Loyalty as an effective strategy to maximize customer lifetime value and multiple customer acquisition for a lingerie retailer

Abstract

Van de Velde has its own retail brands, Rigby & Peller and Lincherie. Worldwide these stores sell Van de Velde's high quality lingerie brands among other selected competitor brands to offer every customer a wide range of premium lingerie. Recently, the retail brands are confronted with a general market trend, namely a decline in traffic. At the same time, they are confronted with results of their loyalty program that were below expectation. One the one hand, Van de Velde wants a renewed, better performing loyalty program that can increase both customer lifetime value and multiple customer acquisition and on the other hands hopes this will increase traffic in stores. It is our job to tackle this challenge during an intensive three- month research of which this report is the end result. This report answers the following research question: How to define a loyalty strategy for the retail brands of Van de Velde (Rigby & Peller and Lincherie) in their different markets that could maximize both customer lifetime value and multiple customer acquisition? Methodology: To answer this question, we conducted several studies. Our secondary research consisted of a literature study about loyalty in general, a market analysis for the four different markets and an internal analysis of the current loyalty program. Afterwards, based on the previous research, we conducted our own primary research including a focus group and a survey to get insights in the buying behavior of women regarding lingerie, their opinion on loyalty programs in general and more specifically on the one currently implemented in the retail stores. The results of these studies have made it possible for us to come up with a recommendation for a loyalty program for the retail brands. However, there are some small differences between the one of the USA and the other markets since loyalty programs in the USA are more developed than in other countries. Results: We came up with a multi-tiered loyalty program with three different tiers, offering more benefits to customers who earn more points. Our program includes a few remarkable aspects. One is the partnerships, as a way to reward the most loyal customers with exclusive deals from other premium brands. We also included the option of Brand Ambassadorship as a way to earn points for referrals. And finally, for recycling your bra, which not only helps the environment but is also valuable for Van de Velde and works as an incentive to get customers to the store. In order to be effective, the loyalty program should be communicated very clearly via different channels. We therefore came up with a communication strategy that has three different stages: the pre-launch stage, the launch stage and the post-launch stage. Every stage includes different communication techniques to attract new members and retain and engage the existing members.