|The Loyalty Guide 5 - Executive Summary|
Report updated on June 15th, 2013
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The Loyalty Guide is the world's only complete, comprehensive report covering every aspect of customer loyalty marketing, customer engagement, customer acquisition, customer retention, best customer marketing, customer relationship management (CRM), social media marketing, customer data-driven business intelligence (BI), loyalty metrics, measurement, reporting and predictive analytics.
The report provides not only detailed case studies, best practices, marketing theory, and all the latest research, but also the kind of practical know-how, up to date facts and figures, market trends, forecasts, best practices, expert opinions, practical advice, and sheer hard data that are needed for well informed and forward-looking business decisions.
This summary provides an overview of The Loyalty Guide, and aims to help you quickly identify the aspects of loyalty marketing that are most relevant to you right now. Each section summarises the essence of a complete chapter of the guide, making it simple to navigate the report and its wealth of illustrations, charts, tables and graphs. We, the authors, welcome you to what has built up over more than a decade to become the world's fullest and most complete report on marketing techniques, practices, strategies, measurement, management, and accountability.
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The Business Case for Loyalty
There are two basic points of view to be considered when discussing the business case for introducing - or keeping - a customer loyalty programme: Some industry observers have argued that a loyalty programme is often unnecessary because it's just a way of spending money rewarding customers who would probably have been loyal anyway.
Others, however, have recognised that the real benefit of a loyalty programme is not necessarily felt first by the customer, and that it is the merchant that gains the necessary insight (from detailed analysis of its loyalty programme and transactional data, for example) to be able to improve the way it communicates with and deals with its customers. The customer is actually the secondary (but still the most important) recipient of the benefits of a true loyalty programme.
To say that a loyalty programme is not useful, or is a waste of marketing budget, is to have misunderstood the real purpose of the programme. Rather than offering a simplistic discount or rebate programme, a real loyalty programme offers the customer any number of incentives to allow the programme operator to collect accurate and useful data about their lifestyle, purchase choices, motivations, interests, circumstances, and in many cases even about their household and immediate family.
The reason for gathering this data is not - as a very small minority of consumers seem to fear - to create some kind of 'Big Brother' database of peoples' personal habits, but to gain practical insights into ways in which the merchant could serve each customer more effectively, more easily, and more satisfyingly.
The best reasons for having a customer loyalty strategy...
In this chapter we explain in detail the different reasons, benefits, strategies and factors driving customer loyalty, including ideas about how to set up a new loyalty programme, what will be involved, and pointers for the financial and operational implications of launching your own loyalty iniative, including:
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- The business benefits of a loyalty strategy
- How customer loyalty pays back, both short term and long term
- Factors affecting and driving customer loyalty
- How a loyalty initiative grows and improves your customer base
- Financial and operational aspects of a loyalty strategy
- What you need to know to run a successful loyalty programme
- Viable alternatives to traditional loyalty offerings
There are two main types of multi-partner programmes: true coalition programmes, and single operator programmes that include other partners.
For example, Air Miles and Nectar are true coalition programmes. The programme management is independent of any of the partners. The partners have contracts with the operators of the programme to issue and/or redeem the currency of the programme, and only have access to data harvested by the programme through its operator. Individual partners don't have direct access to other partners' data held in the programme, although the operators of the programme will usually market to other partners' customers on behalf of another member. For example, a supermarket member could ask for mailings to be sent to the customers (or just certain segments of the customers) of a fuel retailer partner in an area where a new supermarket is being opened.
Tesco's Clubcard is an example of a single operator programme that involves other partners. The programme is owned and run by Tesco. However, Clubcard holders can collect points when buying from various partners in the programme, such as Alders, Beefeater, Marriott, and National Tyres. Vidal Sassoon is an example of a redemption partner.
The best reasons for coalition-based loyalty initiatives...
This chapter examines the many essential goals that any coalition programme must achieve if it's going to succeed, and why they're so important. Examples of these goals include:
The key benefits of joining a coalition programme...
- Rapid market penetration
- Delivery of attractive rewards
- Being the first in the market
- Building communication channels
Supported by statistics, illustrations and expert opinions, the advantages, disadvantages and structural needs of coalition programmes (compared to, say, a non-partnered loyalty programme) are detailed, covering critical factors such as:
Detailed case studies of major coalition programmes...
- Greater interest in the programme
- Members have fewer cards to carry
- Members earn points more quickly
- A greater variety of rewards
- Concentrated, coherent promotions
- Time saved in development
- Lower costs of development
- Database run by professionals
- Sector exclusivity
- Coalition marketing campaigns
- Higher penetration rates
- Real cost benefits of coalition
This chapter also provides details and comprehensive case studies of the world's major coalition loyalty programmes, including:
Other key topics covered in this chapter include:
- Avios, UK (aka Air Miles)
- Air Miles, Canada
- Air Miles, Spain (aka Travel Club)
- Air Miles, Netherlands
- Air Miles, Middle East
- Aeroplan, Canada
- BonusLink, Malaysia
- eBucks, South Africa
- Fly Buys, New Zealand
- FlyBuys, Australia
- iPoints & Maximiles, UK & Europe
- Malina, Russia
- Nectar & Nectar Business, UK
- Nectar Italia, Italy
- PayBack, Germany & Poland
- PayBack India (aka i-Mint)
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- Why a coalition?
- The essentials of a coalition
- The advantages of a coalition
- The challenges of a coalition
- Typical application areas
- Expanding into a coalition
Loyalty Rewards & Incentives
The reward is a vital part of any loyalty programme. It is the bait on the end of the line: the bit that actually convinces the customer to sign up. It is also a complex part of the programme and usually presents a delicate juggling act: it must be worth enough to be attractive to the customer but not cost enough to make the programme unprofitable. It must appeal to consumers of the right profile and it must cater for wide variations in taste and desires among those customers.
All in all, the reward has many functions that we examine in detail in this chapter. We also examine the properties of a good reward, and which of these consumers think are the most important. We also look at the many types of reward that can be offered: Discounts (both targeted and untargeted), points-driven programmes, hard and soft rewards. Which do customers prefer, and why?
We also look at how, in the eyes of an expert, one should go about planning a successful and appealing reward catalogue - quite often a component that lets a reward programme down. And finally, we examine some recent research into what motivates consumers when they are faced with a choice of rewards.
Reward drives behaviour. Experiments have revealed that, while a bigger reward reinforced the desired behaviour better than a small reward, when the rewards were discontinued, those who had received the big rewards were more likely to return to the unwanted pattern of behaviour than the group who had received the small reward. So the warning is there. Never let your best customers feel that you are withdrawing privileges from them, and try to ensure that customers become loyal to the product or service, and not simply to the reward.
But, to have any effect at all, the reward must be desirable enough to actually stimulate a change in behaviour among customers. It also has to be affordable, and balancing the two sides of the desirability/affordability equation is tricky.
Structuring your rewards for optimal redemptions and engagement...
In this chapter we explain all the necessary attributes and practical planning of loyalty rewards, including:
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- The value of the rewards offered
- The function of the rewards offered
- The properties of an attractive loyalty reward
- How to profit from reward redemptions
- Lowering the fulfilment budget without risking loyalty
- How to extract maximum value from your rewards
- Setting reward levels and tiers
- Using different rewards to change customer behaviours
- Types of rewards (goods, discounts, experiences or other benefits?)
- Timing of rewards (now, soon, or much later?)
- Rewards that consumers actually want (and what they think they want)
- Redemption strategies (i.e. internal or outsourced)
- How to plan a compelling rewards catalogue
- Strategies to drive both redemptions and engagement
- Matching rewards with different point levels
- Insights into loyalty rewards and their effectiveness
- Using coupons and vouchers as rewards
Customer Engagement and Loyalty
As time passes and more loyalty programmes are launched, it is becoming increasingly difficult to actually engage the customer in the programme. Customers are now so used to handing over a card at the POS that they feel little real involvement. If there is such a thing as a hot topic in loyalty, it is customer engagement. Handing over a card when transacting and receiving a quarterly statement within a pile of other mail is not engagement. Engagement grows little by little, each time the customer has to actively think about and make a decision about the programme.
In fact, although nearly 90% of shoppers in the US participate in rewards programmes to earn points, discounts or prizes, loyalty programmes alone are not yet fostering the kind of emotional connection that is needed to develop long term customer engagement. Engagement is something that can only be built up over time, and it usually stems from mutually beneficial relationships between customers and brands. It could be argued that engagement comes not a result of a marketing campaign but from the full range of interactions between the customer and the brand, as well as brand-related interactions between customers and their peers. The key to building a real sense of engagement is to provide the consumer with something of personal value that is timely, relevant, wanted, and preferably repeatable.
Insights for true customer engagement...
In this chapter we explain why customer engagement is now seen by most marketing experts as the key to future survival, and how smart marketers are already rethinking the idea of customer engagement. Among the key topics covered in detail:
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- Insights into consumer engagement and its benefits
- How incentives can drive customer engagement
- Customer engagement strategies
- How to engage the individual customer (the 'new CRM')
- Why engagement strategy goes way beyond CRM
- How to drive engagement with loyalty rewards
- Why loyalty without engagement is a dangerous trap
- How to engage loyalty programme members for life
- How social media is reshaping customer engagement
- How to building customer engagement the social way
- Gamification's effect on consumer/brand engagement
- How e-mail can create customer engagement - or not
- Ways to capture and engage online customers
- How digital rewards can increase both engagement & loyalty
- How mobile can drive cross-channel engagement
- Recent innovations in customer engagement technique
Social Media and Loyalty
Social media marketing is a relatively new field, driven by the widespread popularisation among consumers of social networking web sites and services such as Facebook, Google+, Twitter, Foursquare and others. These services don't only hold true to the original vision of sites such as Facebook (i.e. connecting people in a safe and personal way) but they now also include other services and technologies that augment that goal, such as location-based services which allow people to 'check in' just about anywhere - whether it be a popular club, restaurant, or their own home, or any other venue - usually thanks to the GPS that's built into their mobile phone handset. This allows people to 'be seen' in all the right places but, more importantly, it has important implications for brands that they choose to associate with in their social network.
One of the most common misconceptions among marketers is that social marketing is as easy as putting up a page on Facebook, or setting up a Twitter account. Of course those are the basic building blocks, but there's a whole world of detail that needs to be considered first. As in any other marketing or advertising discipline, you first need to identify and clarify a host of factors, such as the brand identity, brand message, brand values, target audiences, value proposition, referral and advocacy benefits, social gaming elements, social commerce and currency, messaging strategy, creative elements and imagery, and how it links up with your loyalty programme.
Turning social media into a loyalty driver, rather than a publicity risk...
