Monday, October 06, 2008

Loyalty Program Primer

An article on loyalty (लोयाल्टी for vishesh) programs, that I liked.

It appeared in Mint, sourced from WSJ, Oct ०६ (Vishesh, ६ अक्टूबर), called loyalty plans need to be customised. Can't find the link on the net.

It talks about rewards along two lines -

Tangible and Intangible; and Intrinsic and Extrinsic.

Intrinsic rewards are along the line of the customer trip type (further explained below), while the latter are outside it.

For definition,these are the trip types and their intrinsic rewards:

Hence, or a guy who's come to buy the milk and eggs that he’s run out in 7-11, the trip type is functional – he wants to get in and get out quickly – and the best award will be faster checkout. Giving him a price discount (the most common easy way out approach adopted by retailers) He might buy the promoted item today,but that would not be reinforcing his natural shopping motivation in your store. Because the focus is on the product offered, and not the brand of the store that the customer perceives.
Tangible awards work in low involvement purchases (detergent bar-soap) while intangible awards more in high involvement. Too easy to mull over.

Liked this article. By the way, in case you’re wondering how to identify a trip type of a customer, there are ways (clustering and segmentation on customer type and trip type and then a matrix to define which customer makes what sort of trip).

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