A large home appliance manufacturing client, having numerous own retail stores and franchise owned stores had an extensive loyalty program into which they had invested over the last 5 years. However, as a manufacturing firm, our client was primarily focused on building new products for homes. Their customers ranged from lower middle income to the very affluent class. The top management felt that the loyalty program was a failure and was looking to understand why their loyalty programs were not a major part of their revenue stream.
The Business Need
The loyalty program had significant investment done over the last 5 years and a large part of it was done to ensure a smooth and seamless customer experience. The ROI of the loyalty program was expected to show within a five-year period. There was negligible “repeat sales” through the loyalty program.
There were processes that tracked customer sales and sales associates were incentivised to enter data into their handheld and POS. Customers were sent messages on different platforms such as email, SMS and social media apps. To reinforce, the process and systems, there was training for all sales staff and regular intervals.
The question that was posed to us was whether the manufacturing client should discontinue the loyalty program initiative or recommend changes to the program.
Our initial discussion with the client showed us that there was a significant disconnect between the different product lines with respect to the loyalty program. The rewards points that a customer could get did not match the cost of the appliance that they bought. Therefore, customers who bought two or more different appliances felt a bit awkward when the reward points were displayed on their invoice.
Another area that slowly revealed itself was that the “touch points” a customer can have with the manufacturer is not limited to the sale of a product. There is customer service “touch points” for installation, annual services, breakdown maintenance, and finally replacement with the same brand or another brand. All these “touch points” form an opportunity to interact with the customer and thereby build deeper relationships. We found that only a few service touch points had integrated with the loyalty program.
Since the client had a siloed approach to the loyalty program, our first initiative was to look at the data each customer generated to understand whether there were any significant levels of interaction across all the different touch points. We were looking to ensure that a customer would receive the same level of attention, and satisfaction as they would at a sales interaction.
The loyalty program did have a monetary value to sales purchase for a customer, however, a majority of the customers did not feel they had the flexibility to use the value locked in their loyalty account. One of the customer’s we had a detailed interview mentioned, “So what if I have money in the loyalty account, the next time I buy a fridge will be 4-5 years from now. That’s too far off for me to even remember that I have a loyalty account”. Based on similar feedback, we recommended an aggressive education campaign for all loyalty program members to understand that there is a range of value that can be utilised. Small toasters, irons and many more products can be relevant to their needs. As part of the campaign, customers were guided to look for products that satisfy their wants through the loyalty program.
So what if I have money in the loyalty account, the next time I buy a fridge will be 4-5 years from now. That’s too far off for me to even remember that I have a loyalty accountCustomer Interview
Another aspect of the loyalty program that was found lacking was the convenience of engagement by a customer. A customer had to produce the physical loyalty card to be tracked. Most customers forget they have a card or do not produce the card at all. We recommended to change the tracking from a card to a customer mobile number and using a physical address as a crosscheck to ensure the client is interacting with the right customer.
Overall, we recommended the client to continue with the loyalty program.
Over a period of six months after the recommended changes were made, there was a significant increase in customer interactions across all the touch points.
The revenue increase was present and clearly showed an upward trend. The top management of the client was extremely confident that they are on the right path because of increased customer engagement. The client’s marketing team mentioned that there was an increased recall of the brand and therefore it was just a matter of time before revenues would show up.
The overall engagement took 6 months to complete.