Among the many topics examined in detail, and the down-to-earth practical advice found in this chapter:
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- Types of social media and their uses
- Social customer loyalty & engagement best practices
- Other social media marketing best practices
- Does the marketer really have to lose control?
- Planning and setting up a social marketing strategy
- How social media can drive customer loyalty
- How social media supports your loyalty strategy
- The impact of social media on loyalty schemes
- The impact of social media on brand reputation
- Maximising social media's brand marketing value
- The link between social media and customer engagement
- Building customer engagement the social way
- Gathering insights from social network profiles
- Social media as a customer loyalty channel
- Social media as a customer service channel
- Integrating the social channel into the marketing mix
- Social media as seen from the marketer's side
- Social media as seen from the consumer's side
- The adoption of social media into corporate strategy
- How to find the true ROI of a social media initiative
- Getting board level buy-in for social media marketing
- Which markets & sectors lead in social media usage
- How consumers use different social media platforms
- How to turn social customers into social advocates
- How 'social shopping' has changed the retail landscape
- How location-based marketing ties into customer loyalty
- Bridging the real world/social media loyalty gap
- Working with viral social marketing
- The future of social & location-based marketing
Loyalty & Marketing Tools
A customer loyalty programme, despite having all the right rewards and engagement strategies in place, can fail catastrophically if the tools and technologies that drive it are either insufficient for the task or inadequately integrated. How could a large coalition loyalty programme ever function if the reward fulfilment function wasn't tightly integrated with the web site, or if the marketing team had to refer to and deduplicate information from several siloed data sources? The technology, the tools, and every functional back-end system must be not only scalable enough to cope with the future success of the loyalty programme but also to be adapted to every market-driven change that affects the programme's goals and direction.
For example, the authors of this report conducted a survey of retail customer loyalty and commitment strategy, and found that while 93% of retailers run a loyalty programme for their web site, stores, or catalogue customers, 74% reported 'partial to no tangible improvement' in their programmes compared to their competitors. This suggests a need to review current and future loyalty processes and solutions, and that a wealth of very similar loyalty platforms may be the cause of a degree of commoditisation of loyalty offerings.
Another example of the more interesting - and potentially game-changing - technological developments has been that, in the US, the nationwide rollout of EMV smart chips on debit and credit cards has opened up a whole range of possibilities and opportunities for loyalty marketing via the payment card platform. Particularly if combined with the mobile channel by means of smart phones and NFC technology, the possibilities for loyalty applications are endless.
Independent advice about what matters most in a loyalty platform...
This highly practical chapter provides details of loyalty tools, technologies and innovations currently in the market, offering advice on the advantages and disadvantages of these approaches. Among the technologies and tools examined are:
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- Loyalty platforms & technologies
- New loyalty card technologies & platforms
- The potential for EMV-based loyalty
- The rise of mobile & app-based loyalty technologies
- Contactless loyalty technologies
- The benefits of NFC & RFID technology
- How mobile & NFC will impact loyalty strategy
- Tools for loyalty metrics, analytics & insight
- Loyalty platforms & technology innovations
- Benefits of loyalty scheme-enabled self-checkouts
- Augmenting Reality for greater engagement & loyalty
- Linking loyalty points with prepaid cards
- Linking loyalty points with mobile payments
- Integrating loyalty into smartphones and apps
- Cloud-based loyalty innovations & platforms
- Benefits of a virtual loyalty currency
- Data pattern-spotting for competitive advantage
- Developments in Retail 3.0 and resulting consumer insights
- The benefits of intelligence-based marketing
- Differentiation using new retail technologies
- Better customer service with kiosks & self-service
- Case study: how Points.com changed the loyalty landscape
Loyalty & Marketing Operations
The theory of customer loyalty is quite plain: a business that retains its customers for longer usually makes more money from them at lower cost than one that is constantly paying to acquire new customers. Actually doing that - the practice of customer loyalty - is not so straightforward. It's not a trick that can be quickly learned and performed; creating loyal customers depends fundamentally on following good and sound business and marketing practices right across the business all the time. It's a sad truth of business that customers are hard to win but easy to lose. A loyalty programme is not a quick fix that can simply be bolted on and produce measurable results immediately.
That said, the principles are quite simple: know your customers, reward them for behaving in the way that you want, and don't reward them for behaving in any other way. In order to know them, you need to collect data and then use it intelligently to identify the valuable customers and to reward them for generating more profit. Of course, there are many refinements that can be made to this broadly stated principle. Enter the loyalty programme.
But many of the so-called loyalty programmes in operation today are not really loyalty programmes at all. Perhaps 'frequent customer programme' is a more accurate term. To be loyal to a business is one thing, but to use it frequently is another (for example, it could be a result of circumstances that there is simply no other choice). Clearly, if another choice becomes available, then the distinction becomes critical. This means that most prudent businesses aim to create loyal customers, not just frequent customers. Of course, not all customers are potentially loyal customers, for a variety of reasons. So the ideal loyalty programme would be one in which already loyal and potentially loyal customers benefited, but other customers didn't. This means that the customers have first to be sorted into groups, and different approaches have to be made to each group. Or, more likely, a programme has to be designed so that it will appeal to the desired group more than to the other group.
The 3 top reasons to have a loyalty programme...
A good point at which to start is at the very beginning - when acquiring the customers. In many typical businesses, as many as 45% of direct, new, one-off purchasers do not go on to purchase a second time. In order to grow and maintain a successful business, three simple rules should be followed:
The main goals of a loyalty programme...
- Acquire customers that are likely to repurchase - even though this may be at the expense of initial raw response;
- Recognise which customers are unlikely to repurchase and limit your marketing spend for this segment accordingly;
- Focus the marketing budget on those who exhibit the same profile as existing repurchasers but have yet to buy a second time.
In this chapter we detail the workings of an effective customer loyalty programme, and how to achieve several obvious goals:
Critical success factors for a loyalty programme...
- Retaining existing customers
- Acquiring new customers
- Moving customers up the RFM segments
- Deselecting or 'firing' unprofitable customers
- Win-back techniques (recovering lost customers)
- Increasing CLV (customer lifetime value)
- Best customer marketing (targeting the most worthwhile customers)
- Building long-lasting customer relationships
- Creating advocates from loyal customers
- Adjusting pricing strategy for greater profitability
- Responding to competitive challenges
- Selecting stock lines more effectively
- Planning merchandising optimally
- Cutting promotional and advertising costs
- Selecting new trading sites based on profitable customer profiles
We also go into depth on the 17 key factors that make a loyalty offering successful, both in the eyes of the customer and in terms of bottom line business results:
Guidance for running a profitable loyalty programme...
- Loyalty programmes are never a 'quick fix'
- Targeting the right people at the right time
- Gaining customer buy-in
- Knowing your customers and gathering intelligence
- Not rewarding the wrong behaviour
- Rewarding versus recognising
- Spotting defection patterns
- Taking advantage of customer lifecycles and trends
- Offering attainable & affordable rewards
- Recovering the programme's cost
- Keeping communications relevant and well-timed
- Keeping it simple
- Measuring the programme's results
- Attracting new customers
- Providing unique, hard-to-copy benefits
- Empowering your customer-facing teams
- Making things easier - for both you and the customer
Among the key topics covered in this chapter, we explain operational details including:
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- Critical capabilities for customer loyalty
- Loyalty programme models & strategies
- The many structures of loyalty marketing
- Planning the 'grand design' of customer loyalty
- Forming the right customer loyalty strategy
- Best practices for loyalty management
- Research into the drivers of customer loyalty
- Loyalty tokens & identifiers, and choosing the right ones
- Examples of different loyalty tokens at work
- Increasing your loyalty scheme's personal relevance
- Stealth loyalty programmes and real-time targeting
- CRM and one-to-one marketing systems
- Generalised, targeted and customer-specific pricing
- Loyalty through stored value, prepaid & gift cards
- Credit and debit card-based loyalty strategy
- Turning ancillary revenue into customer loyalty
- Designing and implementing your loyalty process
- Shattering the myths of customer loyalty
Customer Data Strategy
Whether the data and back-end systems are managed locally or whether they're hosted, and whether the operational systems are platform-dependent or use a thin-client SaaS (software as a service) model, many of the benefits of creating and operating a customer loyalty programme, or implementing a customer relationship management (CRM) system, come from the collection, analysis, and use of data. The more data we can practically use, the better: customer demographics, preferences, lifestyle and life stage, transaction history, returns, and even customer service event history.
The loyalty programme gives us a way of identifying specific customers, and tying their demographic records to their transaction records in the back-end database (whether that be an in-house collection of databases, an enterprise-wide CRM system, or some other data warehouse that's being updated, analysed, and used across the whole business).
The uses of the resultant array of data, given all the technologies that are now available to analyse it and turn it into useful support for business decisions, are potentially endless. Everybody understands that customers' supermarket transaction data can be used to segment them for marketing campaigns later on, whether that's based on demographics, spend, or products purchased.
How customer data turns into loyalty by providing new insights...
Perhaps the most important lesson we teach in this chapter is that customer data - in almost any form - can be turned into insights, which drive continual business improvements, which translate into greater customer loyalty, satisfaction, and engagement. For example, some of the most important data-driven techniques and insights available to loyalty marketers include:
Factors involved in planning a customer loyalty database...
- Customer behaviour profiling
- Customer lifestyle & demographic profiling
- Customer product preferences and repertoire
- Product category relationships & cross-selling
- Dynamic pricing strategies
- Online shopping suggestions
- Segmentation and customer tiering
- Customer base analysis and trend predictions
- Customer flow analysis
- Share-of-wallet estimation
- Market share estimation
- Early defector detection and customer win-back opportunities
- Lower cost competitive response
- Customer targeting and differentiation
- Advertising campaign targeting
- Circular efficiency
- Offer planning and promotion analysis
- Differentiated marketing
- Intelligent deselection of unprofitable customers
- Green targeting to save costs (and the planet)
- Planning and merchandising
- Human resources planning
- Geographical store site selection
- Inventory rationalisation & selection
- Planogram adjacencies & merchandising
- Differentiation based on data analysis
- Real-time data mining and the 'single customer view'
- Behaviour prediction based on past events
- Affinity marketing strategies
- Predictive modelling
This chapter also details the process of planning a customer loyalty programme database, providing advice and guidance on usually thorny issues including:
How much data is needed, and where and how should you get it?
Another common issue that we explain in detail is the question of how much data to collect, when, where, how, and how often it should be refreshed and 'cleansed'. The most popular data collection methods for loyalty programme operators currently include: the loyalty programme sign-up, web site, direct mail responses, mobile apps and sites, transaction records, reward redemptions, promotional responses, customer feedback, customer services and call centres, social media and location-based services, third party data sources, programme partners, point-of-sale (POS) terminals, among others - all of which we explain and illustrate in detail.
