The document discusses the importance of loyalty programs for customer retention and profitability. It notes that loyalty programs should aim to retain best customers, increase spending of good customers, and reconnect lapsed users. Rather than focusing solely on attracting new customers or boosting retention rates, effective loyalty programs grow the overall profitability of customers. This is best achieved through intermittent, personalized rewards that reinforce customer choices and turn customers into brand advocates.

1. “ Business has developed an insane imbalance between obsessive customer acquisition and negligent customer retention”

3. Appropriate question is not; will a loyalty program attract new customers? or will it increase our retention rates? But will it grow the profitability of our customers

6. What is Loyalty? The consumer is loyal to you is s/he frequently buys your product Loyal Behaviour Low High Desired Behaviour

8. Commitment is an emotional bonding High Low Low High Desired Behaviour Commitment Potentially Loyal Behaviour Actively Loyal Behaviour Passively Loyal Behaviour The actively loyal customer is the only (long term) profitable customer

9. Extend the relationship from Product to Brand Desired Behaviour Low High Depth of Involvement Commitment Low High Product Brand Depth of Involvement reflects moving from a narrow relationship with an individual product to broad usage of the full range of products marketed under the brand

10. Desired Behaviour Low High Depth of Involvement Low High Product Brand Commitment Actively Loyal to the Product Actively Loyal to the Brand

11. AMEX Desired Behaviour Low High Depth of Involvement Low High Product Commitment Brand An index of behaviours that reflect a CM’s attachment to AMEX - Tenure of membership -Total number of trans. per month - Months active - Total number of services currently active - Share of plastic spending - Survey responding and responses Total $ revenue from all AMEX products and services - Total $ spending across all AMEX cards - Total $ annual card fees - Total revolving balances on Optima An index of the number of points of connection with AMEX - Total number of types of cards held - Total number of basic cards - Total number of services currently enrolled in