Contents
Retail Loyalty Scheme

Contents

Concepts

Generic Scheme

Combinations

Implementations

Variants

Instantiations


Concepts
Retail Loyalty Scheme

Concepts

Definition

This chapter gives the main concepts of retail loyalty schemes (currently just a definition).  Click any of the above for further information.


Definition

Liz Mandeville's definition from the RMDP report ???? is "Systems which make use of modern retail systems and other new technologies to persuade individual shoppers to prefer one retail group to kts competitors, through spending-related rewards, better marketing, or both.


Generic Scheme
Retail Loyalty Scheme

Generic Scheme

Notation

This chapter develops the generic view of retail loyalty schemes.  The starting point is the diagram given above.

The Loyalty Scheme has two components, a Product Promotion component which promotes products (persuades consumers in general to buy particular products), and a Consumer Targeting component which targets consumers (decides which consumers are the best targets for promotions and aims the promotions at them).

Press Cntrl Tab to see Hot Spots.  Click on "Product Promotion" to see its implementation.  Click on "Customer Targeting" to see its implementation.  Click on "Loyalty Scheme" to see how these implementations are combined to give the generic implementation of the Loyalty Scheme.


Notation

Diagrams are formed from lines and boxes (ellipses in some diagrams).  Both lines and boxes represent the behaviours of systems.  The systems may be human systems, IT systems, other systems, or mixtures of these.

Each diagram has an outer structure (using thick lines and large letters) and an inner structure (using thin lines and small letters).  The inner structure provides an implementation of the outer structure.  There may be multiple implementations of one outer structure represented by multiple diagrams.

Two boxes touching (or two lines touching, or a line and a box touching) represent two systems which interact with each other (and therefore affect each others behaviour).  The interaction is achieved by some shared component (and hence shared behaviour) between the systems.  At a primitive level this shared behaviour might be provided by a shared interface or shared event.

Two or more boxes connected by a line represent systems which interact with each other (and therefore affect each others behaviour) via the system represented by the line.

The term line in the above should more accurately be replaced by the term polyline.  A polyline is a set of lines meeting at a point.

A polyline (rather than a line) is required because it is capable of touching any number of boxes whilst a simple line (a special case of a polyline) is only capable of touching two boxes.


Product Promotion

Notation

Product promotion is something that most manufacturers and retailers do.  It involves promoting some or all products (for products read products or services) in a specialised manner.

Product promotions have little ability to discriminate between consumers, they are broadly applied.  Any consumer making a purchase is involved in the promotion.

Product Promotion has two components, a Promotion Operations component which deals with consumer interactions and a Promotion Control component which monitors and manages these interactions.

Press Cntrl Tab to see Hot Spots.  Click on "Promotion Operations" to see its implementation.  Click on "Promotion Control" to see its implementation.  Click on "Product Promotion" to see how these implementations are combined to give the generic implementation of Product Promotion.


Product Promotion Operations

Notation

Product promotions usually involve inducements for the consumer to purchase products.  Inducements can take many forms, common ones are coupons and points.  Promotions usually provide a mechanism for the redemption of the inducement, the manner in which this is done can also vary by location and by technique.  Common techniques are discounts and gifts (including the products of other retailers).

Inducements may be provided before or at the time of purchase, redemptions may be provided at the time of purchase or afterwards.

The consumer receives an inducement at a Promotion Point. The consumer can redeem the inducement at a Redemption Point.  The Promotion Point and/or Redemption Point may be coincident with or separate from the Retail Outlet.

Press Cntrl Tab to see Hot Spots.  Click on any component to see its implementation.


Product Promotion Control

Notation

The Promoter is the person or group (and supporting IT systems) responsible for controlling the promotion.  It may be part of a retailers HQ, part of a manufacturers HQ, or a bureau acting on their behalf.  It provides policy to the Promotion Point, measures the success of the promotion, and recompenses the Redemption Point for its outlay on redemptions.

Press Cntrl Tab to see Hot Spots.  Click on any component to see its implementation.


Product Promotion Combination

Notation

Derivation

Product Promotion is formed by merging its Promotion Operations and Promotion Control components.  This is done by overlaying the sub-components common to both Promotion Operations and Promotion Control.

