Best practice report: Customer Loyalty 2

January 2, 2014 by BPIR.com Limited

Example Cases

Valuable lessons can be learned from the following organisations:

LoyaltyOne Inc., Canada
Customer loyalty programme achieves premier status

LoyaltyOne, a global provider of customer loyalty programmes, launched its Air Miles rewards scheme in  1992.  By  2013,  the Air  Miles  programme  had more than 10 million active accounts (approximately two-thirds of Canadian households) and had become Canada’s premier coalition loyalty programme. The programme allowed account holders to earn reward miles while doing everyday shopping at retail and service locations across Canada, and also with leading global brands on-line. Air Miles account holders could access more than 1,200 leisure, entertainment, merchandise, travel and lifestyle rewards. In addition, Air Miles rewards could be instantly redeemed on everyday and high value purchases such as gas, grocery, drug store items, and home improvement purchases. In 2012, LoyaltyOne was named one of Canada’s 50 Best Employers for a third consecutive year, and was recognised as one of Canada’s greenest employers. [15]

 

TATA Motors, India
Customer loyalty through personalised connectivity

To better to understand its customers’ needs, Tata Motors, a multinational automotive manufacturer, used a variety of personalised methods to capture customer information. Plant workers and engineers met regularly with truck drivers, taxi drivers and chauffeurs at “street corner” visits. From these, the Tata workers gained first-hand information of customer expectations and product performance in real life. Product engineers made good use of this customer feedback and the new ideas. In addition, Tata’s Customer Relationship Management (CRM) system captured customer transactions and parts delivery schedules, and monitored customer complaints. More than four million text messages, managed automatically through the CRM, were exchanged between customers  and  dealers  annually,  covering  everything from product complaints or reminders about service appointments, to announcements about newmodels, factory reminders for service, and customer satisfaction polling. These connections reinforced the company’s brand, and helped to personalise interactions with Tata Motors. As a result, customer satisfaction levels rose from 72 per cent to 90 per cent in nine months. [16]

 

Chevrolet Motor Division, United States
Building brand and customer loyalty

To turn customers into brand ambassadors, Chevrolet (Chevy) developed strategies to create brand loyalty and credibility. Chevy developed a master programme, using face to-face meetings to encourage people to use the company website. Little League baseball games were sponsored by Chevy, and representatives handed out cards that simply said “Chevy Ignites,” and listed a URL and password. When the consumer went to the site and typed in the information, they received a free T shirt. Chevy camera crews made short video highlight clips of kids playing baseball, and parents were given a private link that enabled them to watch their children playing. The programme generated much goodwill, and parents became ambassadors among their friends and family. Through this programme, it was hoped that the people that had been influenced would consider Chevrolet the next time they purchased a vehicle. [17]

Cisco Systems, United States
Social networking builds customer loyalty

Cisco Systems, a provider of IP networking solutions, set up a social network platform to train and certify technicians called the Cisco Learning Network. The site was content rich and user friendly, which helped users to understand more about technologies, business applications and job opportunities. To encourage participation, Cisco created a VIP programme for those who had made notable contributions on the learning network. These VIPs were rewarded for their contributions, met Cisco executives, received special access to information, and became Cisco’s voice to the community. By 2013, the network became a key portal for the entire IT industry, with over two million users. The network allowed Cisco to differentiate its brand, create loyal customers, gain valuable insights, and  influence the  market. Of the certified people using the learning network, 25-30 per cent were more loyal; this loyalty difference amounted to significant revenue gains for Cisco. [18]

Tesco plc. United Kingdom
Customer loyalty programme gives competitive advantage

Rather than compete on price across the board, Tesco, a retail grocery chain in the United Kingdom, analysed data from its Clubcard loyalty programme. As a result, Tesco focused on a short list of products influencing customer price perceptions, and consequently slashed prices on those items. Tesco also used Clubcard to expand the range of goods customers were putting in their cart. For example, to compete for baby products with a leading pharmacy chain, Tesco introduced the Baby & Toddler Club, which enabled it to leverage the Clubcard infrastructure to give parents helpful and timely information, and to provide discounts on baby products. Within two years, Tesco had grown its share of the UK baby market by 24 per cent, and had signed up 37 per cent of parents-to-be as members. Use of its loyalty programme allowed Tesco to fend off competitors, target new segments and retain price-sensitive consumers – while at the same time maintaining margins on other products. [19]

American Express, United States
Customer focus brings award 

In 2010 American Express, a US-based credit card issuer, won the Forrester Research Voice of the Customer Award for its customer focus approach. The organisation was judged across five categories:

  • clarity of approach
  • business value to the organisation
  • positive impact on customer experience
  • innovation, and
  • potential for other companies to repeat the practice.

The organisation made active listening and connecting with customers central to its business. It also focused significantly on employee engagement. American Express initiated a “Relationship Care” servicing ethos, which provided opportunities to deepen customer relationships and to develop customer loyalty. As a result, the organisation achieved double-digit increases in “Recommend to a Friend” scores. American Express also achieved the highest customer satisfaction rankings among credit card companies surveyed by JD Power and Associates. [20]

Progressive Corp., United States
Customer loyalty programme increases customer retention 

The Progressive Corporation’s customer base was weighted heavily with younger drivers that frequently changed carriers to get better rates. A Progressive study found that a one-month increase in policy dura- tion across their customer base was equivalent to US$100 million in incremental profit for the company. Consequently, increasing customer retention became an immediate goal, and $3 million was invested in a pilot loyalty programme. It was found that policy holders tended to switch companies after receiving rate increases following a minor accident; therefore, Progressive forgave these accidents without automatically raising rates. The pilot resulted in a two per cent incremental retention rate, which more than covered the programme costs. Now all customers are auto- matically enrolled in a six-tiered programme offering escalating awards that include young-driver discounts, decreasing premiums, and accident forgiveness. Due to its proven return on investment, the loyalty program became a core brand propsition at Progressive. [20]

 

 

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