The essence of the work of discount clubs (from the English "discount" - discount) in the distribution of the so-called discount cards- cards the size of a business card, which allow the owner to receive discounts when making purchases in club member firms.
How does the discount club work? Simple enough. It has three components:
- discount companies
consumers (customers who take advantage of the discount),
- and the organizing company itself (that's you).
A discount club can receive funds for its existence either from advertisers or from buyers.
If buyers pay, the average annual fee for them is about 100 USD. By purchasing a discount card for this amount, and with it the right to receive a discount in the firms participating in the system, the consumer actually advances all his subsequent purchases of goods and services in outlets these firms. The size of the discount usually ranges from 2 to 15% (there are cases higher).
If an enterprise willing to become a member of a discount club pays, the fee for the right to be a member of the club is usually about 50 USD per month.
So, companies profit from growing their fame and attracting new customers. Although they sell part of the goods at somewhat lower prices, they benefit from an increase in the number of buyers - after all, cardholders tend to make purchases from them. Cardholders benefit by purchasing goods at lower prices. You make a profit from selling advertising space on your cards to companies. Everyone stays a winner.
It is clear that our people have not yet matured to buy some kind of abstract card, which sometime in the future will bring benefits. Therefore, this option is not worth focusing on. So here I will have in mind the second option - when the payer is the advertiser.
What do you need?
This business can be started almost from scratch. No space required: you can start working in your own apartment. Hired workers are not required either: you can do everything yourself.
* First of all, estimate your card production costs. This will be the main part of your costs. Contact printing houses and advertising agencies in your city and ask them to calculate the cost of such an order. Remember that the larger the circulation, the lower the cost of each card will be. Do not rush to order a printing house without comparing its prices with the prices of other printing houses in the city - prices can vary very significantly - if one company names a thousand USD, another may well ask for one and a half, while in the third you can agree on dollars for six hundred.
Make a cost estimate that, in addition to the cost of making cards, include: phone charges, advertising and distribution costs of cards - in general, all costs associated with the implementation of this project. Knowing all the expected costs, you will be able to determine the amount of the fee that you will have to charge enterprises for participating in your discount club.
*Now is the time to contact potential advertisers. You can do this from your own apartment by phone. No advertising is needed at this stage, as nothing compares to a visit to the firm and a personal conversation. Here is a short list of the types of companies that are likely to want to use your services:
- restaurants (especially - fast food, eateries)
- copy and advertising companies
— mobile and cellular communication operators
- travel agencies
– dry cleaners
- car service companies and gas stations
- clothing stores
- hairdressing salons
– cinemas
- Taxi service...
Naturally, this list is far from complete.
In no case do not go to a potential client with "empty hands"! Prepare well for the conversation. Decide clearly how many cards you will issue in the first month and in all subsequent periods. Explain which population groups are most likely to become clients of this firm as a result of its participation in your discount club. Be prepared to talk about where and how you will distribute the cards. If there are already similar projects in your city, consider what your advantages are over them and explain this to the client. If this idea is new to your city, give examples of discount clubs operating in other cities, mentioning the names of large companies that are members of them. Prepare a sample card - so that the client can see and hold the subject of the conversation. In a conversation, emphasize that the use of cards is beneficial for enterprises - because their customers will certainly want to receive discounts and will use their services more often.
Remember, you need to convince the manager to invest in a certain project, and for this he must be completely confident in its benefits for his enterprise.
* Sign contracts with all companies that want to become members of your club, and be sure to take at least 50% of the cost of advertising in the form of an advance payment - they will pay the rest when the cards are distributed. Prepayment is absolutely necessary to avoid a situation where at the last moment the company suddenly changes its mind to participate. Do not deal with companies that do not want to pay anything up front.
* Having received an advance payment, make the required number of cards (you won’t need many of them, so your discounters are unlikely to want the whole city to buy their goods at a discount). Remember that the card should fit easily into your wallet, so stick to the size of a business card. Come up with a name for your discount club, which should be on the card. It should be catchy, containing words related to saving money and sticking in memory - discount, saving, money, etc. Come up with a logo - either with the name of the club or with an image that symbolically conveys the opportunity to save.
On the map you will place advertising blocks of discount companies. They, as a rule, will contain only the logo of the company, a few words about the nature of its activities and the size of the discount. When the number of members of your club becomes so large that the list of all members will not fit on the map, you can attach to it a small catalog with a listing and advertising blocks of all participating firms.
