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Loyalty Disruption? Prof. Cristina Ziliani , Ph.D - Loyalty Observatory UniPR IMA Europe Conference Milan 18 May 2017
Loyalty Disruption? Prof. Cristina Ziliani , Ph.D - Loyalty Observatory UniPR
IMA Europe Conference
Milan
18 May 2017
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The Loyalty Conference
The Loyalty Observatory at the University of Parma
Founded in 1999 43 academic journal papers 4 books 18 sponsors 16 conferences 2500 attendees 850 companies 110 speakers
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Loyalty Marketing today
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Dunkin' Brands shares jump
as loyalty program hits milestone Monday, 22 Aug 2016 | 4:33 PM ETCNBC.com
Ron Antonelli | Bloomberg | Getty Images
Dunkin' Donuts
Shares of Dunkin' Brands rose nearly 2 percent on Monday
after the company revealed that its loyalty program had reached
a new milestone.
This Is Why Starbucks Might Not Be
the Best Stock to Buy Right Now 21st April 2016
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Investing #StockWatch
“We will grow thanks to our loyal customers. Acquisition is too risky
and uncertain” (Brian Moynihan, Bank of America CEO)
“I congratulate Bank of America. Retention is a sound and forward
looking strategy (Warren Buffett)
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Loyalty «disrupted» Marketing
Retention vs Acquisition
customer-based success measures
systematic individual customer information collection
widespread adoption of CRM
loyalty programs
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1895 - Sperry & Hutchinson Company creates “stamps” to
reward repeat purchase
1980 - American Airlines launches Aadvantage and air miles
1990’s - adoption in European retail
plastic cards
basic segmentation: card holders vs non-holders
rewards take the form of points, gifts, reductions, status
no use of data
overconfidence in program impact on behaviour
first entrant advantage
exits
B2B (trade partner programs)
Milestones in the history of loyalty marketing
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2000’s – diffusion
across industries and countries evolution of loyalty program model rise of loyalty intermediaries consulting firms develop “loyalty” divisions data collection and analysis begin use of loyalty data for marketing decision making begins (Tesco)
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Loyalty Programs across industries - 2000
Penetration
Time
Department stores
Air miles
Grocery Fuel
Restaurants
Credit cards
Hotel
Affinity
Telephone
Utilities
Coalitions
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Supermarket loyalty programs across countries - 2000
time
penetration
Russia, India, China
France
Italy
Benelux
Canada
USA UK
Scandinavia
Spain
East Europe
Malaysia, Thailand
Austria
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Loyalty program model lifecycle
village
stand
alone affinity
coalition
Earning points
Burn
ing p
oin
ts
retailer A others
reta
iler
A
oth
ers
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Coalitions
Numero annuo di lanci di programmi di tipo coalizione
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Media for loyalty marketing – 2001 to 2012
digital loyalty program
digital coupon
social media
app
telemarketing
kiosks
text messages
customer magazine
e-mailing
coupon at till
direct mailing
website
72%
51%
75%
37%
91%
68%
83%
91%
90%
87%
94%
100%
2012
2009
2001
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2010’s – maturity AND morphing
Maturity of «traditional» loyalty programs B2B schemes shift from sell in to sell out and database building goals Digital Revolution New promotional scenario New players
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2016 - maturity
The average US family belongs to 30 loyalty programs (Colloquy, 2016)
Consumers who shop regularly with a loyalty card are between 70% and 90% across Europe (Nielsen 2015)
CPG manufacturers launch brand loyalty programs Overall, coupons, gift cards and loyalty points together account for more than $165 billion in purchasing power in the US, almost as much as total e-commerce sales
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The Information Revolution (AKA Big Data)
The explosion in the variety and quantity of information available to individuals and organisations, regardless of its location
Disruption
from the Latin verb «dis-rumpere»: “shatter, sever, cause to break apart”
Social
and Mobile
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coupon wallet
branded currency
cashback apps
coupons
mobile rewards app
wallet
Non-price promotion
dis
rup
tive
Price promotion
Imp
act
of
dig
ita
l Re
volu
tio
n
lim
ite
d
interface turns (from physical) to digital
customer data based personalisation
new hybrid promotional formulas
new services and new players
points
Flyers/FSI card
customised offers Personalised experience (reccomendations/content)
group deals/flash sales
subscription based services
payment wallet
loyalty wallet
wallet
The Digital Revolution creates a totally new, convergent, scenario
Source: Osservatorio Fedeltà UniPR
Branded currency
• “All forms of currency – points, gift cards, coupons etc. that allow a shopper to exchange with a retailer for its goods and bear the retailer name as an umbrella”
• Retention potential of new means of payment
• Starbuck’s evolution from gift card to «mobile payment tool & loyalty program»
• 1 bn $ in app
• 20% transactions through app
Payments industry disruption
