :

- Will you give me a discount?
- Of course. Moreover, the more you buy from us, the more discount you get. When buying for 10,000 rubles you will get a 5% discount, and when buying for 20,000 rubles you get a 10% discount.

- Nuuuu, okay, then let's get this coat for 22,000, then it will cost me 19800.
- Yes that's right.

I think you have now learned the model of the customer loyalty program, which is used by more than half of small businesses in Russia. And now is the time to change your business and stop looking like 99% of your competitors.

If you don't have a customer loyalty program, it's time to break the system and start it immediately after reading the article, especially since you will learn the tricks and life hacks that work in modern realities in Russia.

And even more so, if you have exactly as I described in the examples, urgently fix it!

And if you are lucky, and you are not, I congratulate you, but still strongly recommend reading the article to understand what to add / improve to your loyalty system.

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Three tasks - one road

So. What is a customer loyalty program? In short, this is a way to motivate your customers with three main tasks that most executives forget about when developing it:

1. To retain customers (you will go to organization B to buy if you have the maximum discount in organization A ?!);
2. To increase sales (will you buy another 2,000 rubles to get an 8% discount?);
3. So that (Remember before everyone went to Letual or Il De Beaute with other people's cards in order to buy with the maximum discount?).

And in fact, all customer loyalty programs revolve around two simple actions (I would even say arithmetic operations) - write off or accrue, that is, plus or minus, that is, a discount or accumulative program.

It is them that we will now consider and get to the thought “What is better - a discount or bonuses?”. If you don't want to read the article further, watch the video:

In general, there are more than 4 loyalty programs, but today we will study only these 4. And yet, get ready that in the course of reading the article you will have thoughts to change the old good / bad working for a new one, which you will learn literally within 3 minutes.

Loyalty discount program

As I wrote earlier, this is the most common loyalty program, and not only in Russia, but in the world in general.

Expressed in either a one-time or cumulative discount. As a rule, this is a discount card that gives a certain percentage discount upon purchase. Why certain?

Because discount cards come in either a fixed or a cumulative discount.

The cumulative discount is due to the following function - when buying at certain price thresholds, the client receives an increase in percentage as a reward for loyalty to the company.

Some are sophisticated and come up with conditions that if a client does not appear with them, for example, once a month, then she drops one step lower and so on until he comes to his senses and comes again.

Pros :

• Customers love discounts a lot. Especially in Russia. In the conditions of this time, it is very special.
• Such a program is simple and straightforward, so it is easy to organize and control.

Minuses :

• Nowadays, any person usually has at least 2-3 discount cards of companies in one sphere.

  And usually the discount amount is the same everywhere. Therefore, in competitive areas, one might say, “loyalty” is more like a word than a really working tool;

• As soon as the client stops growing in the process of winning the maximum discount, his interest in making purchases also begins to fade;
• The main disadvantage of discounts is that they are given from net profit (example below).

Let's give an example about the loss of money from net profit due to discounts. Let's say you sell a product for 9,000 rubles. Your margin is - 30% Discount - 5% or 450 rubles. It seems to be a little, BUT!

You have the cost of goods / services, which you will not go anywhere, and accordingly you give a discount from your net profit.

Thus, you actually lose 450 rubles not from turnover, but from your net profit, which, for example, is 2,700. It turns out that at the exit, taking into account the discount, you earn 2,250.

The total amount of the discount (if calculated in terms of pure money) turns out to be not 5% at all, but as much as 17.5%. And this is already, you see, essential. Of course, this will not be so noticeable if your markup is 100-200 percent, but what if the discount is greater?

Loyalty bonus program

In this program, the client no longer receives a discount. They magically turn into bonuses. But the principle is the same.

When making a purchase for a certain amount, you receive a certain percentage of bonuses from the transaction amount to your account / card, which you can spend when making the next purchase (even exchange it for a free product).

The bonuses themselves can be in any form: points, stickers, rubles. Yes, even the fictitious currency of the store (not the worst option, by the way).

Pros :

• If you imply repeat purchases, then the system can work for a long time and successfully without unnecessary problems;
• To accumulate a decent number of bonuses, the buyer must buy constantly or for large amounts, which is extremely beneficial for the business owner;
• Bonuses may tend to burn out, which means this will be an additional incentive to come to you as soon as possible and spend them;
• Not all customers come to spend bonuses, so you can say that you leave this money in your company and end up selling without a discount at all.

Minuses :

• If the purchase is one-time or very expensive / rare, then such a loyalty program will not work. The client simply has no interest in participating in it, since he will not come to you again;
• If you make tricky / complex rules for a loyalty program, buyers may get confused or not understand it at all, which will completely destroy the whole idea of ​​its creation;
• More difficult to control than discounts, so you might even need special software.

What's the second fastest way to increase profits at any company? Thinking about the first one? Do not think - this is a rise in prices. The second is to switch from discounts to bonuses.

Remember our example about a product worth 9,000 rubles and a 5% discount? Let's apply it to bonuses. All the same.

You have credited the customer with 5% on his bonus card upon the first purchase, which he will be able to use on the next purchase. We count.

1st purchase - 9,000 rubles
2nd purchase (also) - 9,000 rubles
The bonus from the first purchase (lies on his card) is 5% or 450 rubles.

Thus, 2700 (first purchase) + 2700 (second purchase) - 450 (bonuses written off from the first purchase) = 4,950 (your net profit minus the bonus discount). The total discount on your profit was 8.5% versus 17.5% in the first case.

Those who were especially attentive should have noticed that from the second purchase, the guest will still receive another 450 rubles to the account and it turns out, as a result, we will give out the same 17.5 percent. And they will be right.

Only if we return to the advantages of this system, we must remember that half of the people will not come, half of the bonuses will burn out and these bonuses will stimulate the client to come again.

