Igor Marosa Loyalty beyond cards


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Igor Marosa Loyalty beyond cards

  1. 1. Loyalty beyond loyalty cards Moscow, 3rd of February 2011 Igor Maroša
  2. 2. Consumer loyalty Consumer dynamics are driving retailers to focus to loyalty as one of the key growth drivers Retailers recognize the importance of loyalty, the best of them are way beyond loyalty cards Although even loyalty cards programmes are not yet used to its full extent Loyalty can be expanded to various dimensions Social media is not a mere trend – companies have to position themselves rapidly Today, Fortune 100 companies are already using social media to a large extent Social Media may be used along the entire Marketing & Sales funnel Better understanding of consumer is the first step to start building on loyalty A.T. Kearney 43/02.2011/18736p 2
  3. 3. Consumer dynamics are driving retailers to focus to loyaltyas one of the key growth drivers • Sustainability • Price competition • Internationalization • Vertical • Private label integration growth 2 Retail Industry Growing conflict potential and increasing necessity for • Concentration cooperation • Increasing price (horizontal consciousness integration) Consumer • Cost pressure Goods • Declining 1 Industry Consumer 3 brand loyalty • Direct sales • Hybrid consumer behavior • Internationalization • Stagnation of consu- • Sustainability mer spendings (in • Communization mature markets) A.T. Kearney 43/02.2011/18736p 3
  4. 4. Retailers recognize the importance of loyalty, the best ofthem are way beyond loyalty cards…Loyalty stages of excellence: Traditional Emerging Leading World class• Discount cards with Technology Analytics Communication immediate discounts Breakthrough Breakthrough Breakthrough or points collection • Discount/reward based on• Open membership cumulative purchases • Customers divided into• Equal treatment, no based on spend segments differentiation between • Basic consumer • Consumers are invited to customers information exists and is co-create the offerings by• No targeted mainly used for re-active two way communication communication analysis • Targeted communication via social networks• No information base on and offers for segment and • Variety of clubs based on customer or individuals focused customer• No customer segments • Add-on services like segmentation are developed • No targeted banking services, travel & developed, joint events communication yet tourism, mobile telephony and happenings are developed etc. Developed organized • Add-on services offered beyond loyalty card holders, yet they have special bonuses Two way Discount cards Loyalty schemes Add-on services communication Continuous improvement A.T. Kearney 43/02.2011/18736p 4
  5. 5. … although even loyalty cards programmes are not yetused to its full extent Importance of customer metrics1) Customer metric usage Customer transaction metrics % of retailers with Frequency Customer behavior metrics customer loyalty of data mining2) programs Number of in-store transactions per store 93% Less Average in-store 29% than 3 years transaction size 88% or never No Customer Every Number of store 10% 86% Loyalty 1 - 3 years visits Program 37% 10% Quarterly or Number of units Semiannually 74% 63% perchased % of customers involved Continious in loyalty programs 63% Customer 51% or Loyalty Monthly Average time between Program repeat customer visits 57% Average amount of time customers spend in store 36%(1) % Participants answering “very important”(2) Among retailers with a Customer Loyalty ProgramSource: A.T. Kearney 2009 AERO Study A.T. Kearney 43/02.2011/18736p 5
  6. 6. Tesco‘s Clubcard system is perceived as one of the leadingloyalty card systems in the world…Tesco Clubcard Back-Up Loyalty “Currency“ Tier structure Redemption Ease of use Comments concept • Points are stored and • Easy: • Lately Tesco built up. Four times a Vouchers can has invested year the holder receives be spent in £150 mil. in the a statement along with store on Clubcard offers & vouchers to the shopping or • The program is value of points they have used on a great success saved, linked to the Clubcard Tesco factor due to its purchasing history deals where Clubcard formidable use they are worth 1£ spend earns • Clubcard points can also of data four times the 1 Clubcard be used to obtain value • Cooperations point discounted day trips and with external magazines partner • Customers can also get companies like double points on special Eon offers and receive one point for every carrier bag they reuse (UK only) as part of Tescos green initiativeSource: A.T. Kearney, Tesco A.T. Kearney 43/02.2011/18736p 6
