How retail companies evaluate the effectiveness of implementing loyalty systems in Russia and abroad
Image: sekihan , CC BY 2.0
Loyalty programs have become a very popular tool for attracting customers in the retail sector. This is not surprising, because according to research results , up to 87% of buyers want to use such programs, and for 83%, the presence of a loyalty program is a serious motivating factor for continuing interaction with the company.
Thus, a loyalty program can not only attract new customers, but also retain existing customers. However, in order for everything to really work that way, the company needs to periodically analyze how much the developed program is liked by the audience. Today we will talk about how this task is solved by business abroad and on the Russian market.
How does it work abroad
FiveStars loyalty system developers have posted on their blog a list of four ways to evaluate the quality of their work.
One of the easiest ways to measure user satisfaction with a loyalty program is to conduct an online survey organized using various digital channels. For example, surveys can be conducted on your own website or in social networks. Here are some tools for conducting surveys on social services:
In addition, polls can be carried out using text messages on a mobile phone or email. Some companies collect phone numbers of users of loyalty programs, others store email addresses. Here are the tools you can use to create these polls:
Setting up a “point of view” in the store
The idea is simple - in any case, store employees discuss a loyalty program with customers, asking them questions about whether they have the right cards. Those buyers who answer this question in the affirmative, companies can offer a small gift for answering several questions about their attitude to the loyalty program. A gift can be anything, for example a coupon for a ten percent discount or double points of the loyalty program for purchases on this day.
To receive a gift in a couple of minutes of time spent - for many this will turn out to be a rather attractive prospect. In stores where there is not such a large flow of customers, the cashier himself can collect feedback, but if there are a lot of customers, they are often sent to special points of opinion gathering, where dedicated employees ask questions.
Gather feedback on customer events
In the West, the practice of organizing events for buyers of a particular company is quite common - it can be a barbecue in a city park or a concert organized with the support of a business. In such cases, company representatives may approach the event visitors and ask to answer a few questions about the pros and cons of the loyalty program.
Old School: Focus Groups
Despite many years of controversy about whether people tell the truth while participating in focus groups , this tool for public opinion polling is still very popular with both foreign and Russian businesses. Recruitment of experiment participants can be carried out through social networks, mail or SMS mailings. A small gift is offered for participating in the survey - usually these are discount coupons for purchases in stores of a certain company.
Polls are our everything, or what works in Russia
Russian retailers, as well as their foreign colleagues, pay much attention to the issue of evaluating the effectiveness of loyalty programs. The tools for solving this problem are wide, but the experience of domestic companies shows that direct customer surveys bring the most efficiency. For example, one of the Pilot clients using Profi-T cash register software , which has its own loyalty program - a network of children's goods stores - evaluates the effectiveness of the loyalty program through a quarterly questionnaire and measurement of the NPS consumer loyalty index .
There are retailers who use the Internet to find out the opinions of customers. So, the grocery store chain was disappointed in the usual polls and decided to conduct online polls. For this purpose, she plans to make free Wi-Fi available in stores for customers: by going into it, they will need to answer a couple of questions about the operation of the loyalty program. By the way, the network intends to motivate coupons for additional discounts to the most active respondents.
One of our customers, a regional grocery store chain, uses a range of tools to evaluate the effectiveness of a loyalty program. The most archaic of them is the “Book of complaints and suggestions”: oddly enough, the network staff also find reviews in it, with which you can draw conclusions about whether the loyalty program is effective or not. Although, of course, there are not so many such messages in the Book. In addition to this outdated channel, the network uses a hotline, a mobile application, groups on social networks, customers can speak out about a loyalty program by phone, email. All incoming feedback is processed by employees of the marketing department, who on its basis prepare recommendations for the operating and commercial services on adjusting the operation of the loyalty program.
How else do loyalty programs evaluate?
To assess the effectiveness of loyalty programs, not only feedback collection is used, but also specialized metrics. Among them:
- Returns indicator - it allows you to understand how long customers stay with the company. The more participants in the loyalty program, the average should be higher. According to the author of the book “Loyalty Effect” (Fred Reichheld), an increase in the rate of return by 5% translates into a 25-100% increase in profit of the company.
- Negative outflow is a metric that describes customers who, on the contrary, bought additional goods and services or switched to a more expensive tariff plan. These figures help to understand the real state of things and offset the indicators of natural outflow, which cannot be avoided in any business. This metric is important for evaluating the effectiveness of multi-level loyalty programs.
- The NPS Consumer Loyalty Index - it shows the level of user satisfaction on a scale of 1 to 10 - is the degree of likelihood that a person will recommend the company to someone else. The index is calculated by subtracting the percentage of brand critics (detractors - those who would not recommend the company) from the percentage of supporters (promoters - people who are willing to recommend it).
- Customer Effort Score (CES) - allows you to understand how difficult it was for them to solve their problem with the help of the company.
We described in more detail about the technical side of organizing loyalty systems in this article: " Why does the cloud not take off: how store loyalty systems work ."