The document discusses customer loyalty marketing through analogies to the story of the three little pigs, illustrating various marketing leader approaches to loyalty programs. It highlights best practices, the importance of data integration for targeted communications, and the growing necessity of effective loyalty strategies in competitive markets. Additionally, it outlines survey results, challenges faced by loyalty managers, and the potential profitability of improved customer retention efforts.

1. Philippines Loyalty Report
Itmayseemabitsimplistictoframeupthisdiscussionbasedonastoryforchildrenbut,justforfun,let’sseehowcustomerloyaltymarketingmightplayoutifitwereexpressedintermsofthefamiliarstoryofThreeLittlePigs.
Afterthat,wewilllookatsurveydatafromacross-sectionalhouseholdsurveyweconducted.

2. The Competitor
He had dominant market share and growing, and had already locked up extremely favorable locations around the country. Many of his malls were in fact a destination for shoppers. He offered a full range of products and merchandising was good, plus some desirable items were exclusive. Pricing was market competitive. Because of his favorable brand position, he could charge prices that were slightly higher than others in some cases, thus ensuring a favorable profit position.
He had a very effective loyalty program with strong penetration and member engagement. Customer experience was good. And he was able to spend heavily on above-the-line advertising. This cost made sense for him, due to his wide geographic reach.
©Wonders of Disney http://wondersofdisney2.yolasite.com

3. Marketing Leader 1
In response, the first marketing leader gave almost all his focus to above-the-line advertising for mass consumer audiences. Most of his activity was promotion, especially sale events, which were advertised in newspapers and on billboards. Below-the-line efforts were mostly coupons, lamppost banners, in-store collateral, and email and text blasts to people who registered for raffle prizes. His agency recommended that approach, and his main competitor was doing ittoo.
The problem was, he spent too much, had a poor return on advertising investment, with flat or even declining sales, and no loyalty program. He was thinking about developing a program, but it seemed too complicated to figure out and he wasn’t sure whether he needed one.
©Wonders of Disney http://wondersofdisney2.yolasite.com

4. Marketing Leader 2
The second leader had rolled out a loyalty program. Members could earn points for purchases and then redeem them for merchandise. The program worked more or less like a deferred discount and all customers had the same deal. There was no segmentation and almost no soft benefits. With a few minor differences, he had merely copied what his main competitor was doing. He referred to this as benchmarking.
Although he had collected a lot of data about his customers, including contact information, he mostly used this just to send out text and email blasts about store-wide sale events. He was practically unable to send targeted communications because his transaction data was on one server and demographic data on a different system, with no data mart to pull it all together for segmentation and targeting. Most of the time, he was forced to do filtering in Excel.
©Wonders of Disney http://wondersofdisney2.yolasite.com

5. Marketing Leader 3
The third leader had an effective loyalty program, with good member penetration and engagement. Customer segments were defined, and he had identified his top customers. Benefits were structured to reward desired behaviors.
Above all, this leader recognized that a loyalty program is merely an enabler. The main purpose of his program was to enable targeted, relevant and meaningful communication with customers. His program was designed to identify, maintain and increase the yield from best customers through long-term, interactive, value-added relationships. His program structure, segmentation and IT systems were all designed with this end in mind.
Let’s see why this matters.
©Wonders of Disney http://wondersofdisney2.yolasite.com

6. Source: Marketing Sherpa, 2012Conversion RateIs 208% higher for targeted messages then for email and text “blasting”
208% HigherCustomer Loyalty Marketing

7. Source: Nielson, Global Report of Loyalty Sentiment, November, 2013Customers in Asia PacificAre 92% more likely to choose brands that offer a loyalty program.
92% Customer Loyalty Marketing

8. Customer Loyalty MarketingSource: Michael Lowenstein, Customer WinbackSuccess Ratesfrom win-back campaigns are 3-4X higher than for acquisition campaigns.
3-4 X Higher

9. Customer Loyalty MarketingSource: Loyalogy, Loyalty Pulse Study, 201365% AGREE: I would recommend a brand to my friends if they have a good loyalty program.
65%

10. Customer Loyalty MarketingSource: Bain & Company, Loyalty Guide 6, 2013A 5% Reductionin customer defection will bring as much as a 50% increase in profits.
50%
5%

11. Goals of Loyalty & CRM1. Satisfaction & Advocacy•Recognition•Convenience•Personalization•Problem Resolution•Consistency Across Channels•Engagement, Fun, Surprise, Delight

