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Loyalty 2.0
LSM Conseil Club
Tuesday 5th of November 2013
Agenda
1. Introduction The House of Marketing
2. What is customer loyalty?
3. Loyalty program set-up & examples
4. Trends ...
The House of Marketing

3
The 3 main services of The House of Marketing

Temporary Marketing
Support

Marketing Consultancy

Marketing Talent
Develo...
Question

What are your expectations of today?

5
Agenda
1. Introduction The House of Marketing
2. What is customer loyalty?
3. Loyalty program set-up & examples
4. Trends ...
To which brands are you loyal & why?

7
Customer loyalty is a behavioral and attitudinal tendency
to favor one brand over all others

“Customer loyalty is both a ...
To define customer loyalty a distinction has to be
made between behavioral and attitudinal loyalty

Behavioral loyalty

A ...
DELIBERATIVE
CONFIRMERS

low

Consciously
reconfirming their
brand choice upon
purchase

Identifying with the
brand

INERT...
Illustration

Keep the switching barrier high to prevent the customer
from changing brands
• Nespresso’s coffee machine co...
Illustration

Despite changes in regulation to lower the switching
barrier, find a way to keep the customer

Become Telene...
Illustration

But... be aware of negative reactions from unsatisfied
customers

13
DELIBERATIVE
CONFIRMERS

CONVINCED
LOYALISTS

HABITUAL
USERS

INERT
RESIDENTS

low

high

low

Involvement

high

Subjecti...
Be aware, brands can move throughout the framework
due to changing circumstances or consumers‟ perception
CONVINCED
LOYALI...
16
Question

What should Q8 do to increase involvement & switching barriers?

17
Loyalty is often confused with retention in terms of
objectives, tactics and target
Margin

Get!

Acquisition

Grow!

Keep...
Agenda
1. Introduction The House of Marketing
2. What is Customer Loyalty?
3. Loyalty program set-up & examples
4. Trends ...
Traditional loyalty programs can be ranked on 3 axes: the
reward-moment, required counteraction & customer
initiative
Rewa...
Direct advantage program

21
Relationship program

22
Savings program

23
Contest program
Event program
Customer advantage
program
Agenda
1. Introduction The House of Marketing
2. What is Customer Loyalty?
3. Loyalty program set-up & examples
4. Trends ...
Is building loyalty an utopia?
How to build loyalty?
60%

Improve customer
More relevant experience
products/services

Ana...
100% loyalty is out. Divided loyalty is in.
• Loyalty programs have become a commodity

“Your consumers are just
somebody ...
Loyalty programs have become a commodity
Marketers should rethink the loyalty concept

30
Being enrolled in a loyalty program is a habit rather than
influential in purchase decisions
The average
Three-quarters of...
Illustration

Famous loyalty programs don‟t work anymore
• Loyalty scheme:
redeem points for rewards and prize draws
• Uni...
Illustration

Frequent flyer programs are also under pressure

Situation








Limited increase of loyalty as busi...
100% loyalty is out. Divided loyalty is in.
• Loyalty programs have become a commodity
• The savvy shopper wants more, and...
Changing behavior of consumers
“the savvy shopper”

Better informed thanks to internet

Research & plan more deliberately
...
100% loyalty is out. Divided loyalty is in.
• Loyalty programs have become a commodity
• The savvy shopper wants more, and...
Social media like Facebook have become mainstream
Social media reach in Belgium

5.5 mio users

1.178.723 profiles

167.67...
Illustration

Virtual queue for new Samsung smartphone: loyal people
are rewarded, market share has increased

38
Illustration

Pepsi Cola “refresh the world” community: interact with
your loyal customers

39
Illustration

United airlines “Optathlon” gives passengers the chance to
instantly win upgrades
• The app includes five ga...
Illustration

Converse All Stars: co-creation used as loyalty tool

Converse:
•

December 2011

•

Facebook application

•...
Mobile technology provides an answer to the changing
behavior of consumers
Consumers expect immediacy, relevance & conveni...
Illustration

“My Starbucks rewards” steps away from real currencies
Special features & in-store utilities

Mobile Card

C...
Illustration

Qustomer: „the digital loyalty card of the future‟

44
Getting ready for new and emerging technologies

Mobile Payments

Near Field
Communication

Radio Frequency
Identification...
100% loyalty is out. Divided loyalty is in.
• Loyalty programs have become a commodity
• The savvy shopper wants more, and...
Question

“It costs five times more to acquire a customer than to retain one”.
What do you think?

