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Loyalty Alchemy

VIEWS: 9 PAGES: 32

									               Loyalty Alchemy
building brand advocacy through continued innovation
An afternoon discussion

• The Loyalty Landscape
   – The Consumer view and the changing competitive landscape


• The First E - “Enterprise” foundation
   – The top business objectives of a holistic approach to loyalty design


• The Second E - ”Engagement” 2.0
   – The expected business impacts of channel alignment


• The Third E - “Economic” drivers
   – Learnings from the front-line and Innovations that make a difference
The Loyalty Landscape – the Consumer View
• The average U.S. household
  belongs to 12 loyalty programs.
• Loyalty cards are the third most
  frequent card produced in
  America after ATM and Credit
  cards.

• A recent ACNielsen Survey
  showed 64% of Americans said
  their shopping decisions are
  effected by loyalty card
  programs.
                --source SSI Technologies Mar
  2008



• Multi cards, brands, products
  services

• Household members and
  extended relationships
         • Consumer & small business
The Loyalty Landscape – the Consumer View

• PIN Based Credit Cards
   –   Identity theft PIN security
   –   PIN protection on all transactions
   –   Typically no annual fees
   –   Incentives at select merchants


• Non Payment Loyalty Cards
   –   RFID, Gift Card, Prepaid loyalty
   –   Coalition partners



• Mobile Payments
   –   PayPal & PayPal Mobile
   –   Google Checkout (g-pay)
   –   M Rewards


• Web, Brick & Mortar, Partners
The Loyalty Landscape – the Consumer View
• Decoupled
  Debit Cards
  –   "Incumbent deposit
      institutions will need to react
      to the risk of
      disintermediation…

  –   “Decoupled debit cards will
      expose incumbent networks
      to new competition from
      the likes of Amex and
      Discover

  –   “Competition in rewards will
      force the major financial
      institutions to accelerate
      their shift to enterprise
      rewards to resist consumer’s
      cherry picking of the debit
      card product.”
                                        Decoupled
               source Aite Group 2007      Debit
                                         Payment
                                         Platform
          Coming Soon to an iPhone near you

•   Disintermediation of
    loyalty accounts,
    cards, points and
    other currencies

•   Aggregation and
    consumer
    understanding of
    points value

•   Ability to pool
    points and spend              $
    currencies across           Loyalty

    brand

•   All in Real time
Loyalty on the iPhone - How it works

•   Summarize all card
    accounts for rewards
    balances

•   Real-time loyalty currency
    value                         Loyalty Account Points Balance
                                  Amex Platinum        25,000
                                  Delta SkyMiles      100,000
                                  RBCC Credit Card     75,000
•   Ability to buy, exchange      RBCC Debit Card      50,000
                                  Citi Thank You!     200,000
    and pool points               GE Business Card    250,000
                                  Total Points Available 700,000


•   Ability to spend points for       $                   $
    any transaction                Manage
                                   Points
                                                        Spend
                                                        Points
     –   bye bye rewards grid
    The                 of Loyalty – Consumer Edition!


                                                         HELOC
                                 Shop
   latency
                            insurance
                                                          tactic
              Points Bank          Black out dates
Household
Penetration
                recency            Debit
                                             CREDIT
                                                           outsource
  service        products
                                           loyalty RFM

                     activation                years
     The                     of Loyalty – Consumer Edition!


                                                                                                 HELOC
                                    Shop
    latency
                                                                                   Black out dates
                      insurance
   Points Bank                                           Debit                                        tactic

Household
Penetration        “Loyalty marketing is a strategy, not a tactic. The reward
                     is no more a bribe than a birthday present from your
                       partner or a dividend to a shareholder is a bribe.”
                                        from 'Scoring Points: How Tesco is winning customer loyalty


              recency
  service                                                                                               outsource
                 products                                       CREDIT
                                    loyalty RFM

                        activation                                 years
The Alchemy of Loyalty Design
Enterprise Design – Pooling & The Household
Enterprise Design – Leverage Issuing & Acquiring
•   Move Consumers to
    Merchants

•   Move Consumer
    Spend - Drive Usage


•   Attract & Retain
    Merchants

•   Attract & Retain
    Card Consumers


•   Reduce Cost of
    Issuer Program

•   Cash, Check and
    non-Issuer cards must
    Be Included,


•   Increase Consumer
    Loyalty To Merchants
Enterprise Design - The Partnership Landscape




          Develop a business plan to serve as roadmap for growth.
        Establish partnership agreements with “high impact” brands.
    Extend tactical partners to strategic partnerships (multi-dimensional)
 Future priorities should include local, entertainment and “green” partners.
Enterprise Design - Strategic Partnership Value
•   Unique, Fresh and Relevant
    Rewards

•   Localized Rewards

•   Deeper, strategic relationships
    play an important role in
    driving incremental value and
    differentiating the offerings,
     –   MasterCard, United Way



•   Leverages equity of partners’
    brands, provides access to a
    new and extended customer
    base, increases customer
    engagement, increases
    revenues and decreases
    costs over time
Can you explain it to a 5 year old?




