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Expert strategies for your loyalty program

The document provides an overview of strategies for implementing a successful loyalty program using SAP Loyalty Management. It discusses the current state of customer loyalty, an overview of SAP Loyalty Management capabilities, a case study of a loyalty program implementation, and 8 leading practices for a loyalty program. The leading practices include focusing on acquiring customer data, aligning the loyalty experience to the brand, engaging members with personalized content, excelling at core program benefits, harnessing partner networks, empowering brand advocates, increasing member wallet share, and reducing marketing costs.

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Produced by Wellesley Information Services, LLC, publisher of SAPinsider. © 2014 Wellesley Information Services. All rights reserved. Expert Strategies for your Loyalty Program Arun Krishnan Accenture www.linkedin.com/in/EmailArunKrish
1 In This Session • Pursuing Loyalty: Current state of affairs • Overview of SAP Loyalty Management Capabilities • Leading practices to streamline an SAP CRM loyalty management implementation • Recommendations for a successful Loyalty management implementation based on a Case Study implementation
2 What We’ll Cover • Vision for Loyalty • SAP Loyalty Management Overview • A Loyalty Implementation Case Study • 8 Leading Practices for your Loyalty Program • Wrap-up
3 Customer Loyalty, critical to growth • Customer Loyalty is one of Top 3 CMO priorities of Marketing Strategy, in 2014 survey  Source: Accenture 2013/ 2014 CMO Insights  581 Marketing Executives across 11 Countries in 10 industries 76% 78% 80% 82% 84% 86% 88% 90% Increasing sales to current customers Acquiring new customers Improving customer retention/loyalty Using data and analytics to improve marketing impact Improve trust/integrity in your brands & corporate image Making more or better use of digital channels Actively Managing the company's Corporate/brand reputation Measuring return on marketing investment Improving Customer Retention/ Loyalty
4 34% 36% 38% 40% 42% 44% 46% Using technology to improve marketing impact Making more or better use of digital channels Using data and analytics to improve marketing impact Measuring return on marketing investment Improve trust/integrity in your brands & corporate image Improve the effectiveness of marketing operations Increasing sales to current customers Responding to shifting customer demographics Improving promotion effectiveness of marketing campaigns Improving customer retention/loyalty • Retaining Customer Loyalty is hard – a low #10 in terms of success • Compared to 2 years ago, how difficult do you think it is to be successful in these areas?  Source: Accenture 2013/ 2014 CMO Insights Yet, Loyalty remains elusive Improving Customer Retention/ Loyalty
5 % of consumers who switched in any industries as of 2009 Two in every three consumers globally have switched companies in at least one key industry sector due to specific factors over the past year. Our research shows a year-on-year increase. Participation (at least 1 program)Persuasion (much & very much) While loyalty program adoption varies by industry, less than half of participants maintain that these programs will increase their persuasion to stick with their provider Loyalty programs efficiency is limited… …and switching remains high 59% 67% 69% 2007 2008 2009 Source; Accenture - Global Consumer Behavior & Satisfaction Survey, 2009 Life insurance providers Utility companies Cable/satellite TV providers Fixed phone companies Internet service providers Hotels Wireless companies Airlines Banks Retailers 4% 5% 5% 6% 8% 9% 9% 9% 11% 22% 9% 12% 13% 15% 18% 18% 20% 21% 25% 45% Percentage of total sample base % of consumers participating in loyalty programs and implied provider ‘stickiness’ Yet, Loyalty remains elusive (ctd.)
6 “It’s a Marketing thing only” Everyone’s responsibility; orchestrated by Marketing From… Covers all customer experience aspectsDriven by ‘points & rewards’ Focus on price/product promotions Include customer treatments & dialogue …To It is about retention It is about retention, profit, strategic acquisition and win back Holistic approach to drive customer valueShort-term approach to retain value The vision for Loyalty needs to evolve A different approach to managing Customer Loyalty is needed….
7 What We’ll Cover • Vision for Loyalty • SAP Loyalty Management Overview • A Loyalty Implementation Case Study • 8 Leading Practices for your Loyalty Program • Wrap-up
8 Where does SAP Loyalty Management fit in?  Significantly improved in SAP CRM 7.X  A component of SAP CRM Marketing, integration to other SAP Product suites  Foundation for end to end Customer Experience & Loyalty management  Supports multiple channels: Mobile, Social media  Extensive integration with Interaction center  Allows advanced partner management  Benefit and voucher handling  Mixed Payment Capabilities Source: SAP
9 SAP Loyalty Management - Functional Overview Source: SAP Program management enables flexible design of the customer loyalty strategy enables designing the status or tier management scheme, points management & expiration, and tracking the various activities performed towards these statuses.
10 SAP Loyalty Management - Functional Overview Source: SAP Reward rules management enables design of offers and rules for a variety of industries. The rule builder is used to manage program rules related to base miles earnings and tier levels, as well as bonus offers related to seasonal marketing activities.
11 SAP Loyalty Management - Functional Overview Source: SAP Enables Partner management process including registration of new members by the partner, handling of partnerships in the loyalty program, pricing of points for the partner, partner billing and integration to Partner Channel Management (PCM).
12 SAP Loyalty Management - Functional Overview Source: SAP Enables flexible membership modelling for individual and corporate memberships. Tracking of member tier history with manual or automated tier transitions. Tracking of point balances including earnings, redemptions, expirations, and transfers.
