Loyalty Management For Nzsug


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  • Loyalty Management is about making sure that you do not find yourself in this situation: It is about knowing your customer and building relationships that are valuable and sustainable for both parties
  • Ultimately you want to be here: Your customers identify themselves with you and your brand – and proudly show this
  • Hybrid Model: Costco – just recently opened a store in Melbourne
  • Dialogue – Enroll the right customers Determine which customers the company wants to raise their hands to engage in your relationship strategy Highest-value customers to recognize and reward their value high-potential customers who currently split their purchases customers at the highest risk of churning Based on the customer groups a recognition and reward strategy that piques customers’ interestEngagement – Engage customer interest Involve customers via regular communication into a dialogue is critical in moving users through the relationship chain Communication has to answer the question: What’s in it for me? Design Communication with calls to action that will stimulate regular response. Customers who respond are exhibiting increased interest The first redemption is happeningIncrease Member value: Stimulate active participation by encouraging program use and customer engagement Key behaviours include any voluntary customer activity beyond standard transaction Relationship chain analytics are based on such activities as completing surveys, checking points balances online, responding to targeted offers, using kiosks, bidding on auction items, entering sweepstakes, ...Sustainable Retention – Trigger multiple redemptions: Customers who participate in loyalty strategies expect a payoff – the answer to the question “What’s in it for me?” Reward Redemption is both the answer to that question and the ultimate measure of customer value Redemption happens whenever a customer extracts value from a loyalty campaign Multiple redemption is the keySource: Colleen Becker: Forcing the Relationship Chain (http://directmag.com/roi/1119-customer-relationship-chain/ )
  • By comparing the behaviour of loyalty-marketing participators to the behaviour of established control groups, marketers can infer the financial impact of each customer stage by measuring success early in the chain.Proper analysis requires tracking and measurement of loyalty-marketing activity at both the individual customer and segment levels. Key metrics include: Enrollment: Which customers raised their hands to indicate initial interest in the campaign? Are they the right customers? Participation: How many non-participators, one-time participators, and multiple participators are responding to the dialogue efforts? What is the recency of participation by segment? Redemption: How many non-redeemers, onetime redeemers, and multiple redeemers are in the customer file? Is there a steady progression of one-timers to multiples? How recent are the redemptions? Segment mobility: Are you seeing a steady migration of customers from high-potential to high-value segments? How well does program activity correspond to this migration? Churn rates: How many customers are leaving the program? How many are leaving the brand? Is there a reduction in churn? If so, how does that reduction correspond to program activity? Annual average customer value: Is transaction value increasing? Are cross-sell and up-sell penetration rates rising? Customer lifetime value: Is the Net Present Value (NPV) of key segments improving due to increased lift and reduced churn? IncrementalityCustomer equityShare-of-walletIt is important to measure early in the chain to see if they are steering in the right direction. Marketers can examine the reasons behind the results and work to either solve or exploit them – steer right, steer left or hit the gas pedal.
  • Based on the gathered transactional data it is possible to cluster your customers in homogeneous-like segments, which you address with the appropriate marketing strategies and, thus, you make the most out of your marketing expenditures. The clustering could also happen without a point program in place. The sheer amount of transactional data combined with the customer entity should give you enough business insights to promote the right merchandise to the right customer.
  • Retail RequirementsStrategic integration of channels Member profile / tier / interactions drive customer experience and offersOperational integration of channelsMember registration Profile maintenance Statements / Points Lost / damaged card Nominate new member Change programIntegration of core customer management processesSales operationsSales order processing for point redemptionMarketing OperationsCampaign PlanningCampaign DevelopmentCampaign OptimizationCampaign ExecutionCampaign MeasurementService OperationsService Ticket ProcessingComplaint managementService Interaction
  • Dialogue:Personalised communicationIdentifysigns of interest & engangementOffer recognition and rewardincentivesTrackcustomerbehaviourEngagement:Flawlessredemption-process incl. WOW! – factorLoyaltytacticsthatincent WOM behaviourDevelop and use WOM – metricsIncreased member value:Provide communication platformsOfferincentives to shareproduct informationDevelop social network toolsSustainableRetention:Help to build social capital by creating unique soft benefitsIdentify the champions throughbehavioural & additionalmeasurementsEngage in facilitated WOM activities
  • Loyalty Program Management enables set-up and maintenance of loyalty programs. Program maintenance includes information about program partners, program-related loyalty status levels, set-up and maintenance of point accounts, as well as program-specific attributes based on flights, nights of stay, dollars spent, frequency of purchases, and so on.Loyalty Reward Rule Management includes the set-up and maintenance of loyalty rules and conditions, campaigns for enrollment and registration, finally being processed by the loyalty engine. All points accrued and redeemed by members are recorded within the member‘s point account. Loyalty Membership represents the participation of an individual person to a specific loyalty program. Membership is opened by registration to the loyalty program, either paper-based, via Web self-service, or Interaction Center. It also includes member activities such as flights, hotel stays, or sales activities, finally being processed by the processing engine against the reward rules. The Loyalty Management Processing Engine is a highly scalable component to process member activities, tier transition evaluation, and point expiration. It is an integrated part of SAP CRM and the “heart” of the SAP CRM based Loyalty Management solution.Additional features in Loyalty Management are:CollaborationIntegrationLoyalty Management is a cross-industry offering and can be configured for different industries.
