. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
LOYALTY PROGRAMSLOYALTY PROGRAMS
“Making your Bank Card the Card of Choice”
“Making your Bank Card the Card of Choice”
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
NIGERIAN PAYMENT CARD DEVELOPMENT
NIGERIAN PAYMENT CARD DEVELOPMENT
A PARADIGM CHANGINGA PARADIGM CHANGING
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
– Infrastructure Implementations – Switching Networks
– Inter-Operability – ATM networks & POS networks
– Multi-Application
– Mastercard & Visa entry
– Interchange Fees – its impact on acquirer/issuer strategies
– Consumer Expectations
– ROI Focus
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
BANKS &
LOYALTY PROGRAMS
A COMPLEMENTARY RELATIONSHIP
BANKS &
LOYALTY PROGRAMS
A COMPLEMENTARY RELATIONSHIP
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
What are Loyalty Programs?What are Loyalty Programs?
Marketing Strategies to identify, maintain and maximizethe profit from best customers
through long-term, interactive,
value-added relationships
Marketing Strategies to identify, maintain and maximizethe profit from best customers
through long-term, interactive,
value-added relationships
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Why start Loyalty Programs?Why start Loyalty Programs?
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Loyalty Marketing: FactsLoyalty Marketing: Facts• It costs 7x more to acquire a new
customer than to retain an existing one
• A 5% improvement in retention rate can equal an 85% increase in NPV of the customer
• Enhances customer participation
• Generates higher usage frequency & transaction values
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Loyalty Marketing: FactsLoyalty Marketing: Facts
• Lowers marketing communication costs
• Improves Customer LTV
• Enhances Cross-Sell & Up-Sell opportunities
• Provides a measurable ROI
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Average LoyaltyLeader
100%85%
0
50
100
150
200
250%
Average LoyaltyLeader
100%
220%
0
50
100
150
200
250%
Loyalty Leaders: Lower Costs, Higher Growth
Costs
Growth
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Customer Loyalty Mechanics
Customer Loyalty Mechanics
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Use The Perfect Blend of Incentives
Use The Perfect Blend of Incentives
Compelling Hard Benefits
Promotional CurrenciesTangible Rewards
Price Tiering“I get my money’s worth”
Defining Soft Benefits
RecognitionPersonalization
Access“They know I’m important”
To Create The Value Proposition via..
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
DialogueEngage, Exchange, Evolve
DialogueEngage, Exchange, Evolve
Incentives, Rewards,Access, Service,etc.
Engage
Dialogue
Incentives, Rewards,Access, Service,etc.
Evolve
ExchangeChanging needs, attitudes, etc.
Relationship100101100101101010101100101101010101100101101010101100101101010101100101101010101100101101010101100101101010101100101101010101100101101010101100
Data
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Continuous Customer DevelopmentContinuous Customer Development
CustomerMember
Collaborator
Advocate
TotalRevenue
Share of customer
• Uncover drivers of current behavior• Identify obstacles to desired behavior• Blending hard and soft benefits to create the right
incentive
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Loyalty Programs in Financial Services
Loyalty Programs in Financial Services
Driving Customer Profitability in a Payment Card Environment
Driving Customer Profitability in a Payment Card Environment
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Increasing customer loyalty and extending the average lifetime value of customer relationships
Improving marketing efficiency through customer segmentation and target marketing
Consolidating banking relationships and cross-selling products and services such as electronic bill payment
Reducing operating costs by migration
Differentiating payment card offerings to gain a competitive advantage
ObjectivesObjectives
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Creating the Value Proposition
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Loyalty Program FundingLoyalty Program Funding
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Build a Sustainable Economic Model based on the right mix of
OPERATING EXPENSES
• Marketing & Promotion• Application Processing • Account Set-up• Card Production & Issuance• Transaction Processing• Statement Processing• Account Servicing• Administration• Legal• Other Operating Expenses
REVENUES
• Card Membership Fees• Signature Debit Interchange
Fees• PIN Debit Interchange Fees• ATM Surcharge Fees• Foreign ATM Fees• Cost Savings• Other fees
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Benefits of a Loyalty Program To an Issuing Bank
Benefits of a Loyalty Program To an Issuing Bank
• Increased Payment card usage vs. cash/cheque
• Higher Cardholder retention rates• Lower cardholder recruitment costs• Higher cardholder recruitment rate• Provides added-value to cardholders• Can design specific marketing operations
with selected retail chains• Higher Revenue & Profit Generation
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Benefits of a Loyalty Program to an Acquiring Bank
Benefits of a Loyalty Program to an Acquiring Bank
• The ability to secure or expand margins from merchants, as premiums can be charged for value-added services
• Provides a secure & lasting positive differentiation on added-value rather than ‘rate wars’
• New merchants can be recruited easier & faster
• Increases Merchant POS terminal adoption
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
CASE STUDYCASE STUDY
9/9/2004 2:24:32 PM 23
Loyalty Solutions LtdLoyalty Solutions Ltd
Banco Popular, Puerto RicoBanco Popular, Puerto Rico
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
The OpportunityThe Opportunity• Develop a loyalty program that incorporates all of Banco Popular’s
products and becomes the primary loyalty currency in Puerto Rico.
Acquire CustomersAcquire Customers
Grow Relationship / Incremental Sales
Grow Relationship / Incremental Sales
Retain CustomersRetain Customers
Higher Profitability
Higher Profitability
differentiate Popular in an extremely competitive environment
improve lifetime value of customers through behavior and retention
increase share-of-customer
increase effectiveness and efficiency of marketing resources
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Strategic Solution - Payment CardsStrategic Solution - Payment Cards• Require customers to have a debit or credit card to develop
an easily implementable “ Earn / Spend” structure that maximizes profitability.
Point Issuing Partners
Point Issuing Partners
Redemption Partners
Redemption Partners
Value Proposition
Value Proposition
LoyaltyLoyalty
Number of Relationships
Number of Relationships
Customer ProfitabilityCustomer
Profitability
Point Issuing Partners
Point Issuing Partners
Redemption Partners
Redemption Partners
Cost SavingsCost SavingsSources of Income
Sources of Income
Program ProfitabilityProgram
Profitability
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
The ResultsThe Results
80,0
00
108,
000
152,
000
185,
000
0
50,000
100,000
150,000
200,000
Converted Budget Year 1 Actual (First 8Months)
Forecast 2003
• PREMIA exceeded the new member goal for the Year 1 by 250% and
almost reached the 5-year goal.
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
THANK YOUTHANK YOU