13 SAP Loyalty Management - Functional Overview Source: SAP Enables transaction processing against program rules with a rules engine. Processing of member activities through batch processing. Supports evaluating member tier processing for potential changes against rules and manage points expiration based on inactivity
14 SAP Loyalty Management - Functional Overview • Illustrative representation of the various CRM Loyalty Objects in relation to each other Source: SAP
15 SAP Loyalty Management - Functional Overview • Loyalty Module supports multiple Membership Types • 1 Member: 1 Membership, N Member: 1 Membership Supported • Supports Individual and Business Membership Modeling
16 What We’ll Cover • Vision for Loyalty • SAP Loyalty Management Overview • A Loyalty Implementation Case Study • 8 Leading Practices for your Loyalty Program • Wrap-up
17 The need for Loyalty Management System Integrator’s role: • SAP ECC Retail: Finance, HCM, CRM • Peak team size of 200+ resources • Partnered with SAP for Loyalty Mgmt. Case Study Example • Leader in Wholesale • ~ 600 stores in 8 countries, 4 continents • ~ $100 Billion in Annual Revenue • > 80 Million Members • > 45 M Memberships • >150,000 employees • Strategic decision to modernize the Membership management system • Phased migration from antiquated AS/400 Platform to SAP CRM 7.0 EHP 2 • Pilot deployment to 12 warehouses in US and CA. Go-Live Fall 2014 • Full Deployment in USA and CA in 2015
18 Loyalty Implementation Case Study: Process Overview 1 Member Sign-Up Members Shop at Warehouse Rewards are accrued2 3 Rewards Redeemed4 Upgrade, Downgrade, Cancel, Renew 5 Partner Network Referral Terms & Conditions 6 Targeted Offers for Members Multi Channel Marketing 7 Loyalty Program
19 Loyalty Program Loyalty Case Study: Mapped to CRM Objects 1 Member Sign-Up Members Shop at Warehouse Rewards are accrued2 3 Rewards Redeemed4 Upgrade, Downgrade, Cancel, Renew 5 Partner Network Referral Terms & Conditions 6 Targeted Offers for Members Multi Channel Marketing 7 Membership Point Transactions Reward Rule Engine Point Redemption Point Account Loyalty Program, Campaign
20 Loyalty Case Study: Mapped to CRM Objects (ctd.) 1 Member Sign-Up Members Shop at Warehouse Rewards are accrued2 3 Rewards Redeemed4 Upgrade, Downgrade, Cancel, Renew 5 Partner Network Referral Terms & Conditions 6 Targeted Offers for Members Multi Channel Marketing 7 Loyalty Program Partners & Partner Transactions Member Activities Service Contract IC, Web Integration API, Mobile, Social Media Segmentation & Campaigns
21 What We’ll Cover • Vision for Loyalty • SAP Loyalty Management Overview • A Loyalty Implementation Case Study • 8 Leading Practices for your Loyalty Program • Wrap-up
22 8 Leading Practices for your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
23 #1: Focus on acquiring data, not just repeat visits • Design your Loyalty program to learn your Customer behavior: distinguish your most profitable and least profitable customers  Good Member and Membership data is a foundational component for a successful Loyalty implementation • Design your SAP CRM Master Data solution to “Start Clean & Stay Clean”  Profile Member, Membership data and lock in a data cleansing strategy when exiting Blueprint phase  Establish Data Cleansing Goals for each Mock Cutover Cycle. Final Cleansing target to be attained by Cutover Rehearsal  Establish a core Data Steward team upfront. Design, test, train them on on-going data cleansing process. Accountable for post go-live data cleansing and data quality dash boarding. 1
24 #1: Start Clean: Data Conversion Approach • Person data is prone to duplicates, obsolete contact information. Leverage SAP MDG for Business Partner mastering. • Leverage SAP Business Partner model. Same Person could be a member in a Individual Membership (B2C) and a member in a Corporate Membership (B2B)  When de-duping pay attention to contact information mastering.  What on-going business rule changes are needed in SAP CRM to support new contact master • Phased rollout = Implications to Legacy System when syncing from SAP CRM to old data schema  Case Study: 600 Locations in NA, Pilot deployment with 12 locations. Iterate & Learn. 1
25 #1: Start Clean: Data Conversion Approach Legacy Extract SAP MDG SAP CRM Excl. Inactive > 5 Years ~85 M Exclude Duplicate members ~ 80 M Total Legacy Member Data ~120 M Jim Jim Home Membership #456 Acme Hardware Membership #789 Home Phone: 214-934-2341 Home Phone: 972-345-6321 DOB: 1-June-1986 Home Membership #456 Acme Hardware Membership #789 Jim Home Phone: 214-934-2341 DOB: 1-June-1986 MDM De-dup ~80 M Members ~45 M Memberships 1
26 #1: Stay Clean: Data Maintenance Approach • Integrate De-dup into the core Member maintenance process flow across all channels: CRM, Web, Mobile  Leverage SAP MDG or TREX for de-dup. Threshold driven, • If de-dup threshold > 90%, prompt the member/ clerk to confirm duplicate. If threshold < 80%, allow creation of a new member • When de-dup threshold was between 80 – 90%: create cleansing case and route to Data Steward for investigation.  Manage by exception, but let the customer continue shopping  Establish a core Data Steward team early on. Design and Test the exception process. Accountable for post go-live quality. • Consider the impact of de-duped members on integrating systems/ partners.  Identify impacts, develop system test cases for integration test scenarios with de-duped members. 1
27 #1: Stay Clean: Ongoing Data Maintenance Approach Web Channel SAP MDG or TREX SAP CRM CRM UI Mobile Channel Create Cleansing Case1 Route to Data Steward2 Data Steward researches and Merges Members3 Member Create/ Contact Change Member Save in CRM De Dupe logic, records that fail threshold are routed to exception process Exception Process 1
