Case Approach for Loyalty Program

Hello!

Great question. This is a fantastic opportunity to show mature thinking, similar to how real top strategy consulting partners think! If you are able to show and articulate this kind of thinking in an interview, you will blow essentially all other framework-brainwashed candidates out of the park.

1. Verify the objective! Without this, structuring is impossible! --> Let's say it is "Maximizing long term profits"
2. Disaggregate your objecive (=your focus metric) into its components. Revenue, Costs, and further down.
3. Then think through how a loyalty program can impact each sub-branch of your tree into the desired direction (e.g., how can a loyalty program increase frequency of store visits? How can a loyalty program encourage larger basket sizes? How can a loyalty program encourage purchase of more expensive products, how can a loyalty program decrease customer lifetime costs, etc.).
4. Check whether and how the current loyalty program performs on the identified levers and identify pain points
5. Outline options for adapting the current program to address the identified pain points (start with the highest impact/lowest effort options!)

And that sums it up.

Cheers

_______________________

Dr. Sidi Koné 

(🚀 Ex BCG & McKinsey Sr. Project Manager, now helping high potential individuals join the world's top Strategy Consulting firms (McKinsey | BCG | Bain))

can provide you with guidance on the key considerations and elements to address in this case, as well as a suitable structure to systematically solve and present solutions.

When addressing this case, it is important to consider the following key elements:

Objectives: Understand the CEO's specific objectives for enhancing the loyalty program. Is the goal to increase customer retention, drive higher spending, attract new customers, or all of the above? Clarifying the objectives will help guide your analysis and recommendations.

Customer Segmentation: Analyze the customer base of Store X and identify different customer segments based on demographics, purchasing behavior, and loyalty program engagement. Understanding the needs and preferences of each segment will help tailor the loyalty program to their specific requirements.

Competitive Landscape: Assess the loyalty programs of Store X's major competitors and smaller entities in the market. Identify their strengths and weaknesses to gain insights into industry best practices and potential areas for differentiation.

Program Design: Evaluate the current loyalty program's structure, benefits, and rewards. Assess its effectiveness in driving customer loyalty and identify any gaps or areas for improvement. Consider factors such as ease of use, personalization, tiered rewards, and partnerships with other businesses.

Data Analytics: Explore the use of data analytics to gain insights into customer behavior, preferences, and purchasing patterns. Determine how Store X can leverage this data to personalize offers, target promotions, and enhance the overall customer experience.

Implementation and Communication: Develop a plan for implementing the enhanced loyalty program, including any necessary changes to technology systems, staff training, and communication strategies. Consider how to effectively communicate the program's benefits to customers and ensure their understanding and engagement.

In terms of a suitable structure, I recommend the following approach:

I. Introduction

• Briefly summarize the case background and the CEO's objective.

II. Customer Analysis

• Analyze the customer base and segment them based on demographics and purchasing behavior.

III. Competitive Analysis

• Evaluate the loyalty programs of major competitors and smaller entities.

IV. Current Program Assessment

• Assess the strengths and weaknesses of Store X's current loyalty program.

V. Program Enhancement Recommendations

• Propose specific enhancements to the loyalty program based on the identified key elements.

VI. Implementation Plan

• Develop a plan for implementing the enhanced loyalty program, including necessary changes and communication strategies.

VII. Conclusion

• Summarize the key recommendations and their expected impact on Store X's business.

Remember to adapt this structure to the specific details of the case and prioritize the most relevant elements based on the information provided.

I hope these insights and guidance help you approach and solve the case effectively. Best of luck, and feel free to ask any further questions you may have.

Hi there,

Always happy to work through optimal frameworks via coaching!

I do strongly recommend a coaching session to really take your structuring to the next level - it's very very hard to go from good to great in this category without help. This is especially true if you're trying to practice non-classic case questions.

Now, in terms of tips, #1 most important thing is to be objective-driven. Not hypothesis-driven, but objective driven. Remember that there are 2 objectives: 1) the objective of the case (what is the question I'm trying to solve) and 2) The objective of the client (what are their needs, wants, desires. What does "good" look like)

Furthermore, If there's anything to remember in this process, is that cases don't exist just because. They have come about because of a real need to simulate the world you will be in when you are hopefully hired. As such, remember that they are a simplified version of what we do, and they test you in those areas.

As such, remember that a framework is a guide, not a mandate. In the real-world, we do not go into a client and say "right, we have a framework that says we need to look at x, y, and z and that's exactly what we're going to do". Rather, we come in with a view, a hypothesis, a plan of attack. The moment this view is created, it's wrong! Same with your framework. The point is that it gives us and you a starting point. We can say "right, part 1 of framework is around this. Let's dig around and see if it helps us get to the answer". If it does, great, we go further (but specific elements of it will certainly be wrong). If it doesn't, we move on.

So, you should absolutely be prepared to either enter a new piece of your framework or change your framework altogether as new information comes in. How do you handle this?

Well, first, you can really just articulate what you're doing. You can say "Oh, interesting, so if looks like we have some information on y. I don't want to forget about x, but let's see what y brings us first. Ok, looks like it's about..." Then, when you've "finished" with y, you can check to see if there's any info on x. If there isn't, move to z :)

Second, you can re-summarize/iterate where you are. This is especially useful if you have the change the entire framework. Say "Ok, so it looks like now we actually need to look a 3 key things to solve this"

So, in summary, learn your frameworks, use the ones you like, add/remove to them if the specific case calls for it, and always be prepared to be wrong. Focus rather on having a view, refering back to the initial view to see what is still there and where you need to dive into next to solve the problem.

This sounds like a cool prompt, but you're going to get a lot more out of the answer if you provide a sample answer yourself first. 

Also - just for practice - you can feed these sorts of prompts to ChatGPT as well and ask it to come up with alternative ways of structuring the problem. 

This way you can get a better understanding of how to break down the same type of topic. 

Best,
Cristian

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Checkout my TrendWardrobe case it's a loyalty program case as well. It will apply to your case question. 

Warm regards,

Frederic 

https://www.preplounge.com/de/case-sammlung/interviewer-led-mckinsey-stil/schwierig/trendwardrobe-300?lang=en