Development Requirements For Kudler Fine Foods Frequent Shopper Program

Kudler Fine Foods Frequent Shopper Program Project Plan

To inspire customer loyalty and respond to customer shopping preferences, the Sales and Marketing department of Kudler Fine Foods is initiating a Frequent Shopper Program to track customer purchase patterns and provide shopper incentives through a loyalty points program. (University of Phoenix [UoP], 2007). Specialty items are more important to Kudler customers than the price of items, so instead of providing everyday discounts for purchase frequency, Kudler has partnered with a loyalty points program to reward customers with redeemable points for high-value gift items, airline upgrades or other specialty foods. "Building unique rewards programs that differentiate the brand--along with integrating in-store loyalty programs with Web shopping--is what figures to pay off in the future." (Van Riper, 2005, para. 9).

Project Definition

Program Scope and Goals

The goals of the Kudler Fine Foods Frequent Shopper program are to inspire customer loyalty, to better respond to customer's buying needs, and to increase food ordering efficiency. A successful implementation should increase revenue over time by increasing loyalty and satisfying customer needs, and reduce costs by improving inventory processes. The initiative is scheduled to be implemented within 12 months and involves the following stakeholder representatives:

* Each Kudler Fine Foods location: La Jolla, Del Mar, Encinitas - the program will be initiated at all locations

* Purchasing Department - data collected by the new program will be used by the purchasing department to forecast food orders

* Sales and Marketing - the sales and marketing team is the primary customer of the program

* Information Technology (IT) Department - IT representatives must be involved in requirements definition to help determine feasibility

* Loyalty points program - a representative from the loyalty points program partner must be involved to define interfaces between their organization and software products and Kudler Fine Foods

To implement the program, all customer purchases will need to be tracked and counted, including date, item purchased, and purchase price at time of checkout in all three Kudler Fine Foods locations. Customers should be notified of their accumulated points and how to redeem them on their itemized receipt as well as periodic email or physical mail. Point totals should also be made available from the Kudler Fine Foods Website. Purchase information and accumulated points will need to be managed in a centralized system since customers may shop at multiple locations.

Customer purchasing patterns must be made available to the purchasing department to be used to forecast future ordering needs. Sales and marketing must also be able to access purchasing trends as input to advertising and marketing campaigns as well as physical product placement within the store.

Integration and interfaces with the loyalty points program must be defined.

Measures for Success

There are several "critical success indicators" (CSI) or metrics that can be used to measure the success of Kudler Fine Food's new Customer Rewards program and determine its return on investment (ROI). A positive ROI will allow Kudler to make further investments into other initiatives in the future to solidify their customer base and expand it substantially. Critical success indicators can be obtained by generating database reports from data collected at the time of each customer transaction, surveys, or other means. The indicators to be measured include sales volume, type and quantity of products purchased per customer, shopping frequency, customer complaint variances, and customer satisfaction.

A sustained higher sales volume, excluding normally anticipated seasonal increases, after the implementation of the rewards program could indicate a positive effect. A higher sales volume of premium and higher priced products typically exhibit a higher ROI compared with lower priced products. A faster turnover of products might also be a good success indicator. Higher sales volume in these product areas can help reduce waste, the need to dispose expired food items, help reduce the difficulty of selling "fad" items.

If reports indicate that customers are purchasing a greater variety of products per customer, Kudler can grow their market by selling more products to the existing customer base and has achieved greater customer loyalty and satisfaction. Another success measure would be reports indicating greater customer shopping frequency.

Customer satisfaction can be gauged by a number of indicators including fewer customer complaints, less product returns, a greater number of customer referrals, and a greater number of referrals per customer. An increase in customer requests for new products or services would demonstrate greater customer interest. Customer satisfaction and brand name awareness can also be gauged through either in-store or internet based surveys.

One of the most important metrics of success is profitability. Although profitability cannot be guaranteed by any new initiative, as long as Kudler has been profitable in the past and has not changed any major factors that would affect its profitability such as item costs, etc., then theoretically if their customers are making more purchases due to the Customer Rewards program then profits should increase.

Demonstrating the success of an initiative like Kudler's Customer Rewards program can help Kudler obtain any future investment capital they may need for further expansion.

Project Feasibility

When developing a new initiative, it is important to ascertain the feasibility of the project. There are several areas that must be analyzed: Operational, Technical, and Economic Feasibility.

The Rewards Program initiative would have a minimal effect on the daily operations at Kudler Fine Foods. Staff would simply need to be educated and trained on the use and general maintenance of the Rewards System. The Rewards System will have little impact on the checkout process that is currently in place.

The technical feasibility of this project has the largest impact on Kudler Fine Foods. In order to accomplish the goals outlined within this plan, a system of hardware and software is needed as well as staff to maintain it. Most of the hardware that is currently being used by Kudler would be integrated into the new system. However, the system needs a better data server