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Improving Customer retention through loyalty program

Improving Customer retention through loyalty program

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In a developing country such as Philippines, a new and exciting food hypermarket enterprise is attempting to convert the conventional commerce into their extremely modern structure. They requested us to design a loyalty system that would reward their best consumers while also providing them with vital intelligence to help them make excellent marketing decisions and identify trends early on.

Nortb consultants after carefully studying the current developments in this contentious area (some strategists argue retail loyalty programs are a burden, not a benefit), suggested to our partner hypermarket an innovative system focused on client CX and retention which was approved and developed! Loyalty programs that provide a genuine incentive for customers to stay connected with the retailer, so providing important insight into buying patterns, cost between 1% and 2.5% of turnover! This is a lot in the retail industry! This cost might be spent in retail price instead, which is as significant in a growing market .

Nevertheless, nortb strategy consultancy team designed a system that increased within 6 months, 12% the customer retention rate, 23% the customer database and 8.5% more turnover.

The Market feeling

A fresh and interesting hypermarkets chain is striving to convert traditional commerce into their incredibly modern structure in a developing country such as the Philippines. They asked us to create a loyalty system that would reward their most loyal customers while simultaneously providing them with critical intelligence to assist them make better marketing decisions and identify trends early on.

Their base concept consists of a B2C concept: Food-First Store. This concept is ideal for modern hypermarkets, wherein customers mostly browse the store based on their hungry habits. Food-first, unlike regular supermarkets is focused on a meal-centric offering, i.e., the idea of catching customers on a moment's notice and feed them. It is not a store for those who want to save time. Their philosophy emphasizes on a more spacious, bright and dedicated space and the desire to make the shopping process as attractive as possible.

After carefully studying the market, two big players with different advanced business strategy were dominating the market. On one side, SM Supermarkets, the most established chain of supermarkets in Manila, then the second biggest player - Robinson Supermarkets, and finally a recent "low-cost policy" emerging supermarket "Shopwise".

All of the three already with loyalty programs established but yet, due to the current economic legislation in the Philippines, very limited to their offer. This was the door for nortb client to exploit.

The food concept

The human being loves food. Food is one of the most necessities the human body has, and food was already the theme of our client. This was then our UVP and challenge to embed in a unique loyalty program. We design a system them based on points (1₱ - 1 Point) but divided into three options -> Cashback, Use as Currency, exchange for Points.

  • Cashback - with a rate of 0.04 to 1. On accumulated 100points, a reduction of 4₱ over the final price is applied.

  • Use as Currency - with a rate of 1 to 1. On accumulated 100points, the customer can use the points to consume "in-store food tastings / meals and related".

  • Exchange for Points - with a rate of 1 to 1, exchange against a premium offer of food products, food events and VIP chefs.

Outcome

The Nortb strategy team created an innovative concept based on our client's key USP (food) and a one-of-a-kind loyalty program that is more focused on the customers' needs and appetite. Apart from the option of 1% cash back, the program also provided the unique opportunity of exchanging points for premium food tasting kiosks carefully located within each branch, as well as additional premium bonuses such as private food-tasting events and even a renown chef house visit dinner.

Some evident results:

  • Increased 12% customer retention rate

  • Increased customer database by 23%

  • Increased general sales by 8.5%

Summary

Vision

Nortb mission was looking into the current Philippine market, establish its players and define an UVP embedded in a Loyalty program for the end customers in order to increase customer base and retention.

Outcome

Nortb strategy team, developed an innovative concept based on our client main USP (food) combined with a unique loyalty program, more focused on the customers desires and apetite. The program apart from the option of 1% cash back also offered the unique offer of converting points for premium food tasting stalls placed carefully within every branch, and as well more premium bonus such as private food-tasting events and even a renown chef home visit dinner.

Impact
  • Increased 12% customer retention rate

  • Increased customer database by 23%

  • Increased general sales by 8.5%

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