  • This slide gives you an overview of how the individual entities of the loyalty program connect to each other. One could distinguish between the set-up of the program, the corresponding master data, and the transactional data like sales order or POS transactions, which would invoke the infrastructure and the update of the master data objects. At its core the loyalty processing engine would be responsible for complying with all defined rules in order to post the right miles or points to the member accounts. The rule could be a basic rule applying to all standard transactions , but it could also be attached to a campaign, where the rule only applies to a certain target group. The Member is usually identified via card at the POS or via a member number in the Web shop and Interaction Center. Each transaction invokes the rule framework in SAP CRM, creates a member activity, and eventually updates the point account either as a redemption or accrual.And, of course, all interactions are integrated into the SAP CRM regular channels like the Web shop and Interaction Center, or via APIs also to SAP POS.
  • Loyalty Management is embedded in SAP CRM. It uses multiple channels to interact with the customer; mainly the SAP CRM Web shop, the Interaction Center, as well as the CRM UI.Its objects are Web service enabled to allow external applications to communicate with SAP CRM loyalty management. It has already been mentioned that loyalty management is a central component in seamlessly integrated into SAP CRM Marketing. Loyalty Management from a communication perspective is mainly about processing activities, member activities like flights, trips, ticket purchases, point redemption, or any other accrual activitiy, either sent by an external system, manually entered, or derived from SAP CRM sales processes. These activities will be processed against system-specific rules and will finally update to passenger tier levels, point accounts, or execute any other customer-specific functionality according to the settings and definitions which have been made for the loyalty program.
  • It has already been mentioned that loyalty management is based on the following four solid pillars:Program ManagementReward Rule ManagementMembership HandlingProcessing EngineEach area is directly addressing individual, loyalty-specific business processes and comes with rich functionality.In this presentation, we will take a look at each block in more detail.
  • Loyalty Management For Nzsug

    1. 1. Nicole Wieberneit<br />Thomas Wieberneit<br />27.08.2009<br />Loyalty Management<br />
    2. 2. Loyalty?<br />
    3. 3. Loyalty!<br />
    4. 4. Thomas Wieberneit<br /><ul><li>2008 – CRM Practice Manager ANZ
    5. 5. CIBER, ANZ
    6. 6. 2008 – Executive Consultant & Project Manager
    7. 7. CGI, Canada
    8. 8. 2005 – VP CRM Development
    9. 9. SAP, Germany & Canada
    10. 10. 2000 – Quality Manager then VP CRM Quality Management
    11. 11. SAP, Germany
    12. 12. 1997 – Development Manager CRM Technology & Mobile Solutions
    13. 13. SAP, Germany
    14. 14. 1995 – CRM Developer
    15. 15. Kiefer & Veittinger, Germany</li></li></ul><li>Who are CIBER?<br />A US$1 billion Global IT services company that builds, integrates and supports applications and infrastructures for business and government.<br /><ul><li>Over 8,500 employees
    16. 16. NYSE: CBR - HQ in Denver
    17. 17. 85 Offices in 18 countries
    18. 18. 3 US-based Development Centers
    19. 19. 3 Offshore Development Centers
    20. 20. Growth and Profitability since 1974
    21. 21. ISO 9001 certified
    22. 22. 98% Customer Satisfaction Rating</li></ul>“CIBER is positioned as a solid alternative to the large ESPs; it is a smaller, more-nimble provider whose sweet spot is a more-flexible approach to client engagements.”<br />
    23. 23. CIBER ANZ<br /><ul><li>Established in 2005
    24. 24. Subsidiary of CIBER, Inc. (NYSE: CBR)
    25. 25. Offices in Auckland, Sydney and Melbourne
    26. 26. 100+ CIBER full time employees (30+ in NZ)
    27. 27. ANZ SAP Support Centre based in Sydney & Auckland</li></li></ul><li>H<br />Agenda<br />Loyalty Management in Retail<br />The SAP Loyalty Management Solution<br />Demo<br />
    28. 28. Loyalty – What is it? <br />Companies<br />Consumers<br /><ul><li>Shopping at a single exclusive retailer in a particular category