47
Answer: The statement is a myth

Advertising &
promotional
expenses

- Not only for inducing first time purchases, also fo...
The combination of a penetration and a loyalty strategy is
necessary and asks for a dual marketing approach
Combined strat...
Retention and loyalty initiatives will only boost business if
there is alignment with the business strategy and the
market...
100% loyalty is out. Divided loyalty is in.
• Loyalty programs have become a commodity
• The savvy shopper wants more, and...
Illustration

Of course, tailored customer experience is more than a
creative campaign

Creativity works but it doesn’t
me...
Agenda
1. Introduction The House of Marketing
2. What is Customer Loyalty?
3. Loyalty program set-up & examples
4. Trends ...
These trends have changed the loyalty space
From today’s loyalty…

To next generation loyalty

 Programs only focused on ...
What do we mean by customer experience?

CE =

The total set of elements, from product to price/value
perception to channe...
Different stages of the consumer decision journey have
impact on customer experience & loyalty behavior
Pre-purchase

Rese...
Pre-purchase

Illustration

Ikea‟s sleep like a princess contest

Engaging loyalty members and raising awareness

DESCRIPT...
Pre-purchase

Post-Purchase

Illustration

Booking.com reminds review writers of previous holidays

DESCRIPTION
Booking.co...
Purchase

Post-purchase

Illustration

At The Ritz-Carlton Hotel, Ladies and Gentlemen are serving
Ladies and Gentlemen

D...
Post-purchase

Illustration

Telenet „Verwenbrigade‟

Creating advocates with surprise & delight

DESCRIPTION
Telenet look...
Post-purchase

Illustration

Spanair “Unexpected Luggage”

Increase WOM & Customer Satisfaction
DESCRIPTION
• Spanair gave...
Agenda
1. Introduction The House of Marketing
2. What is Customer Loyalty?
3. Loyalty program set-up & examples
4. Trends ...
The approach for developing a top customer loyalty
program at Brussels Airport consists out of 4 steps
IV.
Program roll-ou...
1. Gather insights

Analysis of traditional loyalty programs enabled us to
detect pitfalls, key success factors and other ...
2. Program strategy

We have matched traditional loyalty programs with the
TBAC program objectives
Program objectives

Dir...
2. Program strategy

We analysed the entire passenger journey & customer
experience to detect uncultivated areas
Prepurcha...
2. Program strategy

Determining the right loyalty vision was critical to reach
TBAC‟s objectives
Positioning

Loyalty vis...
3. Program design

We build a program that combines a focus on
targeting, delivering high perceived value at limited
cost,...
Question

Any questions?

69
Loyalty 2.0
LSM Consulting Club
Tuesday, 5th of November 2013
Loyalty needs to be measured in different ways and for
different objectives
Effects of attitudinal loyalty
= customer equi...
Measure behavioral loyalty - Customer Lifetime Value
Net actual value of expected profit during customers’ lifetime
Defini...
Measure attitudinal loyalty - Net Promotor Score

Question

• Have you or would you ever recommend … to others?
• 10 point...
Measure attitudinal behavior - Customer Effort Score

• How much effort did you personally have to put in to get your
Ques...
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Loyalty 2.0 lsm 05.11.2013

