Another way to create customer loyalty

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.