                                Simplicity
                          The picture reminds us that in
                         order for consumers, business
                          partners and merchant clients
                        alike to embrace a large concept,
                                you need simplicity.

                         Without it, you have no buy-in.
A Case Study – Verizon Business Link Rewards
Engagement Strategies 2.0 – Loyalty Analytics

•   A primary benefit of an effective loyalty
    program is gaining insight
     – Leveraged to create new products
       based on deep customer knowledge
                                                Strategic Services Methods
•   Create a strategy and structure that is     -Define measurable objectives

    compelling, operationally feasible, and     -Conduct competitive reviews
    financially rewarding                       -Determine key operational processes

                                                -Outline the work plan

•   Form segmentation and business rules        -Build a detailed financial model

    for customer touch points                   -Assist in employee training

     – Will be used to conduct segmentation     - Test & Learn & Assess & Modify

       analyses, and administer changes
Engagement Strategies 2.0 – Communications


         “
Engagement Strategies 2.0

Interactive Loyalty

• Auctions
• Surveys and Results
• Refer a Friend
  Campaigns
• Sweepstakes
• Chat/Blogs
Engagement Strategies 2.0

•   Integrate multiple communication
    channels and customer touch points
       Call center/customer care
       Program creative and
        communication tactics (Web, IVR,
        direct marketing, Email,
        2-way SMS)
       Marketing partnerships
       Rewards and fulfillment

•   Create the Communications Plan by
    analyzing current strategy, membership
    base, program activity

•   Plan balanced against per member
    investment and defined ROI
   Live Demo – SMS Text Messaging


Send one of the following commands to 39044


          •   RBCC PNTS
          •   RBCC BID
          •   RBCC 33701
          •   RBCC EARN
 Economic Strategies - Inflation & Compression

• The Varying Costs of Channel
  Alignment
   – Implementation Model
   – Call Center portals
        • one touch resolution
   –   Loyalty portals integration
   –   Leveraged IVR solutions
   –   Push to Web
   –   Targeted Emails (trigger and push)
   –   SMS texts (one- and two-way)
   –   Auto redemptions
   –   Print on-demand certificates
Economic Strategies – Zero Liability Model

        • Shift points liability to program partner/vendor

        • Predetermined .bps funds all loyalty operations
           – Call center, web hosting, fulfillment, account
             management


        • Reward value is funded by liability model

        • Eliminate variable vendor fees

        • Marketing fund created and maintained from
          .bps
           – Statements, emails, website design
Economic Strategies – New Funding Streams
        •   Reward Discounts –
             –   negotiate discounts with rewards partners by leveraging
                 buying power


        •   Corporate Payment Card –
             –   use of corporate payment card to pay for rewards expenses
             –   benefit of interchange fees, and interest expense savings.


        •   Affiliate Commissions –
             –   enable affiliate-marketing partners (online shopping mall) to
                 deliver paid online advertising


        •   Advertising Commissions – Co-Op Marketing Funds
             –   monetize insert space and other communications assets
             –   generate revenue from marketing partners and advertisers


        •   Sell Bonus Points –
             –   secure accrual partners to purchase “points” for use as an
                 incentive in their own programs
Economic Strategies – High Costs of Travel

      •   Full Service travel portal - $$$$$$$$$$
          –   Travelocity-style interface allows for searches, special promotions,
              partner tickets, etc.


      •   Certificate-based travel solution - $$$$
          –   Lower cost alternative, members redeem for a wide variety of
              travel reward gift cards from top airlines, car rental services, and
              hotels.




      •   The Shift to Travel Self-Service - $
          –   Members book their own travel on issuer card
          –   Redeem points for a statement credit
          –   Points can be based on pre-established tiers
          –   For the member, this solution yields the most flexibility
          –   A high-perceived value, with a lower cost to issuer
                The Alchemy of Loyalty Design


Begin with                                                   Differentiate
the end in                                                    through all
mind                                                        touch-points
-                                                                        -
Build a long-                                               Engagement
term loyalty                                                      leads to
foundation                                                     consumer
                                                              motivation




                       Leverage economic drivers -
                   ensure sustained program profitability
Where do you go from here?
Kobie Marketing, Inc.
Kobie Marketing, Inc.




    Thank You!

       Michael F. Hemsey
            President
     Kobie Marketing, Inc.
     100 2nd Avenue South
    St. Petersburg, FL 33701

								
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