Why Loyalty Programs are More Important Than Ever
How Tokopedia built TokoMember as a loyalty service that actually works.
Let me tell you the story behind TokoMember as a Loyalty service for Tokopedia Customers and Merchants. In Tokopedia, we focus on how we can get our users come back to our platform by creating a loyalty program. By loyalty program, it means that not only are they being loyal to Tokopedia, but also to Tokopedia merchants.
While most e-commerce usually only give some sort of sales report dashboard, we realized that things should’ve gone beyond that. We thought that it is essential for our merchants to engage closely with their loyal customers. That’s how we got the idea and inspiration to build TokoMember as a service. But, we know that an idea would be nothing if we first don’t solve our problems and have a good execution afterwards.
Figure Out the Problem
Couple months back, we were analyzing as to why most users are not loyal to a brand or a merchant. After doing analysis, we figured that part of the reasons beside the unavailable product and noncompetitive price was because there was no benefit for doing repetitive orders. Loyal customers who usually make purchases in the same shop for a couple of months or even years never get rewards, let alone engagement with the merchant.
Next, we need to delve deeper into a loyalty program for both customer and merchant.
Do some research!
What is loyalty program for customers?
According to Invesp, customers mainly join loyalty programs because of these two reasons: they want to save money (57%) and receive rewards (37.5%). 50% of customers say they would change their behavior to reach higher tiers of customer loyalty program. Accordingly, 76% of customers believe that loyalty programs deepens their relationship with brands.
Based on our research about loyalty programs, most of them are using offline methods like plastic or paper cards. Every user needs to go through a painful process, starting from registration, keeping the card, remembering the expiry date, and not being able to check their status and balance. Above all, it’s not a seamless journey for them.
Then, what is loyalty program for merchants?
Customer retention isn’t always easy. According to the same study by Invesp, sustained customer loyalty programs can see that the average customer spend 67% more. This means that loyalty programs aren’t meant to be short-term customer retention strategies. The longer the customer enjoys your loyalty program, the more likely that person will remain loyal to your brand.
An increase of just 5% in customer loyalty can lead to a 25%-100% increase in profit per customer, and on average, loyal customers are 10x more valuable than first-time customers. The same study as above also shared how loyalty programs are influencing buying influencers, in which 69% of customers say that loyalty programs influence their choice of retailer. This view is shared by 64% of retailers who view customer retention programs as the best way to connect with customers.
Loyalty programs are not something that is easy to build as there are a lot of things to be considered. For example, merchants will need an investment on infrastructure in order to build a loyalty program. Building an infrastructure is not easy and will take a long time. Secondly, they need a well-maintained system, since a loyalty program will take 3–12 months per period. So, they need it to be accessible and maintained.
Lastly, the purpose of having a loyalty program is to get closer to loyal customers. Engagement is important — when we know our customers, it’s easier to engage with them. Currently, none of loyalty program has an integrated engagement platform. So, let’s summarize the problems around customers and merchants.
Customer Problems:
- So much hassle to register
- Need to bring card anytime everywhere
- Remembering the expiry date
- Can’t check balance anytime
- Not seamless
Merchant Problems:
- Huge investment in loyalty program infrastructure
- Not accessible and well maintained
- No engagement platform
Execution is the key
An idea would just be an idea without a good execution. With all the identified problems above, now we know what features are needed for TokoMember. So, we put all the user and merchant pain points to our development backlog one by one. To make sure all the features are as good as our expectations, we need good documentation.
Product Requirement Document (PRD) will have a big role here on the execution, as we need to put all the details of each features in it. Starting from feature objective, product flow, UI/UX design, technical documentation and last but not least, the test case documentation.
TokoMember was built as an engagement tools for merchants to their loyal customers, where merchants are able to customize their own loyalty program and customize the benefit for their customers. Benefit can be varied, from free delivery coupons, cashback coupons, discount coupons, to free products.
After a calm, comes the storm. After all planning are done in peace, there comes a time when we need to do feature testing. As a product manager, this is a very crucial moment as we have to determine the level of quality of the product we want to release. The process is done back-to-back with software engineers and front-end engineers, testing all the use cases that are being prepared.
And… Voila!
Launch and Monitors
When doing a product launch, never launch 100% to the users. Always do a phasing release. In TokoMember release, we do it to 1% of users first. At the first users phase, we need to closely monitor the impact for users by looking at the ticket complaint and backend error. When there is no complaint from users and very minimum backend error occurring in this phase, we can continue to release it to more users until 100% with close monitoring.
If something bad happened at 1% release, we can stop and reverse it to previous version. So, we can avoid more users having bad experience. All process from problem identification, data gathering, execution, launch and monitoring are very important when it comes to product creation and innovation. Those will help to eliminate many ambiguities of the problem and focusing on the objective.
Click here to try TokoMember.
Thanks for reading, hope you enjoyed it. Kudos to Jevon Kadim & Dicki Dahrurozak for designing TokoMember.
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