Thursday, March 24, 2011

Digital Filipino Talks: Keep Customers Coming Back with Loyalty Programs

Last March 9, 2011, Digital Filipino Talks about Keep Customers Coming Back with Loyalty Programs. Interviewed for this episode was Ms. Yayu Javier, President of Avanza Inc.

Keep Customers Coming Back with Loyalty Programs
from Janette Toral on Vimeo.

Ms. Javier also shares her expertise on how to conduct successful loyalty programs.

Purpose of Loyalty Programs

Ms. Javier mentioned that the purpose of a loyalty program is to encourage the customer to keep on buying or coming back for your product or service. Discount cards are not necessarily loyalty programs, specially if there is no incentive for the customer to come back and buy your product again.

Most loyalty programs use the point system like credit cards. After using a particular service or buying their products for a certain period of time, points accumulate, and can be traded for a certain item. People like me want to gain free stuff, so they aspire to gain more points for the freebie.

The RFM modules

Ms. Javier mentions that a store should know what kind of loyalty program they should use to gain more customers or earn better profits. There are three modules for this are: 1) Recency - or how recent the customeer buys your product 2) Frequency - how often your customer buys your product or 3) Monetary - how much your customer spends for your product. A store must know what is the best module to use. If the store wants more customers buy their product, then they should employ number 2, and so on.

Communication is key

Ms. Javier mentions that the success of a loyalty program depends on how the store communicates with its customers. Reminding customers that a loyalty program exists, or telling them to use the accumulated points before the expiry period, can lead to better loyalty from the customers.

My views on the topic

On Social media and loyalty

Ms. Javier tells us that having an online presence like having fan pages on Facebook can help boost loyalty programs through awareness. However she said, being present online does not automatically mean that loyalty exists between the Facebook users and the company.

In other words, just because a Facebook fan page has a lot of "likers" means that all of them are "loyal." Loyalty can be shown if people actually buy the company's product or service.

Using my standpoint as an example, since I love to join contests, to get more people to vote or like my entry, I have to ask my friends to like the Facebook fan page first as a prerequisite. If they liked the fan page, its because they want to help me out, not because their a fan of that product. Still, marketing people behind the fan page highly value a lot of likes on their fan page because it generates popularity.

My take on Online loyalty

Since loyalty can only be shown when a customer frequently buys a product or service, online stores can use what Ms Javier mentioned in order to maintain a healthy relationship with its customers. Online stores, online surveys and services can use their own version of the point system to attract more customers.

Can blogs and websites use loyalty programs on its readers?

In a way, it can, but only in a different manner. Blogs, social networks and information websites like online news are free to join. Therefore, owners of these sites do not gain money when a reader registers on their site. However, these site owners earn through paid advertorials placed on their site. If the site is popular, more people will eventually click their ads and allow the owners to earn more.

Blogs and websites can try to keep its readers loyal by making their own promos and contests so that readers will watch out for them or make them check your site every now and then. Such programs will also allow more readers to join your site or network.

With online loyalty programs, the customers (or readers) and the store (blog owners) can both win.

This is my entry to's Talks Blog Contest. Be part of the conversation. Visit the contest page to join. Feel free to comment on my blog post about My view on Keep Customers Coming Back with Loyalty Programs.

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