Download - Loyalty Presentation - CM Forum April 15
Connecting ConsumersThe evolving role of Loyalty
Ronan Gilhawley
Consumer Markets Workshop
April 2015
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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The evolution of ‘Loyalty’
Making the customer connection
Attracting and engaging the customer
Enhancing the value of loyalty
Where to from here?
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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The evolving consumerThe ‘typical’ consumer is becoming a more dynamic, evolving and fragmented target for organisations to address
Increasing affluence
Value seeking behaviour
Urban migration
A cultural ‘melting pot’
The informed consumer
Time poor convenience
shopping
International competition
Evolving business models
Focus Groups
Mystery Shoppers
Consumer Surveys
Basket Analysis
Connected Consumers
Evolving Competition
Socio-Economic
Factors
Demographic Factors
Credit Card Feeds
Market Research
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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Meeting consumer needs - #1 changing expectationsTo meet target consumer needs, retailers need to continuously refine and adapt their offer and the way in which they engage with their customers
Bas
is o
f bra
nd lo
yalty
cre
atio
n
Brand
Service Convenience
Range Price
Basis of brand loyalty creation Available value proposition levers
Sophisticated
Fundamental
Retail propositions
Note. ‘EST’ Model : McMillan & Dolittle
Easy-est
Hot-est
Big-est
Quick-est
Cheapest
Quality of service
Most fashionable
Range & selection
Speed of service
Lowest prices
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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Meeting consumer needs - #2 the disruptive impact of technologyOmni-channel retailing is creating an increasing sense of complexity in where and how organisation interact with consumers
Technology has introduced new medium for communicating, influencing, and transacting..
Blogs Email SMS Mobile apps
Social media
Customer
Mobile apps
Reseller website
Aggregator websites
Company website
Physical store
TV / radio
Outdoor ads
Print media Mail Telepho
ne
…with different consumer segments interacting through different medium in the path to purchase
Awareness Consideration PurchaseFamiliarity Service
Store
Social media
Comparison Site
Mobile
Blog
Website
Reseller
Engage Recommend Compare InteractAccess Transact PublishTarget
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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Meeting consumer needs - #3 the polarity of scale and intimacyWith increased scale & complexity, retailers increasingly need to invest in analytics to mine insights into who their customers are and how they connect with them
Source: Making the connection – Rethinking the role of loyalty management (KPMG, 2014)
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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Rethinking the role of loyaltyLoyalty is increasingly key in understanding who your most valuable customers are and how best to connect to them, in an adaptive and evolving manner
Source: Making the connection – Rethinking the role of loyalty management (KPMG, 2014)
1. Define• Have you defined the
customers that are/would be most valuable to your organisation?
3. Engage• How do you engage with
these customers throughout the customer lifecycle?
2. Connect• Have you developed a
mechanism to reach out and connect with these customers?
4. Evaluate• Do you evaluate your
engagement and the results it has on customer lifetime value?
5. Adjust• Do you adjust your
engagement and value proposition to reflect the results of your evaluation?
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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The evolution of ‘Loyalty’
Making the customer connection
Attracting and engaging the customer
Enhancing the value of loyalty
Where to from here?
