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Measuring and demonstrating results of loyalty programs


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A overview of the main dimensions that should be tracked in order to demonstrate the impact of a loyalty program

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Measuring and demonstrating results of loyalty programs

  1. 1. Measuring and demonstrating results of Loyalty Programs Benjamin Filaferro – – May 2013
  2. 2. Performance Overview •Number of Loyalty Members •Tiers Figures •Collection & Redemption Data •Churn & Tenure Data •Loyalty Growth Members Evolution •Number of Members (Total & per Tier) •New enrolments per tier •Tier movements •ARPU •Churn per tier •Loyalty Members per product family •Product Penetration per Tier Collection & Redemption •Points Collection vs. Redemption and Expired •Ratio Collection/Redemption •Collected Points per customers per tier •Redeemed Points per customers per tier •Expired Points per Customer per tier Redemption Behavior •Redemption per partner •Redemption per service •Average point per transaction •Channel redemption preference per tier Sources of Points •Sources of collected points •Main product contribution in source of collected points Partner Overview •Partner Redemption evolution •Top 3 outlets (Voucher / eVoucher) Loyalty Underperformance •Customers Refusing to enroll •Customers for which all benefits were not implemented •Customers who never visited a VIP Shop •Customers who never benefited from a Partner Discount Fraud Identification •Abnormal use of Partner Discounts Typical reports needed for the daily management of a point program 2Benjamin Filaferro – – May 2013
  3. 3. Loyalty NPS Loyalty NPS should be measured both as a general NPS enhancer and as a sub-brand or product 3 ENROLMENT EARNING BURNING General NPS Improvements Illustrative Benjamin Filaferro – – May 2013
  4. 4. It is crucial to always calculate the incremental effect of the Loyalty Program over the years 4 - 1,000,000,000 2,000,000,000 3,000,000,000 4,000,000,000 5,000,000,000 6,000,000,000 7,000,000,000 8,000,000,000 9,000,000,000 Year 1 Year 2 Year 3 Customer Acquired and Saved on Y3 (Including ARPU Effect) Customer Acquired and Saved on Y2 (Including ARPU Effect) Customer Acquired and Saved on Y1 (Including ARPU Effect) Existing/Planned Base (ARPU Effect Only) Revenues of Loyalty Business Case Since not all loyalty generated customers will be acquired or saved at the same time during the year, we take as an hypothesis that they will generate half of the average yearly ARPU of the concerned year Disguised Example Benjamin Filaferro – – May 2013
  5. 5. High Level Cost/Revenue Structure of an Affinity Loyalty Program 5 Net Present Value 1 001 M ROI 3.97 Incremental Benefits 1 339 M Incremental Costs 338 M VIP 181 M Benefits Costs 323 M CAPEX & OPEX 14 M High Value 1 158 M+ - Disguised Example Benjamin Filaferro – – May 2013
  6. 6. Loyalty Impact Estimations have to be realistic compared to the Operator Overall Budget 6 563,249 30,615 -101 995 459 5,100 5,559 491,870 450,000 470,000 490,000 510,000 530,000 550,000 570,000 590,000 Planned HNW Base Planed Churn Planned Growth Adds Loyalty Saved Churners Loyalty Additional Growth Add Total Loyalty Impact End of Year without Loyalty Disguised Example Benjamin Filaferro – – May 2013
  7. 7. 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, An alytics, Logistics, & Partnerships) 2 Point Programs and 1 Prepaid Stimulation Game 7Benjamin Filaferro – – May 2013
  8. 8. Benjamin Filaferro – – May 2013 Thank you