Loyalty Marketing

The Measures of Success are Becoming Customer Based and Not Product Based

3. Loyalty is enabled by the collection of individual customer information to analyze: every company is building and buying databases.

4. The widespread of Customer Relationship Management (CRM): approach is called CUSTOMER RELATIONSHIP MANAGEMENT and this is done by employing software tools called CRM SYSTEMS.

5. There is a HUGE SPREAD OF LOYALTY PROGRAMS that are aimed at making customers feel like a member of something, a special customer. What are loyalty programs (LP)?

Not only the consumer behavior is changed, but also the marketplace! Nowadays: Are "mechanisms to make users subscribe, to collect data from them, and to retain them, in change of benefits. They can be based on a fee, like it is very difficult to differentiate product based on there's more competition, there are lots of substitutes in different countries, and it started the globalization of markets."

intrinsic quality

Prime membership, or have no fee

Today it’s no longer enough to be good quality or be good price because you need to be outstanding in terms (supermarkets’ loyalty cards are noof service Today, with the information revolution, companies have the tools to extract individual fee, for example) and they must giveinformation that can be relevant for providing an experience to customers that can make them loyal. you benefits”.

PERSONALIZATION is very important and is a barrier for retention!! If I continue shopping with a certain e-commerce provider, it accumulates knowledge about me and I will get personalized content and the Customers are willing topersonalization creates barriers to going away, to switching (because the offer is differentiated from your became loyal if they see thatcompetitor). they are receiving value!!

Lettura: Amazon and Alibaba’s Loyalty-Centered Strategies

Both Amazon and Alibaba are online retailers that have managed to

Become multichannel because they acquired other physical retail chains. These big retailers are facing a typical business problem: growth. Since they're already very big, it's hard for them to grow even further. Since their growth rate is leveling off, they found categories where they didn't have a big share. For example, Amazon wasn't good with food, especially fresh food, so they purchased WFM. Amazon also introduced Prime membership in 2015 - Prime customers are usually those who buy on Amazon most frequently. So, in order to save on shipping rates, they subscribed to Prime. Subscription provides benefits to Prime members (faster and free deliveries, other services like a video and audio streaming platform, etc.) but it also provides regularly revenue to the company. Members of Prime are loyal customers, people who remain in the company and buy repeatedly and buy across the variety of products and services that Prime offers. Members of Prime are more valuable.

Then non-member because they buy more and spend more than two non-prime members. Why in the reading the author says that Amazon prime is pivotal to Amazon growth?

There are several reasons why the company can grow with Prime and cannot grow without:

1. First of all, because prime's members spend more that non-members and more frequently;
2. It is difficult for Amazon to grow as a regular competitor of any e-commerce business because Amazon has a big market share in regular e-commerce business with a lot of competitors, from traditional retailers (Walmart) to online retailers (Google).

So, Amazon can't grow its market share even more because it is the leaders, the major player in non-food retailing online. The only categories where they could grow was the food and fresh food categories because:

• They have no experience and they have a very little market share.
• It's a category that drives frequency on shopping on the website (if you have to buy fresh food, you have to shop more often).

To visit Amazon almost every 2/3 days). So how did Amazon become credible in selling food?

There are two choices:

1. You develop knowledge inside your company - you start doing it and learn little by little, which may take years to become credible.
2. You buy a company that has a credible name for food acquisition, which was the way for Amazon to establish a new category inside the Amazon assortment.

With the acquisition of Whole Food Market, Amazon can sell thousands of great food products on its website, complementing the assortment online.

In this way, with the acquisition of Whole Food, Amazon adds:

• New categories to the online e-commerce business
• New categories available for Prime members
• Offers all the other categories to Whole Food members
• Attracts new shoppers: With the acquisition by Amazon, Whole Food shoppers who used the store automatically receive the same benefits of becoming Prime members

This is a strategy for retention! The paper said that only 62% of Whole Food customers were already Prime members, this means that 38% of Whole Food customers are not, and from tomorrow every one of those 38% Whole Food customers will be a member of Prime Amazon - succeeding in getting new members of Prime.