28 #1: Lessons Learned on Membership Capabilities • Membership Type cannot be changed after initial selection. • Membership has Assigned Members function but limited attributes available, limited configurability  Consider developing a Custom “Parties Involved” Assignment block functionality using AET • Membership has limited set of dates, consumed by SAP  Consider developing a Custom “Dates” Assignment block functionality using AET • Member and Membership merge functionality: useful but does not affect retro-active member activities or service contracts • Staff a TREX expert. Plan on extensive performance tuning.  Review transaction volume, system availability requirements to determine Master-Slave TREX architecture 1
29 8 Leading Practices for your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
30 #2: Align Loyalty Experience to the Brand Value • Customers perceive the Brand at every touch point  Ensure common Customer experience across all channels: In-Store, Point-of-Sale, Web, Mobile and Contact center • Case Study: Primary channel was In-Store. CRM UI experience had to be “simple and efficient” for the clerk serving member • Problem: Out of the box UI was inadequate. Required the clerk to click ~20 screens to ~45 screens (for simple to complex txns) • Out-of the box options:  IC LOY AGENT: Works on Interaction Center, works for simple memberships. Basic member, membership update.  LOYPRO: Ideal for super-users. Not recommended for maintenance. Best suited for troubleshooting.  Campaign Fast Recording: Ideal for simple memberships, campaign response driven process flow 2
31 #2: Solving the User Experience Challenge Guided Clerk Experience Integrated to IC_LOYAGENT Member Information, feeds TREX deduplication Marketing Permissions 2
32 #2: Solving the User Experience Challenge (Ctd.) Marketing Campaign Integration Up-sell Opportunity Partner Integration: Co-branded Credit Cards Up-sell opportunity: Membership Tier 2
33 #2: Solving the User Experience Challenge (Ctd.) Pricing and Membership Sale POS Integration for payment collection Reports and Other Self service tools 2
34 #2: Considerations for CRM User Experience • Solution: enhance LOYAGENT UI with Guided Procedure  Allowed consolidation of information from multiple assignment blocks to single screen. Track transaction progress  Integrate to POS/ Payment Gateway from CRM  Sale of Memberships is not a standard scenario, requires custom integration to either Sales or Service module • Prototype CRM UI experience. Account for Performance.  Leverage SAP RDS or equivalent accelerator from your SI to “touch and feel” OOB experience during blueprinting  Leverage UX tools like Axure, IRise to mockup Enhancement specification  Involve end-users in UI prototype and early System test  Establish CRM UI Performance SLA & execute performance test 2
35 8 Leading Practices for your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
36 #3: Engage members with personalized content • Relevant communications directly impact customer satisfaction • Members are 3X likely to share more when they trust the Program Source: Bond Brand Loyalty Report 2014 3
37 #3: Approach to enable Member Relevant Marketing • Step 1: Collect Customer Communication Preference  Leverage the Marketing Permission Module to store opt-in, opt- out information. Support contact data level only.  Additional granularity required to store “Topics” of interest – consider enhancement  Address all channels to collect preference: CRM, Web, Mobile • Step 2: Target Groups based on Preferred Medium and Topics  Segmentation Builder includes filters that pull in Marketing permissions, use to build segmentation basis. Update regularly. • Step 3: Outbound communication based on channel  Leverage API or Custom integration to deliver outbound integration with 3rd Party Marketing Comms. Provider for services such as Spam blacklisting etc. 3
38 SAP CRM #3: Framework for Member Relevant Marketing Gift Ideas Vacation Ideas Special Weekend Offers 1. Adrian Enrolls as a Member Online In Store 2. Adrian tells us what she cares about 3. Marketing Activity 4. Adrian is contacted through the channel that she consented to be contacted 5. Adrian responds to marketing message Marketing Preference Business Partner Segmentation CRM Campaigns Campaign Feedback 3
39 #3: Framework for Member Relevant Marketing Filter Favorites Attribute Lists Segmentation Model • Segmentation Leveraging Marketing Permissions 3
40 8 Leading Practices for your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
41 #4: Excel in delivering core Program Benefits • Delivering Program Benefits are just table stakes  Monetary Benefits: Discounts, Cash-back and Rebates  Non-Monetary Benefits: Status, Personalized Experience, Recognition from Brand • Realized in SAP CRM through Point Account, Tiers and BRFPlus  Leverage “Loyalty Attribute” Set in Product Master to define Point Benefits per Product  Sales order booked in CRM creates Member Activity. Member activities are in turn processed by BRF Engine updating Point Account Set, Tier  Use Loyalty API, to post Member Activities if Sales tracked externally  2 Member activities per Item Sold for Point Calculation = Performance concern (~32 M Member activity on Peak day). 4
42 #4: Approach for mapping Program benefits TLOG* or Sales Transactions Sales Member Activity Processing Engine Point Update Mem. Activity Point Account Posting Rewards Issue Tier Update Rewards Redemption Rewards Accrual Rewards Issue Rewards Redemption Members Receive Rewards SAP CRM*Loyalty Web Services to post transactions ~16 M peak day ~16 M peak day ~4 M per month ~4 M per month Members achieve Tier “Status” 4
43 8 Leading Practices for your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