- Data processing
- Data flow
- Data warehouses and data marts
- Data duplication
- Data accuracy
- Data cleansing
- Data ethics
- Data security and privacy
- Data analysis to support business processes
- Predictive analytics to help drive change
This chapter also examines all the best practices, strategies, legalities and theory that go into creating an operational customer data model, such as:
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- The technologies behind customer data
- The importance of loyalty data collection
- Ways to gain business value from customer data
- How loyalty data drives relevance and adds value
- How loyalty data improves marketing effectiveness
- How data ignorance damages both loyalty and the brand
- Turning loyalty data into actionable insights
- How customer data is harnessed to drive customer loyalty
- How loyalty data is harnessed to drive engaged relationships
- The customer-related benefits of using loyalty data
- Database planning, data processing & data flow
- Data analysis to support business processes
- The 'how, where, when, why & how much' of data collection
- How long does customer data last?
- Data duplication, accuracy, and cleansing
- Predictive analytics & business intelligence
- Benefits of data collection and analysis
- Profiling customer behaviour, lifestyles & demographics
- Intelligence from mystery shoppers & feedback systems
- Why customer data has become the 'new oil'
- Segmentation of the customer base
- Customer lifetime value (CLV), RFM & customer tiering
- Customer base & flow analysis
- Share-of-wallet & market share estimation
- Best customers, defectors and win-back strategies
- Customer targeting and differentiation
- Intelligent deselection & differentiated marketing
- Turning 'blind data' into lifetime relationships
- Using data for planning and merchandising
- Using data for other business objectives
- Data mining, OLAP, MOLAP, ROLAP and Magic Cubes
- The practical application of business intelligence
- Data ethics and privacy policies
- Data security & privacy, and related consumer concerns
- What happens when customer data is breached or lost
- How digital security issues are affecting brands
- Conclusions on the benefits of loyalty data
Loyalty & Marketing Communications
There are many more communication channels available today than there were before the rise of social, interactive and other electronic media. Even in the past two years since the publication of The Loyalty Guide 5, marketers have found a growing number of innovative ways to reach consumers, whether at home, at work, or at play - especially through the rapidly growing social media phenomenon.
Communication with consumers and other businesses can take place by mail, telephone, fax, text message (SMS), multimedia message (MMS), computer games, television, films, radio, mobile sales units, in-store teams of brand representatives, focus groups, leaflets, newspapers, free-standing inserts, coupons, e-mail, instant messaging (IM), voice over IP (VoIP), web chat, web sites, bulletin boards, online communities, social networking platforms, and even other internet-based and mobile systems such as video conferencing and meeting sharing systems.
Clearly, each channel has different costs, social implications, complications, emotional connotations, privacy issues, and various perceived benefits and risks for the consumer. Each brings its own challenges in terms of finding the right frequency, message, tone, voice, relationship-based permission, and value proposition.
And with each comes a unique set of challenges: as a rule, consumers don't like junk mail, or 'spam' (unsolicited commercial messages), or unsolicited sales calls. They complain about their mobile phone being invaded by irrelevant advertising messages, and they don't want companies "muscling in" on their private social networks without permission. They don't want to waste bandwidth by receiving unwanted videos and sound clips by e-mail, and they don't want their instant messenger services popping up unwelcome advances from companies they've never heard of or dealt with. The list goes on.
But the good news is that there are still ways, means, laws, and ethical practices that cut through the communication barrier for all of these channels, allowing you to communicate and build relationships with existing customers and sales prospects alike.
Benefits and pitfalls of all the key communication channels...
In this chapter we explain the advantages, disadvantages, strengths, weaknesses, opportunities and threats involved in communicating with your most valuable asset: your customer base, with specific guidance and best practices for each of the major channels and communication strategies, including:
^ ^ ^
- Forecast of consumer communication trends
- A new focus on thinking psychologically
- Loyalty and the mobile channel
- Code of conduct for mobile marketing
- Loyalty and the e-mail channel
- Driving greater customer loyalty through e-mail
- Opt-in and opt-out: a practical guide
- Getting the right timing for e-mail marketing
- How e-mail marketing can become more social
- Loyalty and the web channel
- Web marketing depends on content & personalisation
- How the 'cookie laws' affect marketers
- Loyalty and the social media channel
- How social communications boost customer retention
- Loyalty and word-of-mouth (WOM)
- Word-of-mouth's impact on customer loyalty
- Why loyalty schemes create more WOM champions
- The effect of legislative clamp-downs on WOM
- Loyalty and the the direct mail channel
- Loyalty and the multi-channel approach
- How loyalty depends on multi-channel integration
- Integrated channels give the best marketing ROI
- Loyalty and the self-service/kiosk channel
- Loyalty and the call centre channel
- How contact centres drive customer satisfaction & loyalty
- Loyalty and the advertising channel
- Why advertising's long-term value is being rediscovered
The Human Aspect of Loyalty
It's easy to get so involved in the intricacies and technicalities of loyalty programmes that the most important part - the human aspect - gets neglected. The technology involved is a marvellous tool - without it, loyalty programmes as we know them would not be possible. But we must remember that loyalty (and its opposite, the desire to simply walk away) are both intensely human emotions. And unless the programme generates the right feeling in people, it won't work. We must also remember that humans aren't as predictable as technology. Actions that might make one person loyal could well turn off someone else. It gets even more complicated: something that could engender loyalty in someone on one day might do the opposite on another day.
Customers are human, and loyalty is a strong emotional link...
After all, who is more qualified than customers to tell us what customers want, and what they don't want? For this reason, much of the research presented here looks at the customer/supplier relationship from their side.
But one thing is certain: the building of loyalty will not get any easier. While advances in technology have made loyalty programmes more effective, accurate and appealing to customers, these same advances have made it much easier for customers to switch suppliers. Comparisons of stock, prices, trading policies and delivery times and costs are now only a mouse click away from many customers. And if the item is to be sent to them, need they care from where it comes? Many suppliers are apparently equally trustworthy and reputable. It is important to have some unique property that makes you stand out from the crowd. All other things being equal, a good loyalty programme can do just that.
Because all customers are not the same, we have looked at the different ways that different groups of customers respond to marketing, at the psychology of loyalty, and the influence that different rewards have. In addition, factors such as age, gender, race, wealth, pricing policy, general satisfaction, level of service, the internet and the new 'green marketing' all come into planning a programme for a target market. All of these are examined separately.
Practical ways to keep your customers engaged and loyal...
The customer-related human insights we explain and demonstrate in this chapter include:
Employees are also human, and they bond emotionally with the customers...
- The human side of customer loyalty
- The psychology of customer loyalty
- How consumers interpret and choose loyalty rewards
- Why customers won't go out without a loyalty card
- Trends and changes in consumer behaviour
- The role of trust in consumer relationships
- The role of the customer experience
- Why good customer experiences are more profitable
- Why bad customer experiences travel fastest
- Major enhancers of the customer experience
- How product recalls can actually increase customer loyalty
- Why customer intimacy is the next loyalty frontier
At the same time, there is no question in any executive's mind about the significant role that your employees play in both generating and maintaining the loyalty of your customers. Without polite, courteous, knowledgeable, efficient and empowered staff to help the customer, what chance is there of a customer wanting to repeat their experience with your company or brand? With very few exceptions (i.e. products or services with no differentiating factors and with extremely high utility value), no company can afford to be rude or unhelpful to even a single customer. After all, reports of bad experiences travel far more quickly among consumers than reports of good experiences, and they tend to live longer in people's memories. A helpful employee represents a chance to acquire new customers by word of mouth - and that's a free advertising campaign.
In order to keep your employees on board with corporate goals such as customer loyalty and service excellence, you have to keep them happy, give them all the right tools, and empower them to use them. Furthermore you have to be seen to be listening to what your frontline staff say about problems and potential improvements, and actively seek their feedback and ideas. And you have to reward them for their observations and desirable behaviours 'above and beyond the call of duty'.
With all of this in mind, we have pulled together much of the relevant research that has been done on the subject over the past couple of years, and have extracted the salient points. We have also reported some of the knowledge that experience has brought. There is a comforting correlation in most of the findings, but there are also some differences of opinion and experience.
Practical ways to keep employees engaged, and customers happier...
The employee-related human insights we explain and demonstrate in this chapter include:
^ ^ ^
- Employee loyalty insights & research
- Customer experiences linked with employee engagement
- How employee engagement affects the bottom line
- Why good customer service trumps call centre efficiency
- Why employees should be segmented, not just customers
- Why employee loyalty is not just about the money
- Best practices for rewarding employees
- Ways to keep good employees engaged and loyal
- How travel incentives boost employee performance
- How top retailers build greater employee engagement
Loyalty & Marketing Best Practices
Over the past few years there have been many innovations in the field of customer loyalty marketing, and many of these have come about through the earnest implementation of established best practices. For example, the idea of giving customers exactly what they expect and engaging them in a meaningful two-way dialogue is not something new - but it is the foundation of the current trend toward greater customer engagement and satisfaction.
In this chapter we detail the best practices that need to be observed when building customer loyalty, and to make sure your loyalty initiative doesn't stumble or fail, whether it's online, offline, or both. We also examine the best practices behind successful customer loyalty management techniques, and highlight the main traps and pitfalls that catch so many new programme operators.
In addition, we cover best practices for e-mail marketing - including details of the strategies that have worked best, and the strategies that didn't work at all - as well as customer management, customer retention, customer relationship management (CRM), digital marketing, and a number of other more general marketing best practices and guidelines, including green marketing and how to 'keep it real' and avoid consumer backlash over 'greenwashing' issues.
