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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

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From CRM to CEM – monetizing real loyalty

  1. 1. From CRM to CEM: It ’ s all about Customer Experience Rainer Uphoff
  2. 2. The basic laws of Loyalty Loyalty is … … paying more , despite competitors’ discounts & freebies
  3. 3. The basic laws of Loyalty Loyalty is NOT … … having no choice … buying at a discount … inertia
  4. 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. 5. Let ’ s take a look at aviation history
  6. 6. Customer Experience Leadership 1930s – 1970s Regulated Environment: the pilot-CEO is King!
  7. 7. Customer Experience Leadership 1970s – 2010s Deregulation and Competition: The CFO-CEO is King!
  8. 8. And then, something happened:
  9. 9. Key words slide
  10. 10. What can we do when shaving the skull is no longer an option?
  11. 11. Customer Experience Leadership The time of the people-CEO has come
  12. 12. The Commodity Threat Is your Loyalty Program just another commodity?
  13. 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
  14. 14. The Commodity Threat <ul><li>There can be only ONE cost leader selling “ the perfect commodity ” </li></ul>
  15. 15. The Commodity Threat <ul><li>The rest needs to DIFFERENTIATE and create VALUE beyond PRICE </li></ul>
  16. 16. In the “ material ” world we recognize value immediately. Do you prefer … This? o r “ that ” ? PRICE: ≈ 9 $/€ VALUE: !?!
  17. 17. The Commodity Threat <ul><li>FTPs have come of age </li></ul><ul><li>Loyalty has become an industry </li></ul>
  18. 18. The Commodity Threat <ul><li>Are there wrinkles? </li></ul><ul><li>Outdated dogmas? </li></ul><ul><li>Byzantine rules? </li></ul><ul><li>Loss of focus on adding VALUE? </li></ul>
  19. 19. The Commodity Threat Let ’ s face it: Many loyalty programs have become a boring commodity or even a hassle for your “ valued customer ”
  20. 20. Improvable Practice <ul><li>The Premium tier dilemma: </li></ul><ul><li>Save miles or status? </li></ul>
  21. 21. Improvable Practice <ul><li>Airlines treat premium tier customers like cattle when travelling on a cheap ticket. </li></ul><ul><li>S/he’s still the same person! </li></ul>
  22. 22. Improvable Practice <ul><li>Airlines and hotels frequently don’t reward the decision maker </li></ul>
  23. 23. Improvable Practice <ul><li>No reasonable availability of award tickets, unreasonable fees </li></ul><ul><li>Ever heard of the GOLDEN spot? </li></ul>
  24. 24. <ul><li>What about the </li></ul><ul><li>BLACK </li></ul><ul><li>spot? </li></ul>
  25. 26. Understand what customers VALUE
  26. 27. Customer Experience Leadership The time for CEM integrated loyalty marketing has come
  27. 28. The Commodity Threat RECOGNITION POINTS
  28. 29. CRM+CEM = marriage made in heaven <ul><li>CRM </li></ul>CEM Feelings Loyalty Hapiness Love AWARDS BUSINESS CONCIERGE BUSINESS R easons P rice Miles Features
  29. 30. FTPs: The real Challenge <ul><li>POINTS are a COMMODITY. </li></ul><ul><li>A REWARDS oriented program must a) be cost leader b) be generosity leader to be competitive </li></ul>RECOGNITION generates “ priceless VALUE ” . A RECOGNITION oriented program must be a “ mass customization leader ” (technology and service)
  30. 31. It ’ s all about Customer Experience
  31. 32. CEM can help to … <ul><li>… get all customer relevant value drivers into one strategic framework </li></ul>
  32. 33. CEM: single strategic/operational framework
  33. 34. Are FFPs up to what they were created for? ¿Do they improve the customer-ROI?
  34. 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
  35. 36. ¿Do you have an integrated financial-CEM/CRM STRATEGY?
  36. 37. Traditional segmented analysis of pax value (income based)
  37. 38. <ul><li>CEM helps to make the loyalty marketing investment more precise </li></ul>CEM analysis (persona based)
  38. 39. CEM acts on customer equity, creating long term value. Long term profit analysis
  39. 40. What ’ s next? <ul><li>Do we need some PLASTIC SURGERY to consolidate the beauty? </li></ul>
  40. 41. It’s time to INNOVATE! <ul><li>Get Loyalty Marketing deeply routed in the corporate strategy. </li></ul><ul><li>Get the corporate strategy deeply rooted in what customers VALUE. </li></ul><ul><li>Know what customers value. </li></ul>
  41. 42. CEM TOOLS: VALUE generating INNOVATION Customer Journey ECG Objectives, scope & journey type Customer segment Moments of truth Key Journey Steps Key Journey Steps Key journey steps Levers for solution hunting Customer Satisfaction Rating Great +100 -100 Poor <ul><li>Lucy García </li></ul><ul><li>Eye surgeon @ 3 hospitals 41 years, married, 3 children. </li></ul><ul><li>Here mom lives with them. </li></ul><ul><li>17 business trips/year (she pays: price sensitive) </li></ul><ul><li>3 family trips/year </li></ul><ul><li>Loves 2x1 offers for husband or kids going with her </li></ul><ul><li>Hates overnight trips </li></ul><ul><li>Hates checking in baggage </li></ul>
  42. 43. 1. CEM for FTP users: Airlines, Hotels,… <ul><li>Use CEM to get the loyalty marketing and FTP tied into the core customer strategy. </li></ul><ul><li>Use CRM to provide CEM with basic VoC </li></ul>
  43. 44. 2. CEM for FTP providers/operators <ul><li>Use CEM to find out what customers really VALUE </li></ul><ul><li>Help your customers to de-commoditize </li></ul><ul><li>Integrate both halves of the brain into a single offering </li></ul>Tribute to the pioneers
  44. 45. 3. CEM for FTP IT providers/developers <ul><li>Help your customers to innovate </li></ul><ul><li>Do the CEM homework to create functions that SUPPORT the intoduction of new, higly valued functions </li></ul><ul><li>Overheated buzzword, but still important: SM </li></ul>
  45. 46. Example: Tenerife Tourism Innovation Lab <ul><li>iPad/Smartphone destination guides </li></ul><ul><li>CRM triggers recommendations (+value, +ad $€) </li></ul><ul><li>Location check-in/comments >> rewards </li></ul>
  46. 47. Example: Small European CRS <ul><li>“ CEM built in ” Many small tweaks to enable operators to link CRM/FFP with CEM based Value Drivers </li></ul>
  47. 48. One more Ting
  48. 49. Law Proposal <ul><li>Arquitects, lawyers, doctors and FTP designers MUST use their own product for at least year </li></ul><ul><li>Let employees get miles and status with ID tickets!!! </li></ul><ul><li>Managers will finally notice the stupid rules </li></ul><ul><li>Employees will finally understand why customers buy crazy routes </li></ul>
  49. 50. THANK YOU!! [email_address] blog: rainerup