RECOMMENDATION TO INCREASE POINT REWARD REDEMPTION IN ABC POIN CASE STUDY

Abstract

ABC Poin as a CRM program of ABC company must be improved to keep the customers satisfy and loyal so they do not move to other operators’ product. According to ABC Poin in 2017, the ABC Poin spending of the customer was low with the percentage of 17,8%. On the other hand, the average ABC customers had churn for 9,77% from the active customers in 2017. The low spending on ABC Poin indicated that this program was not effective as CRM program of the company to maintain the relation with its customers and as the main strategy of ABC company to decrease customer’s churn.
Through this research, the effect was measured by LoS (Length of Stay), tier, redeem frequency, merchant, and redeem target towards the participation of ABC Poin customers loyalty program based on the ABC Poin spending transaction history. Moreover, this research clustered the participant of ABC Poin customer’s loyalty program to know the characteristics of each participant’s cluster in this program as a recommendation for a strategy to improve ABC Poin spending.
The analysis technique used in this research was linear regression technique. Based on the analysis, it was known that the effect of Length of Stay, tie, redeem frequency, merchant and redeem target toward redeem percentage or the participation in the ABC Poin customer loyalty program showed a significant relationship. The evaluation model could be seen by the R square value of 0.794 which meant that the independent variable in the model was able to explain the percentage redeem variable of 79,4%, while the rest of 21,6% was explained by the variable outside the model.
By using Silhouette Index as evaluation tool in the clustering by using K-means, there were five optimal clusters with the index which reached 0.639. From the analysis with K-means clustering was resulted in the customer’s characteristic of each from the 5 clusters. The strategy to increase ABC Poin spending was made concerning People, Process, and Technology. People meant that the professional service which gave personal touch to the customer and the awareness of ABC Point program. Process was about the improvement of merchant’s business acquisition process and benefit differentiation business process from ABC Poin according to the customer’s tier, while technology was regarding the usage of customer’s data analytic so the company could make a targeted offering or campaign to the customer.
Keywords: Poin; Reward; Redemption; Linear Regression; Clustering; K-Means; Personalized Marketing.