*Now take care of distributing the maps to the public. First, your advertisers will distribute the cards to their customers themselves. Therefore, supply them with a supply of cards. The rest of the cards will be distributed by you. Decide which population groups should become users of your maps. Think about where it's going a large number of these people - there you can distribute your cards. Perhaps it will be restaurants, cafeterias, supermarkets, cinemas, libraries - or other places where large groups of people gather.
You will need to place a block ad in the local press with your logo and map information. Be sure to list the places where the card can be obtained, as well as all the companies where you can get a discount on your card.
WE COUNT...
So, to get started, no costs will be required, except for the cost of registering an enterprise. A certain amount will require the issuance of cards and their advertising and distribution among the population, however, you will pay these costs after receiving an advance payment from customers.
As for the potential profit from this project, let's say you make and distribute 5,000 cards. Their cost will be about 200 USD. Add to this the cost of distributing cards and advertising - let's say 150 USD for the first month.
If we assume that the average size membership fee will be equal to 50 USD per month for enterprises, then, having only twenty members in your club, you will already receive 1000 USD of income per month. Less all costs will remain 650 USD. And to get 10,000 USD, you will need to involve 200 members, which is also quite realistic.
Here - the same story as with the publication of directories: with an increase in the number of discounters, the number of cards you issue will not increase noticeably. Most likely, it will even remain unchanged - and if there are twenty members in the discount club, and two hundred. Income will increase in proportion to the number of discounters.
Based on the materials of the book by Yu.N. Kiseleva "Bank of ideas for private business"
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discount club- (voluntary association, legal entity, subdivision legal entity) providing services for the issuance and maintenance of discount cards, coupons, vouchers that provide their owners with discounts or other preferences.
As a rule, a discount club issues its own discount card, the acceptance of which and the provision of discounts on which is carried out at outlets by partners of the discount club according to predetermined rules.
The main goal of discount clubs is to unite and mutually exchange client bases in order to expand the business of each club partner and provide discounts to club clients.
Closed discount club differs in that it is possible to become a client or partner of a discount club only on the recommendation and / or consent of other clients or partners of the club, respectively.
Open discount club offers partners and clients of the club the opportunity to participate in the club without the consent of other partners or clients of the discount club.
Open discount clubs can offer customers to become members of the club:
The practice of creating discount clubs appeared as a continuation of the client clubs of individual merchants, and was caused by commercial interest based on reducing the costs of developing each merchant's own client loyalty program.
Later, discount clubs began to use the accumulated client bases as a marketing and advertising tool, conducting advertising campaigns among the club's clients, as a target audience with high purchasing power.
Along with discount clubs using cardboard and plastic discount cards with the development of mobile communications and the Internet, there are clubs using electronic discount cards and electronic tickets, which are stored on electronic media that provide the possibility of contactless transmission of such information (scanner reading from the screen mobile phone, transmission via SMS technology, Bluetooth, WiFi, etc.).
Discount clubs appear on the Internet, where users independently exchange their own discount cards on various mutually beneficial conditions.
Which loyalty programs are becoming a thing of the past, and which are replacing them? Some loyalty programs are effective in retail, but why don't they work in a restaurant or hotel business? I'll try to answer based on my experience in retail.
Recently, many trading companies prefer bonus programs, refusing discount cards. Firstly, it is beneficial for retailers that the client constantly returns and makes more and more new purchases, and secondly, storage system bonuses assigns the card to a specific buyer, which allows you to analyze the demand of an individual, and not all of his friends.
Today, a personalized approach is indispensable, because customers want to know about the availability of a very specific product in the store. For example, the Eurodom company, of which I used to be the CEO, used a loyalty program based on the study of customer preferences. When new collections arrived, we told specific customers about it, and the goods sold out in a matter of days: adherents of certain brands provided us with a steady increase in revenue.
Gradually, retail chains begin to realize the benefits of individual offers. So, according to one of the studies conducted by SAS together with the New Retail industry portal and the CRM Solutions professional community, 76% of networks still have offers addressed to all visitors, without any segmentation. But 23% of retailers already use the division into large age and gender groups, and 9.2% segment customers by purchasing power (“standard” and “premium”). Every fifth Russian retailer develops targeted offers for narrow groups and 11% make individual offers.
