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Loyalty Matters

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Why do loyal customers matter? Learn about the current issues driving loyalty marketing, why loyalty marketing works, and how to define measurable objectives, where and when to use promotional …

Why do loyal customers matter? Learn about the current issues driving loyalty marketing, why loyalty marketing works, and how to define measurable objectives, where and when to use promotional currency, and sure-fire enrollment tactics.

More CRM and Loyalty Marketing Resources

Loyalty Blog: http://www.customerinsightgroup.com/loyaltyblog/

eBooks: http://www.customerinsightgroup.com/white-papers

Loyalty Workshops: http://www.customerinsightgroup.com/custom-loyalty-workshops

Systematic New Loyalty Program Development: http://www.customerinsightgroup.com/systematic-new-loyalty-program

Pinterest: http://pinterest.com/engagekeepgrow/


Who is Customer Insight Group?

Customer Insight Group, Inc. leads the way in the evolution of how companies engage their customers, positively motivate them and earn their long-term loyalty. Our extensive client work is testimony to our depth of knowledge and ability to apply strategic insight and solutions to a wide variety of business objectives. Our team’s client experience includes: NHFA, Thomasville Furniture, The Maxim Group Carpet Franchise, Ashro, A&P, The Bon Ton, Crate & Barrel, Dick’s Sporting Goods, Edwin Watts Golf, GE Consumer Finance, Monroe and Main, Swiss Colony, Midnight Velvet, MySwingle.com, The Great Indoors, G.H. Bass, Golf Galaxy, Helzberg Diamonds, HSBC, Kohl’s, La-z-boy Furniture Franchise, MCI, Payless ShoeSource, Pier 1 Imports, Petco, Proflowers.com, Regis University, Ruby Tuesday, S&K Menswear, Sierra Trading Post, Stein Mart, Tommy Hilfiger, Ulta, as well as various other leading companies.

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  • Discipline of identifying and nurturing the yield of best customers through a long-term, reciprocity, value-added relationship.“*This definition speaks to your CFO as well as your customer experience manager. Now that we have some common definitions, it’s time to concentrate on the hard stuff: nurturing customer loyalty. Five key elements of successful loyalty marketing: Insight — Create a competitive advantage Precision — Treat different customers differently Relevancy— Make it resonate Reciprocity — Deliver value in every interaction Yield — Gain an amount as a return on an investmentNurture:To help grow or develop; cultivate: Promote and sustain the growth and development of:Interactive: capable of acting on or influencing each other. Or Acting or capable of acting on each other.A term describing a program whose input and output are interleaved, like a conversation, allowing the user's input to depend on earlier output from the same run. yield v1. vt to produce something naturally or as a result of cultivation2. vt to produce something as the result of work, activity, or calculation3. vt to gain an amount as a return on an investmentReciprocity - a state or relationship in which there is mutual action, influence, giving and taking, correspondence, etc., between two parties. [1]
  • Programs that reward consumers for loyalty have existed for over 100 years. Today, estimates suggest that in the U.S. there are 129 million individual rewards programs in existence, with over 1.8 billion enrollments—and over $2 billion spent annually on loyalty programs.1One of the main features of a wearable computer is consistency. There is a constant interaction between the computer and user, i.e. there is no need to turn the device on or off. Another feature is the ability to multi-task. It is not necessary to stop what you are doing to use the device; it is augmented into all other actions. These devices can be incorporated by the user to act like a prosthetic. It can therefore be an extension of the user’s mind and/or body.1.8 billion members enrolled in Loyalty Programs in the US covering an estimated 129 million individuals US households enrolled in 14 loyalty programs but are active in 650% of revenue come from fewer than 25% of loyalty members More than 80% of CMOs prefer email for loyalty communications and marketingMore than 20% of all marketing dollars will be spent on digital marketing by 2014 and online technologies now receive the most new loyalty investments
  • a time of both  lingering recession and more choices for consumers’ precious dollars than ever before, retailers are being forced to think differently about how to achieve brand loyalty. According to a new study by comScore, the percentage of brand loyal shoppers has steadily declined across all categories over the past two years.Less than 50% of shoppers in 2010 reported purchasing the brand they had once been most loyal to.
  • Proactively Manage Customer’s Lifecycle to Generate Incremental Sales and Profit
  • Transcript