44 #5: Harness the Partner network • Loyalty Partnership coalition programs expand the reach, acts as a competitor defense to acquire your customers  Benefit partnerships – Ex: Rental car earns Airline miles  Referral partnerships – Ex: Members get Discounted Offerings at participating Partner Vendors • Out of the box SAP CRM Capabilities for Partner Processing  Manage Partner Agreements, Partner Points, Partner transaction posting through Web Service or LSMW  Special Sales Transactions to Sell, Return Points with Partners  Integrated to Partner Channel Management solution: Partner Manager, Brand Owner roles. Secured by Access Control Engine (ACE) 5
45 #5: Framework for enabling a Partner Network Co-Branded Credit Card SAP CRM Membership Change Web Service Membership change in CRM Airline Partner Miles Activity Web Service: Posts Reward Mem, Activity SAP BW Partner Program Effectiveness Referral Partnerships Membership Change Web Service Member Enrollment Details 5
46 8 Leading Practices for your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
47 #6: Future Growth requires a Social media strategy • Growth Segment #1: Millennials (aged 20 – 34) outnumber Baby Boomers. Social recognition is a critical differentiator • Growth Segment #2: Hispanics ~53M, 17% population, Fastest growing. ~2 X more socially engaged Source: Bond Brand Loyalty Report 2014 6
48 #6: Enable and Empower your Brand advocates • Enable your Members to share Program Benefits  Allow social sharing of badges and recognition: > 90% Customers trust recommendations from friends and family • Design your Program to seek and iterate on member feedback  Co-creation with members: Leading Coffee Shop Brand received > 67,000 ideas on new Food & Beverage ideas, Experience ideas, Involvement ideas • Out of the Box SAP CRM capabilities:  Social Media Users Assignment block in Accounts, Contact overview from EHP3: capture social media account info.  Social Media Integration enhancement to Interaction Center: retrieve posts, reply to posts, sentiment analysis, follow-up actions 6
49 8 Leading Practices for your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
50 #7: Increase Member Wallet Share • Strategy #1: Improve Margin by Pricing Analysis  Integrate CRM Sales transaction to a Pricing and Margin analysis solution such as Vendavo, PROS  Implement closed feedback loop process to incorporate outcomes from pricing analysis to drive monetary benefits  Drive Product bundling decisions through margin analysis • Strategy #2: Predictive Analytics to propose offerings  Leverage HANA Based Predictive modeling for offer generation  RTOM Capabilities within SAP CRM:  Rules based, integrated with Campaign Management  Integrated with Interaction Center. Also in Hybris.  Output available through API, integrate into outbound offers 7
51 #7: Closed Feedback Loop Analytics Led Process7 SAP CRM Sales Order Reward Accrual Campaign Pricing Master Product Master Real Time Offer Management (SAP HANA or CRM) Pricing and Margin Management System (Vendavo) Sales Order History Offer recommendations from Basket Analysis Sales Order History, Discounting data Product Bundling Recommendations Discount %, Rebate %, Cash Back %
52 8 Leading Practices for your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
53 #8: Reduce Marketing Costs • Costs 5X to acquire a new Customer over existing • 60 – 70% probability to sell to existing customer vs. 5 -20% for a Prospect • Developing predictive analytics to define customer churn segments and develop target segments  For example skip:  Customers who will buy anyway  Customers who will not buy anyway  Customer who will leave if triggered  Customers below a certain response score • SAP delivers Predictive Analytics on HANA, Integrated to SAP Hybris platform. 8
54 What We’ll Cover • Vision for Loyalty • SAP Loyalty Management Overview • A Loyalty Implementation Case Study • 8 Leading Practices for your Loyalty Program • Wrap-up
55 Where to Find More Information • http://www.accenture.com/us-en/Pages/insight-cmo-digital- transformation-summary.aspx  Accenture CMO 2013/ 2014 Insights • http://info.bondbrandloyalty.com/the-2014-loyalty-report-us  Bond Brand Loyalty Report 2014 • 1250732 - Loyalty Mgmt SAP CRM 7.0 SP01: Customizing Documentation  OSS note that details documentation for Customizing activities for loyalty management, use in-lieu of Best Practice
56 Key Points to Take Home 1. Invest in converting and maintaining pristine Business Partner 2. Member experience is paramount: consider all channels for UX 3. Leverage Permission marketing and targeting capabilities to deliver member relevant communication 4. Use Member Activities, BRF and Loyalty engine to calculate, issue and redeem Member benefits 5. Expand member benefits through Loyalty partner management capabilities 6. Embrace and excel social media integration with CRM 7. Leverage pricing analysis, RTOM to increase wallet share 8. Exploit SAP HANA Predictive analytics capability to save costs
57 Your Turn! How to contact me: Arun Krishnan a.krishnan@accenture.com @ArunKrisTweets Please remember to complete your session evaluation
58 Disclaimer SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other countries. All other product and service names mentioned are the trademarks of their respective companies. Wellesley Information Services is neither owned nor controlled by SAP SE.

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Expert strategies for your loyalty program

  • 1.
    Produced by WellesleyInformation Services, LLC, publisher of SAPinsider. © 2014 Wellesley Information Services. All rights reserved. Expert Strategies for your Loyalty Program Arun Krishnan Accenture www.linkedin.com/in/EmailArunKrish
  • 2.
    1 In This Session •Pursuing Loyalty: Current state of affairs • Overview of SAP Loyalty Management Capabilities • Leading practices to streamline an SAP CRM loyalty management implementation • Recommendations for a successful Loyalty management implementation based on a Case Study implementation
  • 3.