According to another study by Accenture Interactive, which surveyed 1,500 consumers in the US and UK, 56% of shoppers prefer to visit stores that identify them by name, and 58% are loyal to those retailers that keep a customer's shopping history. If three years ago only a third of buyers were ready to provide the retailer with detailed information about themselves, now there are one and a half times more such people.
Somehow, the CEO of Restconsult and the owner of the Meat & Fish restaurants, Sergey Mironov, shared that restaurants have recently been massively introducing various loyalty programs, but they are not getting the expected effect. And he explained why.
In the restaurant business, loyalty programs are the same as in retail - discounts, bonuses, gifts for regular visits. Restaurants are actively implementing electronic cards loyalty and push notifications that inform customers about promotions, free tables, themed parties and an updated menu. They also develop mobile apps that allow diners to pre-order, track meal prices, and calculate loyalty rewards. The paradox is that all these technologies are mainly of interest to an audience with low incomes - for example, students who do not do great weather for restaurants. And catering establishments still live mainly at the expense of wealthy guests, and you should not forget about it. By the way, for the same reason, the system of exchanging bonuses for gifts began to slip in retail. For people with incomes above average, this was not very interesting.
According to the restaurateur, loyalty programs in the HoReCa segment should not be tied to digital and mobile technologies at all: a person comes to a restaurant to forget about them and just have a delicious meal. Exploring a mobile app during lunch is like buying a theater ticket, where instead of a live performance, you will be offered to watch a play on a tablet.
I am absolutely in solidarity with colleagues from other industries - you should not blindly copy what is massively working in the retail market. Getting a discount on goods is one thing, most people strive for this, but when a person invites business partners to a restaurant, and at the end of dinner starts a conversation with the waiter about the accumulated points - this is not comme il faut. Those restaurants that practice free breakfasts and lunches and present new dishes are doing the right thing. Only one thing is required from the guest: write about their impressions on social networks or repost news about the event. This approach multiplies the number of customers, besides, the restaurant does not lose anything on free promotions, and even, on the contrary, earns: having eaten a free dish, a person will definitely buy something else.
In the hotel business, as in the restaurant business, there is no point in chasing clients with small incomes. They go to other countries no more than two or three times a year, which means that they do not return to the same hotel and do not justify spending it on participation in such programs. A typical member of the loyalty program is traveling at least 12 times a year. And in this case, the loyalty of a person to a particular brand is a big question. According to various experts, there are millions of people in the loyalty programs of large hotel chains, but only a third of them actively use the offered privileges. What is the reason?
If we are talking about the same bonuses, for example, it is not enough for people to convert them into free services hotel (laundry, breakfast in bed, taxi) or redeem miles for partner airlines. Both customers of shops and tourists need an individual approach to service. A person must see and understand that the hotel knows everything about his preferences and tastes and is ready to anticipate his every desire. This is why omnichannel approaches to customer service are more important in the hospitality industry than in any other industry. In whatever city a person stays, information about him should be stored in a single database of the hotel chain. But in the loyalty programs of many Russian hotels, alas, such technologies are not used.
In Russia, the most popular are banking programs loyalty programs that offer cash back. And many retail chains are joining these programs. Demand is also growing for installment cards. It is understandable because all three parties benefit from them - the bank, commercial enterprise and buyer. By entering into partnership agreements with a store, restaurant or beauty salon, the bank receives a commission from each purchase, its partner increases revenue due to the growth in the number of customers, and the client himself gets the opportunity to buy goods on credit without paying interest on it.
Another trend is the use of chat bots in Telegram, Viber and Facebook messengers that conduct dialogues with customers. With their help, you can receive discounts or bonuses of the day, as well as a discount on your favorite products.
On the wave of popularity, all these programs in Western companies were some time ago. Now it is fashionable for our European colleagues to develop specialized clubs for the most loyal customers. Clients do not receive discounts, but are invited to various events, workshops and other closing events such as client days, sales or pre-sales collaborations. Gap, Adidas, Visa, MasterCard are examples of such companies. Many enterprises are merging with related businesses - for example, airlines with hotel chains. Of course, bonus programs loyalty in the West is also common, but there they offer to convert the accumulated points not into discounts on the next product, as is customary with us, but into useful services - for example, consultations of stylists in beauty salons or shoe care specialists in shoe stores.
