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Retailing Lessons From Loyalty Programs Around the Globe Essay

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Updated: Dec 13th, 2021

Overall Conclusion

A large percentage of organizations use loyalty programs in their marketing efforts so to encourage customers to keep buying their products. Organizations use loyalty cards, rewards cards, advantage cards, and many others to identify individuals who are members of a loyalty program. The principle aim of loyalty programs is to attract many customers to a business and eventually increase competitive advantage therefore allowing an organization to make more profits. Individuals with loyalty cards are given discounts, coupons, gifts, and others as a reward for goods bought especially if the total price exceeds a certain amount. In issuing loyalty cards, organizations divide their shoppers into different groups depending on the buying behaviors of the different groups (CRMTrends 4). Some of these groups are based on gender, age, ethnicity, sex, lifestyle, and others. Some organizations collaborate with others so as to make the program more efficient. Organizations conduct some research so that they can obtain important information before implementing the loyalty program. Most of the organizations that have employed the program have acquired a worthwhile return on investments. However, some organizations do not employ the program but use other methods to acquire higher profits.

Segmentation

“CVS believes that segmentation enables merchandising, marketing, operations, and other teams to have a common language when talking about their customers”. This statement means that segmenting the customers into groups according to their needs have many advantages to all the teams in the organization. This is because the different teams identify the different groups of customers in the same way, that is, according to their needs. The merchandising team will be producing goods depending on the needs of the different teams. The marketing department will be approaching customers depending on the needs of their groups. The operations team and the others will approach the customers in a similar manner. This means that in dealing with the customers, all the teams in an organization will give them the same approach. The groups will then communicate about their customers in the same language because they have been dealing with them in the same way.

Collaborations

Collaborations between retailers and such information specialists as Emnos and Retalix are quite valuable. This is because such specialists offer services that allow the retailers to be customer focused (Enterprise solutions team 2). The services they provide allow retailers segment customers according to their needs, improve pricing and promotion policies, and develop better assortments. They also provide and implement loyalty software to retailers. Such software is used to integrate and manage promotion and loyalty functionality. Retailers use such specialists in different locations where they operate. The services they provide help retailers manage multiple store locations and handle customer needs. Retailers that collaborate with information specialists are more successful than those that do not collaborate. At the end of the day, retailers that collaborate with information specialists provide more efficient operational and customer service levels. This adds to their competitive advantage over other retailers offering similar services. They attract more customers and open branches in many other locations that increase their revenue.

Kroger’s Retailing Strategy

Kroger has grouped its shoppers into seven groups depending on type, package sizes, and the types of products that the shoppers buy. Based on the three categories, customers are segmented into seven distinct groups. The retailing strategy should be tailored in a way that will increase sales and profits. The organization should come up with different types of loyalty cards aimed at promoting customers who belong to the seven groups of shoppers (Uddin 6). The discounts offered on purchases should be based on the goods bought and their total cost. The specific group of shoppers that helps the company make high profits should have cards that offer more advantages than the others. This will encourage other shoppers to purchase the items that shoppers in this group purchase so that they can have higher discounts. The organization should also offer promotions that other competitors do not offer. This would attract more customers who will be loyal to the organization.

The Seven-Eleven Japan’s Nanaco Program

Nanaco is a contactless payment system that the Seven-Eleven Japan adopted in 2007. It is a loyalty electronic card has helped the organization reduce the payment of interchange fees. The program purely belongs to the organization and is tied to a loyalty scheme where for every one hundred tens that a shopper spends in purchases, he or she earns one yen. The program is available to shoppers either in a smart card or a mobile phone format. A shopper who possesses this card presents it at the point of sale terminal so as to pay for items purchased. The organization adopted the card targeting individuals who shop frequently. This program has helped speed up register transactions and provides a convenient payment method. The Nanaco program is run by the credit card division in the organization. Shoppers with Nanaco cards can recharge them with money at ATMs and group stores.

Tesco and Customer Loyalties

Tesco operates in several countries and it should therefore adopt customer loyalties in a way that will increase sales and profits in all the countries. Research should be conducted in each country so that shoppers can be divided according to their needs. The organization should also collaborate with other organizations that can help it make its operations more efficient in the different countries. Shoppers should then be encouraged to apply for loyalty cards that will allow them win points for the money they spend with the organization’s products. The shoppers should be given a minimum number of points that makes him or her qualify for discounts and promotions. The more the number of points that a shopper has, the greater the discount offered. The loyalty scheme in every country should depend on the shoppers and their preferences in the country.

Wal-Mart

Wal-Mart has chosen not to have a customer loyalty program like other top global food retailers. This could be because the method wastes time, is too expensive and involving. Instead, the organization has sought to develop a different approach to marketing and merchandising. The system adopted will be more customer-focused and localized. This method may not be as effective as the adoption of a loyalty system. This is because the organization will still spend money and time on research like those that adopt the loyalty program. The system also segments shoppers into different groups. This program does not motivate shoppers to spend more in the organization’s products because there are no benefits attached to loyal shoppers. In addition, the program does not increase the competitive advantage of the organization over competitors. Loyalty programs help increase sales and eventually profits.

Works Cited

CRMTrends, Loyalty Programs. 2007. Web.

Enterprise solutions team. Collaborations in Retail: How to Enhance Customer Service: Meet Market Demands, and Increase Revenue.2008. Web.

Uddin, Moin. Loyalty Programs: The Ultimate Gift-Customer Loyalty Management-Brief Article. 2001. Web.

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IvyPanda. (2021) 'Retailing Lessons From Loyalty Programs Around the Globe'. 13 December.

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