The Key to Loyalty - with notes

the key to loyalty Presentation made for the city of Antwerp November 2008 Paul Van Lil www.VanLil.be This presentation is an extract of the presentation made for the marketing & communication department of Antwerp. The original presentation was given in Dutch during their internal customer day on November 25, 2008, by Paul Van Lil (www.VanLil.be).

Lifecycle of the citizen Value of the citizen during the lifecycle lifecycle of the citizen Loyalty systems are based on repetitive sale and thus a long term relationship. The customer value is negative at the start of the relationship based on the investments made to achieve the customer. During the lifecycle of the customer, this value becomes positive. The same applies for cities: investments in sports, cultural and other facilities need to be made in order to attract citizens.

financial loyalty There are three levels of loyalty. The first level is financial loyalty, also called saving systems.

x 10 =1x In financial loyalty the customer is rewarded for every transaction. Every time the customer buys goods or services, for instance flying from Antwerp to London, he/she receives points. If the customer has cumulated a certain number of points (threshold), than he/she will be rewarded, in this case he/she will get a ticket to a sunny place. Thus, the customer needs to show his/her loyalty during a certain period before getting the reward.

The most known loyalty systems are saving systems. This can be systems created by one company so that the customer can only save points at that particular company. Or it can be multi-brand systems, like AirMiles, where the customer can save points with several companies.

high turn-over the right partner The most important reason for companies to set up financial systems is to get to know their customer. Identification is important, but also turn-over and frequency of transactions made. For customers, saving systems are interesting if it is easy to cumulate quickly (high turn over necessary) in order to achieve a gift with a high perceived value (you need an airline company as gift partner). Remember that financial loyalty systems do not create loyalty: take away the points and you loose your customer.

social loyalty Reason enough to introduce the second level: social loyalty.

passion, family, hobby, sport, work, … In social loyalty, we learn to know our customer in order to use this information to get through to him/her. One of the most common examples is to send a birthday card. It is easy to find customer information. The difficulty is to filter the right information which will help you in building up a relationship.

everybody is unique Everybody is unique. It is not easy to get to know everybody and put the personal touch in the communication.

split in groups By asking the right questions (and based on inside information) one can split customers in different groups. This makes it easier to approach them with the right message. The difficulty in segmentation is to identify the leader, the one who makes the decisions and who ensures that the group moves.

structural loyalty The third level, and probably the most binding one, is structural loyalty. In structural loyalty there exists a structural link between the individual and the company.

the bank account number is a very strong structural link One of the best examples of a structural link is the banc account number: most payments pass by the bank account number. For the customer it is difficult to break this link as he/she might loose money or services.

… nevertheless, customers leave banks Nevertheless, customers leave banks. This is not only due to the current financial crisis, but has got everything to do with the fact that banks tend to forget the second level, the social loyalty. They forget to build up the social relationship with the customer. The result is that this undermines the trust customers have in their bank and thus weakens the structural link.

most applications are written for Microsoft Microsoft is an other example of a structural link: most of the PC applications are written for windows or internet explorer. Someone who steps over to an other operating system, risks to loose a lot of his/her applications. A structural link is a knife that cuts at both edges: Microsoft must continue to deliver the best software in order to respond to the needs of its customers.

a.o. Google attacks Microsoft with Google Chrome The market share of Microsoft is attacked at a daily basis. OpenOffice is a well known example. Firefox takes already 19,2% market share in the browser market and GOOGLE, only since 10 years in the market, recently attacked Microsoft Internet Explorer with GOOGLE Chrome.

the mobile number is an other strong structural link Last example of a structural link: the mobile number. Again one needs to inform all of his/her friends when changing mobile number. The danger of becoming ‘unreachable’ is huge.

Belgium counts more mobile numbers than Belgians And yet, Belgium counts more mobile numbers than Belgians. Number portability has weakened this structural link and customers hop from one promotion to the other.

conclusion: loyalty does not exist ! Conclusion: loyalty does not exist! If you want loyalty, buy a dog.