Europeans also like to exchange bonuses for unusual experiences. For example, members of the Nectar UK loyalty program can redeem points for a ride in a vintage British Pullman sleeping car, a ride in a Ferrari or a speedboat. For Russian programs loyalty such services are still rare. But there are also examples: the most frequent visitors to Modi stores will participate in closed sales and receive other privileges - for example, being the first to know about new collections. For them, we will also hold master classes with famous chefs who will agree to reveal the recipes of their author's dishes. Today it is not enough to give people back a percentage of their purchases. The resulting discount on the product is forgotten as quickly as the price itself. Meanwhile, the impressions received from communication with the store remain in the memory for a long time.
When we as customers hear about new program loyalty, a smile involuntarily appears on the face :)
Why?
Take a look right now in your purse. How many discount cards are there with "generous" discounts of 3-5% and "huge" accumulative points in the amount of 100-300 rubles?
And now main question: how often do you decide to go to a particular store / restaurant / beauty salon (substitute yours) just because you have a 3% discount card?
This is the problem with modern loyalty and retention programs. Everyone understands that they are inefficient, but the business continues to churn out card after card "because everyone does it."
Discounts have been discounted. The next 3-5% seems to be as "profitable" as the price tag in the photo below.
Well-known consulting company McKinsey confirms this fact and adds fuel to the fire, claiming that 70% of loyalty programs do not work.
“How, then, to retain customers and stimulate sales?”, You ask. After all, every second marketing book is replete with quotes from "Great Service" by John Shoal and "Customers for Life" by Carl Sewell about the need to retain customers.
One of the main trends recent years - coalition partnership. It involves participation in the loyalty program different companies, which give the buyer the opportunity to accumulate points and spend them on products or services of all members of the coalition.
Agree, the bonus before the discount has two interesting benefits:
● you introduce an element of gamification, which helps to involve the buyer in the process of making purchases (save more - buy more);
● it is cost-effective for the organizer, after all, the bonus is a kind of delayed discount. A person buys at full price, accumulates bonuses and only then returns to spend them.
In simple terms, if the coalition includes a beauty salon and a fitness center, then a loyalty program participant receives points for purchasing a subscription to a fitness center and can spend them on any of the services of a beauty salon.
Coalition partnership has become a logical step in the evolution of loyalty programs. Judge for yourself.
Suppose you are the owner of an optics store. The client came for glasses, bought them, received a discount card, and ... disappeared for a long time. Of course, if he was well served, then he will definitely tell his friends about the store. But the likelihood that he will turn again soon is small. And six months later, hardly anyone will remember the story of a cool optics store.
But the client will definitely be interested in the coalition loyalty program. For example, he learns that he can exchange the received points for paying for dental services.
● customers have the opportunity to visit other places and pay with the points received for the purchase from you;
● by teaming up with someone else, you reduce the cost of attracting new customers, - they come from your partners;
● discount costs are also reduced- repayment of the bonus debt is divided between all members of the coalition. In return, coalition members get the opportunity to sell to your customers.
The main thing is that it does not work out, as in the example with a 0% discount, and the client is really satisfied. Because some coalitions cause only surprise.
For example, one restaurant in Zhengzhou promised to feed a visitor for free, paying for dinner with the “beauty” of this very visitor. It was a joint action with the clinic of plastic surgery. At the entrance, people were scanned, a special jury "evaluated" their beauty, and decided which of the 50 lucky ones to give a 100% discount on that day.
Clients had more questions than they wanted to get involved:
● By what criteria was “beauty” judged?
● What if a participant thinks they are underfed?
● and how is the restaurant connected to the plastic surgery clinic?!
Partner coalition is a format that satisfies customers and increases the profitability of the business, and does not cause laughter and sarcastic discussions on the Internet.
1. King of the Hill.
One of the most effective options coalition partnership, when 1 strong organizing player unites several partners around him, dictates the terms and rules of the loyalty program.
This is an excellent format for large companies that attract partners to get competitive advantage in the form of new privileges for existing customers.
2. Conglomerate.
This type of coalition partnership is used by well-known companies such as MNOGO.RU or Malina.
This format implies that some external operator creates an information space (website, application or subscriber base) and offers all registered participants to take advantage of the bonuses and benefits of the loyalty program member companies.
In order for the company to be able to participate in such a loyalty program, it pays a monthly fee to an external operator.
