BUSINESS CASE: LAUNCHING A COALITION LOYALTY PROGRAM
A project aimed at launching a coalition loyalty program with retail merchants and manufacturers in a large country in Central Asia. Within 2 months, the loyalty program has been launched in test mode with the first partners. The following components have been implemented – bonus system for rewarding customers, generation of over 14 mln QR codes for manufacturers to be placed on goods’ packaging, personal accounts for Program Operator, Merchants from various business areas (food retail, fuel stations, outfit sales, consumer electronics, pharmacies), and also mobile application for end-users.
1. BUSINESS TASK
The project is aimed at creation in co-operation with the Client Company (investment group) and launch of a coalition loyalty program uniting retail merchants and manufacturers. Coalition Loyalty Program is designed to increase the economic efficiency of the partner network and create or strengthen the positive image of each of the brands. There are two main business streams:
- Co-operation with goods manufacturers.
- Co-operation with retail networks and stores.
The loyalty program covers the territory of two countries in Central Asia.
For the Loyalty Program Operator, the main purpose is to accumulate customers’ data through combining the customer databases of the network partners for further monetization. For the loyalty program collaborates (merchants and manufacturers), the goals are as follows:
- Coalition effect: the low cost of customer acquisition, access to a customer base of participating Partners.
- An additional channel of communication, acquiring new customers and retention of existing customers.
- A single channel for all customers combining retail outlets and web stores.
- Increasing target customers inflow because of uniting customer databases, increasing frequency of purchases made by regular customers
- Increase in number of purchases due to higher likelihood of making a purchase within the loyalty network
- Increased frequency of purchases and larger ticket size.
- Sales of additional complementary services.
- Reducing the cost of ineffective marketing campaigns.
Large network distributor is the key loyalty program collaborator. Over 14 mln QR codes have been generated to be placed on it’s products packaging.
The loyalty program unites retail merchants from the following business areas: food retail, fuel stations, consumer electronics, pharmacies, outfit stores etc.
2. LOYALTY PROGRAM MECHANICS
Within the project, our team was responsible for the supply and customization of technological solutions, training the customer’s technical team and participating in the development of products and services based on loyalty platform, while the Customer (loyalty program operator) was in charge of team building, business development, marketing, project financing and establishing relationships with local service providers.
Coalition Loyalty Program consisting of multiple partners was selected as a target model; it provides the following options for the parties: bonus mechanics (accumulation and spending bonuses for customer activity), client flow management, advertising toolkit for merchants, accounting and analytics for business partners as well as for loyalty program Operator. An end-user receives a single bonus card, valid throughout the network of partners, and the ability to install and use a mobile application to manage the bonuses and getting special offers and other communications from program partners.
2.1. LOYALTY PROGRAM FUNCTIONALITY
2.2. HOW THE PROGRAM WORKS
After registering with the program and/or downloading the mobile app, the customer gets two bonus accounts to accumulate rewards in a form of virtual bonuses:
Main bonus account is for accumulating bonuses for purchases in the partner stores.
Bonus account for promo codes is for activating promo-codes for specific products, for accumulating bonuses and refilling mobile account.
Loyalty Program for Manufacturers
When a code is activated, a customer-loyalty program participant can get 1-6 points for purchasing this product and for code activation to his bonus account for promo codes. After the balance on a bonus account for promo codes reaches 6 points, the client’s mobile account is refilled regardless of a mobile operator within the countries of loyalty program operation.
Loyalty Program for Retail Merchants
When a customer fills in his shopping cart, he shows his loyalty card at checkout and receives bonuses to his main bonus account. Afterwards, the customer can spend accumulated bonuses on his purchases within the partners’ network.
Each partner decides on % the product cost which he’s willing to give a customer as a reward in a form of bonuses. The partners’ websites and the main site of the loyalty program are integrated, so the customers databases merge.
The mobile application for customers has been launched. The project also assumes branded plastic cards issuance.
Identification with a plastic card with a QR code or bar code. The codes are generated by the software platform. The customer can also connect his loyalty card ID with his cell phone number and, therefore, create his personal account with the loyalty card linked to it.
Identification with the mobile application.
Successful purchase – sample scenario:
Step 1 Obtaining a card: A person gets a loyalty card or downloads the mobile app, registers with the loyalty program and obtains a status of loyalty program participant.
Step 2 Visiting a Loyalty Program Partner’s store: Loyalty Program Manager (Operator) or a merchant notifies a customer on a special offer or a deal. A customer has been notified and came for shopping.
Step 3 Making a purchase and bonuses accrual: Cashier’s shelf contains information about loyalty program participation terms. A program participant pays for selected goods and presenta an identifier in the mobile app, and cashier scans bar code or QR code. A customer makes a payment and receives a reward in a form of bonuses to his personal account in the Loyalty Program.