    2 What We’ll Cover •Vision for Loyalty • SAP Loyalty Management Overview • A Loyalty Implementation Case Study • 8 Leading Practices for your Loyalty Program • Wrap-up
  • 4.
    3 Customer Loyalty, criticalto growth • Customer Loyalty is one of Top 3 CMO priorities of Marketing Strategy, in 2014 survey  Source: Accenture 2013/ 2014 CMO Insights  581 Marketing Executives across 11 Countries in 10 industries 76% 78% 80% 82% 84% 86% 88% 90% Increasing sales to current customers Acquiring new customers Improving customer retention/loyalty Using data and analytics to improve marketing impact Improve trust/integrity in your brands & corporate image Making more or better use of digital channels Actively Managing the company's Corporate/brand reputation Measuring return on marketing investment Improving Customer Retention/ Loyalty
  • 5.
    4 34% 36% 38% 40% 42% 44% 46% Using technology toimprove marketing impact Making more or better use of digital channels Using data and analytics to improve marketing impact Measuring return on marketing investment Improve trust/integrity in your brands & corporate image Improve the effectiveness of marketing operations Increasing sales to current customers Responding to shifting customer demographics Improving promotion effectiveness of marketing campaigns Improving customer retention/loyalty • Retaining Customer Loyalty is hard – a low #10 in terms of success • Compared to 2 years ago, how difficult do you think it is to be successful in these areas?  Source: Accenture 2013/ 2014 CMO Insights Yet, Loyalty remains elusive Improving Customer Retention/ Loyalty
  • 6.
    5 % of consumerswho switched in any industries as of 2009 Two in every three consumers globally have switched companies in at least one key industry sector due to specific factors over the past year. Our research shows a year-on-year increase. Participation (at least 1 program)Persuasion (much & very much) While loyalty program adoption varies by industry, less than half of participants maintain that these programs will increase their persuasion to stick with their provider Loyalty programs efficiency is limited… …and switching remains high 59% 67% 69% 2007 2008 2009 Source; Accenture - Global Consumer Behavior & Satisfaction Survey, 2009 Life insurance providers Utility companies Cable/satellite TV providers Fixed phone companies Internet service providers Hotels Wireless companies Airlines Banks Retailers 4% 5% 5% 6% 8% 9% 9% 9% 11% 22% 9% 12% 13% 15% 18% 18% 20% 21% 25% 45% Percentage of total sample base % of consumers participating in loyalty programs and implied provider ‘stickiness’ Yet, Loyalty remains elusive (ctd.)
  • 7.
    6 “It’s a Marketingthing only” Everyone’s responsibility; orchestrated by Marketing From… Covers all customer experience aspectsDriven by ‘points & rewards’ Focus on price/product promotions Include customer treatments & dialogue …To It is about retention It is about retention, profit, strategic acquisition and win back Holistic approach to drive customer valueShort-term approach to retain value The vision for Loyalty needs to evolve A different approach to managing Customer Loyalty is needed….
  • 8.
    7 What We’ll Cover •Vision for Loyalty • SAP Loyalty Management Overview • A Loyalty Implementation Case Study • 8 Leading Practices for your Loyalty Program • Wrap-up
  • 9.
    8 Where does SAPLoyalty Management fit in?  Significantly improved in SAP CRM 7.X  A component of SAP CRM Marketing, integration to other SAP Product suites  Foundation for end to end Customer Experience & Loyalty management  Supports multiple channels: Mobile, Social media  Extensive integration with Interaction center  Allows advanced partner management  Benefit and voucher handling  Mixed Payment Capabilities Source: SAP
  • 10.
    9 SAP Loyalty Management- Functional Overview Source: SAP Program management enables flexible design of the customer loyalty strategy enables designing the status or tier management scheme, points management & expiration, and tracking the various activities performed towards these statuses.
  • 11.
    10 SAP Loyalty Management- Functional Overview Source: SAP Reward rules management enables design of offers and rules for a variety of industries. The rule builder is used to manage program rules related to base miles earnings and tier levels, as well as bonus offers related to seasonal marketing activities.
  • 12.
    11 SAP Loyalty Management- Functional Overview Source: SAP Enables Partner management process including registration of new members by the partner, handling of partnerships in the loyalty program, pricing of points for the partner, partner billing and integration to Partner Channel Management (PCM).
  • 13.
    12 SAP Loyalty Management- Functional Overview Source: SAP Enables flexible membership modelling for individual and corporate memberships. Tracking of member tier history with manual or automated tier transitions. Tracking of point balances including earnings, redemptions, expirations, and transfers.
  • 14.
    13 SAP Loyalty Management- Functional Overview Source: SAP Enables transaction processing against program rules with a rules engine. Processing of member activities through batch processing. Supports evaluating member tier processing for potential changes against rules and manage points expiration based on inactivity
  • 15.
    14 SAP Loyalty Management- Functional Overview • Illustrative representation of the various CRM Loyalty Objects in relation to each other Source: SAP
  • 16.
    15 SAP Loyalty Management- Functional Overview • Loyalty Module supports multiple Membership Types • 1 Member: 1 Membership, N Member: 1 Membership Supported • Supports Individual and Business Membership Modeling
  • 17.
    16 What We’ll Cover •Vision for Loyalty • SAP Loyalty Management Overview • A Loyalty Implementation Case Study • 8 Leading Practices for your Loyalty Program • Wrap-up
  • 18.
