Tailoring loyalty programs to strategic objectives


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Overview of all the parameters that should be adjusted in order to tailor a loyalty program according to the strategic needs of a company

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Tailoring loyalty programs to strategic objectives

  1. 1. Tailoring Loyalty Programs to strategic objectives Benjamin Filaferro – filaferro@yahoo.com – May 2013
  2. 2. Typical Objective: Rewarding Most Valuable Customers 2 0.45% 6.19% 0.01% 0.29% 0.01% 0.56% 90.00% 91.00% 92.00% 93.00% 94.00% 95.00% 96.00% 97.00% 98.00% 99.00% 100.00% Subscribers ARPU Out Subscribers vs. ARPU Out Potential Cutoff Point #1 ARPU Out > 15 900 X$ 1,074 Subscribers Leverage = 42 Potential Cutoff Point #2 ARPU Out > 13 300 X$ 863 Subscribers Leverage = 27 Potential Cutoff Point #3 ARPU Out > 5 600 X$ 36 199 Subscribers Leverage = 14 Disguised Example Benjamin Filaferro – filaferro@yahoo.com – May 2013
  3. 3. Designing or Revewing a Loyalty Strategy 3 Current State & Corporate Strategic Alignment Loyalty Program Objectives and Loyalty Strategy Explorations Market Dynamics1 Customer Dynamics2 Pain Areas3 Capabilities & Initiatives4 Benchmarks5 Internal Loyalty Expectations6 Benjamin Filaferro – filaferro@yahoo.com – May 2013
  4. 4. Environmental Factors Regulation Regional Specificities Competitive Outlook Loyalty Benchmarks Branding Strategy Brand Perception Brand Awareness Internal Pain Areas Network Quality Back-end Processes Billing Payment & Queuing Tenure recognition Customer Analytics Revenue distribution vs Service Type ARPU National vs International Potential Value realization Behavioral Segmentation Geographical Distribution vs ARPU Customer Researches Customer Demographics Customer Social Dimension Customer Dynamics Company Capabilities Organization Information Technology Processes Existing Loyalty Constraints Points vs Affinity Program communication Key program feature Ad-hoc Rewards Integration with Corporate Program Sample of Factors used to review an Existing Program 4 Disguised Example Benjamin Filaferro – filaferro@yahoo.com – May 2013
  5. 5. Main Rules Defing a Loyalty Program 5Benjamin Filaferro – filaferro@yahoo.com – May 2013
  6. 6. Sample of Rationales behind the Rules of a Given Program 6 Main Rules Rationales Line Level Membership • All residential lines are eligible • 1 membership per line In order to avoid bias of SMB having multiple residential lines 3 Tiers Based on Status Points Accrual • Customers will cumulate status points based on their eligible revenues • When a customer reach a specified number of status point he is upgraded • Status points will expire after one year and each tier is valid for one year To differentiate customers and encourage them to spend more Existing and new customer will be automatically enrolled to the program • Limited need of demographic/ psychographic information collection • Limitation of the burden of the Shop and CC channels • Avoid non-enrollments due to difficulty to use self-service channels Customer tier at launch will be defined based on customer historical spending, also at launch, customers will get extra bonus points for each year of tenure Reward tenure and previous spending levels Main Rules Rationales Prepaid customers will get points according to the spent Customers should earn points based on the value they bringPostpaid customers will get points according to their payments The number of points given will be calculated by multiplying the generated revenue by a tier specific fixed ratio (i.e. 1€ gives 1 point for Bronze) Points will be credited every month Each point given to the customer for his generated revenues will also give him one status point Customers can earn points by purchasing or getting a service at partner premise Will affect customer behavior and satisfaction positively by rewarding him in several aspects of his life (not only mobile communications) Main Rules Rationales Customers in higher tier will earn more points Customer spending more should be more rewarded At line anniversary, customers will get an amount of bonus points according to the tier and the tenure (in years) Reward and celebrate customer tenure and occasions Reward selected groups of customers on an ad hoc basis with goodwill points Damage control on satisfaction level after SLA breach, network issue, complaint, etc. Customers will get extra points if they use specific Products/ Services Support product launches Customer will get points based on their network usage (days connected to the network per month, calls made during off-peak time) • Multi-simmers should increase their wallet share • Network traffic optimization Customers will get more points based on the channel they interact through Decrease cost to serve Members will get points for referring customers Word of mouth is a powerful tool to acquire customers Customer will get points if he answers a list of questions on the web Use loyalty program to collect or refresh customer data Main Rules Rationales Customers will redeem points to get: • Telecom rewards (minutes, SMS, MMS, data, VAS) • Non-telecom rewards • Partners voucher and points exchange The ratio between the asked number of points for redemption of a rewards and its commercial value will be different for each reward (burn ratio) and the burn ratio will be more beneficial for telecom rewards Give relevant benefits and at the same time lower costs Possibility to transfer fixed amount of points (not status points) between lines against an amount of points as charge Good for families and SMBs The number of points required to redeem a selected non-telecom reward can be decreased on an ad hoc basis (ex: less points require to redeem a 3G handset) Push a certain non- telecom reward that can drive telecom behavior) Customers can exchange points for points from other loyalty programs Appeal for high-end customers accruing points in other programs Eligibility & Enrollment Earn (1/2) Earn (2/2) Burn Disguised Example
  7. 7. Benjamin Filaferro – Independant Customer Strategy Advisor I have been a Strategy Consultant for the last 10 years at first for Banks and then for Telecom Operators, and I have specialized myself in Customer Strategy over the last 6 years. I have especially assisted Fixed and Mobile Operator CMOs on the design and the implementation of: • Segment Strategies (ATL, BTL, Touchpoint Experience, etc.) • New products • Retention Strategies (Loyalty Programs, Winback, etc.) In the specific field of Loyalty Programs, my experience covers: • The design, the implementation, and the launch of 2 Point Programs, 2 Affinity Programs, 1 Enterprise Affinity Program • The supervision of an outsourced team managing from end-to-end (Marketing, Communication, An alytics, Logistics, & Partnerships) 2 Point Programs and 1 Prepaid Stimulation Game 7Benjamin Filaferro – filaferro@yahoo.com – May 2013
  8. 8. Benjamin Filaferro – filaferro@yahoo.com – May 2013 Thank you