Managing Retail Loyalty Programs

Managing Retail Loyalty Programs

As the fight for limited shelf space increases and every single company attempts to make a difference in the stores that matter to them.... nomenclatures like Perfect Stores, Vision Stores, Udaan Stores etc. have become quite common. Unfortunately, what is also common is the way these retail programs are designed and run by many a consumer company. As a result, most of the retail loyalty programs do not end up meeting the stated objective...that of bringing a smile on the retailer’s face.

Let us look at the typical way most of the retail loyalty programs are run. To start with, most of them are me-too programs. Unfortunately, one size does not necessarily fit all in this game. Some companies operate on a fixed payment model and some on a variable model that is linked to volumes. The decision to empanel or qualify a store as a preferred partner largely rests with the field sales force, which makes the process a person-dependent one, in spite of having advanced secondary measurement softwares in some cases.

outsource_img

Where the company ends up missing the plot completely is when the feet-on-street (FOS) sales person starts using the payout as a sales tool as against a retention tool. In fact, more often than not, the sales reps use it to negotiate higher orders from the stores. This leads to lower sales when the incentive is withdrawn. Also, many a time, the retailer is unaware of the exact amount paid by the company as disburser of the amount and negotiator for the scheme is same. Money also gets misused deliberately to meet local sales targets.

At Retail Scan, we realised these systemic flaws long back and have been trying to get the consumer companies admit these flaws and take corrective course. Needless to say, it was easier said than done. We knew the dichotomy. At one end, companies are spending tens of crores annually on these programs, but on the other, the number of disgruntled retailers is on the rise.

We have worked with quite a few leading consumer companies on the entire gamut of Retail Loyalty Programs:

  • Designing contours of the Retail Loyalty – from store classification to measures of success
  • Deciding on nature of POSM to go with different trade channels and different store type.
  • Identifying Payment Model for various class of stores.
  • Designing Performance Metrics & Scorecard for stores and aggregating the same across sales hierarchy right up to Sales Director. Linking scores to monthly sales incentives.
  • Physical Audit of stores and Measurement of performance metrics. Fully automated data capture backed up by state-of-the-art data validation process.
  • Publish scores online, across hierarchy
  • Owning the entire payout process to the Retailer. Making payments to Retailers and closing the loop. Store-wise payment reconciliation with client.