Press Cntrl Tab to see Hot Spots.  Click on "Promotion Operations" to see its implementation.  Click on "Promotion Control to see its implementation.  Click on "Product Promotion" to see the extracted implementation.  Click on Derivation to see how the contents of this diagram have been derived.


Product Promotion Derivation

This diagram summarises the steps taken to derive the generic implementation of Product Promotion.


Consumer Targeting

Notation

Consumer Targeting is the mechanism whereby promotions are focused on and tailored to the needs of individual consumers or groups of consumers, it determines who can benefit from the promotions.  Its decisions are based on several potential sources of information, these include consumer information, purchase information, demographic information and other possibilities.

As with Product Promotion, Consumer Targeting can be broken down into Targeting Operations  and Targeting Control components that interact with each other.

Press Cntrl Tab to see Hot Spots.  Click on "Targeting Operations" to see its implementation.  Click on "Targeting Control" to see its implementation.  Click on "Consumer Targeting" to see how these implementations are combined to give the generic implementation of Consumer Targeting.


Consumer Targeting Operations

Notation

The Enrolment Point is responsible for enrolling consumers into the consumer targeting scheme and collecting information about them.  It may be in the Retail Outlet, at the retailers HQ, or some other body.

The Mail Point can provide inducements including information, points and coupons

Press Cntrl Tab to see Hot Spots.  Click on any component to see its implementation.


Consumer Targeting Control

Notation

The Targeter is the person or group (and supporting IT systems) responsible for controlling the targeting.  It sets policy and receives information from Enrolment Points, Mail Points, Promotion Points, Retail Outlets and Redemption Points.

It liaises with Promoters to establish new promotions and to modify existing ones in the light of the information in its possession.

Press Cntrl Tab to see Hot Spots.  Click on any component to see its implementation.


Consumer Targeting Combination

Notation

Derivation

Consumer Targeting is formed by merging its Targeting Operations and the Targeting Control components.  This is done by overlaying the sub-components common to both Targeting Operations and Targeting Control.

Press Cntrl Tab to see Hot Spots.  Click on "Targeting Operations" to see its implementation.  Click on "Targeting Control" to see its implementation.  Click on "Consumer Targeting" to see the extracted implementation.  Click on Derivation to see how the contents of this diagram have been derived.


Consumer Targeting Derivation

Notation

This diagram summarises the steps taken to derive the generic implementation of Consumer Targeting.


Product Promotion Expansion

Notation

This diagram extracts the detailed implementation of Product Promotion.

Press Cntrl Tab to see Hot Spots.  Click on any component to see its implementation.


Consumer Targeting Expansion

Notation

This diagram extracts the detailed implementation of Consumer Targeting.

Press Cntrl Tab to see Hot Spots.  Click on any component to see its implementation.


Loyalty Combination
Loyalty Scheme Combination

Notation

Derivation

The full Loyalty Scheme is formed by merging its Product Promotion and the Consumer Targeting components.  This is done by overlaying the sub-components common to both Product Promotion and Consumer Targeting.

The functions of Promotion and Targeting interact, they have shared behaviour. In addition, they have separate roles and these roles may be assumed by different organisations. The resulting relationships will depend on several factors as described in:

Targeter/Promoter Relationship

Press Cntrl Tab to see Hot Spots.  Click on "Product Promotion" to see its implementation.  Click on "Consumer Targeting" to see its implementation.  Click on "Loyalty Scheme" to see the extracted implementation".  Click on Derivation to see how the contents of this diagram have been derived.


Targeter/Promoter Relationship
Relationship between Targeter and Promoter

It is not possible to have a loyalty scheme that involves targeting without promotion (targeting relies on promotion).  In general, the Targeter will be the retailer (or an agent thereof) because they have the direct customer contact.  If the retailer is the Targeter then it will also probably be a Promoter and hence have a promotions infrastructure.  However, even then the Targeter will probably also make use of additional external Promoters supported by product manufacturers).

There are 4 types of relationship possible for the instance of  retailer = Targeter and Promoter, manufacturer = Promoter.

1: Targeter Independent

The manufacturer promotes without Targeter involvement.  This may involve a coupon scheme which runs in parallel with retailer based targeted promotions so it can use the same IT promotions infrastructure or even be based on paper coupons when the targeted system may be paperless.  This allows a retailer to independently target and promote.