    29. 29. Frequent shopping at a particular retailer
    30. 30. Loyalty is demonstrated by:</li></ul>Years with retailer<br />Staff favourites<br />Low price sensitivity<br />Willingness to recommend<br />(COLLOQUY Talk: The Loyalty Marketing Index, June 2008)<br /><ul><li>Loyalty Management is part of enhancing the customer experience. (SAP, 2009)
    31. 31. Loyalty Management is the actions a company undertakes to attract and retain profitable customers. (Memberson, 2009)
    32. 32. Loyalty is a feeling or attitude of devoted attachment and affection. This is mostly measured by behavioural KPIs like share of value, purchase frequency or retention rate
    33. 33. Loyalty Marketing is about creating customers who don’t need ongoing marketing investment and therefore are more profitable (BuildingBrands, 2009)</li></li></ul><li>Successful Loyalty Programs<br /><ul><li>Improve the existing customer relationship by offering relevant rewards that reinforce the brand values
    34. 34. Identify, maintain, and increase the yield from best customers through long-term, interactive, value-added relationships
    35. 35. Performance is judged with a combination of behavioural and attitudinal measures</li></ul>COLLOQUY, 2006, BuildingBrands, 2009 <br />
    36. 36. Loyalty Management in Retail – Where are we now? <br /><ul><li>3 distinctive models
    37. 37. Coalition
    38. 38. 2 main program types
    39. 39. Cashback
    40. 40. Points based
    41. 41. Loyalty technology
    42. 42. Smart Cards
    43. 43. E-Coupons (e.g. Safeway)
    44. 44. Active program participation rates are modest: ~40%
    45. 45. Signs of maturity and boredom
    46. 46. Process models
    47. 47. Personalization
    48. 48. Improved loyalty analytics
    49. 49. WOW! factor and soft benefits</li></li></ul><li>Retail Market Environment: 3 Distinctive Models<br />EDLP<br />Loyalty Model<br />Hybrid Model<br />Relentless focus on lowest category prices that leads to<br /><ul><li>Low customer service
    50. 50. Low In-store experience
    51. 51. Unimportance of customer relationships</li></ul>Membership clubs with de facto retail loyalty program<br /><ul><li>Membership fees
    52. 52. Members only wholesale-pricing </li></ul>Focus on differentiated customer relationships via<br /><ul><li>Recognition and rewards
    53. 53. Identifying customers
    54. 54. Tracking their behaviour
    55. 55. Mining data for marketing insight</li></ul>Focusing solely on the lowest price in your sector is a pathway to disaster <br />(If your are not the low-price leader ...<br />... and there can be only one!)<br />
    56. 56. State of the Art Loyalty Relationship Chain(TM)<br />ROI<br />Redemption<br />Dialogue<br />Engage-ment<br />Increase Member Value<br />Sustain-able Retention<br />COLLOQUY, 2009 <br />
    57. 57. How to Increase Loyalty Program Participation<br />One Face to the Customer<br />Brand Linkage<br />Customer Service<br />RelevantProducts<br />WOM Champion<br />TargetedOffers<br />PersonalizedCommunication<br />Social Networks<br />CRM LoyaltyAnalytics<br />WOW!-Factor – Attractiveness of Value Proposition<br />
    58. 58. Building a Customer Strategy based on Segments<br />Some market analysis demonstrates how crucial it is for a retail company to manage their loyalty program in an innovative and aggressive way<br />Loyalty Customer Strategy<br /><ul><li>80% of shoppers use their loyalty cards regularly
    59. 59. 20% of loyalty program members generate 80% of a retailer's profit
    60. 60. It costs 5-10 times more to acquire new customers than keeping existing ones
    61. 61. 5% - 20% of loyalty program costs can be saved through better prospect targeting
    62. 62. Increase of customer retention by 5% can increase profits by 20% to 40%</li></ul>Potential Business impact of Loyalty Management<br /><ul><li>Same storesales could rise two digits over trend after short time
    63. 63. Gross profit percentage could rise significantly
    64. 64. Two digit Sales and profit growth could be achieved
    65. 65. Significantly increased shopping basket size
