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Main types of loyalty programs


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Description of the 6 main types of loyalty programs with a focus on Telecom Operators examples

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Main types of loyalty programs

  1. 1. Main types of Loyalty Programs Benjamin Filaferro – – May 2013
  2. 2. Objectif Objectif Main Types of Loyalty Programs 2 Community based Coalition Pure point based Redistribute Value Affinity based with tiers Pure lifestyle Make Customers Feel Different Hybrid point and lifestyle Benjamin Filaferro – – May 2013
  3. 3. Pure Point Based Programs 3 Based on their spending, Customers accumulate points that they can redeem to get free Services/ Products Historically Operators are using Pure point based programs with different levels of complexity Pros Cons The entire range of mass customers can receive points Difficulty for the lowest and highest customer to use their points Tangible value which customers can sense, cumulate and monitor High Cost of points Flexible and can be used to drive desired behaviors Heavy to operate Examples Belgacom gives points to its top customers. Points can be reddemed for free communications or physical goods Verizon Small Biz Rewards program provides businesses with points that can be redeemed against business- related freebies Benjamin Filaferro – – May 2013
  4. 4. Pure Lifestyle Programs 4 A specific group of customer is targeted (e.g. Youth, Women, etc.) and is offered very targeted deals Pure life style programs offer endless possibilities of partnerships generating revenues with a high churn impact Pros Cons Targeted life style deals create a real “addiction” and forbid customers to leave the program No impact on customers that are not in the targeted segment Developing partnership is really easy with companies targeted the same segments Important difficulties to design a life style program for the “Average Joe” Possibility to create additional non telecom incomes Examples Turkcell has two Lifestyle programs: one for youth customers and another for women. Each lifestyle benefits from discount at Turkcell and partners Benjamin Filaferro – – May 2013
  5. 5. Affinity Based Programs with Tiers 5 Customers are selected based on their spending and are offered gifts, free products, and privileges Affinity based with tiers are also used to target efficiently Prepaid and Postpaid customers at the same time Pros Cons Allows higher churn decrease of the most valuable customers No impact on customers that are not in the targeted segment Limited cost due to no investment on low-end customers Not suited for mass customers who require more value than differentiated treatment Easy to implement and operate Examples According to their price plans, SFR offers systematic benefits to its customers. For example, Platinum customers benefit from: • Possibility to renew their mobile phone every 18 months while benefiting from the same level of subsidization than new customers • Home delivery of an emergency replacement mobile phone in case of technical issue • Immediate exchange of the ADSL modem in case of technical difficulties • Lending of a 3G USB Stick in case of issue with the landline • Direct access to a CC agent (no IVR) • Possibility to have an appointment in a shop (no queuing) Benjamin Filaferro – – May 2013
  6. 6. Hybrid Point Based and Lifestyle Programs 6 Programs offering points together with segmented deals This type of program is useful for example to reward VIP Customers with something more relevant than additional points Pros Cons Cumulate “Pros” of both programs Partially mitigate “Cons” of both programs Is relevant to both value oriented customers and lifestyle/services oriented customers Can be complicated to be launched at once, where it can confuse the customers Can be implemented in phases Examples Oreddo, in parallel with its Nojoom Point Program has an invitation only VIP Club called Al Nokhba. Al Nokhba customers benefit from higher point earning rates within the Nojoom program, but also they have access to: • Specific Redemption Partners • Dedication Account Management Team • Etc. Benjamin Filaferro – – May 2013
  7. 7. Community Based Programs 7 Point based programs rewarding an entire community Community Based Loyalty Program are used to decrease the churn likelihood of group of customers Pros Cons Limit churn of individual customers (the entire group has to churn) High Cost The entire range of mass customers can receive points Difficulty for the lowest and highest customer to use their points Can be used to affect the behavior of a whole community Do not fit all types of social structures Difficult to be understood by population Examples Vodafone Cyprus customers can create communities that will have discounted communications between its members and discount on telecom services. Discounts increase with the number of people in the community Benjamin Filaferro – – May 2013
  8. 8. Coalition Programs 8 Coalition of a group of brands Coalition Programs are used to share operating costs, to generate new sources of revenues (i.e. sell points to partners), and to maximize impact on customer everyday life Pros Cons Possibility to create additional non telecom incomes with redemption of points given by partners High Cost The entire range of mass customers can receive points Risk of having giving more points to customers than they are redeeming with the company Share operation costs Examples In Moscow, Beeline as well as 14 other retail and service brands are providing Malina Points to their customers. 1.85 million Moscow families have at least 2 Malina cards, and 3.8 million Malina cards have been issued. $100 million worth of rewards redeemed by members, over 1,000 items (goods, services, experiences). Benjamin Filaferro – – May 2013
  9. 9. Benjamin Filaferro – Independant Customer Strategy Advisor I have been a Strategy Consultant for the last 10 years at first for Banks and then for Telecom Operators, and I have specialized myself in Customer Strategy over the last 6 years. I have especially assisted Fixed and Mobile Operator CMOs on the design and the implementation of: • Segment Strategies (ATL, BTL, Touchpoint Experience, etc.) • New products • Retention Strategies (Loyalty Programs, Winback, etc.) In the specific field of Loyalty Programs, my experience covers: • The design, the implementation, and the launch of 2 Point Programs, 2 Affinity Programs, 1 Enterprise Affinity Program • The supervision of an outsourced team managing from end-to-end (Marketing, Communication, Analytics, Logistics, & Partnerships) 2 Point Programs and 1 Prepaid Stimulation Game 9Benjamin Filaferro – – May 2013
  10. 10. Benjamin Filaferro – – May 2013 Thank you