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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3 ‘Ages’ of LoyaltyLoyalty has evolved from its origin as a marketing promotion tool to a data driven capability supporting increasing levels of personalisation in engagement and offer
ENGAGEyour customer
Learn from your customerINSIGHT
COMMERCIALISEyour learnings
Ratings
Trends
Merging external and internal data
Data
Insight
Value
The 1st Age
Loyalty as a promotional tool
The 2nd Age
Loyalty enablement of customer
segmentation
The 3rd Age
Loyalty driven personalisation
Loyalty program value levers Evolution in maturity of loyalty capability
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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1st Age : “Thank you for your business, please come again”The majority of loyalty initiatives are characterised by the use of basic customer identifier information to push promotional messaging or to accumulate discounts
Scope & focus Sources of information
Nature of Offer
Examples
Customer identifiers – email address, – mobile number, – postal address
Transaction history– Frequency of visit– Total spend
Promotions by a variety of medium e.g. EDM, text message
Promotions typically discount, BOGOF, or exclusives
Membership is may be card or app based Reward can be member based, or points
accumulation based
Focus on customer engagement
Broadcast marketing
communications
Tailo
ring
of e
ngag
emen
t Personalisation of reward
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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2nd Age : “Getting to know you”Programs such as Tesco’s Clubcard in the late 90’s pioneered the use of POS transaction feeds to develop deeper customer insight, leading to tailoring of offers
Scope & focus Sources of information
Nature of Offer
Examples
Focus on customer insight
Segmentation based
communication
Customer identifiers– Customer surveys
Transaction history – Credit card feeds– Basket analysis
Browsing history – Items purchased
Predominantly points based programs offering a opportunity for ‘personalisation’ in redemption
Tailoring of promotional offers predominantly to identified customer segments
Differentiated service through tiered membership
Tailo
ring
of e
ngag
emen
t Personalisation of reward
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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3rd Age : “Permission to get creepy”Technology is enabling a new means of marketing in a highly bespoke, individual manner, personalising offers based on information specific to the individual
Scope & focus Sources of information
Nature of Offer
Examples
Focus on commercialisation
of insight
Personalised communication
Store service personalisation
EDM personalisation
Web content personalisation
Customer identifiers– Location information e.g. GPS
Transaction history – Basket analysis
Browsing history – Items viewed– Sites visited before and after
Tailoring of service experience based on information relating to customer preferences and history
Individual tailoring of promotions e.g. targeted time based, location based promotions
Tailo
ring
of e
ngag
emen
t Personalisation of reward
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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Making it a realityWhile most organisations acknowledge the potential of loyalty initiatives and most run some kind of program, our research suggests few actually mine the data they get
88%Of organisations run an ‘earn and burn’ loyalty
program whereby points are accrued and
redeemed for a gift
56%See the card as
primarily a means of capturing a contact
point for promotional material
40%Collect the POS
data accompanying a loyalty registration but do no perform regular analytics
with it
12%Indicated that
results are integrated into front-
line operational decision making such as buying,
merchandising, and store operations
6%Actively leverage
their loyalty program to achieve specific
corporate objectives
Source: Making the connection – Rethinking the role of loyalty management (KPMG, 2014)
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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The evolution of ‘Loyalty’
Making the customer connection
Attracting and engaging the customer
Enhancing the value of loyalty
Where to from here?
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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Three dimensions of LoyaltyThe key to success in a loyalty initiative is to build currency and value into the program
Range of redemption
Scope of spend
Depth of data insight
Greater flexibility and freedom in how the consumer benefits from a program equates to greater value in the program ‘currency’
Broader capture of spend (including retail and non retail) increases the frequency with which a consumer interacts with a program, derives benefit and contributes to data
By increasing the data captured in a program to include dynamic data, benefits include deeper behavioural insight, greater ability to personalise offers, more personalised engagement
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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Adding range of redemption to loyaltyIncreasing the range of a program brings greater value in redemption and currency in points, but brings with it added complexity and need for additional skills
Member Database
Member Benefits
Member Accrual
In House Store Points
In House Points
Currency
In HouseAffiliates
Tied Coalition
CoalitionRetail
CoalitionLifestyle
In house membership programs are relatively easy to set up and are typically run within the marketing team
Increasingly the programs fail to ‘cut through’ or differentiate the retailer
A closed in store points system is relatively undifferentiated from a member program
Inclusion of external affiliate partners, or paying for access to airline points increases value
