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e-Commerce, Retail
July 7, 2022

Customer loyalty: deploying a 5-step kitty system

In the world of distribution, the kitty is now the main tool for building loyalty and rewarding consumers. However, the implementation of such a system must respect several essential rules, both to satisfy customers’ expectations and to meet the brand’s requirements.

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1. Be aware of the regulatory framework

As stipulated in Article 125 of the French Law No. 2020-1525 of December 7, 2020 on the acceleration and simplification of public action (ASAP), promotional benefits cannot exceed 34% of the customer’s sale price. In the case of a loyalty kitty, this means that purchasing a product for €1 will credit the card with a maximum of 34 cents. However, this specific framework only applies:

  • food and pet food;
  • product-specific kitty: the purchase of a specific product is what allows you to “kitty”.

Like any loyalty program, the kitty program relies heavily on the collection and use of personal data of customers. Its implementation must therefore be carried out in accordance with the GDPR (General Data Protection Regulation). The CNIL (French Data Protection Authority) recommends(1) : to sort out the information needed for the loyalty program and the information that is not useful (and that should not be kept); to inform your customers about the use of their data; delete your customers’ data after a period of inactivity (3 years).

2. Define your objectives

The main interest of a kitty is of course to increase the turnover of the brand: the amount credited should push customers to consume again. However, this device is not necessarily limited to a transactional objective. It is therefore important to be aware that the kitty can allow you :

  • Increase the frequency or number of visits to the point of sale;
  • Iincrease the average amount of the basket;
  • Promote a product or a range of products, especially private label products for example;
  • Ensure customer retention;
  • Develop customer loyalty to the brand;
  • Turn customers into ambassadors.

70% of customers talk about a brand around them when they are satisfied with its loyalty program(2).

3. Choose the right mechanics

Depending on the objectives previously identified, the company can select the most appropriate reward mechanism. This can take several forms:

  • an assigned kitty: the purchase of a specific product allows to credit a maximum of 34% of its value;
  • an assigned kitty by product group: the purchase of one or more complementary products allows the card to be credited (the customer has put tea in his basket: by buying two other similar products, a sum is “kitty”);
  • an assigned kitty with a free product: like the previous system, the customer is encouraged to buy additional products, the amount of the least expensive of them being credited, for example;
  • a non-allocated kitty by level: the customer “kitty” from a certain amount of spending (5 € every 50 € of purchase for example);
  • a proportional non-allocated kitty: a percentage of the expenses is credited to the customer’s card (e.g. 3% of purchases is “kitty”).

Prohibition on using the word “free

As stated in Article L443-1 of the Commercial Code, it is forbidden to use the word “free” to promote a food product, even if the customer actually “jackpots” the value of a product.

In addition to being able to combine these different mechanics, the company must define several other aspects of the operation of its kitty.

  • The duration of the benefits: you can first of all decide that the credit granted is valid for a determined period (one year for example), encouraging the customers to consume them regularly. On the other hand, you can opt for a sliding kitty so that the credited amount is kept indefinitely.
  • The usage mode: the kitty can be automatically debited when the customer identifies himself (presentation of the loyalty card, online purchase, etc.) or only if he requests it. In the latter case, specific benefits can be granted from a certain amount credited.

7 out of 10 customers use the benefits of their loyalty program(3).

4. Adopt appropriate media

The kitty must be based on an omnichannel vision: the customer must be able to take advantage of his kitty on all the points of contact with the brand. In addition to the traditional physical loyalty card, which is still popular with consumers, several other media can be deployed:

  • dematerialized identification, by communicating his name or his e-mail address at the cash desk for example;
  • a dedicated mobile application;
  • reading the photo of the loyalty card, presented on a smartphone for example;
  • a contactless payment application (Apple Wallet, Google Pay, etc.);
  • an identification code, allowing to identify oneself during a quick online purchase for example.

91% of customers believe that the loyalty program should be available on all of the brand’s sales media (2). In addition to identification, the retailer must allow customers to easily track their kitty. Most often, this can be done by creating a personal space, which can be consulted online or by mobile.

5. Opt for the right technical solution

Whatever the chosen mechanism, it is essential to deploy a flexible, secure and customizable management solution. With Generix Omnichannel Sales’ Loyalty module, you have a tool that is suitable for setting up a loyalty system, guaranteeing emotional loyalty and customized management. It allows you to:

  • Centralize the management of the kitty and the loyalty program;
  • Create various programs for the acquisition and use of benefits (transactional or not);
  • Have a better knowledge of the customer through the centralization of all his data;
  • Adopt an omnichannel strategy thanks to the complementarity of the various media and contact points; to respect the RGPD framework.

You may also be interested in these articles:

(1)GDPR in practice: control your customer relationship – CNIL – 2022 (FR) (2)Loyalty & Engagement survey – Ifop for Comarch – 2021 (3)Loyalty Barometer – 12th edition – Observatory of customer loyalty and retention – 2021 (FR)

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