White Paper Making Loyalty Social: The Social Coupon With every passing moment, consumers are hopping across channels and spending more time on social channels. Social channels provide retailers the platform to indulge the customers in a gaming atmosphere. The next step towards customer engagement should be to reward and engage customer to interact with various touch points and interplay in a periodic manner. Businesses need to connect the dots of current technologies with customers social media platforms. This paper explores the advances in Social Media channels and trends which when intertwined with their overall loyalty plan will profoundly impact the ways to close the final link and increase ROI.
About the Authors Shivani Rawat Shivani Rawat is a Retail Consultant at Tata Consultancy Services (TCS), specializing in Loyalty and Multi Channel. She has worked on assignments for retailers based out of North America, Europe and emerging market geographies in grocery, apparel, department store and specialty formats. She holds a Masters degree in Business Administration and Bachelors of Engineering in IT. Phanindra Meduri Phanindra Meduri is a Retail Consultant at Tata Consultancy Services, specializing in Loyalty and Multi Channel. He has worked on assignments for retailers based out of North America, Middle East and Asia geographies in grocery, pharmacy, department store and specialty formats. He holds a Masters degree in Business Administration and Bachelors of Engineering in Electronics and Communication. 2
Table of Contents The Eras of Loyalty 4 Closing the Gap 4 Making Loyalty Social: The Loyalty Module 5 The Social Coupon 5 The Value of Social Coupons 6 More than Another Channel 7 3
Winning the New Game of Retail means mastering emerging technologies and creating new customer relationship models to take advantage of them. This stretches beyond transactions, marketing and branding: beyond those areas where retailers are already digitally sophisticated. Its impact is felt across assortment optimization, loyalty, discounting, inventory management, pricing across the entire retail operation. To succeed, retailers must redesign, re-engineer, and re-innovate the way they do business. The Eras of Loyalty TCS divides the evolution of loyalty and rewards programs into three broad eras. The evolutionary driver has always been the same: finding and connecting with existing and emerging customer touchpoints. The Era of Anonymity included nearly a century of rewards programs from Green Stamps to box tops. The retailer had no knowledge of who received the rewards. Every customer received the same ones, regardless of their buying behavior, preferences or frequency. The Era of Individualization began with frequent flyer programs. Loyalty was rewarded individually. Everything was personal, from tracking to targeting to tiers. It became a highly efficient way to communicate with customers across channels and to directly reward the customer. Rewards varied based on purchase and frequency. The Era of Shared Loyalty is upon us, just 30 years after the first frequent flyer program. Social platforms turn loyalty into something that can be shared across each customer s own social communities to develop more new customers for the retailer. Closing the Gap The maturity of social platforms has created gaps between the full capabilities of those social technologies and the limited way loyalty programs use them. In many ways, loyalty on a social platform looks no different than loyalty over the telephone or on a web site. This Retail Point of View focuses on loyalty: specifically, on using social platforms as a new way to reward customers, and empower them to create new loyal customers for the brand. For TCS, sharing loyalty is a New Rule in the New Game of Retail. No Sustained Retailer-Customer Interaction Retailers don t deploy social programs that create continual, sustainable interactions, connecting brands to loyal customers social networks. Traditional loyalty programs, even when they re launched from a social platform, are event-driven: usually retailer initiated with limited-time coupons, bundled promotions and other purchasing incentives. Less often, the member initiates it: to manage an account or redeem a reward. Either way, it s a private world an exclusive loyalty club of one, unable to become an engaging, active part of the member s social universe. 4
Channels Work In Isolation Retailers view the social world as another place to replicate their existing loyalty program. Doing so, they miss out on the real promise of social loyalty. Airline loyalty on Facebook, to give just one example, mirrors the web site functionality. That means it loses the much greater value and opportunity that comes from helping customers engage their social community with the brand. Social Media Is Just Another Channel Retailers still view social media as just another broadcast channel. For TCS, that s like viewing an iphone as just another device to make a phone call. The social platform is not an alternative to a web store or an email. It s not just another place to push promotions or post catalogs. It s where customers come to interact. To limit its functionality to posting videos, enabling Like buttons and presenting catalogs is to drain its power to become a critical cross-channel sales driver. Making Loyalty Social: The Loyalty Module Loyalty delivered across a social platform empowers and rewards customers not just for responding to a reward or a promotion, but for sharing it across their social universe. Consider what a social loyalty module on