This chapter explains the latest best practices for customer loyalty management, including:
This chapter also explores in detail the latest thinking and best practices behind customer retention and customer relationship marketing, including:
- Best practices for increasing customer loyalty
- Top ten ways to improve a loyalty scheme
- The key attitudes of successful loyalty marketers
- Principles that create highly loyal customers
- Voice of the Customer (VOC) best practices
- Best practices to stop a loyalty scheme stalling
- Best practices for online customer loyalty
- The six P's of customer loyalty marketing
- Creating loyalty with 'surprise and delight'
- Building loyalty through customer service
- Loyalty management best practices
- A relationship model that predicts customer loyalty
- Safely lowering the cost of a loyalty scheme
- Recession-proofing a loyalty programme
We also detail a wide array of other marketing best practices that are essential in today's fast-paced electronic market, including email, web, social, cause-related and green marketing:
- Customer relationship best practices
- Customer management best practices
- Best practices for successful CRM
- Essential rules for retaining your best customers
- Growing customer loyalty in a recession
- Best customer management strategies
- Forming a customer-centric marketing strategy
^ ^ ^
- The new focus on marketing performance management
- Best practices for mobile marketing
- Best practices for social media marketing
- Digital marketing best practices
- E-marketing strategies that didn't work
- E-marketing strategies that did work
- Best practices for digital customer engagement
- How cause-related marketing increases sales
- Green marketing best practices
- Who consumers trust most when 'going green'
- Why 'plant a tree' is actually a loyalty strategy
- Consumer responses to green marketing
- The strength of green customer relationships
Loyalty Metrics & Accountability
The business case for any loyalty programme needs to be well supported and justified, not only in the planning stages but on a continuing basis after implementation, and during development. The application of solid mathematics, statistics, and scientific measurement is the only way to prove the effect the programme is likely to have on profitability and the customer base. And the application of regular and meaningful management reporting is the only way to monitor all the factors involved both before and after implementation of the programme.
Every aspect of the creation of a loyalty marketing initiative - or of any differentiated marketing initiative - must be evaluated at all stages, and useful metrics must be implemented with proper processes and controls to help determine the success, failure, progress or stagnation using preset standards. In this chapter we examine the detail and practical workings of the necessary formulae, calculations, metrics, and management reporting tools that every marketer needs during the process of evaluating new and ongoing loyalty marketing initiatives.
A loyalty programme's results are often nebulous - hard to see accurately, usually being viewed in combination with the results of other marketing initiatives, seasonal variations in the market, and other disguising factors that make it hard to measure how successful (or not) the programme really is. Being able to monitor, measure, track, and analyse the level of customer loyalty before, during, and even after the programme, is of central importance to the financial justification of a loyalty programme. So, although the psychology and implementation of your programme may be something of an art, the only way to track its performance is through the combined sciences of logic and mathematics.
Customer loyalty itself is difficult - if not impossible - to measure accurately. Loyalty means different things to different people - there are many aspects of it and each could vary in importance depending on the viewpoint of the observer. In addition, loyalty involves emotion, and that's notoriously difficult to measure meaningfully. However, over time the necessity of measuring results has led to the development of some formulae that have become as close to standard as you get. Three of these are the patronage ratio, the switching ratio, and the budget ratio. Added to these, to complete the picture, are a range of other composite measures, such as the Enis-Paul Index and customer retention measurements.
It's probably true to say that the ultimate measure - the one that the board of directors will be interested in - is the effect on the bottom-line profit. But in order to see how well aspects of the programme are functioning, and to be able to make adjustments to it and see what difference they will make, these more specific formulae are needed.
Step-by-step calculations for loyalty, retention, profitability, and segmentation...
In this chapter we provide not only the exact formulae needed to measure and calculate customer loyalty and all its sub-parts, but this report's readers-only web site provides working versions of all of them, both online and as a downloadable Excel spreadsheet. This chapter takes you step-by-step through the calculation and interpretation of dozens of business-critical metrics and analyses, including:
^ ^ ^
- The budget ratio (share of wallet)
- Retention rates & customer churn
- Customer lifetime value (CLV/CLTV)
- Customer retention, attrition and lifetime
- Potential, existing, and defected customers
- The patronage ratio
- The switching ratio
- The Enis-Paul Index
- Customer profitability
- Drivers of loyalty and profitability
- Loyalty and profitability models
- The 'loyalty and profitability chain'
- Past, actual, and future profitability
- RFM segmentation
- Net Promoter Score (NPS)
- Attitudinal equity
- Customer-centric metrics
- New digital marketing metrics
- Examining individual customers and customer groups
- Statistical primer: the mean, median, mode, variance & standard deviation
Reporting & Segmentation
Marketing departments are in ever-greater need of both tools and techniques to help them prove to the board of directors and shareholders that they are performing as well as they should, given the budget they have been given. Moreover, marketing is a fast-developing science combined with a 'human art' that requires constant development, innovation, fine-tuning, and new technologies if the company is to stay one step ahead of the competition. This requires not only more money in the budget to cover the costs of developing new techniques but also a certain amount of money that will be 'at risk' without any certain ROI (return on investment).
While most forward-thinking FDs (finance directors) and CFOs (chief financial officers) accept that development is an ongoing and unavoidable cost of business, most will also demand that the marketing function can pay for itself in other ways - with an increasing ROI, for example. As a result, the days of analysis and reporting for the sake of simply monitoring the success (or otherwise) of individual marketing campaigns are over, and marketers must now show not only their smaller successes but also their overall contribution to the bottom line, brand equity, and corporate well being. The importance of statistical analysis and proper management reporting cannot be understated.
How to prove the loyalty programme's ROI and bottom-line impact...
In this chapter we demonstrate and explain - by way of practical examples, calculations, tables and charts - the most important management reports and tools in the loyalty marketer's portfolio. These calculations, comparisons and reports make the process of proving and justifying the loyalty programme's contribution to the bottom line not only easier but also more timely and accurate. Reports that we detail include:
^ ^ ^
- The Bathtub report
- The Decile report (RFM/RFS)
- The Quo Vadis Retention report
- The New Member Frequency Report
- The Cardholders' Summary Report
- Traditional RFM segmentation (125 cells)
- Reduced RFM segmentation (27 cells)
- Flexible RFM segmentation (8 cells)
Brand Marketing & Loyalty
There would be no point in spending marketing dollars building brand awareness if customers don't buy the brand again after they've tried it the first time. Today's brand marketers all have the same aim: to encourage brand loyalty - the situation where consumers choose a brand over its competitors and private label equivalents because they want to.
In this chapter we focus on the successes and techniques seen most recently, and also the problems facing brand marketers and how they can be overcome. We look at the key drivers of brand loyalty, how to form a more effective brand strategy, and how to predict the impact of brand loyalty. We also detail ways to build and boost a brand, both offline and online, along with an examination of common brand threats and nationally successful brand strategies.
A good definition of brand loyalty is that given by Jan Hofmeyr and Butch Rice, in their book 'Commitment-Led Marketing': "Brand loyalty is the tendency of someone to buy a brand again and again because they prefer it over others."
Hofmeyr and Rice developed a brand marketing tool called The Conversion Model, which enables the marketer to segment users of a brand in a market by their commitment to staying with the brand, and non-users by their openness to adopting the brand. Research shows that the brand loyalty of customers has fallen steadily over the past two or three decades. Results vary, but it's probably fair to say that today's average consumer is only 75% - 85% as loyal as the consumer of the 1970s or 1980s. So why did this happen? There are several reasons:
It must never be forgotten that brands exist in the minds of consumers. A brand is not a finite thing like a building, that will remain unchanged no matter what people think of it. As public perceptions change, brands change with them. A brand can change without the brand owner making any changes simply because, for some reason, public perception of it has changed. That's why much of this chapter is devoted to the consumer's perception of brands.
- There is much more choice today: the number of products within categories has increased.
- Many "me too" products have been launched, some looking very similar to the original.
- The number of advertisements seen by consumers daily has increased enormously, especially since new channels like the internet, email and SMS have come on the scene.
- Modern consumers are more sophisticated and more likely to think for themselves and to try new products.
- There is more comparative information available, on web sites and in consumer magazines and the national press.
- The standard of service (and of products) has in many cases improved to the stage where there is not much difference between brands.
- Price competition has increased.
Brand development and brand marketing are inextricably tied to brand loyalty. And companies that tie brand development to top level corporate goals deliver better shareholder value and build stronger brands.
Strategies and best practices to create value through brand loyalty...
In this chapter we clearly explain the linkage between customer loyalty attributes and brand loyalty, and provide you with the necessary strategies and insights to increase your customers' loyalty to your brand. Key strategies and insights covered include:
^ ^ ^
- Creating & updating a brand loyalty strategy
- Drivers of post-recession brand loyalty
- Factors that break brand loyalty
- Brand positioning's role in customer loyalty
- Why consumers want more emotional ties with brands
- Mobile brand interactions must be more personal
- The role of trust in brand loyalty
- The role of word-of-mouth (WOM) in brand loyalty
- The role of digital channels in brand loyalty
- The role of new technologies in brand loyalty
- Drivers of CPG brand loyalty & defection
- Brand marketing & loyalty strategies
- Premium & luxury brand marketing strategies
- Brand building in the low-carbon economy
- Top brands worldwide and their reputations
- Top brands according to social media data
Business-to-Business (B2B) Loyalty
Business to business loyalty programmes and incentive schemes seem, on first consideration, to be a great idea: a way of encouraging one business to continue doing business with another. But they also come with their own pitfalls that don't occur in consumer-based loyalty programmes. For example:
The list of problems grows or shrinks depending on the industry sector involved, and on how well the relationship between supplier and client is defined and controlled. For example, there is little point in a CPG manufacturer rewarding the product buying clerks at a supermarket's head office when the decisions on product range, quantity, and shelf space allocation are taken by others (such as marketing and merchandising managers). This represents a tightly controlled buying environment in which direct rewards for employees are fruitless.
- Is it ethical to reward a client's employees to make decisions based on personal gain?
- Who should be rewarded: the business owner, management, employees, the business itself, or all?
- Is the person who gets the benefits always the one who makes the actual purchase decisions?
However, in a more flexible (and typically smaller) business environment, buyers often have authority over stock control, product range, quantities, and even merchandising arrangements. In these cases, a B2B loyalty programme that rewards the buyer would probably work - even if it stands on unsteady ethical ground.
There is another situation where B2B loyalty schemes work very well: channel sales partner programmes. These are where a manufacturer directly rewards the sales staff of companies that resell its products. This kind of selling incentive is very constructive because it benefits both businesses equally, in terms of greater sales and profit.
By generating strong engagement between channel partners' sales people and the products themselves, the resultant increase in product knowledge and familiarity means that a more authoritative line can be taken in the sales process when dealing with end users. A fine example of this kind of programme's success is the Indian networking specialist Nortel, which achieved 40% growth in channel sales after one year of running such a programme.
Four main B2B loyalty strategies...
This chapter explains several different B2B loyalty strategies and describes the situations and circumstances under which each should be used, along with practical ideas on which job roles can be most effectively targeted within the client company. The main B2B loyalty marketing strategies are:
Five attitudes of the most successful B2B marketers...
- The two-link chain
- The three-link chain
- The four-link chain
- Targeting the SME owner-manager
We also explain, step-by-step, the five key attitudes that make a B2B client loyalty initiative successful:
We also detail the key drivers of B2B loyalty, strategies for channel loyalty and reward schemes, a new channel engagement strategy, the major factors that drive channel partner loyalty, the link between business intelligence (BI) and successful channel marketing, and how word-of-mouth travels between businesses.