2: Targeter Aware

The Targeter has information links to the Promoter. This enables it to target in a manner that does not conflict with the Promoter.

3: Targeter Modulated

The Promoter promotes through the Targeter.  Its campaigns are directed at the customer through the Targeter.  This allows the Targeter to tailor a generic manufacturer promotion to make it customer specific or to `paste' it onto an existing targeted campaign in a more blunt/broad brush approach.

4: Targeter Interactive

The Promoter to Targeter links enable the Promoter to modify their promotion offering dynamically depending on what the Targeter is doing.  This will potentially enable the Promoter to change its offering uniquely for each customer.  In that case, the Promoter is still no longer aware of individual customers but it can promote in a highly tailored manner.

In the instance when the retailer = Targeter and Promoter  and  there are no other Promoters involved, then the relationship would tend to be very tightly coupled unlike the arms length arrangements described above.


Loyalty Derivation

Notation

This diagram summarises the steps taken to derive the Loyalty Scheme from the implementations of Product Promotion and Consumer Targeting.


Loyalty Expansion

Notation

This diagram extracts the lower level implementation of the Loyalty Scheme.  It provides the starting point for Combinations, Implementations, Variants and  Instantiations described in other chapters.

Press Cntrl Tab to see Hot Spots.  Click on any component to see its implementation.


Combinations
Retail Loyalty Scheme

Combinations

Notation

This chapter considers how schemes conforming to the Generic Loyalty Scheme shown above (or subsets thereof) may be combined together in networks of interacting Loyalty Schemes.

Browse through these instantiations using the arrow buttons (In fact there is only one at present).


Sainsburys' Combination

Notation

Some Sainsburys' sites combine a food store and a petrol service station.  These run food and petrol promotion schemes which reinforce each other.

Press Cntrl Tab to see Hot Spots.  Click on any component to see its implementation.  Click on "Sainsburys' Loyalty Scheme" to see how these implementations are combined to give the full implementation of the Sainsburys' Loyalty Scheme.


Sainsburys' Food Promotion

Notation

Sainsburys' food promotion is a subset of the generic loyalty scheme.  Induce takes the form of a voucher issued by the petrol service station.  Redemption takes the form of endorsing the voucher and attaching the food till roll to it.

Press Cntrl Tab to see Hot Spots.  Click on any component to see its implementation.


Sainsburys' Petrol Promotion

Notation

Sainsburys' petrol promotion scheme is a subset of the generic loyalty scheme.  Induce takes the form of an endorsed voucher plus food till roll provided by the food store.  This is redeemed in the petrol service station by means of a discount.  The size of the discount is related to the amount spent on food and the amount spent on petrol on the previous visit

Press Cntrl Tab to see Hot Spots.  Click on any component to see its implementation.


Sainsburys Store
Sainsburys' Store

Notation

The Sainsburys' food store acts as Retail Outlet and Redemption Point for food and as Promotion Point for petrol.


Sainsburys Station
Sainsburys' Service Station

Notation

The Sainsburys' petrol service station acts as Retail Outlet and Redemption Point for petrol and as Promotion Point for food.


Sainsburys Detail
Sainsburys' Detail

Notation


Sainsburys' Combined
Sainsburys' Combination Expanded

Notation

The full implementation of the Sainsburys' Loyalty Scheme is formed by combining the implementations of Sainsburys' Food Promotion, Petrol Promotion, Store and Station.  Note that it is the triple roles within Store and Station which join together Food Promotion and Petrol Promotion.

Press Cntrl Tab to see Hot Spots.  Click on any component to see its implementation.


Implementations
Retail Loyalty Scheme

Implementations

Notation

This chapter provides detailed implementations for the components of the generic Loyalty Scheme shown above.


Induce

Notation

In most contemporary loyalty schemes induce can take the form of information, coupons, points, and/or gifts.  In a sophisticated scheme which had detailed information about past purchases it would be possible to prepare weekly shopping baskets for regular customers.


Redeem

Notation


Enrol

Notation


Purchase

Purchase is the interaction between the consumer and the retailer which takes place when the consumer buys some product or service.


Consumer

The Consumer is any existing or potential customer of the Retail Outlet.


Retail Outlet

The Retail Outlet is the part of the retailer which interfaces with the consumer when the consumer is making a purchase.