2.3. FEATURES FOR LOYALTY PROGRAM PARTICIPANTS
2.3.1. MerCHANT’S PERSONAL ACCOUNT
Every Partner of the Loyalty Program receives a personal account; it’s a full-functional CRM toolkit with the following options available:
- Administration board with the key brand activity indicators and with a list of recent transactions
- Calendar of promotional campaigns and special offers
- Managing a contact list of business counterparts
- User management (customer database management) including smart filtering, groups management, customer reviews management
- Management of advertising campaigns. A brand can create a new campaign or special offer, adjust the reward amount and type (for review, for a subscription, for a purchase and so on.) and also manage existing campaigns.
- Mailings management. A brand can create an email or sms mailing sending information about its deals and promotions to all its customers or to a specific target group.
- Analytics (sales analytics, RFM analysis, analysis of customers’purchases)
- Personal settings
2.3.2. PERSONAL ACCOUNT OF THE LOYALTY PROGRAM OPERATOR
Operator (Manager) of the Loyalty Program manages its account with the following options for accumulating data and managing relations with its business partners and individual customers :
- Administration board displaying dynamics of transactional activities including consolidated data, breakdown by partners, programs, types of rewards etc.
- Calendar of promotional campaigns and special offers
- Managing contact list of business counterparts with the ability to approve new applications to join the loyalty program, and to edit existing data
- User management – it’s one of the most valued Operator’s tools including accumulating, filtering and grouping customers’ data (filtering and segmenting can be done basingon socio-demographic characteristics or on purchasing activity), customer reviews management and membership cards management. This section provides a broad basis for analytics and further monetization.
- Management of advertising campaigns. The functional capabilities are similar to those of merchant or manufacturer.
- Promo-codes management. Here the following options are available: information about activated promo-codes, management of products with promo-codes, management of promotional campaigns and information about partners’ applications for promo-codes generation.
- Managing mailings throughout the customer base or targeting specific groups of users,
- Analysis (sales analytics, RFM analytics, user data analytics, customers’ purchases analytics)
- Ticketing system allowing customer support team to interact with the partners to resolve technical issues
- Controls, settings and libraries
- Data consolidation. It’s a large-scaled data set containing information about user registration, authorization, social accounts, about changes in customers’ personal information and their brand subscriptions. Also this section contains information about sent text messages and emails with the options of searching and filtering.
2.3.3. LOYALTY PROGRAM MEMBER PERSONAL ACCOUNT
After registration and login, a user gets access to his personal account, where he can review the bonus account balance, the rewards history, their status in the loyalty program, as well as news and special offers from brands.
2.3.4. MOBILE APPLICATION
Mobile application a user to control bonuses balance, to receive news, deals and promotions from brands – partners of the Loyalty Program, to get identified in stores and cafes as a member of loyalty program, to accumulate bonuses and to spend them as payment for goods and services.
2.3.5. LOYALTY WEB PORTAL
The loyalty portal is designed for interaction between the Loyalty Program Operator and Loyalty Program members. The portal contains the general information about the Loyalty Program and its rules, list of Partners and their bonus offerings, deals and promotions as well as possibility to join the Program as an individual member or as a business partner. Registered users can access their personal area.
3. PROJECT IMPLEMENTATION
3.1. THE TECHNOLOGY SOCUTION
The platform used to launch the Loyalty Program, U-SOLUTIONS, is a platform to create and manage loyalty programs for various types of businesses such as large retail networks, retail outlets and web stores. Our platform enables using of various services and modules for flexible and stable operation of the Loyalty Program, and providing end-users with innovative and simple-to-use tools..
- Bonuses processing;
- Settlements, transactions accounting.
Financial and legal framework:
Our team provided a complete legal framework for loyalty program management including rules, settlements, agreements with partners, public offers for end-users.
Plastic cards linked with the bonus account acting as an identifier in the Loyalty Program.
Mobile app with QR/BAR codes to be used as a Loyalty Program ID, a list of Partners, special offers, promo codes and certificates, transactions history, rewards history, etc. The app is available for downloading at Apple Store and Google Play.
Cloud CRM system:
flexible CRM tool for the management of loyalty programs: customizable rules for bonuses accrual, collection and processing customer data, analytics and reporting, communication with participants (email / sms / push), flexible integration methods with cash registers, accounting systems or online stores
3.2. PROJECT DURATION AND MILESTONES
- Preparing, setting up the server software architecture.
- Configuring and launching the current version of the Loyalty Program Platform..
- Connecting the first Partner and integration with the accounting system.
- Development of the Loyalty Program web portal.
- Mobile app development.
- Testing and launch.
- The time between the signing the agreement and the start of operation in test mode was 2 months.
BUSINESS CASE: LAUNCHING A COALITION LOYALTY PROGRAM