PFI Newsletter: February 2002

VIVA LAS VEGAS Come See Us At The ASI Show At The Sands Expo Center, March 12-13, 2002 Booth 4046

For those of you who may have missed us at the Dallas PPAI show now is your chance to visit with Partners For Incentives at the ASI show in Las Vegas, March 12-13, 2002.

Joy Smith, Director of Sales and Jim Kapcar, Regional Sales Manager will be at the PFI booth throughout the show. This is a perfect opportunity to spend time with incentive marketing professionals who are there to help you develop your incentive marketing strategy for 2002 and beyond.

How many time have you said to yourself, or has been said within your organization, "We should be able to offer our clients incentive programs," or "we should do more with incentives." Now is the time to act. If you’re planning on being in Las Vegas for this show, stop by the booth and learn more about how easy it is to become an incentive program provider with PFI.

See you in Las Vegas!

LOYALTY PROGRAMS--Frequent Buyer Incentives

Loyalty incentive marketing is about building relationships with your customers. It is about changing their purchase behavior by offering incentives to buy more, more often. This is a solid business strategy with a track record of success within the incentive industry. Frequent purchase or buyer incentive programs have been successfully implemented for years. The following is a brief overview of the goals your clients can expect to achieve, a sample frequent buyer program, and a brief list of "qualifying questions" to help you get your foot in the door.

What goals can your clients hope to achieve with a customer loyalty incentive?

Loyalty programs are obviously targeted to reward and build purchase loyalty from your client’s targeted customer base, but there are several other goals that a loyalty program will achieve:

• Establish and strengthen customer purchase loyalty

• Strengthen business relationship with existing customers

• Establish a more stable customer base (through greater purchase loyalty)

• Generate customer data (purchase habits: product mix, timing, volume etc.) that can be used for additional incentive and promotional efforts

• Increase sales across multiple product lines/improve mix of product sales

What does a purchase loyalty program consist of?

Obviously, there is no right or wrong answer to this question. However, to proactively respond to a loyalty or frequent buyer program opportunity you need to start somewhere. The following is a sample award plan structure modeled after popular consumer loyalty programs offered by airlines and hotel chains. The plan allows you to introduce a minimum threshold that a buyer must achieve before they can begin to earn awards and includes a step-up award schedule to motivate buyers to continue to increase their overall purchase volume.

Sample Award Plan

Base Plan

Develop a tiered point purchase structure based on annual purchases. Tiers present challenge levels that will motivate buyers to stretch their purchase volume to higher and higher levels. Here is an example:

• A member who reaches the $100,000 plateau will have received $3,250 in points

• Present special benefits or perks to buyers who go beyond the basic "Starter Level" and achieve prestige member status levels (Bronze, Silver and Gold). For example:

• Bronze Level

• 5% point bonus

• Expanded award collection (PFI Deluxe-Lite Catalog)

• Silver Level

• 10% point bonus

• Expanded award collection (PFI Deluxe Catalog)

• Special Shopper Services (personal shopping service)

• Gold Level

• 10% point bonus

• Expanded award collection (PFI Deluxe Catalog)

• Online catalog and interactive ordering

• Special Shopper Service

• Additional "membership privileges" may be offered including special ordering access or special discounts.

Monthly Bonuses

Like frequent flyer or frequent guest programs, present monthly opportunities to earn bonus points. Here are several examples:

• Double dollar credit:
  Offer double dollar purchase credit for selected products during a fixed time frame

Membership Continuity
To maintain the focus on purchase continuity, members must reestablish their level status annually. For example, when a member achieves the "Bronze" level, he receives bronze membership benefits for the following year. During that year he must continue his purchases and reestablish his membership at the "Bronze" level and hopefully strive for "Silver" or "Gold".

Getting Started With A Loyalty Program Opportunity

Where do you begin when you identify a prospect for a frequent buyer or loyalty program? Basically, you need to gather key information. The following is a short list of key questions you should get answers to in order to move to the next step with your prospect.

• Where in the channel does he/she resell your product

• Are there different categories of buyers (institutional/retail etc.)?

• What percent does your product make up of the buyer’s product mix?

• How much discretionary purchase authority or ability does the buyer have?

• How frequently does she purchase?

• What is the average purchase size?

• Is there a direct link to the buyer or do you have to go through a distributor/dealer?

• Is there currently a database of buyers?

• Will you need an enrollment process?

• Is there purchase detail/history available for targeted buyers?

• How will purchases be tracked?

• Do you have direct access to purchase data?

• Do you rely on a third party (dealer/distributor)?

• Can we offer IVR sales reporting or better yet, internet reporting

• How frequently can we get sales data?

• What is your overall product sales volume in units/dollars?

• Monthly?

• Quarterly?

• Annually?

• What is their margin contribution?

• Have they ever sponsored a frequent buyer program? Was it Successful?