- Understand the clients. Learn about them, and make good use of what you learn.
- Deliver flawless results. Always fulfil every benefit and promise made.
- Just let the customer buy. Don't put any unnecessary obstacles in their way.
- Develop a proactive plan, then execute it thoroughly and completely.
- Don't assume the client is loyal, and don't give up when they seem to stray.
Case studies of successful B2B loyalty programmes...
The detailed case studies in this chapter drill down into some of the world's best B2B loyalty success stories, what they did, how they did it, and what the results were, including:
^ ^ ^
- Nectar Business (UK)
- Argos Business Solutions (UK)
- Nortel (India)
- ARBL (India)
Market Sizing & Valuation
In this chapter we explore, on a country-by-country basis, global consumer market sizes and statistics, providing breakdowns of population structure, numbers of households, household income distributions, consumer age groups, gender bias, and other commercially useful facts and figures. The 2012 global data has been researched through and gathered from a number of trustworthy sources including various annual consumer-oriented and marketing fact books and tables. The result is an overall snapshot of each country's key marketing statistics, up to date as of January 2012.
Figures & forecasts for loyalty schemes, worldwide...
Among the up-to-date facts, figures and market forecasting tools provided in this chapter:
^ ^ ^
- How to estimate a loyalty scheme's market size and future penetration rates, year-on-year
- Factors governing a loyalty scheme's participation rate and penetration rate
- Current loyalty market sizes, values, demographics, and developments for major loyalty markets, including the USA, Canada, United Kingdom, Australia, South Africa and China
- Key demographic data about each of the world's 54 biggest countries, plus aggregated totals and averages for North America, Europe, the Middle East, and the Whole World, including: consumer age breakdowns, consumer gender breakdowns, household sizes, population count, number of households, and household income share breakdowns (highest and lowest earners)
Forecasts & Trends
The times, they are a-changing, as Bob Dylan said. But what Bob neglected to tell us was how fast. In terms of customer loyalty marketing, the most significant trends that seem to be surfacing include those surrounding social media, gamification (adding fun and value by providing subject-relevant games), consumer communities, the mobile channel (including apps, web sites, coupons, NFC-based contactless payments, and location-based services), emotional and personal relevance to the customer, cause-related initiatives, more insightful analysis and usage of customer data, and customer advocacy and engagement.
When it comes to consumer behaviour, there are several ongoing changes that are likely to be with us for years to come. The global recession has had a significant effect on consumer attitudes to money - and more specifically value for money - even at the highest ranks of the wealthy and the elite. Shoppers have become increasingly promiscuous when it comes to everyday purchases, but they still value quality and value above simple price.
The pace of change is increasing, thanks to the smartphone...
Mobile marketing is about to see a number of significant developments and changes in thinking, the next few years are likely to see not only an increase in marketing spend on mobile search and a widespread improvement in both speed and usability where mobile web sites are concerned, but also a growing battle between SMS, mobile sites, and the ubiquitous mobile app, thanks to a range of factors including marketing costs, user convenience, security concerns, and mobile platform technology considerations. And the meteoric rise of the smartphone (in the guise of the Apple iPhone, Blackberry, Android-based handsets and numerous others) has changed the way consumers think about product research: when considering a retail purchase of any significant value, most consumers will now reach for their smartphone to find out about the item, read reviews written by 'people like me', compare prices, and even determine product availability.
Social networks have also changed the way consumers interact, not only with each other but also with brands; there is now a sense that anything short of an immediate response to a question or complaint posted via social media should be a public relations disaster. Consumers are changing far more quickly than marketers, and it's a full time job keeping up.
Customer's aren't as predictable as they were. There's a whole new way of thinking...
Consumers are also crystalizing into distinct behavioural groups that can help marketers segment them more easily, even when nothing else is known about them. For example, the art of examining web site visitor behaviour and drawing meaningful conclusions about their possible purchase intentions is no longer an art: it's a very precise science. As more and more data is collected about customers and the way they interact digitally with their chosen suppliers, increasingly refined models can be built to help predict the intentions of other unknown consumers when they make first contact with a brand, regardless of which channel they choose to use. As a result, those parts of the organisation that collect, handle, process, analyse and use data are becoming more instrumental in the success of loyalty and marketing initiatives, turning from back-room IT geeks into modern front-line heroes.
Brands are doing battle with unexpected challenges from every side...
Finally, brand marketing is no exception to the rule, seeing changes in approach not only from the consumer's side but also from the way in which brands are tackling a host of complicating factors, such as the recession, new technologies, changing legislation and government guidelines, evolving consumer needs and the different wants and desires of different age groups. For example, brands will increasingly become a surrogate for the concept of 'value', and what makes goods and services valuable will increasingly be associated with the brand itself and what consumers believe the brand stands for.
For this reason, brands will need to make as much as possible out of green and ethical issues, eco-friendly products and services, emotional engagement and every other aspect of consumers' everyday lives that bears an emotional tie. The challenge, however, will be to find out which issues are most important to the brand's target audience, and how to address those issues in a sincere and relevant way that makes consumers feel good about the brand.
Find out what's really happening out there, and get practical advice on dealing with it...
In this chapter we examine the latest trends and forecasts involving customer loyalty (from both a strategy-driven and a consumer-driven perspective), consumer behaviour and preferences, social media marketing and social loyalty strategies, digital marketing (including web-based, email, digital communications and augmented reality), mobile marketing and mobile media, multichannel marketing and 'commerce anywhere' strategy, brand loyalty and affluent customer loyalty, traditional marketing and mailing, voice-of-the-customer initiatives, green marketing, and experiential loyalty rewards. Our detailed explanations and analysis of trends and forecasts include:
^ ^ ^
- Strategy-driven customer loyalty trends
- Key loyalty marketing trends for 2012-2016
- Coming trends for retail loyalty marketing
- Trends for the future of loyalty in the UK
- Loyalty 2.0 - and what comes next
- Consumer-driven customer loyalty trends
- Coming trends in travel loyalty schemes
- Customer engagement and behaviour trends
- Customer behaviour change forecast 2012-2020
- Social & mobile consumer behaviour 2012-2015
- Customer communication trends 2012-2016
- Social marketing trends & forecasts
- Mobile & social strategies to become a priority
- Digital marketing trends & forecasts
- Email marketing trends for 2012-2015
- Online marketing trends for 2012-2015
- Mobile marketing trends 2012-2016
- Mobile media trends forecast 2012-2016
- Multichannel marketing trends & forecasts
- Key brand marketing trends 2012-2016
- Brand power and brand strength forecasts
- Traditional marketing trends 2012-2015
- Voice of the Customer (VOC) trends 2012-2015
What The Experts Say
If you could have a hour-long personal interview with the world's leading experts on customer loyalty, retention marketing, customer win-back, retail operations, and marketing operations management, what would you ask them?
We've done exactly that, and asked a selection of thought leaders from around the world to share with us their thoughts on customer loyalty marketing. They were given the freedom to comment and expound upon any subject that they think matters most today, and their honest opinions, advice, answers, practical guidance, predictions, and solutions are detailed for you in this chapter.
We hear from more than thirty world experts on customer loyalty, including:
... and many others!
^ ^ ^
- Loyalty Around The World, according to the regional branches of ICLP
- Don Peppers and Martha Rogers from Peppers & Rogers Group
- Bryan Pearson from LoyaltyOne
- Tim Keiningham et al from Ipsos Loyalty
- Brian Woolf from the Retail Strategy Center
- Terry Vavra et al from Customer Experience Partners
- Andrea Burchett from The Mileage Company
- Jolande Duvenage from eBucks
- Kelly Hlavinka from Colloquy
- Gary Hawkins from Hawkins Strategic
- Robert Passikoff from Brand Keys
- Cheryle Frenzel from Maritz Motivation
- Janet Titterton from Collinson Latitude
- Dominic Hofer from Loylogic
- Mike Capizzi et al from Marketing Strategists
- Mike Atkin from the Customer Strategy Network
- Peter Wray from Loyalty Matters
- Bill Hanifin from Hanifin Loyalty
- Carlos Dunlap from Kobie Marketing
- Jill Griffin from Griffin Group
Supermarket & Grocery Loyalty
With consumers becoming ever smarter about prices and product options, countries of origin, 'food miles' (i.e. how far an item actually travels before reaching the shelf), green and organic foods, and healthy lifestyle options, it is no surprise that supermarkets are finding it more difficult to satisfy all of the customers all of the time. But the problem is worse still, with competition having really opened up on the internet over the past two years, and even greater price pressure being applied by discount supermarkets such as Wal-Mart in the US and Asda in the UK. No consumer market is safe from this intensively competitive atmosphere, it seems.
When Sir John Cohen, founder of the UK-based Tesco empire, brought the idea back to the UK from the US soon after World War II, the model for supermarkets was to "pile it high and sell it cheap". Many of the original supermarkets were like glorified market stalls. Then came the concept of self service, and the distant ancestor of the modern supermarket was born. But today, the leading supermarkets (such as Tesco) are among the most sophisticated retailers in the world. They lead every other sector in terms of customer data collection and analysis, stock management, customer service, and pure retail innovation. Metro Group [www.metrogroup.de] in Germany continues to push forward with new automation technologies (such as RFID-based tracking of goods throughout the supply chain, self-checkouts, and 'intelligent' shopping carts), and is steadily marching forward with its Future Store [www.future-store.org] initiative.
And as supermarket groups and traditional grocery retailers diversify rapidly into other markets and sectors, they are strengthening not only their hold on the consumer's monthly household budget but also on insurance, communications, banking, loans, credit cards, household maintenance, car maintenance, travel and holidays, health and well being, and a vast array of other aspects of daily life. This, of course, means that their loyalty card programmes can now collect even more valuable data, gaining a much wider and more general view of each household's lifestyles and life stages. These 'mega retailers' are now the leaders in customer segmentation based on purchases in multiple categories and sectors, and are the ones to watch to find out how to target both meaningful and appropriate offers at specific customers.
With respect to customer retention strategies, supermarkets can be broadly divided into three groups:
Of course, there are many shades in this spectrum and some supermarket chains adopt all three methods to varying degrees.
- Those that rely on every-day low prices (EDLP) to keep their customers;
- Those that rely on loyalty programmes for best customer marketing;
- Those that rely on excellent service and ranges of products.
Just as there is no such thing as an average customer, there are no definitely 'right' or 'wrong' approaches to customer retention. EDLP will appeal to one group of consumers, better service and choice will appeal to another, and loyalty programmes will appeal to another.