    • 1. Loyal Customers:
      Why do they matter?
      February 2, 2011
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 2. Presenter
      Sallie Burnett
      Strategist. Leader. Innovator.
      President of Customer Insight Group, Inc., a leading strategic relationship-marketing firm
      Digital marketing professor at prestigious Daniels College of Business
      2009 Direct Marketer of the Year
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 3. Customer Insight Group, Inc.
      Insight
      Strategy
      Execution
      Customer Relationships – Engage. Keep. Grow.
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 30. Agenda
      What is loyalty marketing?
      How is customer loyalty marketing evolving?
      Where are loyalty programs today?
      What are the key elements of success?
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 31. What is loyalty marketing?
      Loyalty:
      Loyalty Marketing:
      Customer’s faithfulness; advocacy, devotion; constancy
      Discipline of identifying and nurturing the yield of best customers
      through a long-term, reciprocity, value-added relationship.
      5
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 32. How is customer loyalty marketing evolving?
      6
      1896
      Today
      Development has been directly related to advances in IT an POS
      Future developments are supported by IT, specifically in the areas of:
      Social media
      POS
      Web 2.0 (iAPPS — web content management solutions)
      Mobile
      Location or proximity
      Ubiquitous, wearable computing
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 33. Where are loyalty programs today?
      7
      CUSTOMER
      More demanding, more choices
      Trust is key to keeping customer loyalty because people are seeking out cheaper private label options
      Participation in loyalty programs increasing
      STRATEGY
      Me too value proposition
      Launch and put into “auto” drive
      Measurement metrics not tied to strategy
      COMMUNICATION
      Irrelevant, impersonal messages
      Enrolled and forgotten
      No customer engagement plan
      INSIGHT
      Manage defection, not migration
      Data used to run program, not used to run the business
      Customer relationships are “siloed” in the organization
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 34. What could a loyalty program do for your business?
      Retain Customers
      8
      Target Marketing
      Gain Customer Insight
      Increase Spend & Frequency
      Acquire New Customers
      Increased Revenue
      Build Brand Loyalty
      Differentiate vs. Competition
      Build Customer Relationship
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 35. What are the key elements of success?
      Establish program objectives and metrics to measure success.
      Make the program part of your corporate strategy.
      Treat different customers differently.
      Nurture customer loyalty.
      Be relevant.
      Monitor customer migration.
      Engage your customers.
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 36. #1 Establish program objectives and metrics to measure success.
    • 37. Increase
      …customer retention…average profit per customer…frequency of purchase
    • 38. Growth
      …in the number of profitable customers…in the number of new customers…in the number of brand advocates
    • 39. Lift
      …number of product categories purchased…in average transaction size
    • 40. #2 Make the program part of the corporate strategy.
    • 41. Industry Leaders
      Strategy
      Hallmarks
      Align program structure with goals.
      15
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 42. #3 Treat different customers differently.
    • 43. 17
      3.3% Customers, 21.4% Purchases,
      26.2% Margin & 11.6% Visits
      Loyal
      4.1% Customers, 16.9% Purchases
      19.2% Margin & 13.2% Visits
      Frequent
      11.8% Customers, 31.4% Purchases
      32.1% Margin & 31% Visits
      Occasional
      Infrequent
      27% Customers, 30% Purchases
      22.3% Margin & 44% Visits
      Inactive
      54.2% Customers, 0% Purchases.
      0% Margin & 0% Visits
      Know the customers value to you.
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 44. Deliver value the way the customer wants it delivered.
      Customer Experiential Benefit Strategy is a customer-centric approach to align and deliver value that is meaningful, timely and mutually beneficial to the customer and ultimately the company as well.
      Initial participation and enrollment benefits
      Cumulative benefits
      Periodic benefits
      Instant benefits 
      Mix of hard and soft service-related benefits
      Spend/earn rate, bonuses, capped/uncapped,
      transferable points and rewards
      Flexibility for redemption, burn rate, channels
      Tiers and requalification
      Partners for earn/burn and special offers
      18
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 45. #4 Nurture customer loyalty.
    • 46. Advocate
      Repeat
      Customer
      Member &
      Customer
      Value to the Organization
      Prospective
      Customer
      Unqualified
      Customer
      Value to the Customer/Member
      20
      Create strategy to manage customer lifecycle.
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 47. Grow new customers.
      Goals
      Increase frequency of purchase
      Increase annual spend
      Get members to purchase a second time and sooner
      Increase number of departments purchased
      Increase in total retention rate of new members
      Increase in number of rewards issued and redemption rate
      Strategy
      Score all new customers.
      Execute multi-channel contact strategy.
      After the 90 day process, customers are scored based on their level of engagement.
      Based on the customers engagement score, you can tailor your communication strategy to focus resources to increase sales and retention.
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 48.
    • 49. Be relevant.
      59%
      Most marketing and advertising has very little relevance to me.
      Source: Yankelovich Consumer Trust Study
      60%
      companies are failing to send welcome emails to new subscribers, according to a study of major brands in the US.
      23
      75%
      respondents said that irrelevancy is the main reason for unsubscribing from a company‘s email program.
      Source: Merkle 2008
      15%
      retailers used data they received during the purchase process to target promotional messages to buyers.
      Return Path, March 2009
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 50. Always be relevant – understand how your customers define ‘value’.
      24
      Understand Customers
      Align Marketing Investment
      Deliver Relevant Messages
      Golf Enthusiast
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 51. #6 Monitor customer migration.
    • 52. 26
      Forecasted as stable, but there is room for improvement.
      Increase share-of-wallet.
      Significant downward migration predicted from these high value customers.
      Significant upward migration expected.
      Monitor and proactively manage your customer’s migration.
      Customer migration is measured by the changed in customer value over time.
      Migration is more powerful tool because it is broader than just defection.
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 53. #7 Engage your customers.
    • 54. Customer engagement, “repeated interactions that strengthen the emotional, psychological or physical investment a customer has in a brand,” supports loyalty goals.
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 55. Engaged customers buy more and refer more.
      • The attribute of an engaged customer seen as most important is “recommends product, service or brand” (58% of company respondents).1
      • 56. Other attributes regarded as very important are:
      • 57. Engaged customers are “more likely to convert more readily (44%)
      • 58. Engaged customers “purchase regularly” (36%
      • 59. Engaged customers “less likely to switch supplier” (30%)
      1) E-consultancy Engagement Report 2009
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 60. Be responsive to your customers; let them tell you what they want.
      30
      When you know what your customers are saying and what they want and value, you can create a more meaningful connection.
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 61. Remember the seven key elements of success.
      Establish program objectives and metrics to measure success.
      Make the program part of your corporate strategy.
      Treat different customers differently.
      Nurture customer loyalty.
      Be relevant.
      Monitor customer migration.
      Engage your customers.
       2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
    • 62. Questions?
      Sallie Burnett, CEO
      Customer Insight Group, Inc.
      Email: sallie@customerinsightgroup.com
      Website: www.customerinsightgroup.com
      Twitter: @sallieburnett
      LinkedIn Group: Customer Relationships — Engage. Keep. Grow

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