Copyright © 2007 Cartesian Consulting,

Customers become more profitable the longer they remain with a firm: Increase purchases and/or account balances Customers/families purchase in greater quantities as they grow Reduced operating costs Fewer demands from suppliers and operating mistakes as customer becomes experienced Referrals to other customers Positive word-of-mouth saves firm from investing money in sales and advertising Price premiums Long-term customers willing to pay regular price Willing to pay higher price during peak periods

Copyright © 2007 Cartesian Consulting, Must not assume that loyal customers are always more profitable than those making one-time transactions Costs Not all types of services incur heavy promotional expenditures to attract a new customer Walk-in traffic more important at times Revenue Large customers may expect price discounts in return for loyalty Revenues don’t necessarily increase with time for all types of customers

Copyright © 2007 Cartesian Consulting, Profit impact of a customer varies according to stage of service in product life cycle For example referrals and negative word-of-mouth have a higher impact in early stages Tasks Determine costs and revenues for customers from different market segments at different points in their customer lifecycles Predict future profitability

Copyright © 2007 Cartesian Consulting, Shape Shifter Painter Card Magician Techno Links The Band The Campaigner Time Keeper

Copyright © 2007 Cartesian Consulting, Your customers will constantly surprise you Customer Knowledge is competitive advantage

Copyright © 2007 Cartesian Consulting, Scoring and segmentation, satisfaction scores, lifetime value metrics, Notes: Information and management of it for customer retention is not easy. Marketers shun analytics more out of a lack of understanding of what it can do for them.

Copyright © 2007 Cartesian Consulting, Customer flight is inevitable unless you can paint yourself into their picture Build fences, increase their switching cost Bottomline: Protect your turf- Get your concept right

Copyright © 2007 Cartesian Consulting, Rules & processes, earn- burn, rewards, benefits, communication, helpdesk, partners, Notes Building a loyalty program concept requires not just sound strategic thinking, but hard work. The success lies in being able to detail out solutions to over 100 decision points that a loyalty program concept needs to cover. You cannot be reacting to situations as they happen! Social media is your friend

Copyright © 2007 Cartesian Consulting, It’s more than a card trick Loyalty programs are a proven way to capture customer data and prevent customer flight It’s about building relationships

Copyright © 2007 Cartesian Consulting, Smart card, affinity cards, card variants, co-branded cards, card readers, Notes The loyalty card is the most familiar face of a loyalty program. There are many options here as well, but the key point is that launching a card does not a loyalty program make. This space is littered with failed programs that were launched as a card and little else. Name a few…

Copyright © 2007 Cartesian Consulting, If marketing and IT don’t shake hands, you might as well hang up your loyalty boots Technology integration is crucial to success

Copyright © 2007 Cartesian Consulting, Loyalty software, CRM software, analytical CRM software, marketing database, POS integration, points banking, campaign mgmt… Notes The software on which your program depends needs to be designed carefully, and should handle all aspects of your program. Retail POS solutions often offer a basic loyalty module – these are usually inadequate! Don’t design your program to fit the software.

Copyright © 2007 Cartesian Consulting, You need superheroes skilled in marketing, technology, and analytics It takes teams that are nurtured and last It takes patience and top management buy in

Copyright © 2007 Cartesian Consulting, Loyalty manager, loyalty agency, CRM consultant, IT team, events & promotions team, rewards team, creative agency... Notes The team that drives the program internally needs to be composed of skills that are difficult to find in any market. Direct marketing, CRM and Loyalty skills need to be nurtured and the team needs top management support. Importantly, you will need to rely on the right partners to come in with specific skills.

Copyright © 2007 Cartesian Consulting, Loyalty programs throw up a wealth of data driven campaigns Good campaign management allows you to handle hundreds of segments and communications simultaneously

Copyright © 2007 Cartesian Consulting, Campaign calendar, welcome kit, statements, coupons, day- part based, cross sell, activation, churn prevention, win-back, relationship building… Notes Campaign management practices are better established amongst the banks than retailers, Leverage campaign management tools as they will allow you to run hundreds of targeted campaigns which pay off. Compared to a few festival offers and generic promotions.

Copyright © 2007 Cartesian Consulting, Building loyalty takes money, time and patience Assume it will take you 2-3 years to truly reap benefits You’re in it for the long run.

Copyright © 2007 Cartesian Consulting, Points liability, breakage, ROI, enrolment, member base, activity levels, satisfaction scores, wallet share, referrals Notes Set expectations right. To launch a program AND expect a jump in sales within 6 months is pushing it. Building up a quality member base (no mass enrolments), setting up the back end, campaign management – these all take time and effort, and the metrics to measure success take time to show the returns.

Copyright © 2007 Cartesian Consulting, 1. Customers shape-shift 2. You need to paint yourself into their world with a good concept 3. Loyalty programs are more than card magic 4. You need to get marketing and IT in sync 5. The team needs top management buy in 6. The pay off is in the data led campaigns 7. The pay off comes with patience

Copyright © 2007 Cartesian Consulting, How customers perceive reward programs Brand loyalty versus deal loyalty Buyers value rewards according to: Cash value of redemption award Range of choice among rewards Aspirational value of rewards Amount of usage required to obtain award Psychological benefits of belonging to reward program Timing Send customers periodic updates on account status and progress towards particular milestones