Luxury CRM Association - Achieving Premier Status with Your Loyalty Strategy - LoyaltyOne

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This presentation was delivered at the Luxury CRM Association breakfast September 2013 - Achieving Premier Status with Your Loyalty Strategy

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  • LoyaltyOne is part of Alliance Data Systems (NYSE:ADS), an $8.7 B market cap company with global operating experience
  • -I view and define “loyalty” differently than “repeat transactions/visit or retention” … the latter are examples of potential measures of loyaltyAdvocacy is increasingly becoming an importance topic and element of loyalty strategiesCite COLLOQUY data pointExample of brand who offered benefit based upon KLOUT score (Fred – Watercooler)
  • Drivers of growth are:- Areas/consumer with most growth are:-
  • 70% of those with at least $1 millionin assets that are invested or available to invest, excluding home values, don't consider themselves to be wealthy, according to a survey of 4,500 affluent investors by UBS. Rather, it's only when they hit the $5 million mark that millionaires begin to feel "wealthy." - 2013he Fidelity survey found that 42 percent of millionaires still do not feel wealthy, compared to 46 percent, who said they didn’t feel wealthy in 2009. In fact, among those who classified themselves as not feeling wealthy, the investable asset level needed to begin to feel wealthy is $7.5 million.iiiOf the 58 percent of millionaires who say they feel wealthy -- up slightly from 54 percent in 2009 -- they began to feel so at $1.75 million in investable assets, which is consistent with 2009 and up from $1.5 million in 2008.“Our survey reinforces that the feeling of wealth is relative, based on factors such as the current market environment, a person’s age, lifestyle, and so on,” said Durbin. “Regardless of what the market does, these factors are likely to change and, therefore, millionaires will continue to reassess what it really means to feel wealthy.” CompetitionPoint of ReferenceTuning out
  • Value in this case isn’t limited to the financial valueSee Dennis’ data points on Engagement
  • Key point is hard rewards can be a powerful motivator, however should be delivered in combination with compelling soft benefitsOur research supports the stronger appeal of a balanced value propositionNEED SAKS research findings
  • Four particularly interesting areas that we are seeing loyalty program innovation include:Extending the reach / casting a wider net The structures of programs themselves, including Increased incorporation of elements that enhanced the customer or guest experience, largely powered by new technologiesGreater utilization of social channels and networks – less siloing of approachesMoving toward a more enterprise approach
  • BloomingdalesMyLoyalty (early 2012)Nordstrom Fashion Rewards. Early 2012With the new fashion rewards program, Nordstrom cardholders will be given a pre-selected amount of credit towards Nordstrom’s tailoring services.Now, tailor-service credits start at $100 for level-one cardholders and go up to an unlimited amount of free tailoring for top-level cardholders.Cardholders are also able to choose days on which they would like to earn triple reward points.Based on their level, a fashion rewards program member will be given one to four “personal days” on which they will earn three times the bonus points.These will come in addition to the previously-offered days selected by Nordstrom each year.Shoppers will also be able to earn bonus reward points when they shop at Nordstrom Rack. The outlet line was previously not included.Nordstrom has also decreased the amount of dollars a customer needs to spend to reach top-level status.According to the new policies, when shoppers spend $5,000, they will be promoted to level three. Afer $10,000, they will be promoted to level four.The level entries were previously $10,000 and $20,000, respectively.
  • Organizations are now trying new structural approaches, for a variety of reasonSome have eliminated formal program structures, such as mypanera – which helps limit financial liability and drives anticipation of valueOthers have pooled together, in formal or informal coalitions, to accelerate earning velocity, diversifies fixed costs of operation, introduces financial benefit associate with cross-organization customer acquisition
  • Facilitating social sharing and interactions are increasingly at the core of program design and driving customer engagement.
  • Luxury CRM Association - Achieving Premier Status with Your Loyalty Strategy - LoyaltyOne

