Referral & Recommendation Marketing: Fueling Growth through Your Customers’ Trusted Networks

Presenters Confidential & Proprietary Information Peter Oxley chief evangelist & co-founder RewardStream Bill Hanifin Managing Director Hanifin Loyalty LLC Doug Scrymgeour Sr. VP, Marketing & Bus. Development Kiwi Collection RewardStream provides innovative marketing technology solutions, helping companies forge deeper connections with customers through online, in-store, mobile and social channels. www.rewardstream.com Hanifin Loyalty is a specialized marketing agency focused on the delivery of custom measurable marketing programs designed to create profitability for its clients. www.hanifinloyalty.com Kiwi Collection is the premier collection of the best hotels, inns, lodges, camps and resorts for people who care where they stay. Customers book with Kiwi and enjoy insider access, VIP service and the best rates at the very best hotels in the world. www.kiwicollection.com

What we will cover in this webinar
introduce the concepts of referral and recommendation marketing
explore how changing consumer purchase decision making is impacting marketers challenged with acquiring new business
hear how Kiwi Collection is using referral and recommendation marketing to engage customers in trust-based conversations with their personal networks to fuel growth
show you what results you can typically achieve
Confidential & Proprietary Information

Experience
Marketing solution provider delivered with award-winning SaaS (hosted) technology
10 years experience deploying innovative customer loyalty & reward programs
7 years deploying best practice referral & recommendation marketing programs
product
Broad industry experience
Global & multi-lingual – deployed across 39 countries in 9 languages
Brand Promise: Fast, flexible, measurable
Performance-based pricing

Referral and recommendation marketing is the practice of facilitating and encouraging
interactions within trusted networks that influence prospects during your brand’s purchase lifecycle.

Referral & Recommendation Marketing Influencing the Purchase Lifecycle Marketing & advertising Referral by satisfied customer Recommendation through trusted network Ask family, friends, trusted contacts for opinion Visit brand website Read a product review or review consumer opinions Download information Sign up for a newsletter Join a Fan page Watch a video Take a test drive Sign up for a trial Ask family, friends, trusted contacts for opinion Visit competitor websites Price / service comparison Make purchase Sign up for service Promotional offer Become a member Loyalty / Advocacy Refer a friend Recommend Share Join Fan page / group Post content on a social network Product Feedback Answer survey Repeat purchases Awareness Research Consideration & Comparison Activation Engagement

Enter stage left – “Consumer 2.0”

Referral Marketing Confidential & Proprietary Information Research suggests that the best way to predict how much we will enjoy an experience is to see how much someone else enjoyed it. Referral marketing has a basis in history

Before we set our hearts too much upon anything, let us first examine how happy are those who already possess it. Francois de La Rochefoucauld

Social Media: A Paradigm Shift? Confidential & Proprietary Information Paradigm Shift = Anomalies that cannot be explained by existing scientific knowledge Through this lens, social media doesn’t qualify as a paradigm shift

Consumer Connections

Consumer Trust Source: Trendstream, GlobalWebIndex, 2009

90% of consumers trust people they know over any other advertising or marketing channel. Nielson Trust and Advertising Global Report July 2009

Consumer 1.0 & 2.0 1.0 2.0

Consumer Purchase Decisions Access to digital Information Trust in brand-sponsored advertising Comfort buying online Trust in friends, family, trusted connections Rely on own experience to make decisions 1.0 2.0

Confidential & Proprietary Information 42% of Millennials make purchase decisions based on recommendations from friends. More than 72% of women decide what products or services to buy by seeking some kind of help, but are 3X more likely to seek advice from family and friends than to go online. Harbinger Women and Word-of-Mouth Study 9/2010 Graphic from “Millenial Inc. What your company will look like when Millenials call the shots” by Mr Youth and Intrepid

Consumer 2.0 Confidential & Proprietary Information Your customer is in control. Traditional marketing drives brand awareness. Today’s consumer needs to hear from your current customers that your brand delivers.

Consumer 2.0 Social Network & Mobile Trends
Smartphone & mobile internet penetration
“ Web meets the world”
Internet access permeates the entire buying process
Instant access to their social networks
Social network penetration
500M+ Facebook users (growing fastest in older demographic)
Low incidence of email usage in younger demographic
Ease of access to trusted network
Cultural shift towards sharing almost all activities
Confidential & Proprietary Information Consumer 2.0 uses technology across the purchase lifecycle to facilitate recommendations & research in purchase decisions.

Consumer 2.0 + Referral = Opportunity Confidential & Proprietary Information Consumers rate “opinion of others they know” as 3X more trustworthy than next source Positive Word of Mouth 66% credibility 61% likelihood of purchase Time has never been better for referral marketing Consumer 2.0 Uniquely Suited for Referral Marketing They have grown up with new outlooks and available technology. They are redefining how brands establish trust and communicate value. They’ll speak about and associate with your brand as they see fit.

How it works

How do customer referrals and recommendations happen?

