Creating Customer Loyalty with Dynamics 365 for Retail

Retailers are looking for the ‘Holy Grail’ to attracting and maintaining customer loyalty in their business. Loyalty today does not just mean those shoppers who may come into brick and mortar locations, but those customers that also shop online. Having the right solution to measure customer metrics and buying patterns is key to bridging the gap between these two channels.

In Microsoft Dynamics 365 for Retail, businesses have the capability to define how their Loyalty program(s) will work and how customers can reap the rewards of the Loyalty program (Fig 1).

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Before diving into the benefits that Dynamics 365 for Retail can bring to loyalty management, the retailer needs to carefully consider all aspects of their program and what it will entail from inception to termination. The program should include a plan for strong key performance indicators (KPIs) to measure whether the program is successful. The template below depicts a generic plan with objectives and KPIs to set up and measure (Fig 2).


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Just like any new introduction within a retail organization, the program rollout should be gradual with a pilot program introduced first. This pilot should last long enough for evaluation by the KPIs.

This pilot period also enables the retailer to easily tailor and make changes to the program due to the smaller scale impact to customers. The retailer will need to decide which market location to pilot in, as this will determine how the program will work when rolled out to other markets.

For example, consider markets that have a wide variety of demographics and ABC stores. ABC stores are categorized by their size and selling pattern – “A” for large stores and “C” for low volume stores.

Another aspect to consider are the financial costs to plan, implement, support, and maintain the program. Some financial considerations are shown in Fig 3 below.


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These financial numbers must be scrutinized to ensure the retail business can effectively make money with a Loyalty program. After all, the retailer’s incentive for driving a Loyalty program is to increase sales and to increase the number of times a customer comes into the store. The initial numbers should be reviewed and monitored against the KPIs to determine the effectiveness of the pilot before rolling it out to other markets.

Another method that retailers use to understand how to set up their Loyalty program is to compare similar retailers’ programs. As you can see in Fig 4, the grid represents how the Loyalty program will compare to other retailers in the same vertical.


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Now that the program is vetted, the next step is to work through a pilot and rollout strategy. There are many moving parts associated to the set up and execution of a Loyalty program. Since it involves retail field operations, it will be beneficial to work through any discount periods, special events, and holidays when setting up the rollout plan. The rollout plan shown in Fig 5 is a simple example of the steps to rollout across a national chain within 12 months – taking into consideration the blackout period for winter holidays.

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It is also helpful to understand some of the basic terminology used within Loyalty. The table in Fig 6 is has a few common terms you will hear.

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Now it is time to run through a quick configuration using some of the Dynamic 365 for Retail screens to set up a basic Loyalty program that can be used in a brick and mortar location.

The first step is to define your program. You will see in Fig 7 that we have a simple Loyalty program defined that does not have tiers. If you wish to have tiers, you will have to set up tier rules as shown in Fig 8.


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Once the program is created, the next step is to define the loyalty points offering for that program. There are a few different methods in set up.

First is to define the reward point type as an Amount or Quantity. When defining as amount, the point value associated to the reward will be in monetary value indicative of the currency code assigned to the reward point (Fig 9). When defining as quantity, the point value associated to the reward will be in numeric quantity value (Fig 10).


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