And also answering right away your question: “What will happen if we cancel discounts and introduce bonuses, will all the clients run away?”. There will be nothing! Yes, some part will leave, but its departure is compensated by an increase in your profit.

In general, it is not dangerous. We checked it many times. And by the way, the part that will go away is the most unreliable and small number of customers who are ready to go to the other end of the city if they find a product / service 10 rubles cheaper. You don't need to be guided by such.

Although, of course, in order not to be guilty later that your company has ceased to be profitable, I will still make an amendment.

And I have a request for you. There is no need to ask clients: “What would you choose: discounts or bonuses?”. The client will always reply with a discount.

This is how our psychology works - “Good now, bad later”. Therefore, you take yourself ... willpower, cancel discounts (if any) and introduce bonuses.

Life hack. If you want to get a ready-made loyalty program, then I advise ““. Very cool functionality and flexible settings. And with the promo code "INSCALE" - a 10% discount.

Multi-tiered loyalty programs

This is a fairly simple and at the same time complex system. The more a person spends money in your company, the more interesting a group of clients he gets and the more interesting bonuses he gets.

For example, it can be some additional free services (free shipping, extended warranty, etc.).

That is, by spending more money, the client raises himself in status. Often such loyalty programs are used in banking, insurance or airlines.

Pros :

• Such a program is built on self-esteem, since the more a person spends, the more interesting the group he will get, which has a positive effect on the client's desire to spend more;
• Ideal for the VIP and Double-VIP segment of people.

Minuses :

• He is both a minus and a plus. Such a system is ideal only for expensive goods and services;
• You need very strong bonuses when you reach a certain level;
• Quite difficult to implement and track. Again, you need special software.

Paid loyalty program

Or getting some kind of bonuses / privileges / buns for a subscription. That is, the client pays money (usually a fixed monthly fee) and, as a result, receives privileges.

It can be an enhanced service, additional services, access to some closed resources, and the like.

Pros :

• Very easy to organize;
• Ideal for products that buy frequently;
• The client buys access to such a loyalty program, but often does not use it (that is, "free money");
• You can work out the cost of bonuses so that they are the most profitable for you in terms of money.

Minuses :

• If the value (perception) of a paid subscription is lower than the price, then the entire program could fail.

Let's just say it's the coolest and strongest loyalty program. The one you get paid for, but let's be realistic.

For this to happen, you need to be a very popular company in your sales territory.

How to choose a customer loyalty program?

This is a very important point. Since a manager or a marketer always perceives their business in a special way, so to speak, “wearing pink glasses” (this is a fact that is also relevant about us), it is very difficult for them to understand what his client wants.

Yes, to realize everything as in the popular proverb - "And eat a fish, and not wash the frying pan after yourself." So what to do?

1. It's trite, but you have to put yourself in the shoes of the buyer. Let's say you have a wholesale organization.

   What do you think your favorite (for you) customer wants? Accumulate bonuses to exchange them for something free? Or does he want (and is used to) getting discounts here and now?

   Therefore, you take the side of buyers, analyze your range of goods / services and find the answer to these questions.

2. Ask customers who are already buying something from you, what they want (but remember the stop question: discounts or bonuses?). You can post a survey on the website, in social networks, networks or in your office.

   As a rule, the answers will be from the series “prices are lower, discounts are higher”. But sometimes you will come across adequate people who can suggest interesting ideas, this is the essence of this action.

3. Do a competitor analysis and identify one of two strategies:

   3.1 Go the other way. If a client gives a progressive discount, up to the maximum, then perhaps it is better to refuse discounts altogether and switch to a bonus program, just with very interesting prizes.

   3.2 Simulate and improve it. Just remember that things can be ambiguous.

   After all, maybe a competitor miscalculated, introduced a discount loyalty program, now he earns nothing at all and grieves from it at night, but you haven't analyzed it and decided to copy it.

4. And the last step, when you have thought about everything except yourself, ask the same question as in the first paragraph, only to yourself: “What do I want?” or "What is beneficial to me?"

   Sometimes it is better to make a system with discounts, and sometimes with bonuses. As I wrote above, there is always a factor in the market that can change everything.

   Therefore, consider under which scheme your company will grow in profit (or, in your case, it may make sense to grow in turnover to capture market share now).

And finally, a few life hacks that will make your customer loyalty program even more interesting:

1. If you decide to switch to a discount loyalty program, then make it progressive.

   Buying for 10,000 rubles - a 5% discount, for 20,000 rubles - a 7% discount, for 50,000 rubles - a 10% discount).

   The more a customer buys, the more discount he gets. The only thing is that discounts should not be just crazy on an ongoing basis (from 20%), it can play a cruel joke and scare away buyers.

2. If you have a catering or a store, and you are calculating bonuses manually, then rather switch to ready-made solutions that do not cost a lot of money.

   For example, such as Plazius (for catering) or Bazaronline (for retail stores). They already have everything you need. You only need to connect them, calculate the amount of bonuses based on your marginality, and put them into action.

Briefly about the main

Video at last, how silly the picture as a whole can look when you complicate it too much and you stop understanding yourself 🙂

And a small summary of the article: if you just want to start a customer loyalty program because you need to quickly increase your profits, then ... No, it will not help you and you do not need it.

The customer loyalty program is just one of the marketing tools that can get your buyer (sorry for the tautology) more and more, but in the long run.

And one more parting word - don't complicate it. I remember at one customer in a public catering, we decided to introduce a bonus loyalty program.

We've been counting it for about a month. Well, straight for a very long time. He called me all the time and offered me new mechanics. Confusing me, myself, and future guests of my establishment.

In the end, I spat and entered the following conditions: 20 percent of each check accrued for the next visit. As soon as the guests got used to the new system, we began to gradually complicate it.