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  • The Yearly Marketing Survey 2013 indicated that traditional reward programs don’t do the trick anymoreSo in fact, building loyalty is about the basics: work on relevance, improve experience....
  • 53% van de Sensodyne users buy Colgate46% of the Colgate users buy Aquafresh...72% of the Pesdrinkers buy CocaCola....Once or more every 12 monthsMartin Hammer ‘YOURCONSUMERS’AREJUSTSOMEBODYELSE’SCONSUMERSWHOOCCASIONALLYBUYYOUPeople are loyal to a group of productsDevided loyalty: consumer buy different brandsTake care of the basics (experience, needs)Old school rules: gaining a new customer costs 5 times mre than keeping a customerDus het enige wat werkt is de switching barriers hoog houden (vb legaal,vb Nespresso ) maar vooral het involvement (Pampers, Nike) hoog houden
  • Savvy shoppers:They want more, and they want if nowPrice sensitive, but also value quality & serviceWant to be in control over their experienceSharing behavior
  • In stead of investing 20 million dollar in the Super Bowl like they always did, they created a community to finance local projects. Everyone who wanted support could enter the community and people voted for one of the projectsInteraction with consumers & being pro-social
  • http://www.qustomer.com/pages/home
  • Take care of the basics (experience, needs)Old school rules: gaining a new customer costs 5 times mre than keeping a customerDus het enige wat werkt is de switching barriers hoog houden (vb legaal,vb Nespresso ) maar vooral het involvement (Pampers, Nike) hoog houden
  • http://www.youtube.com/watch?v=F-Fk2hpdrdU
  • Source?
  • Transcript of "Loyalty 2.0 lsm 05.11.2013"

