From CRM to CEM – monetizing real loyalty
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Customer Experience Management (CEM) keynote at the New York Loyalty Marketing and FFP Spring 2011 Conference, by Rainer Uphoff. See blog entry at http://ourpax.com/tools/from-crm-to-cem-monetizing-real-loyalty/
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From CRM to CEM – monetizing real loyalty
- 1. From CRM to CEM: It ’ s all about Customer Experience Rainer Uphoff
- 2. The basic laws of Loyalty Loyalty is … … paying more , despite competitors’ discounts & freebies
- 3. The basic laws of Loyalty Loyalty is NOT … … having no choice … buying at a discount … inertia
- 4. The basic laws of Loyalty Neither is loyalty … … being loyal to 2 (3,4,…) parties After celebrating 30 years of FFP, why are your customers cheating on you more than ever? “ Didn ’ t you get my email? ”
- 5. Let ’ s take a look at aviation history
- 6. Customer Experience Leadership 1930s – 1970s Regulated Environment: the pilot-CEO is King!
- 7. Customer Experience Leadership 1970s – 2010s Deregulation and Competition: The CFO-CEO is King!
- 8. And then, something happened:
- 10. What can we do when shaving the skull is no longer an option?
- 11. Customer Experience Leadership The time of the people-CEO has come
- 12. The Commodity Threat Is your Loyalty Program just another commodity?
- 13. The Commodity Threat LOYALTY is KEY to SUCCESS: A SATIFIED customer is NOT more loyal … … COMMODITIES actually do SATISFY ! But only the COST LEADER can make money
- 16. In the “ material ” world we recognize value immediately. Do you prefer … This? o r “ that ” ? PRICE: ≈ 9 $/€ VALUE: !?!
- 19. The Commodity Threat Let ’ s face it: Many loyalty programs have become a boring commodity or even a hassle for your “ valued customer ”
- 26. Understand what customers VALUE
- 27. Customer Experience Leadership The time for CEM integrated loyalty marketing has come
- 28. The Commodity Threat RECOGNITION POINTS
- 31. It ’ s all about Customer Experience
- 33. CEM: single strategic/operational framework
- 34. Are FFPs up to what they were created for? ¿Do they improve the customer-ROI?
- 35. Additional business Higher yield / pax Longer pax lifetime More customer referrals Better pax retention Wallet share recovery Recovered pax Early warning sensors Business saved Business gained+saved
- 36. ¿Do you have an integrated financial-CEM/CRM STRATEGY?
- 37. Traditional segmented analysis of pax value (income based)
- 39. CEM acts on customer equity, creating long term value. Long term profit analysis
- 48. One more Ting
- 50. THANK YOU!! [email_address] blog: ourpax.com rainerup
Editor's Notes
- What makes a FFP valuable to the customer (the shareholder comes later!) You know who to run a FFP, that ’ s a good start. Anecdote “ no idea ” > “ exactly what we want ” After 30 years of sophistication & erosion, ripe for a revolution? Let me speak with the bravery of ignorance FFP: value or nuisance? S trategic options O perational guidance
- Let ’ s start with loyalty: your business Quick survey: who is married or similar? Who married thinking it would be cheap? Who married after been offered a discount? (too intimate …)
- HIJACKED (Stockholm Syndrome?) - BRIBED – STUPID Your customers only will ask for discount if they believe that your value proposition is worth less than your asking price
- We are going to talk about the relationship between customer experience, value, loyalty en benefits/profits
- Operational excellence determines safety and reliability. Safety was still sort of “ added value ” . 1935 -1975 PILOTS ’ WORLD In the beginning of aviation, everything was enthusiasm. Better, bigger, faster aircraft were the key to success. Pilots ruled the aviation world. Then deregulation came and governments and shareholders discovered that financial gurus were much better suited than pilots to save costs and withstand the impact of competition . Of course, pilots continued to be necessary after this change, despite some attempts to prove the contrary by a certain cost conscious airline CEO. But the unions remind us that they will continue to be an item on the payroll for some time to come.
- 1975-2015 CFO WORLD The CFO-CEOs felt like the scientists of the 19th century. They made discovery after discover of how to atomize the air transport product, challenge the laws of nature squeezing more and more people into a given space, but most importantly, suggesting even that certain physical needs should better be abolished when boarding an aircraft. They took a surgeon ’ s scalpel and separated all the flesh from the bones and opened a marketplace to sell it separately, piece by piece.
- People embraced enthusiastically the possibility to travel for 20 euros , as long as you book a few months in advance, don ’ t mind to get up at 3 a.m., don ’ t check in baggage , don ’ t insist on talking to anybody personally at the airline, don ’ t want to use your credit or debit cards nor pay cash and don ’ t need a boarding pass. What? Wait a minute! How far can the service unbundling tendency go?
- When cost cutting and service unbundling (“ the indivisible product atom ” ) created “ the perfect
- … of course, without satisfaction, there is no loyalty
- CEM can help CRM to get connected with the strategic goals of a corporations. The problem is that CRM/FFP cannot be an isolated world: it is the NUMBER ONE TOUCHPOINT for many customers. It CREATES EXPECTATIONS – if FFP is not part of a CEM defined VALUE PROPOSITION it will fail miserably. CRM can help to provide customer insight, CEM can inject it into the the organisations genes. Unconnected CRM can be a waste of money(giving away something that is not valued – i.e. Top tier miles…) or even a nuisance (destroying value). Are corporate bonuses tied into customer loyalty performance?
