The Loyalty Dilemma

Nitish Gulati on July 15, 2016

Problem Statement

Focus on loyalty programs to drive increased conversions on the e-commerce site of a Middle East conglomerate.

Market Requirement Specifications

Why build a Loyalty program in the first place?

According to a research by Business Insider in 2014, loyalty programs are not very effective in general, if you as a company are counting on getting a bump in revenue or profit growth from them.

However, market caps of those with loyalty programs did outstrip those without over a five year period which means that the market rewarded these players over the long haul for them even if their numbers didn’t get a bump. Which brings us to customer loyalty.

These programs help cement your relationship with your customer where it becomes exceedingly clear that the service and site is your go-to destination for shopping.

Existing Consumer Demographics

Online Payments

  1. Based on the seven key country markets studied, United Arab Emirates showed 24 percent year-on-year growth respectively.
  2. Forecast is that the volume of online payments could increase nearly three times by the year 2020 to reach more than US$69 billion of transactions per annum.
  3. UAE is the fastest growing markets for online payment transactions, with 23% average growth across the Middle East region
  4. For online payments, UAE has the highest percentage at 71 percent respectively.
  5. UAE continues to lead the region in terms of adoption with 71 percent of the country shopping online
  6. Credit card adoption across the region varies greatly between countries, with Kuwait and the UAE having the highest penetrations of 97 percent and 89 percent respectively.

What are the products being bought in the UAE?

  1. 55% electronics
  2. 43% are clothes

Influence for buying

  1. FB Ads – 17%
  2. TV Ads – 13%
  3. Google Ads – 13%

Mobile Devices

The adoption of mobile e-commerce in the UAE is second only to China, with close to 60 per cent of UAE users buying something with their smartphones in the past 12 months, according to PayPal.

Growth

As per April 2016, 63 per cent of the total shoppers on the website of the company are Shukran members.

Consumer Preference

According to a 2015 report,

  • 56% of respondents in India and UAE are willing to share online purchase data
  • 66% of respondents in India and UAE are willing to share mobile phone number

What are other businesses doing to counter old method loyalty programs?

  • British Airways made radical changes to its Avios air miles scheme used by millions. The earning power of the cheapest economy class tickets was slashed by 75% while business and expense-account flyers found they could earn more reward
  • Marriott Hotels  announced changes to its Marriott Rewards scheme amounting to a net increase in redemption costs for 323 hotels.

The key point being made here is to be frugal.

It makes sense to target the existing consumer base, and generate an ROI on the loyalty program.

Product Requirement Document

Key Metrics to Measure Success

  1. Customer LTV
  2. Repeat Customer Rate
  3. Net Promoter Score
  4. Redemption Rate
  5. YoY comparison
  6. Average basket size

Product Road Mapping

Objective –

To integrate features that

  1. encourage users to gain Shukrans.
  2. ensure repeat transactions that will impact overall volume.

Sprint 0 – Possible Product Backlog Items

  1. Check if a user has shared the product details on Twitter/Facebook
  2. Online payment rather than COD (Considering the adoption of online payments)
  3. Start monthly shopping days when additional points can be gained. Eg – “[Company Name] days”
  4. Provision of priority customer service
  5. Same say delivery for the first few orders
  6. Buy for your family – enter the other account’s mail, both earn Shukrans
  7. UX – Clear view of how Shukrans will work
  8. Share on WhatsApp – include a referral code, person receiving can also claim Shukrans
  9. Reviews of products bought
  10. Push personalized campaigns each week
    1. Spends
    2. Transactions
    3. Brand Loyalty Index
    4. Price Sensitive
    5. Other attributes
  11. Progressive Web Apps – to improve speed and achieve superior accuracy on mobile site.
  12. Convert Shukrans to donations for charity.

Product Backlog Prioritization

The main factors used for prioritization are quick implementation, faster go to market time and overall impact on business value of the product.

First quarter – 2,6,7,8,9,12

Next quarter – 1

Third quarter – 3,4,5

Fourth Quarter – 10,11

Notes –

  • The prioritization has been made based on market research and certain assumptions. They may change subject to input of more data.
  • The tech team size is small
  • Further breakdown into user story definition and acceptance criterion can be done once the listed items receive a go ahead from the business stakeholders.