    1. 1. Loyalty 2.0 LSM Conseil Club Tuesday 5th of November 2013
    2. 2. Agenda 1. Introduction The House of Marketing 2. What is customer loyalty? 3. Loyalty program set-up & examples 4. Trends & challenges 5. Loyalty 2.0: alternatives to loyalty programs 6. Case study 2
    3. 3. The House of Marketing 3
    4. 4. The 3 main services of The House of Marketing Temporary Marketing Support Marketing Consultancy Marketing Talent Development To bridge capacity & competence gaps To tackle strategic marketing challenges To develop, coach & train marketers on the job 4
    5. 5. Question What are your expectations of today? 5
    6. 6. Agenda 1. Introduction The House of Marketing 2. What is customer loyalty? 3. Loyalty program set-up & examples 4. Trends & challenges 5. Loyalty 2.0: alternatives to loyalty programs 6. Case study 6
    7. 7. To which brands are you loyal & why? 7
    8. 8. Customer loyalty is a behavioral and attitudinal tendency to favor one brand over all others “Customer loyalty is both a behavioral and attitudinal tendency to favor one brand over all others, whether due to satisfaction with the product or service, its convenience or performance, or simply familiarity and comfort with the brand. Customer loyalty encourages consumers to shop more consistently, spend a greater share of wallet, and feel positive about a shopping experience, helping attract consumers to familiar brands in the face of a competitive environment.” Source: PR Loyalty Solutions 8
    9. 9. To define customer loyalty a distinction has to be made between behavioral and attitudinal loyalty Behavioral loyalty A customer who stays (repeat purchase, renew contract,…) is often seen as a loyal customer Be careful: This does not mean that these customers are loyal because they might leave once the situation changes… Attitudinal loyalty Source: Klantenloyaliteit, Marnix Bügel Commitment to continue using a product or service, despite situational influences and marketing efforts of competitors, is true loyalty. 9
    10. 10. DELIBERATIVE CONFIRMERS low Consciously reconfirming their brand choice upon purchase Identifying with the brand INERT RESIDENTS Making the same choice out of habit Locked in or switching is not worth the effort low Involvement CONVINCED LOYALISTS HABITUAL USERS high Subjective axis: Perceived emotional, social, functional risk of switching Loyalty is driven by two dimensions: switching barriers & involvement high Switching barriers Objective axis: Perceived effort, cost, time to switch / frequency of transaction Source: THoM analysis of McKinsey Quarterly & Marketing NPV 10 Involvement drives behavioral & attitudinal loyalty Switching barriers drive behavioral loyalty
    11. 11. Illustration Keep the switching barrier high to prevent the customer from changing brands • Nespresso’s coffee machine could only be filled by Nespresso capsules, which were only available online and in exclusive shops • Consumers didn’t have the choice and were attached to the brand BUT: • Douwe Egberts duplicated the capsules, which can also be used in the Nespresso machines and are available in the supermarkets • Nespresso’s switching barriers decreased: consumers can now easily switch between Nespresso and Douwe Egberts • Nespresso will need to continue working on involvement 11
    12. 12. Illustration Despite changes in regulation to lower the switching barrier, find a way to keep the customer Become Telenet iKing and receive an iPhone 5 for only €199 (€29 for iKong) If you leave iKing within a period of 24 months, you need to pay the remaining value of the iPhone to Telenet 12
    13. 13. Illustration But... be aware of negative reactions from unsatisfied customers 13
    14. 14. DELIBERATIVE CONFIRMERS CONVINCED LOYALISTS HABITUAL USERS INERT RESIDENTS low high low Involvement high Subjective axis: Perceived emotional, social, functional risk of switching Exercise: Put the following brand logos on the right place in the loyalty matrix and explain your positioning Switching barriers Objective axis: Perceived effort, cost, time to switch / frequency of transaction 14
    15. 15. Be aware, brands can move throughout the framework due to changing circumstances or consumers‟ perception CONVINCED LOYALISTS Involvement high DELIBERATIVE CONFIRMERS INERT RESIDENTS low high low HABITUAL USERS Switching barriers 15 True loyalty is the only sustainable, long-term competitive advantage for business in today’s multi-channeling world.
    16. 16. 16
    17. 17. Question What should Q8 do to increase involvement & switching barriers? 17
    18. 18. Loyalty is often confused with retention in terms of objectives, tactics and target Margin Get! Acquisition Grow! Keep! Development Get (again)! Retention Win-back Time Loyalty Retention management • • • • • Primary increasing switching barriers, secondary increasing involvement > Increasing behavioral loyalty Short term fix for churn reduction Long term plan for retention Focus on high and medium value customers with high churn risk Aims at reducing and preventing churn through fixing the basics Source: THoM analysis Loyalty management • GET GROW • • KEEP • 18 Increasing involvement by understanding loyalty drivers > Increasing behavioral and attitudinal loyalty Long term Focus on customers with high potential (customer lifetime value) Aims at retaining and increasing customer value through building sustainable relationships
