Loyalty Matters

February 2, 2011

Loyal Customers: Why do they matter?

2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758

http://www.customerinsightgroup.com/


Presenter

Sallie Burnett

Strategist. Leader. Innovator.

President of Customer Insight Group, Inc., a leading strategic relationship-marketing firm

Digital marketing professor at prestigious Daniels College of Business

2009 Direct Marketer of the Year




Customer Insight Group, Inc.

• Systematic New Loyalty Program• Loyalty Audit• Loyalty Navigator• Custom Loyalty Workshop• Cause Marketing Exploration• Social Media Roadmap• Social Media Navigator• Custom Social Media Workshop

• Data mining• Market research• Modeling• Profiling• Response analysis• Segmentation• Social media

monitoring• Usage and attitudes

• Audience targeted creative• Blogs• Content• Direct mail• E-mail design• Landing pages• Manage online conversations• Mobile marketing• Program management• Social media• Website design and content

Insight Strategy Execution

Customer Relationships – Engage. Keep. Grow.




Agenda

What is loyalty marketing?

How is customer loyalty marketing evolving?

Where are loyalty programs today?

What are the key elements of success?




5

What is loyalty marketing?

Loyalty:

Loyalty Marketing:

Customer’s faithfulness; advocacy, devotion; constancy

Discipline of identifying and nurturing the yield of best customers through a long-term, reciprocity, value-added relationship.




How is customer loyalty marketing evolving?

Development has been directly related to advances in IT an POS Future developments are supported by IT, specifically in the areas of:

Social media POS Web 2.0 (iAPPS — web content management solutions) Mobile Location or proximity Ubiquitous, wearable computing

1896 Today

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Where are loyalty programs today?

CUSTOMER More demanding, more choices Trust is key to keeping customer

loyalty because people are seeking out cheaper private label options

Participation in loyalty programs increasing

COMMUNICATION Irrelevant, impersonal

messages Enrolled and forgotten No customer engagement plan

STRATEGY Me too value proposition Launch and put into “auto”

drive Measurement metrics not tied

to strategy

INSIGHT Manage defection, not migration Data used to run program, not

used to run the business Customer relationships are

“siloed” in the organization


7



What could a loyalty program do for your business?

8

Retain Customers

Target Marketing

Increase Spend &

Frequency

Build Brand

LoyaltyBuild Customer

Relationship

Differentiate vs.

Competition

Acquire New

Customers

Gain Customer

Insight

Increased Revenue




What are the key elements of success?

Establish program objectives and metrics to measure success.

Make the program part of your corporate strategy.

Treat different customers differently.

Nurture customer loyalty.

Be relevant.

Monitor customer migration.

Engage your customers.




#1 Establish program objectives and metrics to measure success.

…customer retention…average profit per customer…frequency of purchase

Increase

…in the number of profitable customers…in the number of new customers…in the number of brand advocates

Growth

…number of product categories purchased…in average transaction size

Lift

#2 Make the program part of the corporate strategy.

15

Industry Leaders

Strategy

Hallmarks

Align program structure with goals.




#3 Treat different customers differently.

54.2% Customers, 0% Purchases.

0% Margin & 0% Visits

27% Customers, 30% Purchases

22.3% Margin & 44% Visits

Inactive

3.3% Customers, 21.4% Purchases, 26.2% Margin & 11.6% Visits

4.1% Customers, 16.9% Purchases19.2% Margin & 13.2% Visits

11.8% Customers, 31.4% Purchases32.1% Margin & 31% VisitsOccasiona

l

Frequent

Loyal

Infrequent

Know the customers value to you.17




Deliver value the way the customer wants it delivered. Customer Experiential Benefit Strategy is a customer-centric

approach to align and deliver value that is meaningful, timely and mutually beneficial to the customer and ultimately the company as well.

Initial participation and enrollment benefits

Cumulative benefits

Periodic benefits

Instant benefits

Mix of hard and soft service-related benefits Spend/earn rate, bonuses, capped/uncapped,

transferable points and rewards Flexibility for redemption, burn rate, channels Tiers and requalification Partners for earn/burn and special offers

18




#4 Nurture customer loyalty.

20

Value to the Customer/Member

Valu

e t

o t

he O

rgan

izati

on

Unqualified Customer

Prospective Customer

Advocate

Member &Customer

Repeat Customer

Create strategy to manage customer lifecycle.




Grow new customers.

Goals Increase frequency of purchase Increase annual spend Get members to purchase a second time and sooner Increase number of departments purchased Increase in total retention rate of new members Increase in number of rewards issued and redemption rate

Strategy Score all new customers. Execute multi-channel contact strategy. After the 90 day process, customers are scored based on their level

of engagement. Based on the customers engagement score, you can tailor your

communication strategy to focus resources to increase sales and retention.




23

Be relevant.

59% Most marketing and advertising has very little relevance to me.Source: Yankelovich Consumer Trust Study

60%

companies are failing to send welcome emails to new subscribers, according to a study of major brands in the US.


75% respondents said that irrelevancy is the main reason for unsubscribing from a company‘s email program. Source: Merkle 2008

15% retailers used data they received during the purchase process to target promotional messages to buyers. Return Path, March 2009



24

Always be relevant – understand how your customers define ‘value’.

Understand Customers

Align Marketing Investment

Deliver Relevant Messages

Customer Statistics

Average Annual Spend

Average Annual Transactions

Average Transaction Amount

Average Margin Percent

Demographics

Financial Statistics

Sales Contribution

Margin Contribution

Right Offer

Complimentary Product

Extended Financing

Product ReplenishmentRight Time

Top: March & April

Secondary: July & August

Right Product

Ping

Nike

Taylor Made

Titleist

Golf Enthusiast




#6 Monitor customer migration.

Monitor and proactively manage your customer’s migration.




#7 Engage your customers.

+ Customer engagement, “repeated interactions that strengthen

the emotional, psychological or physical investment a customer has in a brand,” supports loyalty goals.




Engaged customers buy more and refer more.

The attribute of an engaged customer seen as most important is “recommends product, service or brand” (58% of company respondents).1

Other attributes regarded as very important are: Engaged customers are “more likely to

convert more readily (44%) Engaged customers “purchase regularly”

(36% Engaged customers “less likely to switch

supplier” (30%)1) E-consultancy Engagement Report 2009




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Be responsive to your customers; let them tell you what they want.

When you know what your customers are saying and what they want and value, you can create a more

meaningful connection.




Remember the seven key elements of success.

Establish program objectives and metrics to measure success.

Make the program part of your corporate strategy.

Treat different customers differently.

Nurture customer loyalty.

Be relevant.

Monitor customer migration.

Engage your customers.




Questions?Sallie Burnett, CEOCustomer Insight Group, Inc.Email: [email protected]

Website: www.customerinsightgroup.com

Twitter: @sallieburnett

LinkedIn Group: Customer Relationships — Engage. Keep. Grow

mailto:[email protected]


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