Podcast
Questions and Answers
What is the primary goal of determining the LP's goals during the design and implementation process?
What is the primary goal of determining the LP's goals during the design and implementation process?
Which of the following is a factor that determines the effectiveness of loyalty programs?
Which of the following is a factor that determines the effectiveness of loyalty programs?
What is a key consideration when managing the costs of loyalty programs?
What is a key consideration when managing the costs of loyalty programs?
Which of the following is a consideration when designing the reward mechanism of a loyalty program?
Which of the following is a consideration when designing the reward mechanism of a loyalty program?
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What is a key aspect of the participation requirements of a loyalty program?
What is a key aspect of the participation requirements of a loyalty program?
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Which of the following is a characteristic of a firm that can affect the effectiveness of a loyalty program?
Which of the following is a characteristic of a firm that can affect the effectiveness of a loyalty program?
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What is a key consideration when designing the reward structure of a loyalty program?
What is a key consideration when designing the reward structure of a loyalty program?
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Which of the following is a dimension of loyalty programs?
Which of the following is a dimension of loyalty programs?
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What is a key aspect of aligning the design of a loyalty program with the characteristics of the market and customer base?
What is a key aspect of aligning the design of a loyalty program with the characteristics of the market and customer base?
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Which of the following is a characteristic of a successful loyalty card design and implementation?
Which of the following is a characteristic of a successful loyalty card design and implementation?
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Study Notes
Creating Value and Loyalty Programs
- CRM (Customer Relationship Management) is a core business strategy that integrates internal processes and functions with external networks to create and deliver value to targeted customers at a profit.
- Value is the customer's perception of the balance between benefits received from a product or service and the sacrifices made to experience those benefits.
Key Components of Value
- Benefits (product/service features, quality, and performance)
- Sacrifices (money, search cost, psychic cost, functional-unsatisfactory performance outcomes, financial, temporal, physical, psychological, social, and sensory)
Total Cost of Ownership (TCO)
- TCO looks beyond the costs of acquiring products to the full costs of using, servicing, and disposing of the product throughout its life.
- Economic Value to the Customer (EVC) is a pricing strategy that responds to TCO by proving to customers that the value proposition improves their profitability.
Developing Customer Value Propositions
- A value proposition is a company's promise to deliver a particular bundle of value-creating benefits.
- Three key value delivery strategies:
- Product leadership (providing the best products/services/solutions)
- Customer intimacy (adapting offers to meet individual customer needs)
- Operational excellence (efficiently providing products/services at low cost)
Designing Loyalty Programs
- A loyalty program (LP) is a marketing process that generates rewards for customers based on their repeat purchases or engagement with the brand.
- Key objectives of introducing LPs:
- Building true (attitudinal and behavioral) loyalty
- Efficiency profits (changing customer buying behavior)
- Effectiveness profits (developing better knowledge of customer preferences)
- Value alignment
Attitudinal vs. Behavioral Loyalty
- Behavioral loyalty refers to observed customer actions towards a product/service.
- Attitudinal loyalty refers to a customer's perceptions and attitudes towards a product/service.
Designing Loyalty Programs
- LP design involves discretion in composition, choice of dimensions, and weights assigned to each dimension.
- Dimensions of LPs:
- Reward mechanism (transaction-based vs. engagement-based)
- Reward structure (hard vs. soft rewards, product proposition support, aspirational value, rate of rewards, tiering, timing, and rewards based on specific criteria)
- Participation requirements (voluntary or automatic enrollment, automatic or manual point accumulation)
- Payment function
- Sponsorship (existence of partner network, network externalities)
Factors that Determine LP Effectiveness
- LP design characteristics
- Customer characteristics
- Firm characteristics (perishability of product, breadth and depth of firm offering)
Successful Loyalty Card Design and Implementation
- Clearly determine LP goals compatible with marketing strategy and organization positioning.
- Align LP design with market, customer base, and firm characteristics.
- Manage LP costs.
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Description
This quiz covers creating value and loyalty programs in customer relationship management, focusing on identifying key components of value and designing effective loyalty programs.