    1. 1. FRONT ROW: ACHIEVING PREMIER STATUS WITH YOUR LOYALTY STRATEGY SEPTEMBER 19, 2013 LUXURY INSTITUTE BREAKFAST
    2. 2. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. LoyaltyOne is part of Alliance Data Systems (NYSE:ADS), an $8.7 B market cap company with global operating experience Integrated credit and marketing solutions that drive sales for our retail partners. Multi-channel marketing services including data, database, digital marketing and agency services. Global leader in the design and management of customer centric solutions. Retail Services
    3. 3. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. • Highly favorable preference for your brand • Heightened anticipation and interest in new products & services • Forgiving when things don’t go exactly right • Evangelizing good experiences with friends and even complete strangers 3 “I’ve learned that people will forget what you said, and did, but people will never forget how you made them feel.” - Maya Angelou
    4. 4. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Number of Total U.S. Loyalty Program Memberships
    5. 5. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. % of Active U.S. Loyalty Program Memberships Source: 2011 COLLOQUY WOM Study and Loyalty Census: 2.089 billion program memberships; U.S. Census data from the 2009 American Community Survey = 113.616 million U.S. Households *Among household with income of $150,000+ (Luxury Institute 2013) Loyalty Program Penetration -- 76% of Total US Households -- 72% of Wealthy Consumers* -- 93% HH > $125K Income Loyalty Program Usage -- Enrolled in avg. of 21.9 programs -- But only active in 9.5
    6. 6. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Travel Specialty Retail Department Stores Wholesalers Financial Services Grocery/Drug 26.2% 28.5% 36.8% 36.9% 41.2% 42.5% I am happy with the value I get from the program. The degree to which respondents agreed to the statement on a 0-10 scale with 10 being strongly agree; represents the percentage of respondents that responded with a 9 or 10 (Top 2 Box).
    7. 7. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. • High expectations of elevated service levels, particularly among top tier members • Motivated by compelling soft benefits, most notably preferential treatment and insider access • Feel entitled to and respond very favorably to meaningful hard rewards (particularly among $150,000 - $1,000,0000 HHI)
    8. 8. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.
    9. 9. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. 9 Exploration of Multi-Tender Programs Attainability of Rewards / Status • Reduced time-to-reward / value • Deliver value in 3 visits or 30-60 days • Time-to-reward of 3-6 months (retail) • Lower tier / status thresholds • Engage high potential customers • Grow scan rates (40%-80%) • Drive PLCC / co-brand acquisition
    10. 10. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. 10 Specialty Retail Travel Grocery/Drug Department Stores Wholesalers Financial Services 17.0% 17.5% 20.9% 22.5% 25.4% 26.4% 38.6% 37.2% 51.4% 48.5% 49.1% 48.0% I am happy with the value I get from the program. No - Did Not Receive a Reward Yes - Received a Reward Reward redeemers are 2-2.5x more likely to rate their happiness with the program as “high”
    11. 11. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Unique Program Structures Greater Incorporation of Experiential Benefits Connecting with Non- Transactional Behaviors • Beyond points and “spend & get” • Simplification • Fungible currency • Payment vehicle • Personalized experiences • Preferential treatment • Pain point elimination • Beyond the moment of purchase • Engagement & healthy behaviors • Cause and common purpose
    12. 12. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. 12 Sharing & Social Shopping Enhanced Consumer Experience Facilitating social interaction as part of the shopping and/or program experience Using mobile and social to enhance the shopping experience and program engagement
    13. 13. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Promotion optimization  Data-driven promotional rules to drive the right category and customer behaviors  Optimize marketing mix by customer segment Price optimization  Pricing strategy and prices based on importance and elasticity to priority customers  Customer-driven zones and KVCs/KVIs Assortment optimization  Right products to maximize sales/profit based on true item value & importance for priority customers (localized)  Innovation to meet customer needs Business category & customer strategy  Alignment of priorities  Segmentation, Insights & Strategy  Customer Engagement Plan Business & customer strategy Promotion Assortment Optimization Price 4 3 2 1 Targeted Marketing:  360 Customer Insights  Prioritize Customers/Segments  Customer Engagement Strategy/Marketing Plan  Execute & Measure Across Channels 2 4 3 5 1 Integrated Solutions Platform 5 Org. Alignment, Change Mgmt. & Tools
    14. 14. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. • There is power in a balanced value proposition (meaningful hard rewards + compelling soft benefits) • Demonstrate value early in the relationship and evaluate your benefit attainability • Think beyond traditional structures and benefits to meet your customer needs and to amplify your brand • Aggressively explore opportunities to truly impact the customer experience through Mobile and Social integration • Unleash and infuse the power of your data throughout your organization … with prioritization and patience
    15. 15. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.
    16. 16. All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

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