Now, that Whole Food supermarket has this new loyalty program called Amazon Prime, there's a big competitive impact on all the other supermarkets because immediately they find themselves with loyalty programs that are unattractive, because now the comparison is with Prime. So, the traditional supermarkets will have to improve the value in terms of services, discounts, and offers that they give to the members of their loyalty programs.

What are the advantages of also buying the physical stores of Whole Food market? By acquiring Whole Food, Amazon gets 350 physical supermarkets that it could use for logistics. This means that Amazon has 350 places that it can use for lockers, and lockers you

Is Whole food happy with the acquisition or not? Amazon has a lot of power (so it can make Whole food grow) and has a lot of data about consumer preferences (so it can contact customers who are interested in specific products, that are similar to that specific supplier and offer personalized communication making the customer aware they now have their specific suppliers).

Suppliers can reach a lot of new customers who are interested in their specific product and also Amazon can increase its power, they put a lot of pressure on the prices of the producers.

For Amazon, instead, it is a way to acquiring a whole new set of brands to sell on their website.

COMPARISON WITH ALIBABA - Is there even in

The Alibaba strategy an interest in customer loyalty?

Alibaba is the biggest retailer in the world. It used to have different LPs for each website, but now they unified all these LPs into one big membership: the 88 membership. Why?

1. First, because This company thinks that a loyalty program is something necessary for the business;
2. it's more useful to have all the data gathered together because so they get richer data and it's easier to manage customers and keep track of their points.

By having one single loyalty program across all their diverse businesses (food, non-food, travel and moreover), they can get 360 degrees picture on their customer shopping behaviour!

Alibaba's LP has 3 different levels. The higher the level, the more benefits you get (discounts, executive services)

The points you accumulate are based on your behaviour on Alibaba's websites (the purchases you make) and on your engagement (how much you interact with digital content on their websites).

Alibaba's 88 membership is different from Amazon Prime because it's no fee. In fact, Alibaba has said in the past that fee-subscription programs, where you pay monthly/yearly a certain amount in order to get regular benefits, didn't resonate with Chinese culture.

Nevertheless, Alibaba recently introduced a new level to their LP, which is a fee subscription program, called V.I.P. level.

Why did they do so? Because not all customers who joined the no fee LP are going to be retained, some of them will not use their membership because they don't spend much. Others, instead, are much more engaged and willing to spend more, so they deserve a proper LP.

Developing a system for nagging a people to stay in the loyalty program has clearly shown that retaining customers is worth the investment.

Alibaba's loyalty program is really looking like Amazon.

Prime. They do the same things more or less: access to digital services, video, training and more for a fee.

What is loyalty? It is necessary to define what loyalty is in order to measure it and quantify success. If it can't be measured, then it can't be part of the firm strategy.

When can I say that a customer is loyal? If you want to be successful to retain customers you need to find a metric and you will monitor the metrics all the time. An example of metric is "the number of people who remain member of the program": every 6 months for example company has to check how many have lived the program.

There are many approaches to measures loyalty, everyone is valid:

• Intention of re-purchase: the intention is difficult to track and the simple intention doesn't imply the purchase itself. The intention is a step before the purchase. It's an ATTITUDINAL MEASURE and these are typical questions that are using marketing research when we want to investigate.

emotional aspects of loyalty. (for example: “Are you satisfied with your brand/Retailer? are you happy?).

The problem with attitudinal measures is that making such questions to your customers is not a good way, because people sometimes they do not telling the truth or do telling what you want to hear.

It would be better to use a BEHAVIORAL MEASURE because tracking behaviour loyalty is relatively easy (repetition and frequencies of shopping, how many time you go to a store, how many time in a specific period of time you go to a store …).

For example if I give to my customer a plastic card, every time they use it inside the shop I can get the day visiting, how much they spend, when they visited.

BUT if we only measure behaviour, we don’t’ know nothing about why, nothing about how he is happy and so on behaviour alone can be misleading!!!!!

This is why company typically track behavioural loyalty on a continuous basis (every day, every month) but they also take the

Pulse of customers' attitudes and measure the attitude, and sometimes they discover