    17 The need forLoyalty Management System Integrator’s role: • SAP ECC Retail: Finance, HCM, CRM • Peak team size of 200+ resources • Partnered with SAP for Loyalty Mgmt. Case Study Example • Leader in Wholesale • ~ 600 stores in 8 countries, 4 continents • ~ $100 Billion in Annual Revenue • > 80 Million Members • > 45 M Memberships • >150,000 employees • Strategic decision to modernize the Membership management system • Phased migration from antiquated AS/400 Platform to SAP CRM 7.0 EHP 2 • Pilot deployment to 12 warehouses in US and CA. Go-Live Fall 2014 • Full Deployment in USA and CA in 2015
  • 19.
    18 Loyalty Implementation CaseStudy: Process Overview 1 Member Sign-Up Members Shop at Warehouse Rewards are accrued2 3 Rewards Redeemed4 Upgrade, Downgrade, Cancel, Renew 5 Partner Network Referral Terms & Conditions 6 Targeted Offers for Members Multi Channel Marketing 7 Loyalty Program
  • 20.
    19 Loyalty Program Loyalty Case Study:Mapped to CRM Objects 1 Member Sign-Up Members Shop at Warehouse Rewards are accrued2 3 Rewards Redeemed4 Upgrade, Downgrade, Cancel, Renew 5 Partner Network Referral Terms & Conditions 6 Targeted Offers for Members Multi Channel Marketing 7 Membership Point Transactions Reward Rule Engine Point Redemption Point Account Loyalty Program, Campaign
  • 21.
    20 Loyalty Case Study:Mapped to CRM Objects (ctd.) 1 Member Sign-Up Members Shop at Warehouse Rewards are accrued2 3 Rewards Redeemed4 Upgrade, Downgrade, Cancel, Renew 5 Partner Network Referral Terms & Conditions 6 Targeted Offers for Members Multi Channel Marketing 7 Loyalty Program Partners & Partner Transactions Member Activities Service Contract IC, Web Integration API, Mobile, Social Media Segmentation & Campaigns
  • 22.
    21 What We’ll Cover •Vision for Loyalty • SAP Loyalty Management Overview • A Loyalty Implementation Case Study • 8 Leading Practices for your Loyalty Program • Wrap-up
  • 23.
    22 8 Leading Practicesfor your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
  • 24.
    23 #1: Focus onacquiring data, not just repeat visits • Design your Loyalty program to learn your Customer behavior: distinguish your most profitable and least profitable customers  Good Member and Membership data is a foundational component for a successful Loyalty implementation • Design your SAP CRM Master Data solution to “Start Clean & Stay Clean”  Profile Member, Membership data and lock in a data cleansing strategy when exiting Blueprint phase  Establish Data Cleansing Goals for each Mock Cutover Cycle. Final Cleansing target to be attained by Cutover Rehearsal  Establish a core Data Steward team upfront. Design, test, train them on on-going data cleansing process. Accountable for post go-live data cleansing and data quality dash boarding. 1
  • 25.
    24 #1: Start Clean:Data Conversion Approach • Person data is prone to duplicates, obsolete contact information. Leverage SAP MDG for Business Partner mastering. • Leverage SAP Business Partner model. Same Person could be a member in a Individual Membership (B2C) and a member in a Corporate Membership (B2B)  When de-duping pay attention to contact information mastering.  What on-going business rule changes are needed in SAP CRM to support new contact master • Phased rollout = Implications to Legacy System when syncing from SAP CRM to old data schema  Case Study: 600 Locations in NA, Pilot deployment with 12 locations. Iterate & Learn. 1
  • 26.
    25 #1: Start Clean:Data Conversion Approach Legacy Extract SAP MDG SAP CRM Excl. Inactive > 5 Years ~85 M Exclude Duplicate members ~ 80 M Total Legacy Member Data ~120 M Jim Jim Home Membership #456 Acme Hardware Membership #789 Home Phone: 214-934-2341 Home Phone: 972-345-6321 DOB: 1-June-1986 Home Membership #456 Acme Hardware Membership #789 Jim Home Phone: 214-934-2341 DOB: 1-June-1986 MDM De-dup ~80 M Members ~45 M Memberships 1
  • 27.
    26 #1: Stay Clean:Data Maintenance Approach • Integrate De-dup into the core Member maintenance process flow across all channels: CRM, Web, Mobile  Leverage SAP MDG or TREX for de-dup. Threshold driven, • If de-dup threshold > 90%, prompt the member/ clerk to confirm duplicate. If threshold < 80%, allow creation of a new member • When de-dup threshold was between 80 – 90%: create cleansing case and route to Data Steward for investigation.  Manage by exception, but let the customer continue shopping  Establish a core Data Steward team early on. Design and Test the exception process. Accountable for post go-live quality. • Consider the impact of de-duped members on integrating systems/ partners.  Identify impacts, develop system test cases for integration test scenarios with de-duped members. 1
  • 28.
    27 #1: Stay Clean:Ongoing Data Maintenance Approach Web Channel SAP MDG or TREX SAP CRM CRM UI Mobile Channel Create Cleansing Case1 Route to Data Steward2 Data Steward researches and Merges Members3 Member Create/ Contact Change Member Save in CRM De Dupe logic, records that fail threshold are routed to exception process Exception Process 1
  • 29.
