LOYALTY MARKETING
SECTION ONE
SECTION TWO
 |
Loyalty Strategy: A Juggling Act for CPG
Loyalty strategy is a juggling act for many consumer packaged goods (CPG) companies, says
a new study by Partners in Loyalty Marketing (PILM) on behalf of the Shopper Technology
Institute (STI).
“Loyalty programs can be executed successfully in a variety of ways with varying degrees
of technology. My Coke Rewards, with its unique pin code under the cap, is often touted as
best in class; smaller programs, such as a series of targeted coupons, work just as well,”
commented Tanya Bhothinard, Senior Director with PILM.
Regardless of the program structure, the study found the top three reasons CPG companies engaged in loyalty were:
- To retain existing customers
- To encourage purchases
- To up-sell or cross-sell other products.
This confirms what PILM has observed over the years; namely, interest in loyalty peaks during good economic times as well as during downturns. For some, building a loyalty strategy during the boom years provides an edge over their competition. For others, the Great Recession prompted a loyalty strategy to protect and maintain their share, said Bhothinard.
“In the past five years, we have seen the number of loyalty membership increase significantly. Technology and internet advances have been the key driver for this trend,” she said.
In the online study conducted over the summer among 100 respondents, 53% of CPG manufacturers indicated that they currently have a loyalty strategy in place.
Over 90% of survey respondents said they generated additional revenues through their loyalty programs. When asked about their investment, 71% of manufacturers reported that their investment in loyalty has increased over the past year. Even more -- 87% -- believe that investment will continue to grow over the next 3 years.
From a manufacturer’s perspective, Bhothinard said, it is easier and more cost effective to build a program today than at any time in history. The average cost to launch a program can range from $1 - 125 per member. From a consumer perspective, membership is as easy as providing an email address.
Bhothinard advises companies that are looking to enhance their loyalty strategy follow some basic rules:
Define & Prioritize Objectives
- Understand the Options - What are the objectives and how many dollars are at stake?
- Identify the Target - Who will will join the program, who are your best consumers?
- Define Success - What is the short and long term success metrics?
Determine the Basis of the Relationship
- True Brand Loyalty Serves Consumers - What do consumers want from a loyalty program?
Build the Program Plan
- Synthesize Overall Plan and Select Tactics - Are the tactics supporting the goal and do they work cohesively?
- Evaluate - What are the key metrics? What’s the ROI of the program?
- Learn and Improve - What are the areas for improvement?
In the summer of 2013, one hundred consumer product good manufacturers took part in the online survey which polled executives about their loyalty marketing usage.
Tanya Bhothinard is a Senior Director at Partners In Loyalty Marketing, a consulting firm that specializes in program strategy, optimization, and evaluation for CPG, Rx, and OTC companies. For more information: www.partnersilm.com
Click on the LinkedIn logo to join the new Shopper Technology Institute Discussion Group
SECTION THREE