Loyalty does not exist ?!? So, loyalty does not exist? Stop! Time out! Let’s start over.

what makes Antwerp unique? These are 6 air pictures of cities at a river: Antwerp, Amsterdam, London, St- Petersburg, etc.. What makes Antwerp unique? It is possible to go fishing at the quay in all of these cities, so… what is it that makes Antwerp unique?

Antwerp is a brand! It is a brand! Antwerp is a strong build brand.

relationship with ‘A’ is the most important The civilians relationship with the brand ‘Antwerp’ is the most important thing.

the success of that relationship is loyalty The success of that relationship is loyalty.

the key to loyalty is ‘reaching and understanding’ The way we reach the individual and understand his/her needs and desires is the key to loyalty.

to mary you need to be with two To mary you need to be with two. Loyalty is not uni-directional: the citizen needs to be loyal to Antwerp. Loyalty goes both ways: Antwerp needs to be loyal to its citizens.

loyalty (and trust) is mutual Loyalty and trust go hand in hand. You need trust in order to get married. Loyalty is mutual.

mutual respect It starts with mutual respect. The ads say: ”every day I clean 2 football fields”; “every day I run 2 marathons”; “every day I lift 7 tons”. These people work hard for the citizens. Citizens may pay respect and say a friendly ‘hello’ to them.

personal contact And it all boils down to personal contact. The advertising says: “the policeman is there for A(ntwerp)” and “the city is from everybody”. The people who work for Antwerp make the brand ‘Antwerp’. They ensure that somebody likes to live in Antwerp.

personal contact mapped out The company seen through the eyes of the customer © 2008 Carlson Marketing. All rights reserved. This is a view of all the contact moments a customer has with a single company. At all these touch points, the company can confirm or fail the loyalty and trust. There are more than a thousand places and moments where the citizen comes in contact with Antwerp, touch points of personal contact, every day again.

building a relationship is complex Nobody will say it is easy. A 1-to-1 relationship is linear: I ask a question, you respond, we understand each other. The relationship is known. If several persons are involved, than the relationship becomes complicated, but knowable. We know what the group wants and we can try to respond. If several groups and media channels are involved (as is the case in a city), than the relationship is complex. The only thing one can do is to perceive and adapt. Building a relationship is complex.

social media is the gateway to ‘reaching and understanding’ Social media makes it even more complex as it multiplies the number of touch points: it gives the citizens a voice. And just that makes that social media becomes the gateway to ‘reaching and understanding’ the citizen. One can find the key to loyalty, reaching and understanding, in social media.

Guru Seth Godin about the way ‘tribes’ work http://www.squidoo.com/tribebuilding This brings us back to segmentation. Seth Godin uses the word ‘tribes’. His book about ‘tribes’ is a ‘must read’. He claims that it is important to identify the leader within the group and to build a strong relationship with him or her. If you can do this, then you ‘cement’ the loyalty of the whole group.

Should you recommend Antwerp to friends or family? An other ‘must read’ is the book of Fred Reichheld: ‘the Ultimate Question’. Fred Reichheld claims that you need only one question: “Should you recommend Antwerp to friends or family?” The answer should not be simply ‘yes’ or ‘no’, but a number on a scale from ‘1’ to ’10’ where ‘1’ is absolutely not and ’10’ is certainly yes.

promoter neutral detractor Those who answer 7 or 8 are neutral. Those who answer 9 or 10 are promoters. They are very satisfied and will promote your service or product Those who answer 6 or lower are detractors. They do not feel connected with your product or service.

promoters will tell 6 of their friends Why is the question ‘should you recommend Antwerp to friends or family?’ so important? Promoters will tell 6 of their friends why they are happy. They will promote your services and products without you asking them to do so.

detractors share their grieves with 10 friends Detractors share their grieves with 10 of their friends. When you can identify these customers, it is absolutely necessary to ask them why they detract. This way, you can try to recover them and/or use the information to improve your services and products.