    66. 66. Increased store count in double digit percentage range</li></ul>Small Town <br />Executive Families<br />High<br />Customer<br />Segments<br />Segment B<br />Segment C<br />Segment A<br />Segment D<br />Elite Urban Singles & Couples<br />Monetary Value<br />Mobile Singles & Couples<br />Empty Nesters<br />Young Middle-ClassFamilies<br />Young Mobile Singles<br />Mid-Level <br />Urban Couples<br />Low<br />Middle Income Young Singles<br />Single-Parent Families <br />Low<br />High<br />Frequency and Recency of purchase <br />OlderSingles & Couples <br />Older Families in Isolated Areas <br />Older, Rural Couples<br />Customers<br />Given the profit contribution of loyalty card buyers , it is vital for retailers to continuously recruit new members into their loyalty program<br />
    67. 67. How to Increase Loyalty Program Participation<br />One Face to the Customer<br />Brand Linkage<br />Customer Service<br />RelevantProducts<br />WOM Champion<br />TargetedOffers<br />PersonalizedCommunication<br />Social Networks<br />CRM LoyaltyAnalytics<br />WOW!-Factor – Attractiveness of Value Proposition<br />
    68. 68. Retail Requirements for the Customer Strategy<br />Customer Driven Experience<br />Customers<br />Retail Requirements<br />Strategic integration of channels<br />Memberregistration<br />Member activitysales transaction<br />Member activity service transaction<br />Member activity campaign driven<br />Member activity tier upgrade<br /><ul><li>Member profile / tier / interactions drive customer experience and offers</li></ul>Operational integration of channels<br />Multi<br />Channel<br />Interaction<br />Integration ofcore customer management processes<br />Fax<br />Phone<br />Store<br />IVR<br />Letter<br />Counter<br />E-mail<br />Messaging<br />Kiosk<br />Internet<br /><ul><li>Member registration
    69. 69. Profile maintenance
    70. 70. Statements / Points
    71. 71. Lost / damaged card
    72. 72. Nominate new member
    73. 73. Change program</li></ul>Customer Management<br /><ul><li>Sales operations
    74. 74. Sales order processing for point redemption
    75. 75. Marketing Operations
    76. 76. Campaign Planning
    77. 77. Campaign Development
    78. 78. Campaign Optimization
    79. 79. Campaign Execution
    80. 80. Campaign Measurement
    81. 81. Service Operations
    82. 82. Service Ticket Processing
    83. 83. Complaint management
    84. 84. Service Interaction</li></ul>Customer Loyalty Management<br />SegmentC<br />SegmentD<br />Customer<br />Segments<br />Segment B<br />Segment A<br />
    85. 85. Retail Requirements for the Customer Strategy<br />Customer Driven Experience<br />Customers<br />Memberregistration<br />Member activitysales transaction<br />Member activity service transaction<br />Member activity campaign driven<br />Member activity tier upgrade<br />Multi<br />Channel<br />Interaction<br />Fax<br />Phone<br />Store<br />IVR<br />Letter<br />Counter<br />E-mail<br />Messaging<br />Kiosk<br />Internet<br />Customer Management<br />Customer Loyalty Management<br />SegmentC<br />SegmentD<br />Customer<br />Segments<br />Segment B<br />Segment A<br />
    86. 86. How to Increase Loyalty Program Participation<br />One Face to the Customer<br />Brand Linkage<br />Customer Service<br />RelevantProducts<br />WOM Champion<br />TargetedOffers<br />PersonalizedCommunication<br />Social Networks<br />CRM LoyaltyAnalytics<br />WOW!-Factor – Attractiveness of Value Proposition<br />
    87. 87. Word Of Mouth Marketing<br />Engagement<br />Dialogue<br />Value Exchange<br />Participation<br />Identification<br />WOM Acquisition<br />WOM<br />Increased Member Value<br />Multiple Exchanges<br />WOM Facilitated<br />Champions<br />Profitable Long-Term Relationship<br />Sustainable Retention<br />COLLOQUY talk: The New Champion Customers, January 2009<br />
    88. 88. WOM enhanced Loyalty Relationship Chain <br />Higher ROI<br />Cost<br />Revenue<br />Increase Member Value<br />Dialogue<br />Engage-ment<br />Sustain-able Retention<br />COLLOQUY, 2009 <br />
    89. 89. H<br />Agenda<br />Loyalty Management in Retail<br />The SAP Loyalty Management Solution<br />Demo<br />
    90. 90. Loyalty Management – A Complete Solution<br />
    91. 91. Loyalty Management – Overview<br /><ul><li>Independent Affiliates
    92. 92. 3PL
    93. 93. Service stations
    94. 94. Other B2C business</li></ul>Loyalty<br />Program<br />Loyalty<br />Campaign<br />Point<br />Types<br />Point<br />Account<br />Tier<br />Groups<br />Program<br />Partner<br />Tier<br />Level<br />Rule<br />Group<br />MemberActivity<br />Loyalty Processing Engine<br />Rule<br />Card<br />Membership<br />Member<br /><ul><li>Transactional Data