New technological advances in tokenisation of card details, NFC
readers, standards, biometric authentication…
New entrants: device manufacturers, tech companies,
retailers, telco, startups
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1995 2015
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Loyalty Marketing
LOYALTY as program
LOYALTY as CRM
LOYALTY as Service and Experience
1980 - 2000 2000 - 2015 2015 - today
Source: Osservatorio Fedeltà UniPR
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23
Customer Relationship Management: Profiling Best in Class Companies
Silhouette=0.53
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CRM subdimentions Cluster 1
“Low performers”
Cluster 2
“Best in class”
PROSPECT measurement 2.24 4.55
ACQUISITION 2.28 4.56
REGAIN 2.17 4.71
Customer measurement 3.26 5.48
RETENTION 3.67 5.24
CROSS SELLING and UP SELLING 2.43 4.80
REFERRAL 1.47 3.01
TERMINATION 1.95 3.18
Values on a scale from 1 to 7
Customer Relationship Management : Profiling Best in Class Companies
“CRM processes evaluation scale” from Reinartz, Krafft e Hoyer (2004)
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CRM best in class
Use loyalty KPIs at all organisation levels and in all departments
Are multichannel, specifically use offline to drive online
Spend more of the marketing budget on loyalty
Train employees to manage customer segments differently based on value
Reward employees for customer retention
Consider the website pivotal for retention
Began CRM 2,5 years in advance compared to others Believe that personalisation is the most effective retention
Use both digital and traditional media in a targeted way to contact customer
Are very open to partnerships with new intermediaries and e-commerce pure players
16% 24% 21% 18% 21%
39%
26% 18%
7% 9%
0%
10%
20%
30%
40%
50%
0-5% 6-10% 11-15% 16-20% oltre il20%
Best in class Altri
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…is the evolvement of a person’s sensorial, affective, cognitive, relational, and behavioural responses to a firm or brand by living through a journey of touchpoints along pre-purchase, purchase, and post-purchase situations…” (Homburg et al. 2015)
Customer Experience Management
…aims to achieve, as a final goal, long-term customer loyalty by designing and continually renewing touchpoint journeys.
This is done by designing touchpoints that are connected, consistent, context-aware and branded
Customer Experience
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Is the Customer Experience Management concept clear for companies?
…YES for 19% of respondents
for 27,5% of those who sell online
for 6,8% of those who don’t
…and WE ARE GOOD AT IT 13% of respondents agree
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Touchpoint based
strategic management
capabilities
Data capture at
touchpoints
Organisational customer
insight sharing
Customer information
integration at touchpoints
2016 - Customer Experience Management
Source: adapted from Homburg et al. 2016
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BRANDS RETAILERS SERVICES
Loyalty Program 50% 79% 59%
e-mail marketing 52% 58% 71%
customer service/call center 51% 53% 72%
website 48% 56% 45%
social networks 53% 37% 56%
sweepstakes 50% 38% 48%
store associates 33% 51% 39%
app 40% 41% 39%
coupon 34% 38% 31%
Data capture at touchpoints
% is sum of frequencies of 6s and 7s to question
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Customer information integration
TOTAL BRANDS RETAILERS SERVICES
We integrate customer information from different customer facing functions (e.g.: marketing, sales, customer service)
17%
11%
18%
33%
We integrate customer information with data from external sources at the individual level
10%
8%
10%
14%
We integrate customer information from different touchpoints at the individual level (e.g..: telephone, mail, e-mail, web and personal contact)
15%
11%
14%
23%
We integrate information from different sources for each customer
13% 8% 12% 29%
Overall customer information integration capability (% of companies)
14%
9%
14%
25%
“information integration” scale from Jayachandran et al. 2005
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Insight sharing across the organisation
TOTAL BRANDS RETAILERS SERVICES
Customer insight is shared across departments/functions
8%
3%
8%
24%
Customer insight is shared across organisational levels
13%
8%
10%
23%
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Touchpoint based strategic management capabilities: where are we?
18% CAPACITA’ COMPLESSIVA
6% Respond immediately through touchpoints when a competitor targets their customer base
14% Use touchpoints for conducting market research
17% Disseminate customer satisfaction results collected through touchpoints across the organisation
23% Use touchpoints to discover changes in customer product preferences
26%
When a function discovers something relevant about a competitor through touchpoints, it alerts other functions immediately
18% Have high touchpoint base strategic management capabilities
“strategic touchpoint management capability” 13 item scale adapted from Kohli et al., 1993
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Touchpoint based strategic management capabilities are strongly positively correlated with company performance:
Sales Margins Overall economic performance
Why should companies embrace Customer Experience Management?
Controlling for company size, industry and loyalty orientation
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Thank you for your attention!
@Oss_Fedelta
