Kik, a Germany-based discount retailer founded in 1994, has over 4000 physical stores in 14 European countries including Nederlands, Germany, Austria, and Poland.
They sell a wide assortment of daily use and home products, including stationary, clothes, decoration articles, and some food articles, mostly to low-income households.
MyKik, their loyalty program launched in late 2022, already has around 6 million members and pays for itself. No wonder it won the best loyalty program launch at the International Loyalty Awards 2023!
Here are 5 lessons we distilled from their launch success.
Kik serves families, most of them with low income. While the visit frequency is high, the basket value on each visit could be low, as are Kik’s margins, as a discount store. Shoppers walk in looking for an assortment and don’t necessarily have a concrete buying plan.
Despite being 30 years old, Kik had never collected data until two years ago, investing mainly in mass communications. While a lack of data is a challenge in present times, says Sebastian Hense, Head of Marketing and CRM for Kik, it is also a great opportunity to start from scratch and build a data-first loyalty program for an established brand.
As a discounter, it was important that any loyalty program balance cost-efficiency with value for the shopper. Because both – the average basket value per visit and the margins are low, rewards too could not be too lavish.
In other words, the program had to find an attractive way to reward frequency and retention rather than spend, while still creating a benefit and privilege value proposition.
The program design:
Given the context, MyKik started with benefits that had a high-value perception for shoppers but did not cost the company any money. For instance, members could reserve articles and return articles without a receipt, and receive exclusive birthday discount vouchers.
In terms of financial rewards, which can often be the largest cost component of the loyalty program, key elements included:
- A 20% discount on every fifth visit, irrespective of spend value, keeps customers coming back frequently without worrying about spends
- A new catalog of products each month that members can buy at a 15% discount makes them feel privileged and gives them a concrete reason to revisit at least once a month.
5 insights that helped MyKik convert 6 million shoppers in one year, and earned it the Best Loyalty Program Launch Award for 2023.
Easy to understand: MyKik chose an easy-to-understand program that does not require complex calculations for the member to understand benefits and rewards. The program avoids bonus points and percentage points based on spends because they know the average spend per visit is low.
Physical card: In a mobile-first era, MyKik believes its card gives shoppers a sense of stable, concrete, and immediate benefits in exchange for transactions and data. While there is also an app, at the moment close to 100% of shoppers use the physical card. Showing the physical card at checkout also gives Kik staff a chance to interact, collect more valuable data, and share offers that can be immediately redeemed.
Decouple rewards from spend: By rewarding frequency and not forcing their discount-focused shoppers to worry about spends, they drive retention, frequency, and loyalty without costing Kik as much as a traditional points-and-tier-based loyalty program.
Respect current shopper behavior instead of changing it: most members are low-income families that visit frequently but spend small amounts on each visit. Kik chose to reward instead of changing this behavior, with its frequency-based rewards.
A CRM first loyalty approach: the CRM foundation of data collection is foundational not just for the loyalty program to succeed but also for the business to succeed and grow. Right from the MVP at launch, the benefits and rewards of Kik’s program are available only for card-holding members who have shared data with the company. Members too understand that the better the company knows you, the more benefits and rewards it can give you. Expansion plans include geographical footprint as well as doing more with the data to reward members.
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