It is important to choose the method that will appeal to the chosen market sector: if the culture of the business revolves around quality (up-market premises, exclusive ranges of premium goods and a superior shopping experience) then EDLP is probably not the way to go. However, for an enterprise geared toward attracting and retaining the bulk of the population as customers, EDLP may be the answer. Once the decision is made, it has to be whole-heartedly applied. All decisions should be made with the culture of the business in mind.
Key insights into the success of supermarket loyalty schemes...
This chapter explains why supermarket loyalty programmes usually succeed where other retailers' loyalty programmes risk stalling, as well as other insights such as:
Case studies showing how the best loyalty schemes work, and why...
- Why supermarkets are usually the best at understanding their customers
- What drives grocery shoppers' choices
- What grocery shoppers need and want from their favoured supermarkets
In this chapter we have researched, explored, detailed, summarised and explained every aspect of what we believe are some of the world's most exemplary supermarket loyalty programmes, and we present details of the programme and rewards structure, the programme operator, and programme developments over the past few years, along with membership counts and redemption figures wherever possible, including:
Case studies of UK supermarkets:
Case studies of US supermarkets:
- Asda (EDLP)
- Co-op (Dividend Card)
- Iceland (Bonus Card)
- Sainsbury's (Nectar)
- Tesco (Clubcard)
- Dunnhumby (the story behind Tesco's analytics)
Case studies of other supermarkets around the world:
- Big Y (Express Rewards)
- Giant Foods (BonusCard)
- Kroger (Kroger Plus)
- Meijer (EDLP)
- Price Chopper (AdvantEdge Card)
- Safeway US (Club Card)
- Safeway Canada (Club Card)
- Wal-Mart (EDLP)
We also highlight some of the most recent and innovative developments in customer loyalty from other supermarkets including: Giant Eagle (USA), Winn-Dixie (USA), Stop & Shop (USA), Market Street (USA), ShopSavvy & Grocery Server (USA), Metro (Canada) and Carrefour (France).
^ ^ ^
- Coles/Wesfarmers, Australia (FlyBuys)
- Countdown, NZ (OneCard)
- Pick'n'Pay, S. Africa (Smart Shopper)
General Retail Loyalty
In general retail, today's key need is to focus on what drives loyalty programmes, what customers actually prefer, and what the future is likely to bring. Most retailers accept that they need to know more about their customers, and that the knowledge should be centrally recorded so that it is available to employees when they need it.
In this chapter we examine what makes consumers shop the way they do, what makes them choose one retailer over another, and illuminate the dynamics and challenges of loyalty programmes in the general retail sector, looking in detail at some of the leading programmes, operators, and developments in the field.
Most retailers accept that they need to know more about their customers, and that the knowledge should be centrally recorded so that it is available to employees when they need it. The days when it was enough for 'Mary in Haberdashery' to know all about which lace sells and which one doesn't, or who the best customers are and what they like, have long gone.
Loyalty programmes enable that information to be recorded and so are an essential part of retail. The retailer judges the usefulness of a loyalty programme by how it can help run the store more efficiently and profitably. But customers have a different view of loyalty programmes. To the customers, the programme exists solely to reward them for their custom. If they think that they would prefer to be rewarded in some other way, they dismiss the programme as being unnecessary. The people on opposite sides of the counter assess the usefulness of loyalty programmes in totally different ways. With that in mind, it's not surprising that many customers, when given the choice, opt for simple discounts instead of a loyalty programme - they are not taking into account the hidden benefits that a programme provides for them - the more effective stock control, the better merchandising and the greater personal relevance of marketing messages.
However, it's what the customer thinks of the programme that really matters. That's why it's important to listen to their views and to do whatever is possible to correct their misapprehensions. It must also be understood that loyalty cards are not a substitute for getting the basics right, even though they do add value to the retail proposition.
Strategies and insights for a successful retail loyalty scheme...
In this chapter we detail all the latest insights, strategies, and 'pain points' affecting retail customer loyalty, including:
Case studies showing how the top retail loyalty schemes have succeeded...
- Retail loyalty strategies
- The arguments for retail loyalty schemes
- Latest US retail loyalty programme membership figures
- Insights into the retail customer
- The effect of the increasingly anonymous customer
- The effect of the retail customer experience
- Consumers' enthusiasm for new retail technologies
- How loyalty has saved retailers from the recession
- The business benefits of cross-channel retail systems
For this chapter we researched, summarised and explained every aspect of what we believe are among the world's finest retail customer loyalty programmes, and we present details of the programme and rewards structure, the programme operator, and programme developments over the past few years, along with membership counts and redemption figures wherever possible, including:
Retail case studies from the UK:
Retail case studies from the USA:
- Boots (Advantage Card)
- LG (brand loyalty)
- Pigsback (retail rebates)
- Superdrug (Beautycard)
Retail case studies from other countries:
- Best Buy (Reward Zone)
- CVS/Pharmacy (Extra Bucks)
- eBay (eBay Bucks)
- Neiman Marcus (InCircle)
- Nordstrom (Fashion Rewards)
- Rite Aid (Wellness+)
- Sears/Kmart (Shop Your Way Rewards)
- Staples (Staples Rewards)
We also highlight some of the latest innovations and developments in customer loyalty from other retailers around the world, including: Amazon.com (USA), Bluewater Mall (UK), Buy.com (USA), Citizy NFC Project (France), DubLi (Spain), Green Stamp (Japan), HMV (Canada), Holland & Barrett (UK), House of Fraser (UK), IndiaPlaza.com (India), JCPenney (USA), Jewel-Osco (USA), Macy's (USA), National Gift Card (USA), Sam's Club (USA), Sears (Canada), Shoppers Drug Mart (Canada), Toys'R'Us (USA), Zazzle (USA), and Zed Tema (Russia).
^ ^ ^
- Hbc, Canada (Hbc Rewards)
- Canadian Tire (Canadian Tire 'Money')
- Home Ideas, Australia (AdvantageCard)
- Jet, South Africa (Jet Club)
- SPC Card, Canada (Student Price Card)
Financial Services Loyalty
Customer acquisition and retention costs a lot in the financial services sector, and that calls for deeper relationships to help keep customers loyal over time. With a growing ease of switching, relying on inertia is no longer an option to keep customers tied in, so financial service institutions in every country have identified the need to adjust their customer loyalty strategy to suit today's highly competitive marketplace.
It's often said that it can cost up to seven times more to acquire one new customer than to retain an existing one. But in the financial industry, the costs reach a whole new level: acquiring one new customer can exceed US$350. As a rule, of these 20% will be very profitable, 20% will cost money to retain, and the middle 60% will pay for themselves while generating marginal revenue, according to Harvard Business Review [www.hbr.com]. With statistics like these, a customer engagement and retention plan based on extensive data collection and analysis is imperative for the long-term health of companies in the financial industry.
Financial institutions must therefore find a way to retain profitable customers, make marginally unprofitable customers into profitable ones, and reduce the marketing budget spent on the most costly customers. To do that, and to increase customer loyalty, financial industry firms need to constantly monitor their customer portfolio and actively manage their marketing efforts based on the changing behaviour of their customers.
Best practices and insights to grow financial customer loyalty...
In this chapter, we examine not only the latest thinking on how to do so, but also the many customer retention, loyalty and CRM initiatives that have been launched during the past two years. Among the practical insights and best practices detailed in this chapter for financial service providers:
This chapter contains detailed case studies and programme summaries of major financial institutions around the world and their loyalty offerings, including:
- Drivers of financial loyalty and churn
- Building loyalty to banks
- How credit unions can boost loyalty
- Barriers to banking loyalty
- How banks can earn younger customer loyalty
- Co-branded payment card initiatives
- Debit & credit card loyalty strategies
- How customers choose their preferred payment method
- The potential for debit card loyalty
- The potential for credit card loyalty
- Factors driving insurance provider loyalty
- How car insurance providers are earning new levels of loyalty
We also detail some of the latest developments and innovations from other brands and companies using financial products to engender greater loyalty, including: Qantas, Priority Club Rewards, QuickTrip Rewards, NFL, Delta Air Lines, Hyatt, Kroger, AAA, AviancaTaca LifeMiles, Amazon.com, and Gulf Bank Kuwait, among others.
^ ^ ^
- American Express (Global)
- Bank of America (USA)
- Barclaycard (Global)
- Barclays Life's Rewards (UK)
- BMO (Canada)
- Capital One (USA)
- Chase (USA)
- Citi (Global)
- Discover (USA)
- HSBC (Global)
- Lloyds TSB (UK)
- MasterCard (Global)
- MBNA (Global)
- MoneyGram (US, Canada & Europe)
- PayPal (Global)
- RBC (Canada)
- Scotiabank (Canada/USA)
- TD Bank (Canada)
- US Bank (USA)
- Visa (Global)
- Wells Fargo (USA)
- Zions Bank (USA)
Airlines, FFPs & Airport Loyalty
The traditional long-haul and domestic airlines and their frequent flyer programmes have faced increasing competition over the past few years, not only from each other but also from a vast array of smaller start-ups and low cost, budget carriers. An increasing number of 'business class only' airline operators has added extra pressure to a market that relies heavily on business and first class fares to subsidise operations. And business growth has been made even harder to achieve by increasing numbers and complexities of security checks and updated airport procedures, all of which have conspired against the humble passenger and caused many people to seriously re-think any plans they have for air travel.
The simultaneous rise of internet-based phone calls (such as Skype), online meeting and presentation services, and of course video conferencing has provided many business people - who would previously have had to travel by air - with an alternative way of conducting business without the cost or inconvenience of leaving the office.
These factors have combined to spur airlines across the board into ever-more clever and innovative frequent flyer programme developments. Some of the new features focus on the airport and its associated services, while others focus on the flight itself. Almost all focus on passenger comfort and convenience, with almost all higher tiers (the so-called 'elite' frequent flyers) being offered faster ways of getting through check-ins, security checks, baggage collection, and transfers. There has also been a mass move among the larger airlines into online loyalty malls and new mileage redemption options that start at lower levels than the traditional 25,000 or 35,000 miles-per-seat award ticket.
The higher classes of travel (business class, premium class, first class, and half a dozen other names describing non-economy classes) are clearly the focus of airlines' attention. This report's authors predict that this trend will continue to grow, driving a significant wedge between airlines that carry economy passengers (for whom personal service can be expected to decline in line with decreasing prices) and those that carry business and luxury passengers (for whom personal service will increase thanks to the lower financial and staffing overheads caused by the loss of economy class).
But otherwise-loyal passengers face a growing problem...