Channels Matter From Social Sharing Research Report, Chadwick Martin Bailey, September 2010

Social networking example

Integrated webmail example

Verbal / word of mouth example

key behaviors + key channels Awareness Research Consideration & Comparison Activation Engagement

THE ROLE OF RECOMMENDATIONS IN LUXURY ACCOMMODATION

Agenda
Introduction to Kiwi Collection
Context Around Luxury Accommodation
Observations About Recommendations
Adding Recommendations to The Marketing Mix
Conclusion

“… Kiwi Collection is to luxury hotels what the Michelin Guide is to restaurants.”

Introduction to Kiwi Collection
Curated collection of world’s best hotels
Reviewed and rated by our team of expert travelers
Hotels included by invitation
Hotels leave the collection if standards are not met
Booking services for consumers
Best rates guaranteed
Perks and upgrades
Vetted database for peace of mind travel
Visa Luxury Hotel Collection for Visa Premium card-holders

Aggressive growth targets for next 18 months:
Grow our prospective customers
Increase site traffic 10x
Convert prospects to 1 st time customers
Increase conversion rate 4x
Increase share of wallet
Increase the value and frequency of reservations
Introduction to Kiwi Collection Continued …

“… Kiwi Collection’s unbiased service finds a grateful audience: web-savvy travelers who want objective reviews.”

Context Around Luxury Accommodation
Offering is targeted at the mass affluent
Differences in behaviour drivers and expectations at the two different ends of this target market
Affluent
Our competition is not Tablet or Expedia but a new car, or new yacht
They seek exclusivity and exceptional experience from start to finish
Mass Affluent
Price sensitive and compare prices across other accommodation vendors
They seek value for money – experiences that will be worth what they’ve spent
Challenge: selecting accommodation – creating an experience
Difficult to differentiate from others
For both audiences, recommendations build trust

“… Marketing has lost its power; consumers are the “new influentials. Brands selling direct to the consumer are now being substituted by consumers recommending to consumers. In some ways they’re hijacking brand marketing for all products.”

Observations about recommendations and referrals
VIP program
In place for 4 years
0.4% of customers drive > 25% of the revenue
Recently, offered VIP’s the ability to give their friends and acquaintances VIP status

Observations About Recommendations and Referrals Continued …
Actively use social media
7800 fans on Facebook
2000 followers of Twitter
Active blog and content share programs
Super Influencers who really champion our brand (Industry Stat: 1% of your brand’s social media followers are responsible for the majority of sharing)
We understand the reach and viral potential of SM but haven’t been able to track its impact all the way through to reservations or determine a monetary value of our brand champions’ sharing activity

Observations About Recommendations and Referrals Continued …
Ambassador Program
Program that we will roll out in Q2
Limited number of ‘famous’ people with global appeal
Athletes, entertainers, fashion icons, celebrities
Can stay at any of the 2200+ properties and will blog about the experience
Recommendations still, maybe not from a personal perspective but from someone we aspire to be like

Adding Recommendations to The Marketing Mix Ambassadors
VIP to VIP
Immediate results
Unique in nature Will encompass large brands and independents Target: The largest segment of our database

Conclusion
Referral marketing is a key plank in our platform to grow our business because it will drive two of our three objectives
Grow prospects
Improve conversion
Product will allow tracking of social media conversions
Ambassador Recommendations have viral potential
Program that has the ability to effectively measure ROI

Measuring social media marketing

Social Marketing 2.0 Closing the Loop / ROI Social Marketing 1.0 Front-end interfaces that generate outbound sharing, forward to friend, and likes Social Marketing 2.0 Capturing the resultant downstream behavior so you can measure conversion to sale, and marketing ROI

Customer Acquisition Methods Comparative Conversion Rates Confidential & Proprietary Information Referral Marketing generates over 3X the number of new customers as compared to the nearest traditional acquisition method. RewardStream’s Referral Marketing Affiliate Marketing Email Marketing Search & Keywords Direct Mail

What results can you expect?
5 - 10% of customers will participate in your program
C-SAT drives participation rate
2 referrals per member annually
25% of referrals convert into a new, purchasing customer
Typical program ROI > 200%
Confidential & Proprietary Information A well executed Referral Marketing Program will generate 1 new customer for every 2 program participants.

Real-time access to key metrics

Referral & Recommendation Marketing Considerations
How big is your active customer list?
How healthy is your Customer Satisfaction?
Is your product in a “considered” or highly discussed category?
Can you uniquely identify a customer in the transaction?
Is it appropriate for you to offer a thank you to your customer for the referral or recommendation?

Summary Confidential & Proprietary Information There has been no better time for a system to encourage referrals and recommendations between customers and their trusted networks Due to high conversion rates, Referral & Recommendation programs can have a profound impact on growth

Thank you for joining us!
Visit www.rewardstream.com for more information and best practices
Questions and Answer Session

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Referral & Recommendation Marketing: Fueling Growth through Your Customers’ Trusted Networks

by Word of Mouth Marketing Association on Jan 21, 2011

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Referral & Recommendation Marketing: Fueling Growth through Your Customers’ Trusted Networks — Presentation Transcript