Reliable VIP Program Survey

JOE ROBLESBELLEVUE UNIVERSITY

MASTER OF SCIENCE, MARKETINGDR. JULIA CRONIN-GILMORE

5/4/2015

HypothesisWill the customers of Reliable be willing to pay for a reward or loyalty program?

The premise we are validating is that the customers will be willing to pay for such a program.

Research Objectives

Four objectives were researched:1. Are Reliable’s current customers participating in

membership or loyalty programs?2. How important is customization of the program to

the customers.3. What are the current loyalty levels of the customers?4. What is the gender breakdown of the customers?

Objective 1 – current membership

Do you currently belong to any membership programs?

No– 23 Yes – 23

Do you have any Loyalty Reward Cards?

Yes – 35 No – 11

Showing that Reliable’s customers were already participating in reward and membership programs was the first step to determining if they would be willing to partake of a similar program offered by Reliable. While the membership program is split 50/50, the loyalty program showed high marks. Next, we’ll see the types of product programs they are participating in.

Types of Membership ProgramsWhat types of membership programs do Reliable’s customers currently belong?

Interestingly 25 people said they do not belong to any membership programs, while 23 said the same to the previous question. This may mean the question wasn’t clear, or the respondent’s were not paying close attention.

Types of Loyalty ProgramsWhat types of loyalty programs do Reliable’s customers currently belong?

Again, one extra person responded they were not a member of loyalty programs than responded to the yes/no question seeking the same information.

With both breakdowns it is evident that people belong to a wide range of programs. For the purposes of Reliable, the clothing section is most promising as this matches closer to what their program would consist of. Both had high numbers of participants.

Objective 2 - Customization

Tailor BenefitsDo customers currently have the ability to tailor their benefits with their loyalty programs?

Desire to TailorHow important is choosing your own reward?

Monitoring AbilityHow important is the ability to monitor status online?

Objective 2 – continuedBased on the survey results it appears that customers cannot currently customize their reward programs, at their various stores, but would like that ability. These customers would also like the ability to track their reward status online. These are two features Reliable will keep in mind going forward with their eventual program. Next, the survey delved into what types of perks would be desirable. Also, what would the willingness of the customers be to pay for a membership program.

Objective 2 – Perks

The top three perks desired by respondents were Gift Cards, Birthday Gifts (free product), and Exclusive Products not offered in stores. These items were ranked by the respondent with only one item allowed to be #1, #2, etc. This information allows us to see that receiving free product would be a desired perk. Since previous answers show a desire to choose a product, having a selection of items that one could choose from as a perk might lead to the most program satisfaction.

Objective 2 – Willingness to Pay

Free Loyalty Reward

Q. If we offered a free program where you earned a 10% discount for every $100 spent, would you sign up?No – 16 Yes – 30

$25 Annual FeeIf a program was offered where you received 20% off all merchandise as the main perk with a cost of $25 per year, would you sign up?No – 20 Yes – 26

$60 Annual FeeWould the ability to save 25% off all store merchandise, plus 40% off featured new items, interest you if the cost were $5 per month or $60 per yearNo – 30 Yes – 16

The number of respondents who answered “yes” to signing up for a program decreased as the cost increased. However, over 50% did say they would sign up at the $25 level. 10 respondents switched from yes to no at the $60 level, which means there is some room between those two price points, perhaps with further explanation of benefits some who said no to $25 would be compelled to sign up. Further, perhaps for even more benefits some of the middle group could be convinced to pay more than $25.The data do suggest that a freemium (offer free with additional perks at paid) may work for Reliable and get more people to sign up for the program.

Objective 2 – Willingness to Pay

Objective 3 - Loyalty

One aspect of reward and membership programs is that customers in these programs are more loyal than those not in the program (Omar, Wel, Musa, & Nazri, 2010). To determine Reliable’s customer’s current level of loyalty the survey asked how long it had been since the respondent had last been in the store, whether they followed the company on social media, and whether they had ever reviewed the store online. Below you can see the results of when respondent last shopped with Reliable.

Social Media EngagementVery few of the respondents follow Reliable on social media. Given the number of followers Reliable has (which leads one to expect more “yes” answers), a future research question may be what types of social media are Reliable’s customers on. Engagement via social media is not a definite sign of loyalty, but is one of the aspects of it.

Objective 3 – Online Reviews

Have you left a positive review?Have you left a negative review?

Given the answers to the social media question, perhaps it is not surprising that almost no reviews, positive or negative, have been left by respondents.

Objective 3 – DiscussionThe overall data are not conclusive on the current loyalty levels of the Reliable customer. Shopping habits do indicate that most respondents, who shared their email with Reliable, have shopped within the last 6 months at one of the stores. A future consideration might be asking how often one shops with Reliable.

As Omar et al (2010) state that loyalty levels increase with a successful program, perhaps engagement will increase as the program takes off. Reviewing these base numbers after the program has been running for 6 months may yield better results.

Objective 4 - Demographics

Melnyk & Van Osselaer (2012) were able to show gender differences in the types of loyalty programs chosen. For this reason the gender breakdown was surveyed.The split is fairly even with 52% female (n=24) and 43% male (n=20) with 2 choosing Non-binary or Transmale. With the slightly higher percentage of females, choosing a program that emphasizes a sense of luxury (Kopalle, Sun, Neslin, Sun, & Swaminathan, 2012) and that allows for tailoring (Melnyk & Van Osselaer, 2012) would be slightly more successful as these are features desired by female shoppers. This is also supported by the fact of earlier responses wanted tailored or customized rewards.

DiscussionBased on the survey results the hypothesis is supported that Reliable’s customers would be willing to pay for a reward or loyalty program. The exact price they are willing to pay is still to be determined, but over half of respondents were willing to pay $25 annually for simply saving on the entire store.

The program would benefit from a freemium model, and should have elements of customization built into it. The small size of the sample does not allow for broad generalizations, but it does allow Reliable some insight into what their more engaged customers think. The exact details of the program still need to be worked out, but the program would definitely be accepted by the current customers base.

References

Kopalle, P. K., Sun, Y., Neslin, S. A., Sun, B., & Swaminathan, V. (2012). The joint sales impact of frequency reward and customer tier components of loyalty programs. Marketing Science, 31(2), 216-235,365-367. Retrieved from http://ezproxy.bellevue.edu:80/login?url=http://search.proquest.com/docview/1009046131?accountid=28125

Melnyk, V., & van Osselaer, S. M. J. (2012). Make me special: Gender differences in consumers' responses to loyalty programs. Marketing Letters, 23(3), 545-559. doi:http://dx.doi.org/10.1007/s11002-011-9160-3

Omar, N. A., Wel, C. A. C., Musa, R., & Nazri, M. A. (2010). Program benefits, satisfaction and loyalty in retail loyalty program: Exploring the roles of program trust and program commitment. IUP Journal of Marketing Management, 9(4), 6-28. Retrieved from http://ezproxy.bellevue.edu:80/login?url=http://search.proquest.com/docview/817464647?accountid=28125