making money out of loyalty
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Making money out of loyalty. 22 nd April, 2014 / Tero taskila. The purpose for the Loyalty programs is to make money. Extension of the marketing approach One-off or Limited time-only promotions (acquisitions) Rewards for the purchase (growth) - PowerPoint PPT PresentationTRANSCRIPT
Making money out of loyalty22ND APRIL, 2014 / TERO TASKILA
The purpose for the Loyalty programs is to make money
Extension of the marketing approach One-off or Limited time-only promotions (acquisitions) Rewards for the purchase (growth) Tiered and / or points based program (retention) Potentially making money through partnerships and
selling points
Aim to increase foot traffic or website visits to generate more repeat purchases Does not replace #1 reason for being loyal – product
and service
Points programs generate the most cash and loyalty, but require investment
• Many forms / typically “buy 10, get 11th free”• Easy to implement• Challenging to increase frequency and upsell
• Requires investment and set up• Balance sheet implications• Generates cash• Struggle to remain relevant
Partnership requirement
Discount program
Subscription
Points program
Earning potential
high
low
low high
• Easy to implement• Difficult to sell• Very specific and narrow clientele
How does the point sale work?
When customer “burns” points, loyalty program purchases the service from
partner
Loyalty Program
maintains the points-database
Partner pays to loyalty program for the points
given to customer
Customer purchases from the partner and receive points
Loyalty program drives
traffic to partners through
marketing
Loyalty program makes money – mechanism same as currency trading
Some findings on loyalty programs
Customers prefer to have tier levels (and recognitions which comes with it) Remember to communicate if your top tiers are about to lose status!
People tend to increase frequency or amounts their spending when the reward is getting closer Opposite is true as well – if the rewards are far away (or perceived that way), you will not get users
If using points based program – big numbers work better than small ones
Give people opportunities to fast-track getting the status for example Aadvantage Challenge
Loyalty programs struggle to stay relevant
Staying relevant and offering timely promotions and opportunities to redeem
Getting customers’ attention
Average European participates in 7-9 loyalty programs. Managing cards, coupons and online accounts is challenging.
Getting enough wallet space
Good programs have 30-40% activity rate, most driven by top tiers
Keeping people active
Promotions are important
Own website
Newsletters
BrochuresAdvertisement
Partner promotion
Visibility at POS
Larger partner footprint will increase your wallet share
Everyday activities
Groceries
Petrol
Commuting
Telecommunication
Necessary, but less frequent
Insurance
Banking
Electricity
Hobbies
Occasional
Culture
Events
Travel
Loyalty programs possess wealth of information which can be monetized
Customer demographic
s
•Surveys•Targeted marketing•Behaviour analysis and adjustment
•Add-on sales
Purchase details
•Product•Amount and payment type•Point of sale (location, distance travelled)
•Time•Location•Frequency
Customer
•Address•Gender•Age•Family situation•Purchasing power•Habits & interests
Improve the yield by utilising loyalty programs
Targeted communication for better conversions and upsell
People pay more on experiences – analyse what matters
Monetize the data
Mobility is changing customer behaviour
Platforms change (mobile phones are new cards)
Instant gratification
Prices, promotions and discounts are more transparent
Time based offering
Location based offering
Customers want engagement
50% of companies use gamification in 2015 30% of all e-messaging by 2016
5.5 Bn USD business by 2015
Most applicable for Loyalty and Marketing AMEX, airBaltic etc. are using it
• airBaltic changed ownership structure – altering the financial conditions to maintain an existing Frequent Flyer Program
• We did not want to have just another Frequent Flyer Program• Did not want to just offer discounted tickets• Low Cost airline pricing promotes loyalty better than miles issuance• We wanted to encourage loyalty
• The Baltics did not have any consumer loyalty program worth mentioning
• We set our sights to learn from the best (aeroplan, nectar)– and be the best
Case example / BalticMiles
Strategy and Planning• Program parameters identified• Supplier strategy outlined• Staffing requirements defined
Local Market Coverage Plan• Recruited new partners and brands• Locally sourced rewards• Determined launch campaign
Implementation Results• Delivered on time and within budget• Program parameters delivered• 9 Core Markets• 7 Languages• 7 Currencies to support core markets• Local team in place (Latvia)• Shared services structure with
rewards partner (Loylogic) for support
Contract signed
January 2010
April 2010
February March
Program Launch
Designed, implemented and launched a global rewards and loyalty program within 4 months
One year after launch – 850 000 members in 163 countries
Loyalty programs should make money
Increasing revenue should be the aim Higher yield, more frequency,
commitment, partners Acquiring and managing partners for
better footprint in customers’ daily life Managing and monetizing data is the key Instant gratification and gamification will
come with increased mobility
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Sports and loyalty have one things in common – both try to maximise fans to attract partners
Thank you!