Promoter

Notation

The Promoter is an individual or group of individuals within the retailer or manufacturer (or within a bureau acting on its behalf) together with the IT support they use.  It is responsible for managing a promotion.


Targeter

The Targeter is an individual or group of individuals within the retailer (or a bureau acting on its behalf) together with the IT support they use.  It is responsible for managing consumer targeting.


Promotion Point

Notation

The Promotion Point provides inducements to make consumers want to purchase products from the Retail Outlet.  The Promotion Point may be within or outside the Retail Outlet.  It could be an advertising point in an exhibition.  It may be a Retail Outlet of another (collaborating) company.


Redemption Point

Notation

The Redemption Point redeems inducements by for instance providing gifts or discounts.  The Redemption Point may be within or outside the Retail Outlet.  It may be a Retail Outlet of another (collaborating) company.  The redemption for one Loyalty Scheme may be the inducement for another (eg Air Miles).


Enrolment Point

Notation

The Enrolment Point enrols consumers into a loyalty scheme.  The Promotion Point may be within or outside the Retail Outlet.  It may be a Retail Outlet of another (collaborating) company.


Mail Point

The Mail Point may be in the retailer's head quarters, in a retail outlet, or in a bureau.  It will be responsible for sending inducements including information by mail to targeted consumers.


Consumer Details

Notation

The level of sophistication of a loyalty scheme depends upon its ability to move customer and purchase information about in real time (i.e. within human reaction time).  For instance if, when a consumer enters a store, the store is able to obtain the consumer's purchase history from its head quarters, then it will be able to tailor its treatment of the consumer to her or his past history.


Purchase Details

Notation

The level of sophistication of a loyalty scheme depends upon its ability to move customer and purchase information about in real time (i.e. within human reaction time).  For instance if, when a consumer enters a store, the store is able to obtain the consumer's purchase history from its head quarters, then it will be able to tailor its treatment of the consumer to her or his past history.


Reconcile Targeting

In a sophisticated scheme it will be possible to check that coupons and points being redeemed at a Redemption Point by a particular consumer are coupons and points which were issued earlier by Promotion Points to that consumer and are not forgeries.


Measure Promotion

The Promoter will need to measure the success of its promotion.  One measure is the number of inducements which have been redeemed.


Repay For Promotion
Repay For Promotkon

The promoter will need to recompense the redemption point for the cost of gifts, discounts, etc.


Demography

Demographic details will probably be supplied by an agency specialising in such information.


Targeting Policy

Notation

In sophisticated loyalty schemes the Promotion Point will need to be able to obtain a Targeting Policy for each consumer from the Targeter and will need to be able to do this in real time (i.e. within human reaction time).


Promotion Policy

Notation

In sophisticated loyalty schemes the Promotion Point will need to be able to adjust its behaviour according to the current stock position within the Retail Outlet and within the supply chain of the outlet.   It will need to be able to receive a Promotion Policy from the Promoter in real time (i.e. within human reaction time).


Enrolment Policy

The Targeter may give the enrolment point a policy for enrolling customers.  This may be tailored to different categories of consumer.  It may exclude undesirables.


Mail Policy

The Targeter may give the Mail Point a Mail Policy for targeting consumers.  In a sophisticated scheme it may provide a separate policy for each consumer (recorded for instance in the consumer database).


Policy Liaison

Notation

The Targeter and Promoter may be in different organisations.  There may need to be a complex interaction between them to coordinate promotions.  For more details click on:

Targeter/Promoter Relationship


Variants
Retail Loyalty Scheme

Variants

Notation

Generic Loyalty Scheme

This chapter describes variants on the generic loyalty scheme shown above.

Browse through these variants using the arrow buttons.  Click on Generic Loyalty Scheme to display generic loyalty scheme whilst browsing.


Generic Loyalty Scheme


Multi-Promoter Variant

Notation

A retailer will normally act as Targeter and as Promoter for some of its products.  It will also collaborate with manufacturers (or their agents) which are acting as Promoters for their own products.


Consumer-Ignorant Variant

Notation

The scheme shown above is a simple promotion scheme with no consumer targeting.


Consumer-Neutral Variant
Consumer Neutral Variant

Notation

The scheme shown above has a retailer acting as Promoter and Targeter.  The targeting here will be weak, just issuing consumers with membership cards.


