How do retail companies evaluate the effectiveness of loyalty systems implementation in Russia and abroad

Image: sekihan , CC BY 2.0

Loyalty programs have become a very popular tool to attract 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.
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Thus, the 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 appeals to the audience. Today we will talk about how this problem is solved by a business abroad and on the Russian market.

How does it work abroad

The developers of the loyalty system of the company FiveStars have published in their blog a list of four ways to assess the quality of their work.

Online surveys

One of the easiest ways to measure customer satisfaction with a loyalty program is to conduct an online survey, organized using various digital channels. For example, polls can be conducted on your own site or in social networks. Here are some tools for conducting surveys in social services:

• Facebook poll (or built-in VKontakte functionality)
• Twitter poll
• Twtpoll

In addition, polls can be conducted via text message to a mobile phone or email. Some companies collect phone numbers of loyalty program users, others store email addresses. Here are some tools that can be used to create such surveys:

• Polls via text messages: TXTImpact
• Email Surveys: SurveyMonkey
• Google forms

Installing a “point of collection” in the store

The idea is simple - the store employees in any case discuss with the customers a loyalty program, asking them questions about whether they have the right cards. To those buyers who answer this question in the affirmative, companies may offer a small gift for answering a few questions about the attitude towards the loyalty program. A gift can be anything, such as a coupon for a ten percent discount or double loyalty points for purchases that day.

To get a gift in a couple of minutes of time spent - for many it will be quite an attractive prospect. In stores where there is not such a large flow of customers, the cashier himself may be engaged in collecting feedback, but if there are a lot of customers, they are often directed to special points of opinion gathering, where questions are given by dedicated employees.

Collect feedback on customer events

In the West, the practice of organizing events for customers of a particular company is quite common - it could be a barbecue in a city park or a concert organized with the support of business. In such cases, company representatives may approach event attendees 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 over whether people are telling the truth while participating in focus groups , this tool for ascertaining public opinion is still very popular with both foreign and Russian businesses. A set of participants in the experiments can be conducted through social networks, mail or SMS-mailing. For participation in the survey offer a small gift - usually a discount coupons when shopping in stores of a particular company.

Polls - our everything, or what works in Russia

Russian retailers, as well as their foreign colleagues, pay a lot of attention to the issue of evaluating the effectiveness of loyalty programs. The toolkit for solving this problem is wide, but the experience of domestic companies shows that direct customer surveys are most effective. For example, one of Pilot's customers using Profi-T’s cash software , which has its own loyalty program, a network of children's goods stores, evaluates the effectiveness of the loyalty program through a quarterly survey 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 surveys. For this purpose, she plans to make free Wi-Fi in stores accessible to buyers: by entering it, they will need to answer a couple of questions about the work of the loyalty program. By the way, the most active respondent network intends to motivate coupons for additional discounts.

One of our customers, a regional grocery store network, uses a whole range of tools to evaluate the effectiveness of the loyalty program. The most archaic of them is the “Book of Complaints and Suggestions”: oddly enough, but in it the network staff find reviews, with the help of which it is possible to 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 about the loyalty program by phone or e-mail. All incoming feedback is processed by employees of the marketing department who, on its basis, prepare recommendations for the operating and commercial services to adjust the work of the loyalty program.

How else do loyalty programs evaluate

To assess the effectiveness of loyalty programs use not only feedback collection, but also specialized metrics. Among them:

• Customer return rate - it allows you to understand how long customers stay with the company. The more members of the loyalty program, the average should be higher. According to the author of the book Loyalty Effect (Loyalty Effect) Fred Reheld (Fred Reichheld), the increase in the return rate by 5% results in a 25-100% increase in the company's profit.
  
  
• The 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 situation and compensate for the indicators of natural outflow, which can not 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 - this is the degree of probability that a person will recommend the company to someone else. The index is calculated by subtracting the percentage of critics of the brand (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 the organization of loyalty systems in this material: “ Why the cloud does not take off: how loyalty systems work in stores .”