3. Family ties.
This format implies a cooperation agreement between several organizations working with the same target audience. For example, hotels and tour organizers. Or a plumbing salon and repair crews.
Regardless of which format you choose, the main benefit is clear: attract an audience, reduce the cost of finding new customers, and create a competitive advantage through additional perks.
There are really many questions:
● How to attract the right partners to the network?
● How to organize loyalty programs technically?
● What bonuses to give?
We decided to talk with the marketing director of the company Dinect Nadezhda Vdovenko. Her company specializes in providing simple and affordable solutions for coalition loyalty programs.
“I often noticed the same situation, when the ideal loyalty program collapses due to two factors: human and technical,” Nadezhda says.
“The cashiers forgot to ask one of the clients about the card, the client also forgot, and when he remembered another member of the coalition, he was offended that he had not been counted points.
On the technical side, too, not everything is smooth. Each of the partners, as a rule, has its own cash register software, which blocks the civilized work of loyalty programs.”
The thought haunted me all the time: how to effectively organize such a loyalty program? I put myself in the shoes of a client and imagined how convenient it was to receive points for visiting a fitness center and exchange them for a free manicure at my favorite beauty salon.
After all, it is beneficial both for me as a consumer and for sellers.
I looked at modern trends and thought that if you make a similar program “in the cloud”, then, for sure, everything will work out.
Why cloud?
There are many advantages.
The company then does not need additional server maintenance specialists. In addition, the cloud allows companies from different regions to partner. For example, Moscow companies can partner with regional ones and vice versa. We have one of the projects: a travel agency office in Moscow, a sanatorium in Kislovodsk.
Despite the fact that the development of a cloud solution is an expensive pleasure, I decided to take it on. Confidence was reinforced by studies showing that there are companies in the market that want to form a coalition, but they lack the technology to provide a single system for accounting for buyers, purchases and accruals / write-offs for all participants.
Time has shown that we made the right decision with the cloud solution.
To make it clearer how it works, Nadezhda told about one of the interesting cases.
Among clients Dinect There is an International Automobile Club. The company started as a network of car services. After a while, they wanted to expand the number of places where their customers could receive the service.
We decided that this should be done by connecting partners, so we issued a single card to ensure customer identification. At that time it was a discount card.
But over time, the profile of the partners changed: he didn’t just leave the car service sector, they were business representatives who had nothing to do with the automotive industry.
This trend coincided with the decision to reconsider the way customers are rewarded: instead of a discount system, they decided to switch to cashback, issued economy and VIP cards.
The leadership of the car club came to grips with finding a solution, because in order to implement the changes, several questions had to be answered:
● how to use 2 types of cards at once?
● how to “environmentally” switch from discount to cashback?
● how to provide partners with a fast connection, regardless of the field of activity and region?
● and most importantly - how to do all this with minimal costs for connecting partners and further using the system?
The task was difficult, but interesting. We studied the existing discount system of the car club and took several steps:
1. Consulted Loyalty program mechanics planned to be implemented by the client. We came to the conclusion that it is better to refuse informing by SMS and use instead mobile app and push messages.
2. Studied current business automation, offered options and tools for integrating with the Dinect system: what functions our client and his partners get and at the expense of what opportunities.
3. Optimized our own system for the reality of the Client-adapted API interaction protocols, expanded the list of transmitted parameters.
4. We also held a number of webinars where they explained how to implement and use the Dinect cloud so that all participants in the program can immediately start using the new features.
5. Provided support to the client's specialists when working with external counterparties. We advised and explained how to use the tools of the system. Separately, we focused on how to explore the needs of a client who will use the opportunities of a partner coalition.
6. The final stage was the examination of those new documents and solutions for working with cash desks, which were prepared for the car club. We had to make sure that everything was in accordance with our agreements, that it was functioning properly and could be launched.
It took 2 months.
Our client was directly the organizer of the coalition. When we asked for feedback on the implementation of our Dinect cloud solution, he spoke about the first results:
● the cost of implementing the cashback system turned out to be 7 times lower than the budget he originally planned;
● noted convenience automated registration card holders. Previously, everything was recorded in Excel, and then manually transferred to the database;
● Now his coalition could include partners from micro and small businesses. Before Dinect, he could only work with medium and large businesses, which limited the circle of partners, as a result, this limited the possibilities of the coalition;
● also with the advent of a cloud solution, it became possible to keep records of customer purchases even where there is no automated cash register.