12. Goals of Loyalty & CRM2. Customer Retention•Reactivation•Win-Back•Competitive Defense•Satisfaction is a Key Driver

13. Goals of Loyalty & CRM3. Customer Development•Basket Size•Up-Spend•Frequency•Cross-Shopping•Relevant Offers•Best Customer Programs

14. Goals of Loyalty & CRM4. Customer Acquisition•Referral•Activation•Trial

15. Goals of Loyalty & CRM5. Cost Reduction•Optimize ATL v BTL•Better Targeting•Higher Conversion•Optimize Rewards Cost v Perceived Value•Simplification, Reduced Admin Waste•Fraud Prevention

16. Goals of Loyalty & CRM6. Derivative Value•Monetize Loyalty Data•Multi-Partner Agreements•Supplier Funding

17. Cross-Sectional Survey
570 Households, Philippines

18. 41% 25% 19% 9% 4% 2% <1%
Original Research: Cross-Sectional Survey, 570 households, PhilippinesAre you aware of any programs that give points or rewards for buying? 1.1 programs cited on average per householdDistribution of Mentions
0
50
100
150
200
250
0
1
2
3
4
5
7
Number of Respondents
Number of Programs Cited

19. 27.4%
Original Research: Cross-Sectional Survey, 570 households, Philippines27.1% Which ones? Program Types
Grocery
GeneralRetail
DrugStores
Banks
SpecialtyRetail
Government
Gasoline
Air Miles
% of Mentions 24.1% 12.4% 3.6%3.4% 1.2%0.8%

20. 27.4%
Original Research: Cross-Sectional Survey, 570 households, Philippines27.1%Program Types24.1% 12.4% 3.6%3.4% 1.2%0.8%
Grocery
GeneralRetail
DrugStores
Banks
SpecialtyRetail
Government
Gasoline
Air Miles
% of Mentions Top 2 ProgramsSM Advantage + Suki Card = 47% of Mentions221 Other Programs Cited = 53% of Mentions

21. Other ChallengesExperienced Loyalty Heads are Hard to Find

22. Other ChallengesRapid Changes in Technology Options

23. Other ChallengesIncreasingCompetitive Sophistication

24. Other ChallengesChanging Regulatory Environment

25. Other ChallengesNo Local Community Devoted to Loyalty

26. Even Fundamentals are Sometimes MissingNot Collecting Demographic Data

27. Case 1
FMCG

28. 2012-13... Social Focus was facebook170,000 Fans so far(after 2-1/2 years) 1-2 Posts per day, themed

29. 2012-13... Social Focus was facebookBUT Agency Cost was P13 MillionOnly 12.7% of target is online1-2% are fans, if lucky

30. facebook –Declining Organic Reach16.0% 12.6% 10.2% 7.8% 6.5% Source: edgerankchecker.comFeb 2012Sept 2013Nov 2013Dec 2013Mar 2014facebook Filtered Feed60% Decline in Reach in the Past Year alone

31. facebook –Declining Organic Reach16.0% 12.6% 10.2% 7.8% 6.5% Source: edgerankchecker.comFeb 2012Sept 2013Nov 2013Dec 2013Mar 201460% Decline in Reach in the Past Year alone. It means that of the 170,000 customers who liked the page, only about 11,000 see each post. Question: What is the business case?

32. 2014-15... More Focus on MobileMembers per yearOn Pack (mobile) vs. facebook68,000facebook253,000On Pack

33. But then... 40% Opt-Out 68,000facebook253,000On Pack40% Opt-Out Rate due to sending “tips” (Content was not relevant.)

35. Some Good Questions... •What behavior is desired? •How can we track behavior? •How to make it easy? •Is the reward worth the effort? •What are the segments? •What do we say to each?

36. Case 2
Retail

37. Program Relaunch
44.4%
18.5%
11.1%
7.4%
18.5%
Rewards and Benefits
Points not Awarded
Long Wait for Card
Points not Known or Verified
OtherSources of Dissatisfaction

38. Program Relaunch
44.4%
18.5%
11.1%
7.4%
18.5%
Rewards and Benefits
Points not Awarded
Long Wait for Card
Points not Known or Verified
OtherSources of Dissatisfaction FixedPoints will buy anything in the store.
Pay P 434.00

39. Program Relaunch
44.4%
18.5%
11.1%
7.4%
18.5%
Rewards and Benefits
Points not Awarded
Long Wait for Card
Points not Known or Verified
OtherSources of Dissatisfaction Fixed FixedSimplified point rules