    28 #1: Lessons Learnedon Membership Capabilities • Membership Type cannot be changed after initial selection. • Membership has Assigned Members function but limited attributes available, limited configurability  Consider developing a Custom “Parties Involved” Assignment block functionality using AET • Membership has limited set of dates, consumed by SAP  Consider developing a Custom “Dates” Assignment block functionality using AET • Member and Membership merge functionality: useful but does not affect retro-active member activities or service contracts • Staff a TREX expert. Plan on extensive performance tuning.  Review transaction volume, system availability requirements to determine Master-Slave TREX architecture 1
  • 30.
    29 8 Leading Practicesfor your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
  • 31.
    30 #2: Align LoyaltyExperience to the Brand Value • Customers perceive the Brand at every touch point  Ensure common Customer experience across all channels: In-Store, Point-of-Sale, Web, Mobile and Contact center • Case Study: Primary channel was In-Store. CRM UI experience had to be “simple and efficient” for the clerk serving member • Problem: Out of the box UI was inadequate. Required the clerk to click ~20 screens to ~45 screens (for simple to complex txns) • Out-of the box options:  IC LOY AGENT: Works on Interaction Center, works for simple memberships. Basic member, membership update.  LOYPRO: Ideal for super-users. Not recommended for maintenance. Best suited for troubleshooting.  Campaign Fast Recording: Ideal for simple memberships, campaign response driven process flow 2
  • 32.
    31 #2: Solving theUser Experience Challenge Guided Clerk Experience Integrated to IC_LOYAGENT Member Information, feeds TREX deduplication Marketing Permissions 2
  • 33.
    32 #2: Solving theUser Experience Challenge (Ctd.) Marketing Campaign Integration Up-sell Opportunity Partner Integration: Co-branded Credit Cards Up-sell opportunity: Membership Tier 2
  • 34.
    33 #2: Solving theUser Experience Challenge (Ctd.) Pricing and Membership Sale POS Integration for payment collection Reports and Other Self service tools 2
  • 35.
    34 #2: Considerations forCRM User Experience • Solution: enhance LOYAGENT UI with Guided Procedure  Allowed consolidation of information from multiple assignment blocks to single screen. Track transaction progress  Integrate to POS/ Payment Gateway from CRM  Sale of Memberships is not a standard scenario, requires custom integration to either Sales or Service module • Prototype CRM UI experience. Account for Performance.  Leverage SAP RDS or equivalent accelerator from your SI to “touch and feel” OOB experience during blueprinting  Leverage UX tools like Axure, IRise to mockup Enhancement specification  Involve end-users in UI prototype and early System test  Establish CRM UI Performance SLA & execute performance test 2
  • 36.
    35 8 Leading Practicesfor your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
  • 37.
    36 #3: Engage memberswith personalized content • Relevant communications directly impact customer satisfaction • Members are 3X likely to share more when they trust the Program Source: Bond Brand Loyalty Report 2014 3
  • 38.
    37 #3: Approach toenable Member Relevant Marketing • Step 1: Collect Customer Communication Preference  Leverage the Marketing Permission Module to store opt-in, opt- out information. Support contact data level only.  Additional granularity required to store “Topics” of interest – consider enhancement  Address all channels to collect preference: CRM, Web, Mobile • Step 2: Target Groups based on Preferred Medium and Topics  Segmentation Builder includes filters that pull in Marketing permissions, use to build segmentation basis. Update regularly. • Step 3: Outbound communication based on channel  Leverage API or Custom integration to deliver outbound integration with 3rd Party Marketing Comms. Provider for services such as Spam blacklisting etc. 3
  • 39.
    38 SAP CRM #3: Frameworkfor Member Relevant Marketing Gift Ideas Vacation Ideas Special Weekend Offers 1. Adrian Enrolls as a Member Online In Store 2. Adrian tells us what she cares about 3. Marketing Activity 4. Adrian is contacted through the channel that she consented to be contacted 5. Adrian responds to marketing message Marketing Preference Business Partner Segmentation CRM Campaigns Campaign Feedback 3
  • 40.
    39 #3: Framework forMember Relevant Marketing Filter Favorites Attribute Lists Segmentation Model • Segmentation Leveraging Marketing Permissions 3
  • 41.
    40 8 Leading Practicesfor your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
  • 42.
    41 #4: Excel indelivering core Program Benefits • Delivering Program Benefits are just table stakes  Monetary Benefits: Discounts, Cash-back and Rebates  Non-Monetary Benefits: Status, Personalized Experience, Recognition from Brand • Realized in SAP CRM through Point Account, Tiers and BRFPlus  Leverage “Loyalty Attribute” Set in Product Master to define Point Benefits per Product  Sales order booked in CRM creates Member Activity. Member activities are in turn processed by BRF Engine updating Point Account Set, Tier  Use Loyalty API, to post Member Activities if Sales tracked externally  2 Member activities per Item Sold for Point Calculation = Performance concern (~32 M Member activity on Peak day). 4
  • 43.
    42 #4: Approach formapping Program benefits TLOG* or Sales Transactions Sales Member Activity Processing Engine Point Update Mem. Activity Point Account Posting Rewards Issue Tier Update Rewards Redemption Rewards Accrual Rewards Issue Rewards Redemption Members Receive Rewards SAP CRM*Loyalty Web Services to post transactions ~16 M peak day ~16 M peak day ~4 M per month ~4 M per month Members achieve Tier “Status” 4
  • 44.
    43 8 Leading Practicesfor your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
  • 45.
