Case Study 7: Channel Loyalty Program

“As the ‘Premium Supplier’ in a competitive market experiencing heavy discounting, this well-designed Channel Loyalty Program meant we were able to shift the focus, away from margin erosion, towards our product and service value.”

A leading FMCG company drives sustainable sales growth through it’s supply channel

Accumulate designed and delivered a Channel Loyalty Program that built customer loyalty, grew the number of customers and increased in-store brand presence, to deliver cost-effective and sustainable growth.

Meeting high customer expectations

When servicing a geographically dispersed channel network of extremely cost-conscious customers, maintaining distribution and maintaining product margin is an ongoing challenge. And in an industry where a significant portion of your sales is delivered through a vast number of independent retailers and retail groups, servicing this channel is crucial to achieving sales targets.

As the ‘Premium Supplier’ in a highly competitive market, our client faced the issues of margin erosion across their large independent supplier network, as well as the threat of future distribution loss. Their ability to cost-effectively call on every customer to provide product education, maintain their ‘premium’ positioning, protect margin and maintain distribution, was not feasible.

Building stronger relationships with customers

After analysis of the competitive market in which our client operated, where there was a large number of competing products available at point of purchase, we identified the opportunity to design a program that would not only drive sales through an effective incentive program but also to build long-term customer loyalty to help achieve increased end-customer sales.

Accumulate designed a member-based program, to which customers could become members, giving them a sense of belonging to a ‘premium club’. Club members are rewarded points for all products purchased, and can receive additional points for engaging in activities at point of purchase, that were proven to result in increased sales.

These in-store activities include participating in promotions, displaying POS materials, improving product location and shelf presence. Additional points are also awarded for retail stores adding new products to their range.

An inspirational rewards range was chosen for point’s redemption, with a skew towards rewards that requires a medium to high number of points, ensuring that members are motivated to accumulate a higher number of points, resulting in a stronger sales result.

Driving sales growth

The program was also designed with tiered membership to cater for the range in size of customers and to create another means of motivating customers. The higher tier, to which a customer belongs, the more points they are allocated per ‘rewarded’ behaviour. Customers are motivated to improve their point earning capacity by moving into a higher tier by increasing their purchase volumes and improving in-store presence.

For the smaller customers who do not see a sales representative, an outbound phone campaign services this group to register these customers into the program, introduce monthly specials, promotions and drive new product sales.

Motivating behaviours that produce results

For any manufacturer or distributor looking to maintain or grow sales within a broad channel or customer base, a tailored Incentive or Loyalty program can target and influence the behavioural levers that will improve business results. During the design phase of any program it is important to analyse and understand the market, the customers, the budget and the behavioural levers that relate to the business outcome.

Just as important, is to determine how to measure the program impact. Then, a program can be designed to deliver the expected business results.

A fast implementation and return on investment

The solution we designed for this client was operationally efficient to allow a fast and effective implementation across the channel network, which in turn brought an equally fast return on investment.

A highly ambitious member acquisition target of 96% was achieved. New customers were gained. The frequency of contact to all customers increased dramatically. The promotional participation across all retailers increased.

The overall result was an increase in channel sales and a wider distribution of products that ultimately re-focused the customer on product quality and service value, rather than product margin and discounting.

An additional benefit of the program was the client now had a quantitative measure for in-store presence, which also indicated sustained improvement in channel performance.