    95. 95. Master Data</li></li></ul><li>Communication<br />Customer<br />Segments<br />External Applications/POS system<br />Customers<br />Multi<br />Channel<br />Interaction<br />Fax<br />Phone<br />IVR<br />Letter<br />E-mail<br />Internet<br />Back-Office<br />Counter<br />Web Shop<br />Interaction Center<br />CRM UI<br />Web-Services<br />Membership Handling<br />Points / Bonus<br />Determination by Rule Engine<br />Member<br />Activities<br />Point<br />Accruals<br />Loyalty<br />Management<br />CRM Marketing<br />Reward Rule Management<br />Processing Engine<br />Point Account<br />Point<br />Redemption<br />Point<br />Expiration<br />Program Management<br />
    96. 96. Functional Overview<br />Reward Rules<br />Management<br />Membership<br />Handling<br />Processing<br />Engine<br />Program<br />Management<br />Tier Management<br />Scalable Engine Component<br />Membership Types and Registration<br />Robust Rule Modeling<br />Points Management<br />Online Member Activity Processing<br />Member Tier Management<br />Version Management<br />Tier based Point Expiration<br />Batch Member Activity Processing<br />Member Activities<br />Template & Expert mode maintenance<br />Program Creation<br />Tier Evaluation Processing<br />Member Profile Maintenance<br />Rule Scheduling<br />Program Partners Management<br />Point Expiration Processing<br />Point Account Management<br />Partner Sponsorship<br />Dynamic Attributes<br />Simulation of Rule Processing<br />Basic Membership Card Handling<br />Campaign Integration<br />Integrate / Analyze / Collaborate<br />Sales Order Integration<br />IC Integration<br />Loyalty API Connectivity<br />Web Channel Integration<br />
    97. 97. Key Take Aways<br />
    98. 98. H<br />Agenda<br />Loyalty Management in Retail<br />The SAP Loyalty Management Solution<br />Demo<br />
    99. 99. Retail Loyalty Dashboard Overview<br />Champaign Analysis by Product Category<br />Multi-Channel Analysis<br />Analysis by Tier and Region<br />
    100. 100. Dashboard – Loyalty Campaign Details<br />Campaign Analysis Overview<br />Detail Analysis by Tier and Campaign<br />
    101. 101. Loyalty Program Overview<br />Loyalty Program Hierarchy<br />Loyalty Program General Data<br />Several Component:<br />Events – Loyalty Campaigns<br /> Reward Rule Groups – e.g. for campaigns, sales orders, tiers<br />Reward Rules – How many Points<br />
    102. 102. Membership in Loyalty Program I<br />Membership Overview<br />Tier Changes<br />
    103. 103. Membership in Loyalty Program II<br />Member Activities:<br />Tier Change, Accrual, Redemption, …<br />Point Balance – Several Point Types per Program Possible<br />Multiple Members and Cards to a Membership Possible<br />
    104. 104. Loyalty Campaign<br />Loyalty Campaign – General Data<br />With or Without Enrollment<br />Enrollment by all Members or Target Group Based<br />Reward Rule<br />
    105. 105. Reward Rule Details<br />Easy Maintenance of Reward Rules via the Formula Builder<br />
    106. 106. Web Channel – My Account<br />Consumer – Account Area with several Options<br />View of all Loyalty Campaigns<br />
    107. 107. Browse Catalogue and Earn Some Extra Points<br />Browsing in the Product Catalogue <br />Extra Points if Buying Long Chairs<br />
    108. 108. Web Shop – My Loyalty - Transactions<br />Points are Added to the Balance<br />Earn 3x Points by Buying the Chair:<br /><ul><li>Standard Points (Qualifying)
    109. 109. 2 Loyalty Campaigns</li></li></ul><li>Web Shop – Redeem Points<br />Costs in Points Shown<br />Shopping Basket View<br />Redemption Product Catalogue<br />
    110. 110. My Transactions after Redemption<br />All Member Activities are Happening in Real-Time <br />
    111. 111. Call Centre Support Specialist Overview<br />Mr. Baker calls in<br />Confirmation of Account and Membership Details<br />
    112. 112. CIC – Membership Overview<br />Donation and Transferring of Points<br />Membership General Data<br />Activities Visible: Sale and Redemption from Web Shop<br />
    113. 113. Donate or Transfer Points<br />Selection of Destination Membership<br />Number of Points<br />
    114. 114. Manual Up- or Downgrade<br />Possibility to Up- and Downgrade a Membership from the Membership Overview<br />