The Loyalty Leap -

Turning Customer Information into Customer Intimacy

096 | January - February 2013 |

Earlier this month, the Mumbai session of RAI was hosted by Bryan A. Pearson, President and

Chief Executive Officer LoyaltyOne Inc. The session was centered on Loyalty lessons from

Bryan's best-selling book, the Loyalty Leap. Through his book, Bryan leveraged and shared two

decades of frontline experience with loyalty programs to give Indian marketers sound

strategies for navigating the world of loyalty, privacy and data integrity. The key highlights of

his presentation are below.

Retail Learning

097 | January - February 2013 |

The rise and fall of the CFO

The focus on efficiency and cost

cutting has yielded strong results for

companies. But the problem is that

cost based management can take a

company only that far, and compa-

nies are beginning to recognize the

limitations of the CFO mind-set. It is

mathematically impossible for every

organization to enjoy a cost advan-

tage if its competitors are approach-

ing the problem in the same way.

Today's reality is that most organiza-

tions, in order to achieve sustainable

growth, must increasingly compete

through customer intimacy.

Media fragmentation

Consumers are not immune to our

efforts to get products in front of

them, but they are only half listening.

Arguably, there is no longer such

thing as the average consumer.

Despite the explosion of segmented

media and data targeting, our

customers face 5000 to 10,000 brand

messages every day. Only the

relevant or the obnoxious break

through. Consumers will pay greater

attention to those messages that

strike a resonant chord due to mean-

ingful content, or due to a pre-

existing relationship with the brand.

Consumer to the power of 10

Word of mouth has a new meaning in

the age of internet and social media.

The company to customer relation-

ship has given way to customer to

community members. And the

community is not friends but just a

group of like-minded individuals. In

this context an interested brand is

challenged to seek them out and talk

to them in a relevant manner. Apart

from seeking out homogenous

groups on social media, today's

brands need to find their voices and

operate at a higher standard. This is

because while social media can be a

powerful tool for creating positivity, it

can as quickly become a destructive

force.

The capability revolution

Organizations today have the ability

to collect, manage and analyze huge

volumes of data. Digitization of trans-

actions and data collection allow high

degrees of customized customer

experiences. But having said that,

with big data comes big responsibil-

ity. Organizations must commit to

using the data to provide optimal

value to customers on a sustained

basis. One cannot assume that a once

satisfied customer is a loyal customer.

Enterprise Loyalty

If traditional database marketing

results in direct-to-consumer

communications and changed behav-

ior, then enterprise loyalty extends

the application of data to those

through processes within the organi-

zation that have customarily been

operationally focused. Simply put,

enterprise loyalty brings the applica-

tion of data to areas of the company

that rarely or never before used such

information to guide their decisions.

The 3 Rs of Loyalty

Reward, recognition and relevance

are the three pillars that make a

loyalty program real and customer-

centric. A reward simply is how the

company acknowledges a customer's

loyalty. Recognition is how the

company provides a unique value

based on the customer's level of

engagement. Airline and hospitality

programs bring this forth efficiently

through tiering. Relevance is by far

the most important aspect through

which companies can customize a

particular customer's experience to

ensure that it resonates directly with

the customer's needs and prefer-

ences. Collection of data is the first

step in this process and allows

companies to deliver value across the

3Rs.

Dimensions of Relevance

Relevance can further havespatial,

temporal, cohort and individual

considerations. Spatial is based on

geography and physical presence.

Temporal is based on the life stage

that a customer is in. Cohort is

defined basis social, cultural and reli-

gious affiliations. And finally individ-

ual is a customer's personal set of

choices or interests that are generally

not exhibited in public.

Making the Loyalty Leap

Finally in a nutshell the following

steps will help an organization make

the Loyalty Leap:

Drive organizational commit-

ment Understand your best customers Create value around the 3 Rs Break free from the data ghetto

by moving to enterprise Loyalty Be transparent and reasonable

with use of data

Bryan Pearson is President & CEO,

LoyaltyOne, Inc. He was nominated to

Smart Money's Power 30 list, along-

side Steve Jobs, Marissa Mayer, etc.

He is the author of The Loyalty Leap:

Turning Consumer Information into

Customer Intimacy, a Wall Street

Journal hardcover bestseller.

LoyaltyOne is a global leader on

consumer insights & strategy, loyalty

marketing and customer experience

management.

Retail Learning