Loyalty Programs – Does Yours Actually Retain Customers? 

Look. We all know it’s tough to attract new customers, and it’s even harder to keep them. With the large amount of new brands popping up each year in every industry imaginable, it’s more important than ever to maintain customer relations.

  
Who does a great job to keep wallets open? Hudson’s Bay. 

  • Daily contact through email notifying customers of the latest deals. 
  • Daily deals with steep discounts like 50%-70% off an exclusive item. 
  • Direct mailers with exclusive deals for VIPs.
  • Money spent in store collects points that can be used as cash to purchase additional items in store. Just keep shopping!

What happens when you take these steps? 

  1. Customers receive news regarding in-store promotions and exclusive deals through multiple channels – email, direct mail, social media. 
  2. The deals are real. We’ve all been there, the fake sales. A large SALE sign decorates the storefront, but when you go in it’s the last rack at the very back that’s on sale and each item is only $5 off the original price of $90. At Hudson’s Bay you actually get the 50% off and the additional 30%. Crazy but real.
  3. What? The money I spent here earns 4x points and I can redeem them to use as cash in store towards that new Kate Spade bag I really want? Fantastic. 

Who could use some improvment? Sephora. 

  
Though Sephora also follows the key points of keeping multiple communication channels open, offering gifts/free samples in exchange for points collected, they could use some help in event planning. 

As part of the Sephora customer loyalty program they offer exclusive events to what they call VIB (Beauty Insider) and VIB Rouge members.

Though VIB members spend over $1000 per year in stores and online, exclusive events tailored to these VIB Rouge members often hit “capacity”. So if these VIPs are slow to RSVP they actually don’t get to enjoy the benefits as promised. 

As experienced event planners, our suggestion to Sephora to improve their customer loyalty program would be to plan ahead. If you know there are 500 VIB Rouge members in your immediate store area, prepare for that amount of attendance and more. Setting an arbitrary capacity and turning away your VIPs for events that are supposed to be exclusive to them is bad business. It shows the customer how it’s more important to make it convenient for your staff to organize the event than to ensure all your loyal customers stay happy. 

The problem is resolved quite easily. Too many members in the area? Host the event for 2 days to ensure they can all attend. Not enough VIPs to justify the cost of extending your store hours for both days and paying extra for additional staff? First, let me call BS on that because your customers will come to spend way more money than the cost of having your staff there for extended hours. Second, you can just start the event earlier or end later to accommodate more attendees. 

This is just laziness on the brand’s part. So what happens when every year they accumulate more VIPs? More VIPs will be turned away from these exclusive events that were meant as a benefit for them. How counter intuitive. It’s a problem they should address if they want to keep growing their customers’ spending with their stores. 

So ask yourself. Is your customer loyalty program actually keeping customers? Does every component of the program show the customer that they are valued? Do you deliver on your stated membership benefits? 

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McDonald’s International Service Standards

This is a true story showcasing how a brand has to decide on the value of each of its customer segments and invest accordingly. If you want to give the impression of an international corporation serious about its tourist and business traveler segments, invest in foreign language menus and train staff to speak English.

So. Here’s the scenario.

I thought there used to be a 2-minute service standard (plus a smile) at international McDonald’s, but I was proven wrong this morning.

I landed in Korea at 4:49am this morning and was craving breakfast. I saw a familiar logo, and had a craving for a savory McMuffin. I lined up and noticed the menu didn’t have full English translations on it so I guessed at some of the items. When I reached the counter I asked the cashier what the third item was. Blank look. Ask again making gestures. Another 5-second blank look. I give up and order a sausage McMuffin McMorning combo.

I asked if I could switch my coffee for orange juice. Met with a side wave and a quick no. I thought: “ok understand that I shouldn’t change a combo.”

Since I don’t drink coffee (I am allergic and get migraines from drinking it), I asked for a glass of water.

This request was met with a “no water”, a bigger side wave and an annoyed look.

Who wants to guess whether I’ll ever go back to McDonald’s? Service was definitely below par compared to service in North America. Hopefully McDonald’s finds the tourist/foreigner market important enough in Korea to make the necessary training improvements. Even then it’ll take me a while to consider trying it again.

Remember – we tell 100 people about a negative experience and only 10 about a positive one. Your staff is an extension of your brand, that’s why it’s so important to ensure they are ALWAYS on their best behavior.