Managing the economics of ‘earn & burn’ partners requires greater financial oversight
Operating a coalition loyalty program offers the greatest opportunity to create value for customers due to their openness
However, operating these programs are complex and data intensive
Participating as an ‘earn & burn’ partner will limit access to customer insights
In house ‘earn & burn’ programsIn house ‘membership’ loyalty programs Coalition Loyalty Programs
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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Adding depth of insight to loyaltyThere is an obvious ‘hierarchy’ to data within a loyalty program, with higher sets of data offering deeper insights and richer opportunities to add value
Who am I?name, e-mail, address, mobile number
What is my household?Age, family, gender, income, residential information
What are my interests?Lifestyle information, travel history, hobbies, service preferences
Who do I follow?Social media interests and activities, browsing activity
What do I spend & where?Credit card feeds, POS feeds, transaction history, channel history
What are my activities?Health & wellbeing, gym visits, driving habits
Where am I?Real time location based information
Transactional Activity
Online & social media Activity
Location Information
Lifestyle Activity Information
Survey based interests & hobbies
Socioeconomic & demographic data
Identifying Information
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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Expanding horizons beyond retailThe evolution of loyalty in adjacent sectors, notably insurance, has created a new category of loyalty which increases the depth of insight and frequency of interaction
Auto Insurers Auto manufacturers Maintenance & spares
Discounted insurance premiums linked to ‘safe’ driving activity & distance
Information on distances travelled, popular routes, driving style, peak times of travel for individuals
Promotional discounts linked to lifestyle preferences
Data on demographics and driving habits linked to brands and brand preferences
Ability to improve alignment of brand to targeted demographics
Proactive management of maintenance intervals
Impact of driving frequency & style on vehicle wear & impact on service intervals
Improved frequency of interaction with customer, enhancing garage service proposition
Health Insurers Gym memberships Retail
Health dashboard, promotional discounts, incentives to lead healthier lifestyle
Information on dietary habits and lifestyle preferences
Tailored insurance premiums to match individual’s lifestyles
Links to discounted fitness apparel
Discounted gym membership, linking gym membership & vitiation frequency to health insurance premium
Link to healthy eating habits, Weightwatchers membership
Grocery retailer participation, focused on discounts on ‘healthy food’
Health & Wellbeing Programs
Linking health insurance, physical activity,
pharmacy spend, healthy basket analysis
Motoring ProgramsLinking telematic based
car insurance to car servicing and auto
retailing
Gymbetter
Safe Driver
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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The evolution of ‘Loyalty’
Making the customer connection
Attracting and engaging the customer
Enhancing the value of loyalty
Where to from here?
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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Where to from here?In order to understand the role and value of loyalty within your organisation, its is key to first understand what role and function you want it to serve
The two roles of loyalty
Marketing and promotions tool Tool to drive changes in customer behaviour
Typically creates one off benefits such as sales uplift resulting from promotional activity
A channel for direct marketing and customer engagement
A point of connection to deliver promotional messaging
Loyalty owned by marketing
Typical executions include: points, coupons, discounts
Focus on influencing ATV (Average Transaction Value) or CLV (Customer Lifetime Value)
Refine retail offer (store location, range, pricing, etc) based on insight into most valuable customers
Loyalty management as a function linking into store operations, marketing, merchandising, ranging decisions
Increased range, depth, and frequency of customer interaction
Source: Making the connection – Rethinking the role of loyalty management (KPMG, 2014)
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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Where to from here?While there is clearly a degree of complexity to the subject of loyalty, we have identified seven questions that may help you tailor your approach
1
2
3
4
5
6
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Tailoring Loyalty to
your needs
Customer insight
Customer diversity
Valued customers
Goals to improve value
Measureable benefit
Ownership of the customer
Adaptive organisation
How well do you need to know your customer?
How diverse is your customer base and how much tailoring of your value proposition is required to address these different segments?
Do you understand which customers are most valuable to achieving your organisation’s goals
Do you have clear goals for improving your value to customers? And are these supported by structured programs / initiatives?
Can you measure the return you get from these initiatives and are these benefits sustainable?
How integrated and co-ordinated are the customer touch points across your organisation
Do you know what your customers think of you? and Do you have processes to continuously adapt and refine your proposition in response to these thoughts?
© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Ronan GilhawleyPartner
KPMG 10 Shelley StreetSydney NSW 2000
Tel: 02 9335 7029 Mob: 0410 668 440Email: [email protected]