Kudler Loyalty Program
Kudler Loyalty Program
Kudler Fine Foods is a well-known California grocer specializing in high quality and specialty foods. Since Kudler does not consider the price of its products to be a primary differentiator from other grocers their intent is to produce more profit through increasing their customer purchase cycle. To achieve their goal Kudler has partnered with a loyalty points program to provide customers with points which can be redeemed for high end gift items, airline first-class upgrades, or other specialty foods. This program will also enable the ability to track customer transactions and ...view middle of the document...
This database can be altered with a table to record transactions. This table should contain a customer identification number which would relate to a table with customer information. This implementation should be a relatively simple addition to the current point of sale system which will keep costs low.
Several expenditures must be taken into consideration when implementing this program. The monetary return on the loyalty program must exceed the cost of its implementation for the program to be considered a viable solution for increased profitability. (Benefit-Cost Analysis Center, 2011) Expenses that should be considered are illustrated in the following diagram and explained in detail below:
• Each Kudler’s Fine Food location must be upgraded with point of sale software that recognizes and knows how to record the loyalty program information. Training and support of upgrades will be an on-going expense.
• The purchasing department will need access to the data to forecast food inventories and increase purchasing as needed.
• Information technology will need to be engaged to make the appropriate upgrades in hardware and software at all points of sale as well as at the enterprise level. The data from each point of sale will need to be sent to a centralized data warehouse for analysis. Cost of any software and hardware purchases must also be taken into consideration.
• Training how to create actionable results from the new data will need to be implemented at the enterprise level. Resources to maintain this reporting indefinitely is also required.
• The cost of being a part of the loyalty program will also need to be considered.
Leveraging these costs against the forecasted monetary gain from an increased customer purchase cycle and potential new customer gains will give a good cost analysis of whether this loyalty program is a good financial decision for Kudler’s Fine Foods.
Legal, Ethical, and Security Considerations
Assessing the loyalty program from a legal standpoint will likely be primarily handled by the vendor running the program. However, it is very important for Kudler’s Fine Foods to be up front with the information collected from its customers and how that information will be used. It is recommended that Kudler’s contact a representative from the loyalty program who can outline exactly what can legally be done with the data collected from its customers. Presenting this same information to the customers in written form as a condition for joining the loyalty program will appropriately communicate the program’s intent to collect detailed customer data and purchase history. This agreement will also obtain the customer’s acknowledgment of Kudler’s intentions in regards to the data obtained from its customers. Some customers could find this detailed data collection invasive and attempt legal action if appropriate notice was not given.