    19. 19. Agenda 1. Introduction The House of Marketing 2. What is Customer Loyalty? 3. Loyalty program set-up & examples 4. Trends & challenges 5. Loyalty 2.0: alternatives to loyalty programs 6. Case study 19
    20. 20. Traditional loyalty programs can be ranked on 3 axes: the reward-moment, required counteraction & customer initiative Reward-moment Immediate Transaction based Counteraction 1 Customer initiative Direct Adv Program Postponed Not transaction based 2 Relationship Program 3 Savings Program No initiative Direct discount 4 Initiative Contest Program Advantage won through contest Source: Klantenloyaliteit, Marnix Bügel 20 Saving points for gifts via transaction Service related & other advantages 5 Event Program Event invitation 6 Customer Adv Program Saving points for gifts via initiative
    21. 21. Direct advantage program 21
    22. 22. Relationship program 22
    23. 23. Savings program 23
    24. 24. Contest program
    25. 25. Event program
    26. 26. Customer advantage program
    27. 27. Agenda 1. Introduction The House of Marketing 2. What is Customer Loyalty? 3. Loyalty program set-up & examples 4. Trends & challenges 5. Loyalty 2.0: alternatives to loyalty programs 6. Case study 27
    28. 28. Is building loyalty an utopia? How to build loyalty? 60% Improve customer More relevant experience products/services Analyze customer needs 50% Focus on CLV Personalize Communication Net Success 40% Refine segmentation Invest in employees Create dialogue 30% 20% Review pricing strategy Reward with incentive 10% Involve customers in marketing projects 0% 0% #YMS2013 10% 20% 30% 40% Usage 28 50% 60% 70% 80% 90%
    29. 29. 100% loyalty is out. Divided loyalty is in. • Loyalty programs have become a commodity “Your consumers are just somebody else‟s consumers who occasionally buy you” Martin Hammer 29
    30. 30. Loyalty programs have become a commodity Marketers should rethink the loyalty concept 30
    31. 31. Being enrolled in a loyalty program is a habit rather than influential in purchase decisions The average Three-quarters of households are enrolled in at least one frequent customer account. Fewer than 20% of loyalty household has members say their memberships signed up for no are influential in purchasing less than 18 decisions and only 33% of memberships. loyalty customers feel that American households are active in less than 50% of the programs those programs are addressing But ... they have signed up for. Source: The power of points: Strategies for making loyalty programs work 31 Customer Strategist, Peppers&RogersGroup their needs.
    32. 32. Illustration Famous loyalty programs don‟t work anymore • Loyalty scheme: redeem points for rewards and prize draws • Unique experience: redeem points for Coca-Cola merchandising, magazines, cosmetics, speakers,… “We are making some changes to Coke Zone following a review of which parts of the site are of most interest to people. What this review tells us is the vast majority of people visit Coke Zone for news, competitions and the chance to win great prizes and experiences, rather than to collect and redeem points in exchange for gifts like T-shirts and headphones.” Statement Company Coca- Cola 32
    33. 33. Illustration Frequent flyer programs are also under pressure Situation       Limited increase of loyalty as business travellers have cards of all airlines Rewards based on wrong metric: airmiles flown instead of amount spent Only reward when it’s convenient for the airline (e.g. upgrading) Slow reward redemption Frustrated non-frequent flyers: lack of engagement Lost status can destroy relationships 33
    34. 34. 100% loyalty is out. Divided loyalty is in. • Loyalty programs have become a commodity • The savvy shopper wants more, and he wants it now 34
    35. 35. Changing behavior of consumers “the savvy shopper” Better informed thanks to internet Research & plan more deliberately Increased switching behavior Far more discriminating in choosing to which brands to give their loyalty Expect to be rewarded & recognized for their loyalty Want instant gratification, value & relevance in every transaction 35
    36. 36. 100% loyalty is out. Divided loyalty is in. • Loyalty programs have become a commodity • The savvy shopper wants more, and he wants it now • Digital channels reshape the loyalty landscape 36
    37. 37. Social media like Facebook have become mainstream Social media reach in Belgium 5.5 mio users 1.178.723 profiles 167.679 profiles* 46.243 profiles Source: B.L.V.G Blog, June 2012 * Estimation end 2011 37
    38. 38. Illustration Virtual queue for new Samsung smartphone: loyal people are rewarded, market share has increased 38
    39. 39. Illustration Pepsi Cola “refresh the world” community: interact with your loyal customers 39