    44 #5: Harness thePartner network • Loyalty Partnership coalition programs expand the reach, acts as a competitor defense to acquire your customers  Benefit partnerships – Ex: Rental car earns Airline miles  Referral partnerships – Ex: Members get Discounted Offerings at participating Partner Vendors • Out of the box SAP CRM Capabilities for Partner Processing  Manage Partner Agreements, Partner Points, Partner transaction posting through Web Service or LSMW  Special Sales Transactions to Sell, Return Points with Partners  Integrated to Partner Channel Management solution: Partner Manager, Brand Owner roles. Secured by Access Control Engine (ACE) 5
  • 46.
    45 #5: Framework forenabling a Partner Network Co-Branded Credit Card SAP CRM Membership Change Web Service Membership change in CRM Airline Partner Miles Activity Web Service: Posts Reward Mem, Activity SAP BW Partner Program Effectiveness Referral Partnerships Membership Change Web Service Member Enrollment Details 5
  • 47.
    46 8 Leading Practicesfor your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
  • 48.
    47 #6: Future Growthrequires a Social media strategy • Growth Segment #1: Millennials (aged 20 – 34) outnumber Baby Boomers. Social recognition is a critical differentiator • Growth Segment #2: Hispanics ~53M, 17% population, Fastest growing. ~2 X more socially engaged Source: Bond Brand Loyalty Report 2014 6
  • 49.
    48 #6: Enable andEmpower your Brand advocates • Enable your Members to share Program Benefits  Allow social sharing of badges and recognition: > 90% Customers trust recommendations from friends and family • Design your Program to seek and iterate on member feedback  Co-creation with members: Leading Coffee Shop Brand received > 67,000 ideas on new Food & Beverage ideas, Experience ideas, Involvement ideas • Out of the Box SAP CRM capabilities:  Social Media Users Assignment block in Accounts, Contact overview from EHP3: capture social media account info.  Social Media Integration enhancement to Interaction Center: retrieve posts, reply to posts, sentiment analysis, follow-up actions 6
  • 50.
    49 8 Leading Practicesfor your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
  • 51.
    50 #7: Increase MemberWallet Share • Strategy #1: Improve Margin by Pricing Analysis  Integrate CRM Sales transaction to a Pricing and Margin analysis solution such as Vendavo, PROS  Implement closed feedback loop process to incorporate outcomes from pricing analysis to drive monetary benefits  Drive Product bundling decisions through margin analysis • Strategy #2: Predictive Analytics to propose offerings  Leverage HANA Based Predictive modeling for offer generation  RTOM Capabilities within SAP CRM:  Rules based, integrated with Campaign Management  Integrated with Interaction Center. Also in Hybris.  Output available through API, integrate into outbound offers 7
  • 52.
    51 #7: Closed FeedbackLoop Analytics Led Process7 SAP CRM Sales Order Reward Accrual Campaign Pricing Master Product Master Real Time Offer Management (SAP HANA or CRM) Pricing and Margin Management System (Vendavo) Sales Order History Offer recommendations from Basket Analysis Sales Order History, Discounting data Product Bundling Recommendations Discount %, Rebate %, Cash Back %
  • 53.
    52 8 Leading Practicesfor your Loyalty Program Focus on acquiring data, not just repeat visits Align Loyalty Experience to the Brand Value Engage members with personalized content Excel in delivering core Program Benefits Harness the Partner network Enable and Empower your Brand advocates Increase Member Wallet Share Reduce Marketing Costs 1 2 3 4 5 6 7 8 Foundational Capability Acquire, Defend and Thrive Improve Bottom line
  • 54.
    53 #8: Reduce MarketingCosts • Costs 5X to acquire a new Customer over existing • 60 – 70% probability to sell to existing customer vs. 5 -20% for a Prospect • Developing predictive analytics to define customer churn segments and develop target segments  For example skip:  Customers who will buy anyway  Customers who will not buy anyway  Customer who will leave if triggered  Customers below a certain response score • SAP delivers Predictive Analytics on HANA, Integrated to SAP Hybris platform. 8
  • 55.
    54 What We’ll Cover •Vision for Loyalty • SAP Loyalty Management Overview • A Loyalty Implementation Case Study • 8 Leading Practices for your Loyalty Program • Wrap-up
  • 56.
    55 Where to FindMore Information • http://www.accenture.com/us-en/Pages/insight-cmo-digital- transformation-summary.aspx  Accenture CMO 2013/ 2014 Insights • http://info.bondbrandloyalty.com/the-2014-loyalty-report-us  Bond Brand Loyalty Report 2014 • 1250732 - Loyalty Mgmt SAP CRM 7.0 SP01: Customizing Documentation  OSS note that details documentation for Customizing activities for loyalty management, use in-lieu of Best Practice
  • 57.
    56 Key Points toTake Home 1. Invest in converting and maintaining pristine Business Partner 2. Member experience is paramount: consider all channels for UX 3. Leverage Permission marketing and targeting capabilities to deliver member relevant communication 4. Use Member Activities, BRF and Loyalty engine to calculate, issue and redeem Member benefits 5. Expand member benefits through Loyalty partner management capabilities 6. Embrace and excel social media integration with CRM 7. Leverage pricing analysis, RTOM to increase wallet share 8. Exploit SAP HANA Predictive analytics capability to save costs
  • 58.
    57 Your Turn! How tocontact me: Arun Krishnan a.krishnan@accenture.com @ArunKrisTweets Please remember to complete your session evaluation
  • 59.
    58 Disclaimer SAP and otherSAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other countries. All other product and service names mentioned are the trademarks of their respective companies. Wellesley Information Services is neither owned nor controlled by SAP SE.