- AB vs. AA practical joke (PLEASE DO NOT ALWAYS do what consultants recommend…!!) AA manager tried to convince me that Americans like the chewish sandwich (I learnt in the US that “GOURMET” stands gourmet pricing of substandard food…)
- Make sure you remain attractive
- Not yours, of course …
- Fly paid tix to save status vs fly on miles to avoid their expiry. IDEAS: Free premium tier (any tier) customers from any limitation: their motivation to maintain the tier will be a larger revenue driver than anything else IF you give them the value: Change fee excemption, or redeemable with points Minimum fare miles accrual limitations Minimum fare fore miles-paid upgrades
- Give them at least the points!
- Decision takers are cost sensitive – and can switch to the competition tomorrow Corporate passengers will do what the company says. Professionals can switch tomorrow: double their actual yield, considering it always “ business at risk ” HOTELS: I tell customers to book and pay hotel – I don’t get points nore status GRAPH ARISTOCRACY – get all the attention without merit on their own: corporate customers who follow corporate rules The PROFESSIONALS – fly as much as corporate customers, VALUE PRODUCTIVITY MORE THEN THEM (it’s THEIR money), but they have a hard time getting beyond that infamous SILVER lever because they are price sensitive (but can change tomorrow) General public: ¿high potentials vs loss makers?
- I heard airline execs saying that the system should “ encourage expiry without using it ” That’s WORSE than not having a program, because you have created an expectation. (Air Berlin 18 months rolling expiry – you permanently see expire points, miles, km) – ever hear of the GOLDEN SPOT? If you make miles a currency, treat award tickets like revenue tix (IB does)
- Integrate CEM KPIs with FFP “ early alert sensors ” : change in consumption pattern? Pushes balance to ZERO (>>black spot)? IDEA: Make points a real currency – and allow to When people get frustrated about expiring miles, low award availability, low earning levels, tricky conditions, high ticketing or otherhidden fees (“car insurance”), they are happy when the balance finally reaches ZERO and they don’t have to worry any longer. Generates your program VALUE or FRUSTRATION?
- CEM can help CRM to get connected with the strategic goals of a corporations. The problem is that CRM/FFP cannot be an isolated world: it is the NUMBER ONE TOUCHPOINT for many customers. It CREATES EXPECTATIONS – if FFP is not part of a CEM defined VALUE PROPOSITION it will fail miserably. CRM can help to provide customer insight, CEM can inject it into the the organisations genes. Unconnected CRM can be a waste of money(giving away something that is not valued – i.e. Top tier miles…) or even a nuisance (destroying value). Are corporate bonuses tied into customer loyalty performance?
- Loyalty programs act beautifully on both sides of the customer universe: cost conscious customers – premium customers. Combining REWARD+RECOGNITION creates value.
- AND NO, I am NOT saying that CEM is IRRATIONAL > it just must integrate with CRM Combine adequately the "rewards" (points) and the "customer recognition ” perspectives (CRM) to become part of a broader Customer Experience strategy. POINTS are a COMMODITY. A rewards oriented program must a) be cost leader b) be generosity leader to be competitive RECOGNITION is generates “ priceless VALUE ” . A RECOGNITION oriented program must be mass customization leader Most airline programs combine both
- What happens when the program gets outsourced or is spun-off? The “ awards business ” generates cash. Operator is like a bank with its own currency. But what about the value if BUYING a seat/room switches from revenue management to account (different mindsets). What about the “ Concierge business ” ? The money is in the long-term increase in customer-equity. You cannot outsource this. Can you? Is there a strategy behind the decision?CEM can provide you with the tools to decide!
- Both brain halves must be managed rationally to make money!
- (make sure all forces are pullinginto the same direction)
- Goal: Make goals manageable
- Scope of FTP/CRM-CEM business improvement After 1 year flying weekly the same route – why don’t I get a “ nurture/thank you call? CEM-CRM integration at its best! BTW, is your FFP good enough to draw in new customers (CEM integration)? Is it ok to prevent current customers from looking for other options? Is it efficient to detect early defecting customers and the causes? Can you use it to mitigate the impact of “ catastrophic events ” in a segmented manner?
- The AVIONLINE MODEL - This is a MODEL, not a RULE Anybody employs PERSONA/RETENTION MANAGERS?
- Graph: short term cash flow vs. customer equity value increment strategy NEED OF DEFINING AN INTEGRATED STRATEGY I s your FFP a sales outlet and short term cash driver? Or is your aim to generate long term customer equity? Or both? Did you define a CX based strategy? Optiontown: OK, but with CEM/loyalty integration No quick buck priority, please. Pax VALUE long term attention as you do: a FREE upgrade can be MORE profitable than a cheaply paid one. Investment in relationship
- Make sure you remain attractive
- Listen – segment – know your customer Deliver at touchpoints Connect to corporate strategy
- Full suite of CEM: Listening, PERSONA management, touchpoint analysis, Customer Journey management, Corporate KPIs, Innovation CRM makes CEM fly: Mass customisation or micro-segmentation optimises investment vs. cost of opportunity CRM allows CEM to understand the customer universes better, but CEM needs to tell CRM which personas are key to built the loyalty offering around: Student: discount Family accumulate points in one account, etc.
- Tribute to the pioneers of LatinPass
- You are in the innovation business! SM: iPad destination guide that KNOWS and offers what customer likes (advertising opportunity), rewards comments
- That’s “ awesome ” ! That ’ s powerful!!! Tenerife: Beautiful place, all year 21º-25º, but spoilt by 60s, 70s building boom, needs new value proposition (despite current boom x Egypt)
- It’s all about the small details that make life easier! - True loyalty is becoming an evangelist (NPS)
- A last idea: I have want to propose a law.