    40. 40. Illustration United airlines “Optathlon” gives passengers the chance to instantly win upgrades • The app includes five games: Legroom Legend , Linejump Hero, Mileage Ace, Suitcase Skyway & Airport Oasis. • Playing the games just before a flight gives you a chance for instantly winning access to the airlines Red Carpet Club, Premier Line, Economy Plus or a 10% ecertificate. There’s also a chance to win one million Mileage Plus miles during game play at any time. • All the games are dealing with the realities and frustrations of airline travel 40
    41. 41. Illustration Converse All Stars: co-creation used as loyalty tool Converse: • December 2011 • Facebook application • Design own Converse shoes and sell them through friends on social network and virtual store • Free pair of shoes when enough pairs are sold 41
    42. 42. Mobile technology provides an answer to the changing behavior of consumers Consumers expect immediacy, relevance & convenience Immediacy Relevance Convenience Nectar Using location-based services to provide discount codes directly Hilton Loyalty apps which give customers immediate access to booking info, let them order room service, checkin/out, etc Delhaize Mobile shopping Targeted & personalized offers Shop & collect, find stores, … Source: THoM analysis 42
    43. 43. Illustration “My Starbucks rewards” steps away from real currencies Special features & in-store utilities Mobile Card Card Balance E-Gifts Locationbased Rewards overview 43
    44. 44. Illustration Qustomer: „the digital loyalty card of the future‟ 44
    45. 45. Getting ready for new and emerging technologies Mobile Payments Near Field Communication Radio Frequency Identification Also referred to as mobile money, mobile money transfer, and mobile wallet generally refer to payment services operated under financial regulation and performed from or via a mobile device. Ex.: Paying at Starbuck’s and with QR-codes without using credit card A set of standards for Smartphone's and similar devices to establish radio communication with each other by touching them together or bringing them into close proximity Ex.: Entering a concert with the digital pass on your Smartphone and it immediately shares this on your Facebook. Wireless non-contact use of radio-frequency electromagnetic fields to transfer data, for the purposes of automatically identifying and tracking tags attached to objects Ex.: Send promotions when clients pass by a shop. 45
    46. 46. 100% loyalty is out. Divided loyalty is in. • Loyalty programs have become a commodity • The savvy shopper wants more, and he wants it now • Digital channels reshape the loyalty landscape • Forget “old school rules”: focus on light users and penetration #YMS2013 46
    47. 47. Question “It costs five times more to acquire a customer than to retain one”. What do you think? 47
    48. 48. Answer: The statement is a myth Advertising & promotional expenses - Not only for inducing first time purchases, also for brand image and awareness among current customers - Promotions are often enjoyed by both new and current customers Diversity of customer base in terms of acquire and retain costs - Customer profitability is not evenly distributed. - Often the most expensive customers to retain = those who generate most profits - desirable to competitors and receive attractive offers - customers know this and expect a higher level of service BUT - Best customers outspent others by: - 16 to 1 in retailing - 13 to 1 in restaurants - 12 to 1 in airlines - 5 to 1 in hotels - Satisfied customers spread more WOM Source: www.ipsosloyalty.com 48
    49. 49. The combination of a penetration and a loyalty strategy is necessary and asks for a dual marketing approach Combined strategy and approach Penetration growth & Existing customers might buy the brand more often New customers might buy the brand Mass Marketing Loyalty growth & Reach all the buyers, including the occasional, light buyers and non-buyers Target Marketing Reach all the heavy users Most effective campaigns aim at new AND existing customers. A company is successful when it targets light users AND heavy users. 49
    50. 50. Retention and loyalty initiatives will only boost business if there is alignment with the business strategy and the marketing strategy Vision & Business objectives Positioning Sales strategy Penetration growth Retention & loyalty strategy & New customers Mass Marketing Reach all potential targets Loyalty growth Existing customers & Target Marketing Reach valuable clients
    51. 51. 100% loyalty is out. Divided loyalty is in. • Loyalty programs have become a commodity • The savvy shopper wants more, and he wants it now • Digital channels reshape the loyalty landscape • Forget “old school rules”: focus on light users and penetration Loyalty 2.0: working on tailored customer experiences #YMS2013 51
    52. 52. Illustration Of course, tailored customer experience is more than a creative campaign Creativity works but it doesn’t mean the customer won’t buy the competitor’s product Keep in mind that obtaining 100% loyalty is difficult today. Make sure your brand is at least part of the customer’s basket of brands 52