There is, however, a consumer-facing problem that is common to many of today's airline loyalty programmes: excessive complexity. While airlines are complex enterprises with many hundreds of variations of tickets, seats, classes, routes, destinations, customers, and even baggage and security rules, the customer should not have to understand and negotiate all of these complexities in order to work out what reward they can get for flying from Point A to Point B next month.
Most frequent flyer programmes offer different tiers or status levels (which are clearly necessary to differentiate between high-end benefits for profitable customers and low-end rewards for occasional passengers), but programme members are understandably confused by a wealth of tier points, elite status qualifying miles, qualifying segments, qualifying miles, partner points exchange rates, redemption mechanisms, vouchers, class upgrade options, and so on. Now compare this situation to a supermarket retailer's "points means rewards" loyalty card programme, in which shoppers understand that every US$1 they spend earns them 1 loyalty point, which equals US$0.01 in rewards, and in which redemption is as simple as walking up to a checkout counter.
New ideas to support differentiation in the commoditized air travel market...
If frequent flyer programmes are really aiming to differentiate their respective airlines in the mind of the time-pressured traveller, airlines must surely take a step back and re-examine their loyalty offerings with a view to simplifying them and making them more predictable and comparable.
Among the hundreds of facts, figures, insights and consumer research detailed in this chapter:
Case studies of 26 major FFPs and their strategies, structures and development...
- Why FFPs are still vital to airlines' future growth
- Strategies to reinforce the value of FFP miles
- Key factors for building stronger FFP relationships
- Value that airlines can extract from their loyalty data
- How even low-cost airlines can benefit from loyalty
- Why FFPs represent a Panacea for airport loyalty
- The benefits of an FFP in times of recession
- How FFPs can generate significant increases in income
- How passengers really feel about airlines and airports
In this chapter we present detailed case studies and programme summaries for 26 major airlines, with programme developments and membership figures in all cases, including:
We also chart the latest developments and loyalty initiatives of several other airlines from around the world, including: Aeromexico (Club Premier), Air China (Companion), AirTran (A+ Rewards), Bahrain Air (Loyalty Rewards), bmi (Diamond Club), Flybe (low cost flights), Hawaiian Airlines (HawaiianMiles), Kulula (Jetsetter Club), Qantas (Frequent Flyer), and TAM Brazil (Multiplus Fidelidade).
^ ^ ^
- Air Canada (Aeroplan)
- Air France/KLM (Flying Blue)
- Air New Zealand (Airpoints)
- Alaska Airlines (Mileage Plan)
- American Airlines (AAdvantage)
- British Airways (Executive Club)
- Brussels Airlines (Miles&More)
- China Southern (Sky Pearl Club)
- Continental Airlines (MileagePlus)
- Delta Air Lines (SkyMiles)
- Emirates (Skywards)
- Etihad (Etihad Guest)
- Frontier (Early Returns)
- Jet Airways (JetPrivilege)
- JetBlue Airways (TrueBlue)
- Lufthansa (Miles&More)
- Malaysia Airlines (Enrich)
- Northwest Airlines (merged with Delta)
- Qatar Airways (Qmiles)
- South African Airways (Voyager)
- Southwest Airlines (Rapid Rewards)
- United & Continental (Mileage Plus)
- US Airways (Dividend Miles)
- Virgin America (Elevate)
- Virgin Atlantic (Flying Club)
- Virgin Blue (Velocity Rewards)
Hotel & Resort Loyalty
In today's competitive hospitality market, many hotel operators are adding frequent guest loyalty programmes to foster customer relationships, attract new customers, and encourage longer stays, which suggests that rewards programmes are seen as being more effective in creating loyalty to hotel brands than simple discount-based promotions and incentives.
In the past two years, hotel and resort operators have also made significant efforts to expand the 'pampering' and luxury options available to their most frequent guests. Many hotel groups have also found value in providing extras and perks for every guest, regardless of membership of a frequent guest programme. But by far the most valuable rewards offered to travellers who frequent the same hotels time after time are the personal touches that provide a feeling of consistency, familiarity, and home-like comfort - such as having their preferred newspaper delivered each morning, having their preferred type of pillows and bedding, or having the hotel staff know their preferences in advance. While there is still a lot of progress that can be made in this respect - for example, with the use of technologies such as RFID, NFC, and even biometrics - many upscale hotels have already taken active steps to get this aspect of their service right.
Case studies, programme summaries, and up-to-date membership figures...
In this chapter we provide not only the latest membership figures of each of the major hotel frequent guest programmes around the world, but also complete case studies and programme summaries for each of the following:
Case studies charting the rise of the independent hotel alliance...
- Accor (A-Club)
- Best Western (Best Western Rewards)
- Carlson Hotels (Club Carlson)
- Choice Hotels (Choice Privileges)
- Hilton (Hilton HHonors)
- Hyatt (Gold Passport)
- IHG (Priority Club Rewards)
- Marriott (Marriott Rewards)
- Ritz-Carlton (Ritz-Carlton Rewards)
- Starwood Hotels (Preferred Guest)
- Wyndham (Wyndham Rewards)
Another growing trend that has appeared in the hotel industry over the past few years is the rise of 'hotel alliances' - such as Voila - which seek to unite smaller hotel groups and independent hotels under one marketing umbrella, and usually under a single loyalty programme offering. In this chapter we provide detailed case studies and breakdowns of each of four major alliances:
^ ^ ^
- GHA Discovery (Global)
- sQuidcard (UK)
- Stash Hotel Rewards (USA)
- Voila Hotel Rewards (Global)
General Travel & Tourism Loyalty
This chapter looks into recent developments and innovations in the general travel and tourism sector that are not directly associated with airlines, frequent flyer programmes, hotels, holiday resorts, and frequent guest programmes. It includes loyalty and customer satisfaction-related developments throughout the sector, worldwide, and the findings of surveys and research concerning cruises, travel sellers, travel incentives and loyalty schemes, rail operators, regional and national tourism initiatives, and car rentals.
Clearly, the loyalty market has reached a state of maturity in the airline, hotel and car rental industries, with very few such loyalty programmes today being able to claim genuine competitive differentiation. Simply matching the proposition offered by the competition is not enough to create lasting customer loyalty. When all programmes within a sector are basically the same (e.g. they all have online enrolment, an award chart, a welcome bonus, double miles promotions, and so on), customers tend to react with indifference. With this in mind, true differentiation is the best way (and arguably the only way) to maintain interest and increase consumer awareness, for the simple reason that customers tend to notice new products and services that stand out from the crowd.
So how can travel-related loyalty programmes differentiate? To gain that competitive advantage, the marketing team responsible for the loyalty programme must:
Only by using this knowledge - and using it before the competition does - can a travel sector loyalty programme create a sustainable, differentiated proposition.
- Use their member data to garner true customer insights;
- Use all their market know-how to enable better market positioning on a strategic level.
Indeed, loyalty schemes cannot afford to stand by and watch new schemes and approaches develop among their competitors. Along with some methods for measuring differentiation, some best practices, and some future trends, this chapter demonstrates that:
Loyalty programmes are adding much needed value for travel customers. It is true that there are still many opportunities for travel loyalty programmes to lead the way, but having the next 'great idea' is just part of the success equation: putting them into action before the competition does (and creating a barrier to entry wherever possible) is what completes the equation.
- Despite significant competition in the travel sector, there is still plenty of room for differentiation;
- Smart positioning and innovative techniques can make the difference between successful differentiation and being "just another travel programme".
Case studies and summaries of the major car rental loyalty schemes...
In this chapter we provide detailed case studies and programme summaries of car rental companies' loyalty programmes and incentive schemes, including:
Insights for a deeper understanding of what travellers want from loyalty schemes...
- Avis (Avis First)
- Budget Rent A Car (RapidRez)
- Dollar Rent A Car (Dollar Express)
- Enterprise (Enterprise Plus)
- Europcar (Privilege)
- Hertz (Gold Plus Rewards)
- National Car Rental (Emerald Club)
- Thrifty (Blue Chip Rewards)
This chapter also examines a number of other travel and tourism-related customer loyalty insights, including:
We also detail a number of the latest innovations and developments in travel-related loyalty programmes around the world, including: Club Yogi Rewards (USA), Raiffeisen-Tours-Kooperation (Germany), Seawings (UAE), Affinion & Connexions (USA), Amtrak Guest Rewards (USA), Sabre Red (Global), Travelex & Air Miles (UK), Royal Caribbean Crown & Anchor Society (USA), Club Med & Carlson (USA), SuperAgency SuperCa$h (USA), RBC Rewards & Travelocity (Canada), Marriott Rewards (Global), Latitudes Rewards (Norway), Sixt & PayBack (Germany), Eurostar Plus (Europe), Expedia Rewards (USA), Ticketmunky (UK) and Merseytravel Walrus Card (UK).
^ ^ ^
- Why the travel industry needs to re-ignite customer loyalty
- Why value is the key driver of travel loyalty and engagement
- How travel loyalty schemes need to 'go the extra mile'
- Why travel loyalty schemes should offer 'lifestyle bundles'
- Why there's little brand loyalty among online travel bookers
Food, Drink & Entertainments Loyalty
Food and drink providers - whether they are diners, quick service restaurants, pizzerias, snack bars, or full service restaurants - have all had a hard time differentiating their offerings during the past few years. The over-abundance of these establishments in every town in almost every country has had a profound effect on customer loyalty, with many consumers now viewing the task of choosing a place to eat or drink as being insignificant and irrelevant. The nearest place is often the first choice.
But there have been many innovative efforts to combat this undifferentiated and often lack-lustre market, including the use of new technologies such as mobile phone loyalty programmes, new and more convenient payment methods, programmes to drive greater emotional engagement, internet-based and mobile phone-based coupons and vouchers, and a host of partnerships between food service providers and major brands in other sectors.
Other recreational sectors have also seen great strides in terms of customer loyalty innovation over the past few years, with new programmes, rewards, and engagement tactics appearing in family entertainments, film and video, sports (of just about every kind), and of course the ever-popular casinos and gaming markets.
In this chapter we examine the best of the best among these initiatives, and explore how their mechanisms work, and what effect they have had on customer loyalty, repeat business, and overall customer retention and engagement, along with studies and insights including:
We also examine the latest developments in food-service customer loyalty, including initiatives at CA Pizza Kitchen, Panera Bread, Carl's Jr. & Hardee's, Eat24Hours.com, Dunkin' Donuts, Red Robin, and UltraONE.
- Factors that influence diners' restaurant choices
- Proof that loyalty schemes work for restaurants
- Evidence that restaurants leak 30% of their customers
Loyalty to beverage suppliers is also a hot topic, and we examine and highlight recent changes and innovations in the drinks loyalty market, including Starbucks, Guinness, Coca-Cola and Baristas Coffee among others.
