Counter intelligence

Customer loyalty programmes are not simply a matter of pack offers for plastic dinosaurs- you must think about what is most lkely to go wrong and make sure it doesn’t.

SBHD: Customer loyalty programmes are not simply a matter of pack offers for plastic dinosaurs- you must think about what is most lkely to go wrong and make sure it doesn’t.

SBHD: Personal service and pretty packaging may be vital components of the handling process, but in Granby’s case it’s the ability to respond quickly to requests which is key to the Persil Funfit scheme’s success. Richards claims the company’s computer system enables Granby to turn around orders quickly and provide a flexible response to customers.

Phil Westoby, chairman of the Promotional Handling Association, reckons that the way customer loyalty programmes are handled can be the difference between gaining a customer for life or turning them off your product for good.”When aconsumer gets involved in some sort of promotion, either a customer loyalty scheme run by a petrol company, or a one-off pack offer for a plastic dinosaur, it can be the start of something or the end of something,” says Westoby.

“Loyalty programmes are about reducing churn,” he adds. “But it can all go drastically wrong if you don’t get the project right operationally.”

The key to getting it right, he believes, is to have the handling house involved from the start. “Right from the beginning, you have to think about what is most likely to go wrong and make sure it doesn’t,” he says. “For example, the volume of stock to meet response could be too much or too little. Forecasts are never exactly right, so you need a system which balances stock with redemptions so you don’t run out.”

Since no system is foolproof, you also need a process for handling customers who don’t receive their gifts or rewards as and when they expect them. “You should have a hotline number for customers to call with queries and gripes,” he says. “And a suite of letters which can be sent to customers in particular circumstances – for instance, when the product is out of stock.”

The point is, says Westoby, that by handling customers well when things don’t go to plan it’s possible to save the situation and retain that customer’s loyalty despite the difficulties. “If you handle the problem skillfully you can capture the consumer as a fan for life.”

Becci Richards, client services account manager at Granby Marketing Services, which handles the Persil Funfit programme, would certainly agree with this assessment.

The Persil Funfit scheme, which aims to promote fun and fitness to children and build brand loyalty, began with an on-pack points collection scheme whereby points could be redeemed for sports equipment, and is now in its second phase whereby schools, playgroups, gym clubs and leisure centres can register for the scheme and receive a resource pack containing teaching materials.

The 33,000 registered organisations can also buy certificates and badges to reward children’s effort, and these often have to be sent out at short notice, for a specific event or presentation. “Sometimes we get a note from a teacher saying they want the badges the next day,” says Richards, who comments that occasionally things go astray. “It happened once,” she says. “A headmistress didn’t get her badges on time and complained. But we wrote to her apologising, waiving the fee for the items, and she wrote back to thank us. If you can respond like that you can turn a negative situation into something positive.”

As well as a team member handling correspondence, Granby also has three full-time telemarketing staff dealing with enquiries from scheme members. Richards believes this personal touch helps promote loyalty. “Customer care is important in a scheme like this,” she says. “You can build up more loyalty through personal contact.”

The loyalty scheme handled by Kersten Promotions for Buitoni also relies on personal contact. Kersten manages the Casa Buitoni Club, whose 70,000 members receive a monthly newsletter and can call a free-phone number to obtain information and advice on pasta cookery. Ann Osborne, club secretary, explains that Kersten has a small, highly trained team handling calls and letters. “They provide a very personal service,” she says. “We get all sort of letters and calls, asking for recipes, cookery tips, product information and nutritional advice. As soon as the newsletter has gone out the phone goes mad. Then the correspondence starts pouring in.”

When gifts and packs are sent through the post, presentation provides a new opportunity to impress, or to disappoint, as Granby’s Richards explains. “Getting things in the post is exciting. If it arrives in a grotty bag it takes away from the reward. We try to make our packaging as attractive as possible.”

Personal service and pretty packaging may be vital components of the handling process, but in Granby’s case it’s the ability to respond quickly to requests which is key to the Persil Funfit scheme’s success. Richards claims the company’s computer system enables Granby to turn around orders quickly and provide a flexible response to customers.

A similarly fast and flexible response is vital for Westex, which handles a trade loyalty programme for British Airways, designed to encourage travel agent staff to support certain BA flights. Staff register to become members of the scheme and collect points each time they sell British Airways flights. These points can then be redeemed through various differentpromotions, for a variety of gifts including vouchers and flights.The scheme has 10,000 members and 90 per cent of them redeem their points regularly.

Jane Young, sales and marketing manager at Westex, explains that the scheme relies heavily on handling. Westex manages the computer database, which keeps track of members’ points and sends out details of individual promotions to the scheme members. The company also handles members’ applications when they want to redeem their points for gifts.

“Where flight vouchers are involved, we have to turn applications around very quickly,” she says. “Because of certain criteria stipulated by BA members before booking flights, Westex has a limited time during which to dispatch the relevant documentation. A delay could result in missed flights and last-minute panic.”

Computer technology is at the heart of all the major reward-based loyalty schemes, where large volumes of goods have to be in the right place at the right time. Among these is the scheme run by Excel Plus and Product Plus for the Spar store group, which, during the run-up to Christmas, offered reduced-price merchandise from the blockbusting film, the Lion King, to customers who collected special stamps.

The Do It All loyalty scheme handled by NCH Promotional Services, which awards vouchers for spending in Do it All stores, and the Texaco star collection programme handled by Acxiom UK, which provides gifts for points, also rely heavily on computer power. “The Texaco scheme requires the warehousing and shipment of about 1 million gifts a year,” says Charles Hughes, senior consultant at Acxiom. “The computer system supporting it needs to address all the fulfilment aspects, as well as customer service and the database.”

Capturing data is an integral part of any customer loyalty promotion and information technology makes it possible for handling houses to provide increasingly precise data for the client. The Texaco scheme, for instance, is based on plastic cards, which are swiped at the point of sale to provide electronic data on consumers’ petrol buying habits.

The Do it All programme, which is also based on plastic cards, provides similar information by storing details of how much individual customers spend, where they spend, and when. Andy Wood, marketing manager at NCH Promotional Services, comments that the scheme has more than 2 million members, and the information collected through the programme represents “a very powerful data source”.

Similarly, the Shell Smart loyalty programme, which is based on a smart card and rewards customers buying forecourt products with a range of gifts, provides Shell with detailed data on the purchasing habits of consumers at each Shell outlet.

PCL Group, which developed the system and handles data processing, can analyse the information by geographical region, type of product, frequency of purchase and so on, creating a powerful tool for directmarketing.

A slightly different approach is taken by Burmah, which has upgraded its Reward programme to include Kingfisher vouchers and uses an electronic tracking facility to identify the precise voucher redemption behaviour of customers. Burmah views this as an opportunity to tailor promotions more precisely to customer aspirations.

The increased importance of data capture means involving the handling house in a loyalty scheme from the outset has become more desirable than ever. Westoby adds: “It’s important that the company handling a customer loyalty scheme understands the marketing background and knows what the client is trying to achieve. Handling houses need to be in there from the beginning, so the client gets the data it wants in the form it wants it.”

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