Multi-Promoter Consumer-Neutral Variant

Notation

The scheme shown above has a retailer acting as Promoter and Targeter and manufacturers (or their agents) acting as Promoters.  The targeting here will be weak, just issuing consumers with membership cards.


Consumer-Related Variant

Notation

This scheme supplies the Promotion Point in real time (i.e. within human reaction time) with a policy for handling each consumer.  The policy is based on details supplied by the consumer at enrolment time.  It does not take into account purchase history.


Multi-Promoter Consumer-Related Variant

Notation

This scheme supplies the Promotion Point in real time (i.e. within human reaction time) with a policy for handling each consumer.  The policy is based on details supplied by the consumer at enrolment time.  It does not take into account purchase history.

The Promotion Point also has to take into account promotion policies coming from a number of Promoters.   These promotion policies are probably supplied and updated on a daily or weekly cycle rather than in real time.


Purchase/Stock-Related Variant

Notation

This scheme supplies the Promotion Point in real time (i.e. within human reaction time) with a policy for handling each consumer.  The policy is based on the consumer's purchase history, the retailers current promotions policy and current stock levels.


Multi-Promoter Purchase/Stock-Related Variant

Notation

This scheme supplies the Promotion Point in real time (i.e. within human reaction time) with a policy for handling each consumer.  The policy is based on the consumer's purchase history, the retailers current promotions policy and current stock levels.

The Promotion Point also has to take into account promotion policies coming from other Promoters.   These promotion policies may be supplied and updated on a daily or weekly cycle rather than in real time.


Multi-Promoter Purchase/Stock/Consumer-Related Variant

Notation

This scheme supplies the Promotion Point in real time (i.e. within human reaction time) with a policy for handling each consumer.  The policy is based on the consumer's details supplied at enrolment time, the consumer's purchase history, the retailers current promotions policy and current stock levels.


Instantiations
Retail Loyalty Scheme

Instantiations

Notation

This chapter shows how the generic loyalty scheme shown above can be instantiated to give various existing retail loyalty schemes.

Browse through these instantiations using the arrow buttons.


Shell Instantiation

Notation

The points can be redeemed for small gifts (or large gifts with HQ authorisation) at the retail outlet, or via other redemption outlets such as UCI cinemas or charities.  By accumulating Air Miles, the option to link in other loyalty schemes is demonstrated.

Press Cntrl Tab to see Hot Spots.  Click on any component to see its implementation.


Shell Induce

Notation

The Shell loyalty scheme uses smart cards to accumulate points (or Air Miles) on the basis of customer spend on petrol.

Prior to joining the scheme, a consumer may be given vouchers.  Vouchers can be converted into points (or Air miles) when the consumer joins the scheme.


Shell Enrol

Notation

At enrolment time the consumer chooses whether to collect points or Air Miles.

Enrolment may be by one of following:

- telephone request followed by receipt and return of form and despatch of card

- postal request followed by despatch of card

- form filled in at service station followed by despatch of card

- unsolicited or independent receipt of card (i.e. for existing Air Miles users)

Despatch of cards involves card personalisation and  mailing services performed by other agencies i.e. PSI and PCL.


Shell Enrolment Point

Notation

Enrolment services are provided by a bureau, i.e. Granby.


Shell Redemption Point

Notation

Service stations can convert vouchers into points.

Small redemptions can be performed at service stations with points being redeemed for small gifts.

Collaborating organisations also provide redemption facilities i.e. UCI Cinemas and HMV stores.

Large redemptions are requested at service stations with authorisation being required by head office  Large gifts are sent out by post also through a bureau.

The shell scheme allows for redemptions to charities and to other Loyalty schemes i.e. Air Miles.  The redemption mechanism for these is also via request at the service station.


Shell Consumer

Notation

Groups of consumers may operate as one member of the scheme if they so choose.


Shell Details

Notation

The points (or Air Miles) count is kept on the smart card but a duplicate is stored centrally by an overnight poll of retail outlets (the Purchase Details interaction above).

The Shell scheme does not Target (in the sense of keeping and using information about consumers other than points allocated) yet it provides itself with the opportunity of so doing in the future.


DoItAll Instantiation

Notation