40. Program Relaunch
44.4%
18.5%
11.1%
7.4%
18.5%
Rewards and Benefits
Points not Awarded
Long Wait for Card
Points not Known or Verified
OtherSources of Dissatisfaction Fixed Fixed FixedPermanent cards printed in the store real time

41. Program Relaunch
44.4%
18.5%
11.1%
7.4%
18.5%
Rewards and Benefits
Points not Awarded
Long Wait for Card
Points not Known or Verified
OtherSources of Dissatisfaction Fixed Fixed Fixed FixedReal-time points calculationon the receipt+ website
Lassu
www.lassuloyalty.com

42. Program Relaunch
44.4%
18.5%
11.1%
7.4%
18.5%
Rewards and Benefits
Points not Awarded
Long Wait for Card
Points not Known or Verified
OtherSources of Dissatisfaction Fixed Fixed Fixed Fixed FixedLive customer service line with email and chat support

43. Program Relaunch
7%
28%
50%
9%
6%
E
D
C
B
A
Classifications derive from
•Member Income
•Occupation
•Automobile Y/N
•Household Staff
3,240 possible combinations each maps to a socio-economic class. THENMember data could not describe profile of shoppers. and NOW

44. The ResultsMember BaseLoyalty Sales95% Growth22% GrowthPrior YearPrior YearRelaunchRelaunch

45. The ResultsMember Basket Size2.4X Non-Member Basket2.4X79% of Cards are Active79%

46. The ResultsPayback on P16 Million InvestmentIncremental Sales per Month* * At 95% significance vs. control group.
24 Million
per Month
2.8 Months

47. Great! So where does that position the program so far?

48. Good penetration. Good Engagement. No segmentation. No data mart to enable targeted communication. Ready to start next phase now...
©Wonders of Disney http://wondersofdisney2.yolasite.com

49. None of the loyalty heads we interviewed claim that they are doing a “great job” Delivering a personalized customer experience, with highly-relevant, targeted offers based on RFM and customer demographic profile.

50. What is Usually in PlaceAdvertising Agency of Record
aor

51. What is Usually in PlaceSocial Media(Hygiene Factor)

52. What is Usually in PlaceLoyalty Program with Scale

53. What is Usually in PlacePartner to Push Campaigns

54. the GapThe Agency has established brand position and creativesThe tech partner is able to push campaigns... but what exactly to communicate, to whom, and when? . . . .. . .

55. Tying it all Together
About Lassu

56. Lassu is the ASEAN partner member of Customer Strategy Network. Collectively, the members of our global team have launched or helped to reengineer well over 100 loyalty programs around the world, including most of the top global brands. Working with a CSN partner like Lassu, gives you access that network. We bring this expertise to your doorstep.

57. Optimized Program Design
•Benchmarking, Voice-of-Customer
•Customer Value Proposition
•Financial Model
•Program Mechanics & KPIs
•Best-Customer Marketing
Mike Atkin
Chairman, CSN
Jim Griffin
Founder, Lassu

58. Lassu is connected to faculty at the University of the Philippines, Graduate School of Statistics. We have experience with nationwide household surveys, and the head of our statistical practice is a consultant for measurement science at Nielsen Media Research, SAS and McCann Worldgroup, among others, including a wide variety of marketing initiatives at top companies in the banking sector, FMCG and other verticals.

59. Customer Knowledge
•Single Customer View
•Segmentation
•Analytics
•Event Detection
•Campaign Management
•Serving the Right Content
Francisco de los Reyes
Professor, Statistics
University of the Philippines, Diliman

60. Lassu is the ASEAN distributor and reseller
of Loyalty Prime – a complete enterprise-class
loyalty platform. We offer full CRM
and loyalty management, and excellent
integration to backend systems, like POS,
reservations, and ERP. With our platform,
you can easily segment your customers, and
then build engagement using social, mobile,
website, email, SMS and marketing
campaign automation. Or we can handle it
for you.

61. Delivery Platform
• Integrated Loyalty & CRM
• Member Engagement via SoLoMo
• Campaign Automation
• Reporting & Analytics
Kunal Mohiuddin
Cofounder

62. Creatives and Launch
Metro Rewards Card II
Launch Campaign

63. Creatives and Launch
Metro Rewards Card II
Launch Campaign

64. Creatives and Launch
Metro Rewards Card II
Launch Campaign

65. The CampaignRelaunch
Creatives and Launch

66. Let’s build a solid foundation for sustainable growth & profitJim Griffinjim.griffin@lassuloyalty.com