Net Promoter Score NPS = % promoters - % detractors Example total segment = 125 or 100% promoters = 30 or 24% neutral = 75 or 60% detractors = 20 or 16% NPS = 24% - 16% = 8% The Net Promoter Score or NPS is the way to follow up on results. You become the NPS by detracting the percentage of detractors from the percentage of promoters. By comparing the different scores, you can use the NPS to become insight in your retail points, the time of transaction, the different segments, staff, etc.

Where is north? Last question: where is north?

Where the citizen of Antwerpen says it is ! Answer: north is where the citizen of Antwerp says it is. It is very important to go and have a look there, because that is the place where it all happens.

… and maybe you do not always agree … and it is very well possible that you do not always agree. But your citizen has always the last word.

you make the difference The final message: treat every customer as customer of the year … because you make the difference.

acknowledgements 1to1 touch point mapping Browser and OS stats for July 2008 Gertjan Keg Malta Euro coins Brian - Cybernetnews Carlson Marketing Group Meliticus - Flickr The conversation prism Roatan Connected people Brian Solis Janusz I - Flickr bratan - Flickr http://www.briansolis.com/ Hotel Kamp Desktop Globalist360 - Flickr Cellphone man Radical Mobilis gringogidget - Flickr Teemu Arina - Slideshare.net The Florida Keys Key West Baseball - Flickr Dueling Bandwagons Speaker's Corner, Hyde Park Eric Kilby - Flickr Pixelsnap - Flickr Holding hands Casey Keith - Flickr Time Out HZZ Two three nine - Flickr David Brussee - Flickr A face in the crowd P. Van Allen - Flickr London Speaker Corner Under construction II Rüdis Fotos - Flickr morpace.com Miss waterlau - Flickr Valentijn – Zot van A Een tevreden bezoeker The weakest link Stad Antwerpen - Flickr Basgoodpeople - Flickr Darwin Bell - Flickr Complain Eiko’s credit card Cathy Rucsi - Flickr Eikootje - Flickr F. Frederick - Flickr Compass rose Stoffel’s place Harper Wray - Flickr photographe de mariage à montreal http://kristofvds.wordpress.com/2007/08/28/ Seby - Flickr Pierre shows the way to success Life and its little pleasures Bart Azare - Flickr http://claudiaschiepers.typepad.com/claudi Bridal party Trickster shot as_blog/reclame/ Kelvin Ong - Flickr Street spirit Abre/tus/ojos - Flickr Day34 - 02.03.08 www.trust-emun.org On the bandwagon - Flickr Christians, Jews, and Muslims bond during some enriching downtime at a multi-faith conference in Petra, Jordan.

special thanks to Richard Rosen who brings brand and direct together through his Brand Interactive Model RICHARD G. ROSEN is founder, President, and CEO of ROSEN, a global consultancy that specializes in transforming marketing and advertising campaigns into cost-effective business models. He speaks to and consults on convergence marketing with recognized brand-name clients around the world. His firm has received twenty-eight Echo Awards, and Richard has received the Caples Organization’s Emerson Award and the first ever “B-to-B Marketer of the Year Award” from the International Direct Marketing Association. To get in on the dialogue, visit www.rgrosen.com. I attended Richard's speech on Convergence Marketing in October 2008 at the Distance Selling Show in Lille. He gave me the quote on what loyalty is all about. In his book he continues to explore this topic. Through his Brand Interactive Model he brings brand and direct together.

Paul Van Lil www.VanLil.be paul@vanlil.be www.linkedin.com/in/paulvanlil Do not hesitate to send your questions by mail. You will always get an answer. If you want to keep in touch, then send me an invitation through LinkedIn referring to this presentation. Thank you.

The Key to Loyalty - with notes

by Paul Van Lil

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