Another way to create customer loyalty

Agustina Wayansari, The Jakarta Post, Jakarta

Notices such as "You will receive a free drink if you find our cashiers not smiling" or "Please return any item if the price in other stores are lower" can be easily found in the country's major department stores or supermarkets.

The message of such notices is clear: The department stores or supermarkets want to ensure that they care for their customers's basic needs of wanting to be appreciated. By doing so, they hope the customers will return and become their loyal buyers.

However, in a situation where the competition is tight, giving a promise is no longer enough. Owners of the department stores or supermarkets should be more innovative, particularly in providing their customers with a sense of belonging.

According to Houston-based marketing specialist David Frey the membership program is one of the most effective ways to increase customer loyalty. With this feeling, the buyers will eventually become loyal customers.

Besides helping increase the buyers' loyalty, the programs also offer many other benefits such as providing a predictable stream of revenue, selling more services and products with less effort and improving referral business.

Through incentives such as rewards in the form of price discounts or gifts, the membership programs encourage customers to return. More importantly, regular newsletters or invitations sent to customers to attend a product launch, for example, will make customers feel as though they are part of the business. This will breed loyalty.

In Indonesia, membership marketing is not new at all. Many department stores, supermarkets and hotels have used the strategy to increase loyalty.

Retail chain Matahari, for example, introduced a membership program in October, 2000. This program offers free membership and gives customers a number of benefits.

The Matahari Club Card (MCC) gives customers reward points every time they make a purchase at the chain's outlets. In addition to the points that can be converted into gifts or shopping vouchers, the program also offers several other benefits such as receiving free newsletters about the chain's discount programs and new shopping items.

Through such incentives, the program has successfully netted about 3,000 members from its branches in the country's 380 cities.

"Almost a half the members use their Matahari Club Card at least once a month," MCC senior marketing manager Max Adjie Pangestu said.

Matahari, which launches the membership program as part of the retail chain's customers relations management program, is regarded as one of the most successful membership programs in the country.

According to Hadi Irawan, a Frontier marketing specialist, the success of Matahari's MCC program was mainly supported by the retail chain's strong customer base and its ability to provide concrete benefits to members through the reward program.

Besides the advantage of the chain's strong customers base, Matahari also gives additional reward points to holders of certain credit and debit cards such as Lippo Visa Electron to further lure new members.

In the hotel industry, the membership program is the main marketing strategy in turning their occasional guests into loyal customers.

Hotels usually charge customers a membership fee to join their membership programs which provide members not only with a free stay or a special room rate but also discounts vouchers that can be used in restaurants available in the hotel.

The five-star Shangri-La hotel launched Club Shangri-La several years ago and has attracted 2,279 members.

With a joining fee of Rp 1.65 million, a member can receive a free stay facility or discount of up to 50 percent whenever they use the membership card at restaurants in the hotel.

According to Windri S. Aziz, the sales and marketing manager of Club Shangri-la, the membership program gave a significant boost to the hotel's revenue.

"But more importantly the program has significantly enhanced customer loyalty," she says.

The hotel's communication manager, Prissilia Pangemanan, shares her colleagues's view about the effectiveness of the membership program in increasing loyalty

Shangri-La, which started the membership program during the early years of operation, formerly appointed a third party to handle the program. However, the hotel ended the cooperation and has handled the program internally since September last year.

The hotel has assigned five senior staff to carry out the job, particularly in marketing its membership programs. "At least we can save 30 percent of the revenue (usually paid to the third agency) by operating the program ourselves," says Windri.

Unlike Shangri-La, JW Marriot, which started its Indonesian operation late last year, still relies on the global membership program offered by the French hotel chain.

Through the global program called Marriot Rewards, a customer can receive rewards in the form of a free hotel room or free airline tickets.

Public relations manager Melani Solagratia said every guest staying in a Marriot hotel automatically became a member of the membership program. Although no membership fee is required, a member can reap benefits from 2,300 Marriot hotels in 69 countries.

"We have not yet launched our local membership program. But we offer a special discount to holders of HSBC credit cards when eating in our restaurants," she says.

Like JW Marriot, the Inter Continental Midplaza Hotel also still relies on the hotel chain's international membership program.

The global hotel operator has two membership programs, the Priority Club Rewards and Six Continents Club. The former can be used in all hotels under several hotel chains such as Inter Continental, Holiday Inn, Crown Plaza, while the latter is only valid when staying in Inter Continental hotels.