Definition of loyalty programme

Companies often try and drive behavioural loyalty through the simple frequency programmes (FPs) that are designed to reward customers who buy frequently and in substantial amounts (for example, every fifth purchase is free), or through more complex loyalty/ membership programmes that have a much wider range of objectives according to different levels of membership.

The latter aims to develop long-term, cost-effective links between an organisation and its customers for the mutual benefit of both parties such as enhancing convenience like having customer data such as billing and credit card information, customer preferences readily available.

This enables segmentation of the customer base or the grouping of customers to allow the identification of the most and least profitable customer relationships.  For instance, customers can be grouped by revenue into different membership levels, and then offering different tailored services such as enhanced customisation, priority and higher level services based on that membership.

Example
Caesars Entertainment Corporation (CEC) is the world's largest casino entertainment company, owning or managing casino resorts on four continents.  The company's resorts operate primarily under the Harrah's, Caesars and Horseshoe brand names.  Caesars also owns the London Clubs International family of casinos and the World Series of Poker.

The group’s loyalty programme, called Total Rewards (www.TotalRewards.com), is a leader in the use of highly sophisticated loyalty programmes. Harrah’s was first to launch a tiered customer loyalty programme in the gaming industry which has now been extended to all CEC’s brands. Today, it has five tiers in its programme: Gold, Platinum, Diamond, Seven Stars, and Chairman’s Club.

The programme is integrated across all of its properties and services. Customers identify themselves (and earn points) at every touchpoint throughout the company, ranging from its gaming tables, restaurants, and hotels to the gift shops and shows. The points collected can be used to obtain cash, merchandise, lodging, show tickets, vacations and events.

What is special about CEC is not its loyalty programme, but what it does with the information about its customers when they use their cards to earn points. At the backend, CEC has linked all of its databases from casino management, hotel reservations and events to get an holistic view of each of its customers.

CEC now has detailed data on over 42 million of its customers and knows their preferences and behaviours ranging from how much they spend on each type of game and their likes in food and drinks, to entertainment and lodging preferences.

All of this information about the customer is captured in real time. CEC uses this data to drive its marketing and on-site customer service. For example, if a Diamond card holder on slot machine 278 signals for service in a Harrah’s property, a Harrah’s associate is able to ask, “The usual, Mr. Jones?” and then track the time it takes for a server to fill the guest’s request.

In another example, when a customer wins a jackpot, Harrah’s can tailor a reward that celebrates that win. Harrah’s also knows when a customer is approaching his maximum gaming limit on a particular evening and therefore, when the customer is likely to stop playing. Just before the limit is reached, Harrah’s can offer him a heavily discounted ticket in real time via text message for a show with available seats.

This method keeps the customers on the premises (and perhaps keep them spending), makes them feel valued as they get a special deal just when they wanted to stop playing. Also, this utilises otherwise wasted capacity in its shows and restaurants. [1]


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