a retailer s fan page can accomplish: Reward customer purchases (for instance, with a social coupon like the one described below). Allow brand fans to not only redeem that coupon, but to upload and share it with friends. Let retailers engage the customers in a gaming atmosphere and invoke location based, contextual and group-based behavior. Award customers points for coupons downloaded by their Facebook friends. Motivate those friends to visit the brand s store, redeem the shared coupon, and get their own social coupons to be further shared. The Social Coupon Using Facebook as the model, let s look at how the social coupon works. When loyalty program members go to the retailer s fan page, they log in to their loyalty module. The first time members log in, the loyalty module asks permission to access their public Facebook account information, and to include it in their loyalty account information. After that, when members make purchases no matter where the purchases are made a social coupon is generated, and is displayed as part of the member s loyalty module, available to be redeemed. It s available for something else now as well: it s available for sharing. When the social coupon is generated, members are given the option of posting it on their friends walls. Friends can then redeem their version of that coupon. 5
How retailers administer and regulate social coupons is up to them. They can create incentive-to-redeem by limiting the number of friends who can use the coupon on the wall: the first n number of friends can redeem the coupon. They might time-constrain it as well. The customer whose friends receive the coupon will be rewarded themselves for every coupon downloaded by their friends. They can allow sharing to continue indefinitely, or more likely prohibit friends from further sharing the coupon. Ofcourse, Membership Still Has Its Privileges: Only a program member can share a social coupon. Members earn points every time a social coupon is used by a friend. Members can transfer points to other members (for instance, if they see something on a friend s wish list). Members can convert points to Facebook credits. Purchasing doesn t have to be the only way to generate a social coupon. The retailer can create tasks and activities that, when completed, reward members with additional points, coupons or both. Now the member is not rewarded just for purchases, nor or even for bringing in new customers; now they re rewarded simply for interacting with the brand. The Value of Social Coupons The value of the social coupon is broad and extensive. Increased Incremental Sales: The social coupon reaches many times the number of Facebook fans or loyalty program members, driving high incremental sales. Loyalty Reach: Once members friends download the social coupon, retailers have an opportunity to enroll them as new loyalty program members. Loyalty Spread Through Customers: Shared loyalty empowers customers to drive campaigns by pushing the content across their social networks. Gaming In Retail: Retailers can create game-like activities, designing tasks and functionalities that customers complete to earn additional points. Points Exchange: Members can transfer points to their friends whenever they come across a wish list on friends walls. Points Conversion: Retailers can target social gamers, by letting them convert loyalty points into Facebook credits. Private Label Marketing: Retailers can promote private labels by offering social cupons coupons (in selected categories) and designing campaigns around them. 6
More than Another Channel The social platform is no more another channel than web sites proved to be another brochure. It possesses unique capabilities, unique functionalities and far and away most importantly a unique dynamic among its users. Here the New Rule is a simple one: Share Loyalty. Using techniques like the social coupon we ve described here, retailers can expand the reach of their brand, increase the engagement of their Fans, and drive new revenue. 7
Contact To find out more about how the social coupon is part of the New Game of Retail, contact us at retail.solutions@tcs.com Subscribe to TCS White Papers TCS.com RSS: http://www.tcs.com/rss_feeds/pages/feed.aspx?f=w Feedburner: http://feeds2.feedburner.com/tcswhitepapers About Tata Consultancy Services (TCS) Tata Consultancy Services is an IT services, consulting and business solutions organization that delivers real results to global business, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT and IT-enabled infrastructure, engineering TM and assurance services. This is delivered through its unique Global Network Delivery Model, recognized as the benchmark of excellence in software development. A part of the Tata Group, India s largest industrial conglomerate, TCS has a global footprint and is listed on the National Stock Exchange and Bombay Stock Exchange in India. For more information, visit us at www.tcs.com IT Services Business Solutions Outsourcing All content / information present here is the exclusive property of Tata Consultancy Services Limited (TCS). The content / information contained here is correct at the time of publishing. No material from here may be copied, modified, reproduced, republished, uploaded, transmitted, posted or distributed in any form without prior written permission from TCS. Unauthorized use of the content / information appearing here may violate copyright, trademark and other applicable laws, and could result in criminal or civil penalties. Copyright 2013 Tata Consultancy Services Limited TCS Design Services I M I 12 I 13