    53. 53. Agenda 1. Introduction The House of Marketing 2. What is Customer Loyalty? 3. Loyalty program set-up & examples 4. Trends & challenges 5. Loyalty 2.0: alternatives to loyalty programs 6. Case study 53
    54. 54. These trends have changed the loyalty space From today’s loyalty… To next generation loyalty  Programs only focused on in-program transaction data to reward target customers (purchase/earn/redeem) ▪ Loyalty extends beyond purchasing, and rewards behavior across the customer decision journey: focus on interaction ▪ Diversify away from currency: increasing focus on customer experience  One size fits all ▪ Customized: personalized offers, differentiated ▪ Programs reach customers through ▪ Channel ubiquity – loyalty is conveniently traditional channels: a program website, call centers, email or mail experiences & relevant rewards present wherever and across multiple vehicles ▪ Social media & mobile as powerful loyalty generators : engage customers through new media Relentless focus on the consumer, fueled by data and powered by a remarkable customer experience will enable true attitudinal loyalty Source: THoM analysis
    55. 55. What do we mean by customer experience? CE = The total set of elements, from product to price/value perception to channel interactions… … from promises to execution to messaging …that determine a customer’s satisfaction …and therefore drive value What I get = What I expect Source: THoM analysis 55 How I feel
    56. 56. Different stages of the consumer decision journey have impact on customer experience & loyalty behavior Pre-purchase Research Awareness Evaluate Advocacy Loyalty Use (service) Post-purchase Buy Purchase Capture data at all touchpoints Source: THoM analysis 56 Datamining & analysis Use insights to learn & adapt
    57. 57. Pre-purchase Illustration Ikea‟s sleep like a princess contest Engaging loyalty members and raising awareness DESCRIPTION • Ikea ran a Facebook competition which was only open to loyalty card holders • Users had to upload a photo of a friend who was having a nap • Then Facebook users voted for the best picture • Prize = a bed worth up to £1,500 Results: • 44,000 YouTube views • 13,650 Facebook visitors • Almost 4,000 new fans Source: Six awesome examples of Facebook campaigns by Ikea 57
    58. 58. Pre-purchase Post-Purchase Illustration Booking.com reminds review writers of previous holidays DESCRIPTION Booking.com sends a mail one year after writing a review to remind the customer of a previous holiday and to advertize new accommodations Source: www.booking.com 58
    59. 59. Purchase Post-purchase Illustration At The Ritz-Carlton Hotel, Ladies and Gentlemen are serving Ladies and Gentlemen DESCRIPTION • Employees are empowered to create unique, memorable and personal experiences for our guests • Employees note all the preferences of the guests and fulfill these, even if the guest doesn’t ask it explicitly • Each employee has a budget to serve the customer in any way he likes • Employees are also treated like ladies and gentlemen Source: www.corporate.ritzcarlton.com 59
    60. 60. Post-purchase Illustration Telenet „Verwenbrigade‟ Creating advocates with surprise & delight DESCRIPTION Telenet looked on Twitter for customers who were having a bad day and surprised them with a nice gift, a voucher to rent a movie with Telenet Digital TV. Source: https://twitter.com/Verwenbrigade.com 60
    61. 61. Post-purchase Illustration Spanair “Unexpected Luggage” Increase WOM & Customer Satisfaction DESCRIPTION • Spanair gave Christmas Gifts to all the passengers of the last flight that arrived at midnight before Christmas. Results: • 100.000 views in 48 hours • 7.000 people shared it on Facebook & Twitter • 600.000 viewings in 12 days & Presence in the international media • +13 Mio people received our greetings Source: http://www.youtube.com/watch?v=F-Fk2hpdrdU 61
    62. 62. Agenda 1. Introduction The House of Marketing 2. What is Customer Loyalty? 3. Loyalty program set-up & examples 4. Trends & challenges 5. Loyalty 2.0: alternatives to loyalty programs 6. Case study 62
    63. 63. The approach for developing a top customer loyalty program at Brussels Airport consists out of 4 steps IV. Program roll-out & execution III. Program design • Structure main components of the program & strategy • Provide high level implementation plan II. Program strategy I. Data analysis & insights • Set objectives & determine scope • Determine high level loyalty vision & scenario’s • Collect internal & external insights about the market, customers, competition etc. 63 • Build IT capabilities, shape internal capabilities, train employees • Set up launch campaign & marketing plan
    64. 64. 1. Gather insights Analysis of traditional loyalty programs enabled us to detect pitfalls, key success factors and other learnings Benchmark based on THoM framework Sector European airports Relevant airlines for BAC Other sectors: hotels, car rental, finance, FMCG, … 64