And being merry...
At the same time, in the field of entertainments, movie theatres have also been very active in nurturing not only repeat business but perks and benefits-based customer loyalty. In this chapter we examine the cream of these programmes from the US, including AMC Theatres, Audience Rewards, Red Carpet Rewards Club, Regal Crown Club, and Star Rewards.
^ ^ ^
Mobile, Fixed Line & ISP Loyalty
Telecoms operators across the world have tried a number of different techniques to nurture customer loyalty and reduce the inevitable churn produced by number portability and mobile handset subsidies. Some operators have paired up with existing loyalty programmes while others have set up their own schemes. Yet others have chosen to run shorter-term promotions in their bids to both acquire and retain customers.
As has been the case for at least the past three years, much of the sector's loyalty-related activity has come from the mobile telecoms sector, while fixed line providers - particularly in the USA - seem to have been concentrating more on the bundling of services, internet and cable broadband services, VoIP (voice over internet), and improvements in both customer service and satisfaction.
In particular, the mobile phone has become increasingly associated with customer loyalty, not only because mobile network operators and handset manufacturers are desperate to find ways of 'locking customers in' to their brands but also because the mobile phone itself has become a worthy target for all kinds of new loyalty-enabling concepts and technologies. For example, loyalty marketers are now - as we predicted in The Loyalty Guide 5 - looking at the consumer's mobile phone as not only a potential replacement for plastic loyalty cards, but also as a replacement for payment cards and as a mechanism for direct, personalised, one-to-one marketing communications.
And with the addition of contactless technology and integrated social networking to many mobile phones, our next prediction is that personalised, opt-in, event-based and location-based marketing will increasingly take place through contactless consumer interactions with anything from POS systems and 'smart posters' to social networks and mobile apps.
In this chapter we examine customer loyalty to both mobile telecoms providers and fixed line telecoms providers, charting the telecommunications industry's progress in terms of earning greater loyalty and reducing the churn levels that have for so long characterised the market.
Mobile network customer loyalty explained...
This chapter's coverage of developments and insights into mobile customer loyalty include:
Fixed line telecoms customer loyalty in a nutshell...
- Mobile loyalty insights and research
- Why loyalty is the top priority for mobile networks
- Mobile network rewards programmes drive satisfaction
- Why smartphone users are more loyal to their networks
- How smartphone loyalty can't be forced
- Drivers of mobile network loyalty and churn
- The key drivers of smartphone user churn
- A bright future for mobile loyalty schemes
- Why loyalty to European mobile networks is high
- How unsuitable CRM systems ruin mobile relationships
- Which customers aren't loyal to their mobile service, and why
- Loyalty offerings from mobile network operators around the world
And our coverage of developments and insights into fixed line customer loyalty include:
^ ^ ^
- Consumers' surprising loyalty to fixed line telcos
- Customer loyalty's critical role in telco growth
- Why telecoms customers don't really want discounts
- The primary driver of telco customer defections
- Why broadband churn has become an epidemic
Automotive & Fuel Loyalty
There are two key areas involving customer loyalty in the automotive sector: automotive sales, and fuel sales. In this chapter we examine both areas, showing how each is being handled by manufacturers and suppliers.
Cars are now almost a commodity, and car manufacturers have a problem. It might almost be fair to say that the most noticeable point of differentiation between competing, similar marques is the dealer who sells the car. Certainly, that seems to be the area where most can go wrong, and most complaints arise. So much depends on the way the car is sold and particularly the way that the after sales contacts and service are carried out. It's quite possible that it's for this reason that research shows less loyalty to dealers than to manufacturers.
To build loyalty to the marque, the manufacturer has to produce an attractive, desirable, reliable vehicle at the right price. Most of them would seem to be very good at doing that. It is essential that dealers - the potential weak link in the chain - are single pointed, focusing on finding out what their customers want, why they want it, and work out ways of meeting these needs as closely as possible. And, while new cars with very lengthy service intervals may be very convenient for the customer, they make it even less likely that the dealer and customer will have many opportunities to build a relationship. Every contact - rare as they are becoming - must be treated with great care and delicacy if any loyalty is to be built.
And the fuel retail market (that is, 'petrol' to the Briton or 'gasoline' to the American) was one of the first to become involved in loyalty programmes. In fact, in the early 1990s, many people equated loyalty programmes with forecourt programmes. Many of the initial programmes were quite rudimentary and collected no useful customer data. Some gave a gift when a certain amount was spent on fuel - for example, a free drinking glass for each £5 spent. Not even the customer's name was collected. Others issued stamps or coupons for each purchase. And when these were redeemed, the customer was only sometimes identified. Another problem with forecourt loyalty programmes is that they tend to eat into already-slim profit margins, and usually contribute very little to lucrative non-fuel sales in forecourt shops.
However, the market has changed significantly over the past few years, and fuel companies have been quick to change their tactics accordingly. Loyalty card and token-based initiatives on the fuel forecourt have become far less common. Today, the most common types of reward seen on fuel forecourts are undoubtedly the 'cents off per litre' discount offers tied to various minimum supermarket spend levels, reward points-per-litre that are redeemable for fuel discounts and convenience store vouchers, and fuel retailer branded credit cards that offer rebates against future fuel purchases.
Factors driving vehicle buyer loyalty, and how the market has responded...
This chapter details all the latest customer loyalty research, insights and developments in the automotive field, including:
How rewards and incentives are being used to drive vehicle sales...
- Automotive loyalty insights
- Why car buyers seem to prefer imported vehicle brands
- Who leads and lags behind in car owner loyalty
- Factors that drive loyalty to vehicles and marques
- Details of loyalty-boosting ideas from Belle Tire, Pit-Stop, AAA, Ford and Tata Motors.
We also provide case studies and programme summaries of the major vehicle purchasing loyalty initiatives (while most are in fact incentive-based offerings), including:
How fuel retailers keep motorists coming back to their pumps, again and again...
- Chrysler Group (USA)
- Kenworth Trucks (USA)
- Kia (USA)
- Kia (Canada)
- Mercedes-Benz (USA)
- Toyota (Canada)
In addition to detailing the latest loyalty and reward programme developments in the fuel retail market, this chapter provides detailed case studies and programme summaries of 11 major fuel retailer loyalty programmes around the world, including:
^ ^ ^
- BP (UK)
- Coles Express (Australia)
- Esso (Canada)
- Esso/Exxon Mobil (Singapore)
- FuelPerks! & Fuel Rewards (USA)
- Indian Oil (India)
- Petro-Canada (Canada)
- Shell (UK)
- Shell (USA)
- Shell (other countries)
- Texaco (UK)
Media & Publishing Loyalty
Many media publishers and channels (particularly magazines and radio stations) have recently found that, with an increasing number of non-traditional entertainment options (such as internet video and radio, and online daily journals and blogs), the battle for the loyalty of listeners, viewers and readers has become more intense than ever before.
Many forward-thinking newspapers and magazines have begun rewarding subscribers and re-subscribers with luxury or aspirational rewards and services.
Radio stations are increasingly using web sites and the mobile channel to encourage listeners to engage with them and earn rewards. Marketers have also come to realise that today's youngsters are tomorrow's mature consumers, and a number of youth loyalty initiatives have also been implemented to make brand advocates out of students.
And, with the rise of online booksellers (for both new and second hand books), a number of bricks-and-mortar book retailers have implemented loyalty programmes to help them keep customers coming into their stores.
What booksellers have been doing to keep customers loyal...
In addition to examining newspaper & magazine loyalty, radio & television loyalty, and other media publishing loyalty initiatives, this chapter provides detailed case studies and programme summaries of four major bookseller loyalty programmes (including the one that got away):
^ ^ ^
- Angus & Robertson (A&R Rewards)
- Barnes & Noble (B&N Member)
- Borders Rewards (now closed down)
- Indigo Books & Music (Plum Rewards)
Loyalty in Other Sectors
Organisations in a wide variety of market sectors - other than the most familiar ones such as travel, retail, and grocery - have begun to experiment with customer loyalty, behavioural rewards and incentives. And there are yet more sectors that are increasingly becoming involved in loyalty and relationship management initiatives, despite not having "customers" in the usual sense of the word.
For example, charities and non-profit organisations (NPOs) around the world are increasingly turning their attention to donor relationship management to either stabilise or increase their flow of donations. During the past two years, many NPOs have discovered what they believe to be flaws in traditional charity marketing strategies and have set about creating new strategies, often employing the latest customer loyalty ideas and technologies.
At the same time, a number of everyday retail and coalition loyalty programmes have found favour with consumers by offering charitable donation facilities among their other redemption options. Many consumers appear to feel that, while their loyalty points do not accumulate quickly enough to provide them with worthwhile personal rewards, their loyalty points could be better used by donating them (or their cash value) to deserving charities or local community non-profit initiatives.
Governments have also become far more involved in rewards programmes to drive citizen behaviour changes, including the use of emerging technologies and complex rewards platforms to encourage, for example, waste recycling efforts.
How loyalty is changing in diverse and niche markets...
In this chapter we examine all the other sectors in which customer loyalty has - in one way or another - helped to change the way people think and behave, whether that's toward brands, charities, services, education, authorities, lifestyles, or even other people. Among the topics and insights examined:
^ ^ ^
- Community, town and city loyalty schemes
- Government/citizen reward schemes
- Charitable and cause-related loyalty schemes
- Education-related loyalty schemes
- Health & lifestyle loyalty schemes
- Green, eco-friendly & recycling loyalty schemes
- Energy utility loyalty schemes
- Sports loyalty schemes
- Gaming loyalty schemes
- Gambling loyalty schemes
- Niche market loyalty initiatives
Global loyalty suppliers
The appendix provides a detailed, categorised directory of customer loyalty related businesses and service providers, created to provide a quick reference and access to market-leading suppliers, whether they are potential suppliers, clients or strategic partners. Each company is listed along with contact details, company background (where available), a summary of its usual activities, service provision categories (as determined by the company itself), and a list of countries or territories in which the company usually operates.
The appendix is split into two sections. The first section lists the 17 service provision categories (each company is associated with up to five such categories). For each category the relevant suppliers are listed in groups according to their country of origin. The service provision categories are:
The second section includes a complete listing of all 208 customer loyalty and service suppliers in strict alphabetical order.
- Customer loyalty systems
- CRM/BI systems
- Customer experience management
- Call centres
- Developers & integrators
- Application hosting
- Loyalty scheme operators
- Point of Sale (POS) technology
- Data warehousing & data mining
- Consultancy & advice
- Gift certificates & incentives
- Internet marketing
- Direct marketing
- Research and analysis
- Public relations/media/events
- Industry associations
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