Sun, Sep

The true cost of gifting

Can it pay for PSPs to offer customer loyalty programmes, especially ones that provide gifts and offers as well as a dedicated support service? Pixartprinting sales and marketing director Andrea Pizzola thinks so.

On 31 December new entrants and returning members will be confirmed for Pixartprinting’s 2016 Starway customer loyalty programme, recently updated for what will be the programme’s second year. By being a member of this ‘club’ customers get exclusive perks and dedicated customer care (UserHub) guaranteeing them priority treatment - the intention being for Pixartprinting to grow alongside its best customers by becoming a true support partner. So is it paying off, and is it something worth emulating in your own business?

Pixartprinting sales and marketing director Andrea Pizzola is a convincing advocate for the customer loyalty programme, which he says was created “with the objective of integrating and building an effective platform to manage personalised relationships with our users, a true branded relationship based on constant dialogue”.

He explains: “We start from the premise that retaining a client is always cheaper than acquiring a new one. Pixartprinting clients have a strong tendency to remain faithful to our brand, and, after the first year, one in two clients usually remains loyal for the next four at least. This means that operating a loyalty programme for our top clients has merely a reward and gratification value.

“We ask no joining fee and the programme doesn't require the accumulation of loyalty points.

Pixartprinting clients become part of the programme if, and only if, they satisfy certain rules linked with frequency, repeat purchase and the profitability of some product categories. This allows our company to present top clients with the best services, with specific promotional offers and a major welcome gift. The return on this investment for us is of the highest degree, but most of all, it's a driving force that stimulates new potential entrants, attracted by the advantages of joining this exclusive, prestigious club.”

Starway’s operational theme is based on a star’s evolution - by entering the programme, customers can develop through three levels, depending on how much they spend with Pixartprinting: Star, Red Giant and Supernova – each level having it’s own benefits.

“Compared to the resources you need to deploy to win over new clients, loyal users represent an added value which doesn't require large investment and offers much greater returns. This is why the operations we launched to ensure reliable, dedicated support, exclusive and appealing promotions and the marketing activities associated with the plan turned out to be significant in terms of absolute value.

“As for the impact on expenditure on our resources, the costs of this project amount to a very limited fraction of the overall revenue generated by this cluster. If we consider the revenue coming from the whole group of active Pixartprinting clients, we can say that the costs are negligible.

“In the preliminary budgeting phase we also took into account a crucial aspect linked to the retention rate of the active client base: that the propensity to buy would greatly increase exactly because it was going to be stimulated by the holistic structure of the operations we planned, so that the incidence of the costs we budgeted for would further diminish.

“Besides, a better knowledge of our promotions and services would automatically translate in fewer requests for assistance. This would allow the creation of new services and benefits, to be launched in the course of the year or planned for the future, all to the advantage of the programme's success.

“Finally, there are intangible benefits we expect but will be able to verify only after a careful, ex-post lifetime value analysis. These stem from the fact that we offered this client group a personalised approach to the sales relationship - we diversified and customised our offering and we constantly put an emphasis on fidelity. This allowed us to widen the gap between our company and the competition in relational terms. We therefore tried to work so as to make the costs of switching to another supplier truly unaffordable for our clients.”

So, an argument for a customer loyalty programme that’s worth pursuing as we head into 2016?

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