    65. 65. 2. Program strategy We have matched traditional loyalty programs with the TBAC program objectives Program objectives Direct advantage Relationship Savings Increase share of travel Increase spent/pax Improved communication Improved awareness Fit with business objectives Fit with positioning 65 Contest Event Customer advantage
    66. 66. 2. Program strategy We analysed the entire passenger journey & customer experience to detect uncultivated areas Prepurchase of flight Actual purchase DEPARTURE Postpurchase Transport Parking Boarding Gate Check-in Shop, eat, relax Customs Security Flight ARRIVAL Arrival Transport Stay/ Home Arrival @ TBAC Customs Bag claim Bag complaint Postevaluate Stay/ Home 66 Transport Waiting pick-up ... To declare
    67. 67. 2. Program strategy Determining the right loyalty vision was critical to reach TBAC‟s objectives Positioning Loyalty vision To ___________________________________________ (Target group) Is it relevant? BAC is the ___________________________________ Is it unique? That _________________________________________ (Frame of reference) (Rational/emotional benefits) Is it sustainable? Because _____________________________________ (Reasons to believe) Fit with equity of today? 67
    68. 68. 3. Program design We build a program that combines a focus on targeting, delivering high perceived value at limited cost, and creating a memorable customer experience Best Practices Target customers 1 based on activity and profitability Deliver unpublished 2 benefits Form partnerships with 3 both industry and nonindustry companies Definition ▪ ▪ ▪ ▪ ▪ ▪ ▪ 4 Diversify away from currency Engage customers 5 through new media Make earning rewards 6 fun and engaging ▪ Move away from a “one size fits all” program to strengthen the company’s relationship with its best customers by giving them the best rewards Recognize customers through differentiated rewards (e.g. tiers, and status) to drive increased customer engagement with the brand Use unpublished benefits to maintain competitive advantage and avoid raising the customer experience “bar” for everyone In many cases, unpublished benefits are highly valued by customers and cost companies little to deliver (e.g. personal concierge, exclusive access) Share program costs with partners to reduce individual company reward expenses Redemption flexibility increases perceived reward value to the consumer With currency programs becoming more ubiquitous, there is an increasing focus on non-currency rewards (e.g. experiences) Non-currency rewards are typically harder for competitors to replicate and can change more often to keep rewards fresh and relevant to consumers ▪ Social media & mobile can be powerful loyalty generators – and can often yield behavioral lift without expensive benefits (e.g., use of virtual badges at foursquare, …) ▪ Use “Gamification” in loyalty programs to make real world activities more engaging, and maintain customer contact outside of transactions
    69. 69. Question Any questions? 69
    70. 70. Loyalty 2.0 LSM Consulting Club Tuesday, 5th of November 2013
    71. 71. Loyalty needs to be measured in different ways and for different objectives Effects of attitudinal loyalty = customer equity Effects of behavioral loyalty = marketing value Key questions • • • How loyal do customers feel? What is driving their loyalty? Would they recommend us to others? • • • What is the ROMI of the loyalty initiative? To what extent did it help reach retention and development? How did the CLTV evolve? Measures • • • • NPS Customer Effort Score Qualitative research on drivers Quantitative tracking of performance on these drivers • • • • CLTV Changes in frequency, monetary value,… Price sensitivity Contract renewal rates, profitability Use • Defining direction for loyalty instruments: Branding, product, service, loyalty actions, loyalty programs,… • • 71 Business case ROMI
    72. 72. Measure behavioral loyalty - Customer Lifetime Value Net actual value of expected profit during customers’ lifetime Definition Value yr 1 + Value yr 2 + … + Value yr n (1 + r) (1 + r)n-1 Start – before initiative: • Current customer base • Current profitability Impact of loyalty initiative on CLTV After initiative: • # extra customers • Profitability • Current retention % • Retention % • Current referral % • Referral % Change in CLTV Investment loyalty initiative 72
    73. 73. Measure attitudinal loyalty - Net Promotor Score Question • Have you or would you ever recommend … to others? • 10 point scale 1 2 3 4 5 6 7 8 9 10 Responses Detractors Calculation Neutral # Promoters - # Detractors # Respondents 73 Promoters
    74. 74. Measure attitudinal behavior - Customer Effort Score • How much effort did you personally have to put in to get your Question problem fixed? • 5 point scale • Single metric Result • Indicates improved areas for separated customer processes to increase experiences • Predictor of loyalty Source: Geert Teunkens, May 2012 74
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