The document discusses loyalty programs and provides best practices for developing successful programs. It notes that loyalty program memberships have grown significantly in recent years. Key elements for success include targeting offerings, offering the right rewards, understanding customers, effective communication, and measuring results. Innovative programs are integrated with payments, marketing, customer service, supply chain, and employee programs. The document concludes there is an opportunity for restaurants to develop profitable loyalty programs.

1. The Loyalty Program: A Recipe for Success Stuart Kiefer Vice President, Loyalty Solutions First Data Corporation

2. What we’re going to talk about today Market / Business / Practices / Innovations / Programs

3. Loyalty programs help you better understand customer preferences and spending habits , while monitoring, reinforcing and rewarding desired behaviors.

4. The loyalty market today The Loyalty Program: A Recipe for Success

5. Loyalty memberships are growing 1.3 billion loyalty memberships in the United States in 2006 Source: Colloquy ® talk™ Censustalk April 2007, pp. 3-6 2000 973 million 2006 1,139 million

6. Loyalty memberships are growing 85% households participate in at least one reward program* 12 loyalty programs per household on average** 40% participation in active loyalty programs** Sources: * Loyalty & Rewards: A Market Overview , Aite Group, January 2007 ** Colloquy ® talk™ Censustalk , April 2007, pp. 3-6

7. Restaurant loyalty is a sliver of the pie Source: Colloquy ® talk™ Censustalk April 2007, pp. 3-6

8. Loyalty is growing in many industries Source: Colloquy ® talk™ Censustalk April 2007, pp. 3-6

9. Loyalty is growing in many different verticals so you are competing for share of customer mind across all verticals .

10. How a loyalty program helps your business The Loyalty Program: A Recipe for Success

11. Loyalty programs… … move you beyond transactions, enabling you to monitor , reinforce and reward consumer behavior. … help you build program campaigns and promotions that resonate with each customer. … help increase revenue potential by building customer relationships through targeted , valuable and relevant promotions and rewards.

12. Loyalty programs… … provide a return on the capital investment of your POS system. … build visibility and advocacy for your brand. … differentiate you from your competition.

13. Where do your loyalty needs fall? Electronic punch card

14. Where do your loyalty needs fall? Single promotion Single message at POS

15. Where do your loyalty needs fall? Multiple targeted promotions Product specific offers Customized, multi-channel messaging Web site registration

16. Where do your loyalty needs fall? Multi-purse, targeted promotions Analytics/modeling Segmentation Customized messaging Additional Web site data capture Payment-enabled phone Tied to gift card

17. Loyalty helps grow your business Increased Revenue Retain Customers Target Marketing Comms. Increase Spend & Frequency Build Brand Loyalty Build Customer Relationship Differentiate vs. Competition Acquire New Customers Gain Customer Insight

18. Increase… … visits per customer … spend per visit … number of purchases

19. Growth… … in the number of loyalty members … in the number of new customers

20. Lift… … product specific sales … sales during slow periods

21. Following loyalty best practices can help deliver more than 15% in annual improvement in return on gross revenues, customer retention rates and marketing investment. Source: Clark, Robin and Clark, Peter. The Loyalty Guide , The Wise Marketer, Wise Research 2006, p. 26

22. Value to customers Effective & relevant offers Recognition as a valued customer Perceived value of membership Immediate gratification Ongoing communication

23. Best practices in loyalty The Loyalty Program: A Recipe for Success

24. Five key elements for success Target your offerings Offer the right mix of rewards Understand your customers Communicate effectively Measure the results

25. Loyalty program offers Recency, frequency, monetary, day part, points Velocity programs POS receipt, e-mail/SMS, Web site Messaging programs SKU-based Product-based programs Exclusive campaigns Special promotions

26. Best practice: Member engagement Increase customer frequency Retain existing customers Attract new customers

27. Best practice: Program goals Establish defined program objectives and metrics to measure success Make the program part of the corporate strategy Give front line employees the skills to perform — they are your program advocates

28. Best practice: Loyalty program Loyalty program rules should be easy to understand Always be relevant – understand how your customers define ‘value’

29. Best practice: Customer knowledge Treat different customers differently: deliver value the way customers want it delivered Understand the needs of your target audience, then deliver simple, effective offers Pay attention to your most profitable customers but don’t neglect the rest

30. Best practice: Effective communication Be responsive to your customers; let them tell you what they want Know what is or isn’t working, change as needed Use multiple touch-points – e-mail, Web site, etc. Provide relevant and concise follow-up communication

31. Best practice: Data analysis Creating value and loyalty success depends on how effectively customer data is managed and implemented. There is intelligence in every transaction.

32. Innovations in loyalty programs The Loyalty Program: A Recipe for Success

33. Innovations in restaurant loyalty Form Factors Payment Customer Service Employees Supply Chain

34. Innovation in form factors Technology can enable real-time rewards, offers and messaging More convenient forms like contactless Go-Tags can increase visits

35. Innovation in payments Tie your loyalty program to multiple forms of payment Credit/debit, prepaid cards, ACH

36. Innovation in customer service Use data from loyalty program to drive excellent service Tie in customer service with your loyalty program

37. Innovation in employee programs Rewards programs are not just for your customers Increase acquisition and retention Deepen relationships with employees Increase customer value Reduce costs

38. Innovation in the supply chain Increase opportunities for inventory management Understanding customer purchasing behavior helps you make decisions that can reduce inventory costs Reward and manage SKUs better

39. Components of an industry-leading loyalty program The Loyalty Program: A Recipe for Success

40. Industry-leading solutions Real-time Tender-neutral Any loyalty identifier Targeted comm. CRM Targeted offers & rewards All program types Flexible reporting Web-based pgm mgmt Back office capability

41. Case Study: Compass Group Zipthru Rewards The Loyalty Program: A Recipe for Success

42. Zipthru Rewards innovations Technology: Contactless key fob tapped at POS Real-time: Receipt is printed with total points or a coupon Program types: Time of day and frequency rules Rewards: free meals, discounts, event tickets Communications: Promo and reward notifications by e-mail Web site: View account balance, points earned and rewards redeemed

43. Zipthru Rewards transactions 75,000 loyalty transactions 3,000 loyalty redemptions 2+ visits per day on average

44. Zipthru Rewards results so far 82% all day participation 29% higher average check than all day average 26% café transactions from loyalty rewards 34% café revenues from loyalty transactions

45. Wrapping up The Loyalty Program: A Recipe for Success

46. Five key elements for success Target your offerings Offer the right mix of rewards Understand your customers Communicate effectively Measure the results

47. Loyalty programs help you better understand customer preferences and spending habits , while monitoring, reinforcing and rewarding desired behaviors.

48. Innovative loyalty programs are tied in to payment , marketing , customer services , supply chain and employees .

49. There is an opportunity for restaurants to develop profitable loyalty programs .

50. The Loyalty Program: A Recipe for Success Stuart Kiefer Vice President, Loyalty Solutions First Data Corporation [email_address]