  7. 7. …and consumer insight deriving from Clubcard representsan excellent base for expansion of services andgeographies ExampleUsage of consumer insights as a primary capability for expansion: 1 Expansion into new consumer needs • Insurance: Fortis, Tesco Bank • Telecoms mobile: Tesco/O2 with over 2m UK subscribers • Telecoms Internet service provider: Tesco/ Cable & Wireless 2 Development of a leading online channel • 1994: Tesco enters online retail • 2000: Tesco.com formally launched, largest online retailer in the UK (in 2008/9, 1.9bn£ in sales i.e. around 5% of UK sales, 5% EBIT) • 2010: m-commerce site, used by 4% of online orders by year-end 2010 Consumer 3 US market entry with new format, Fresh & Easy insights • Leverage of consumer insights expertise and fresh/ cool-distribution/logistics operations knowledge • 550m$ in revenue achieved in 3 years, more than 100 stores, gap to break-even remains due to heavy promotions to stimulate growth, lack of scaleSource: A.T. Kearney research A.T. Kearney 43/02.2011/18736p 7
  8. 8. Loyalty can be expanded to various dimensionsOverall loyalty scheme: Client example Customer segments Assortment• Demographic (children, seniors…) • Premium private label brands with tradition • Regular loyalty offers with points collection for attractive pieces of assortment, card holders have additional advantages• Lifestyle (healthy living…) Loyalty card increases reward but not a Channels serving particular prerequisite Additional services segments• Grocery internet • Travel, combined with segment clubs • Financial services, mobile telephony• Premium stores on premium locations formed in clubs Constant communication, one and two-way supports the overall scheme A.T. Kearney 43/02.2011/18736p 8
  9. 9. Introduction to Social MediaSocial media is not a mere trend – companies have toposition themselves rapidly!Social media today Social media "Stats" Global social media landscape 14 mn Germans already have a Profile on a Social In Jan 2010 more than 25 mn Network Facebook user have visited the site via a mobile device Worldwide 588 mn are using Social Networks/Tools Facebook gains 700 thsd. more members each day 6000 Tweeds per minute on Twitter More than 3 mn images In Germany, 2.4 mn are uploaded daily on people are using Micro Blogging Services Flickr …and a lot more – in Germany ~175 social networksSource: Deloitte "2009 Tribalization of Business Study", A.T. Kearney Flowtown; Seitwert; A.T. Kearney Analysis A.T. Kearney 43/02.2011/18736p 9
  10. 10. Today, Fortune 100 companies are already using socialmedia to a large extentUsage of social media among Fortune 100 companies(usage of Twitter, Facebook, Youtube and Blogs) Usage of social media …at least one of them …all of them (in %) (in %) (in %) 65 79 Global 20 54 50 33 86 US 28 88 Europe 15 Twitter Facebook Youtube Blog 50 Asia 25Ø number ofaccounts per 4.2 2.1 1.6 4.2company …usually companies have more than one account per social networkSource: The Global Social Media Check-up (January 2010); A.T. Kearney A.T. Kearney 43/02.2011/18736p 10
  11. 11. Social Media may be used along the entire Marketing &Sales funnelForms of social media usage along the funnel Brand management Sales CRM Conside- Satis-facti Awareness Interest Selection Loyalty Advocacy ration on Targeting Viral marketing Seeding Social media monitoring Social video News Feeds Micro-blogging advertising Augmented reality Social network analysis Presence page Social bookmarks Embedded storefront Widgets Social network Blogging User community In-game fanpage Embedded online store advertising features Social search Engagement Video hyperlink ads Crowd sourcing/ voting Sponsored stories advertising Social shopping Self-service Tweet-ups Blogging Branded community Referral campaign Cause-driven communities Evangelist communities communitiesSource: SocialRep, A.T. Kearney A.T. Kearney 43/02.2011/18736p 11
  12. 12. Managing the Brand in Social MediaBy blogging about fashion news, Otto improves its imageas fashion expertBlogging: Otto’s Two For Fashion Example Two fashion addicts reporting about fashion in New York, Berlin and Hamburg Topics around trends, people and events, including videos Commenting on blogs and newsSource: Two for Fashion; A.T. Kearney A.T. Kearney 43/02.2011/18736p 12
  13. 13. Better understanding of consumer is the first step to startbuilding on loyaltyWay forward in loyalty: Understand your Strengthen your core Increase loyalty and consumer business expand• Set the infrastructure for • Optimize your existing • Detect spending patterns data collection and mining offerings • Based on detected• Invest in analytics • Prepare target offerings spending patterns capabilities investigate expanding • Introduce/strengthen 2-way opportunities• Understand spending habits communication • Expand the offering and• Perform tailor made • Increase traffic and basket services consumer segmentation size • Attract consumer base to expanded offerings and services Thank you! A.T. Kearney 43/02.2011/18736p 13