Loyalty Programme Development

Identifying goals and expectations or, in other words, defining a clear project baseline. The bottom line for us here is, of course, to establish transparent communication with our Customer and to ensure that we speak the same language when discussing the issues that are to be addressed with the implementation of the loyalty programme.

Goals:

• to assess purchase frequency and the level of the Customer’s involvement; and
• to discuss and agree upon the primary objectives and project priorities with the Customer.

Activities. In this first phase, our specialists carry out consultations with the Customer to identify the needs and expectations regarding the future programme.

As early as at the first meetings the Customers share their business vision and talk of their companies’ short-term and long-terms goals and objectives. We, in our turn, use our experience to help identify and prioritise primary goals in accordance with the Customer’s expectations. For instance, when it comes to loyalty programmes, there might be various goals: increase in sales, cost reduction, buying behaviour and preferences research, and so on. Zolotaya Seredina’s specialists together with the Customer decide which of these goals might be more important for the further development of the company.

As a result  of all this work, we shall have a clear plan for the further research of target audience (TA) and a signed agreement with mutually agreed upon terms.

Market and TA research and analysis. It is important for any seller to understand its customer, to know his motivations, priorities, and capabilities.

Goal. The second stage of the loyalty programme development process is totally devoted to the analysis of TA buying behaviour and spending.

Activities. In the course of this work, our specialists will assess the general level of TA loyalty. We will conduct a full-scale research, during which we will:

• identify goods/services segments—define segment purposes in order to promote them through merchandising, media, and other channels;
• perform predictive modelling, which enables for calculating the Customer life cycle;
• perform consumer analysis based on the company’s data, qualitative research, and feedback from buyers. Main assessment areas will include such criteria as the programme’s competitive value, the presence/absence of any successful experience with the programme in a competitive environment, the importance of the programme for the company, and the programme’s effectiveness; and
• perform financial analysis to assess the loyalty programme’s application potential (the three-step risk assessment of financial statements; long-term risks and profitability; the assessment of the breakage risks, as well as the ways of adjusting the programme; the assessment of impact on net profit, competitiveness, and commercial value; and cost-efficiency improvements).

The loyalty programme’s economic model will include: cash flow description (spending patterns, profit influencing factors, and payback estimates), which will enable to identify optimised and viable business models with the possibility of new sources of income and alternative types of ownership.

As a result of all such work, we will draw up a report on the research, develop a corresponding financial model with a three-year development forecast, and present a feasibility study report.

Loyalty Programme Development and Design.

Goal. Preparation of a detailed plan for engaging buyers in the loyalty programme.

Activities. Based on the data obtained, our specialists will draft a plan for engaging buyers in the loyalty programme, which will include both strategic and technical parts, as well as legal and financial aspects of the LP. The description of the project strategy and tactics will include: a detailed description of the loyalty programme (goals, objectives, type, key indicators, peculiarities in terms of positioning, the LP guidelines, special aspects, and benefits), the implementation mechanism (the description of types and terms of loyalty bonuses and types of buyer identification) and a detailed description of channels and types of communication with the target audience within the framework of the loyalty programme (ways to obtain and register buyer data and the organisation of personal and mass communication).

The description of legal and accounting mechanisms will include Customer guidelines, legal mechanisms for paying loyalty bonuses, and some additional recommendations regarding the programme accounting policies. In order to ensure the full functionality of the programme, our specialists will establish the requirements for a computer system.

As a result of all these activities, there will be a full-fledged analysis of the programme’s impact on buyers, and all the aspects of the project, including its financial model, will be finalised and agreed upon.

Project approval and launch.

Goal. The description of the project’s operating model.

Activities. In order to finalise and approve the project, it is necessary to thoroughly describe all of the business processes that will occur during the project implementation and to prepare user documentation. The fourth stage includes the following steps:

• description of high-level business processes; and

• preparation of user documentation, including manuals for the personnel of sales outlets, manuals for CRM users (recommendations on the activities implementation and the usage of communication channels), manuals for call centre operators (mechanisms and scripts for taking and processing calls), and manuals for IT staff.

As a result of this stage, we will have a finalised plan for launching the loyalty programme.

The development of a loyalty programme is an extremely complex process. However, the above-described algorithm is something that our specialists have worked out in detail, fully inspected and calibrated during our work with different Customers from various businesses. This is why the development of a loyalty programme takes a minimum of time.