COLLOQUY | India Loyalty Summit | February 1, 2012 The Experience of Loyalty: 2011 Cross-Culture Study Insights

2 All information contained herein is confidential and/or proprietary information of Loyalty One, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Who we are Voice of Loyalty Marketing Since 1990 Publishing Research Education Wholly Owned Subsidiary of

3 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, EXPECTATIONS EXPERIENCE Im Bored. Im Dissatisfied. Im Delighted. The Customer Experience Depends on expectations EXPERIENCE Im Satisfied

4 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Relevance Recognition Rewards The Great Divide Profound Differences in Customer Experience Engaged Enthused Excited Tuned Out Turned Off Tired

5 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, CA US AU BR IN CH 2011 COLLOQUY Cross-Culture Loyalty Study Sponsored by LoyaltyOne and Epsilon Six-nation study of loyalty attitudes and behaviors »Trust in businesses »Loyalty program participation »Privacy and data security Developed Economies »US, Canada, Australia Emerging Economies »India, China, Brazil Fielded in July 2011 »Published Autumn 2011

6 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1,

7 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Rewards Program Penetration Indicates Upside in Emerging Economies Source: COLLOQUY 2011 Cross-Culture Study Q: Do you currently belong to any rewards program? Rewards Program refers to an program that offers points, airline miles, gift certificates, discounts off purchases or cash rebates, or that requires you to keep, scan, or make purchases with a card in order to receive special benefits and rewards.

8 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, The Meaning of Loyalty in India has Class Nuances Ranking of factors that reflect loyal behavior by SEC Non Price-Conscious Willingness to Recommend Staff Knows Them Well Years/Tenure with Retailer Receives Tailored Service Familiar with Store Layout Share of Spend with Retailer Location Proximity Sales Shopper A B C SEC B/C do not equate loyalty with a willingness or ability to pay-up for quality. Loyalty reflects far more practical concerns for SEC B/C, such as a store location being close to home A

9 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, ? MAYBE Willingness to Join Loyalty Programs Indians are more positive than negative, but still cautious. India SEC A/B/C Total ? ? ? SEC A SEC B SEC C 52% 46% 1% 36% 58% 6% 12% 58% 29% Source: COLLOQUY 2011 Cross-Culture Study Q How likely are you to join a program (assuming one is made available)? Asked of non-program members only n = 270 YES NO 26% 57% 17%

10 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, SEC A/B Motivations to Join Practical Utility and Aspirational Status TOP 3 Practical Utility: 1.Easy to Redeem 2.Good Time/Value 3.Practical Rewards Aspirational Status: 1.Recognition 2.Special Tiered Levels 3.Rewards to Dream 35% 32% 39% 29% 28%

11 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Classes Differ: Barriers to Joining SEC B/C Concerned About Privacy and Rewards Attainability

12 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Attitudes Towards the Role of Money 31%29%18%15%8%66%17% 5% 7% Indians are far more diverse, and view money as a source of power regardless of SEC

13 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Word-of-Mouth (WOM) Greater Importance in Emerging Economies

14 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Electronic Communications More Use in Emerging Economies, Especially India Source: COLLOQUY 2011 Cross-Culture Study Q: What are your preferred channels for receiving information from your favorite companies? Percentage indicating channel preference.

15 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Relevance is a Moving Target Developed countries consumers are Tuned Out

16 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Needs Drive Economic Progression No one really needs experiences…or do they? C OMMODITIES P RODUCTS S ERVICES E XPERIENCES Adapted from Maslows Hierarchy of Human Needs T IME

17 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Need State Time * India * China Brazil * * Canada * U.S. * Australia Easy, No Fuss Basics Privacy & Security Recognition Insider Status Customized Program Rewards Program Benefits Adapted from Maslows Hierarchy of Needs Loyalty Program Progression Needs migrate up over time. Are we meeting unmet needs?

18 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, What Do Elite Airline Travelers Want? Privilege, Preference, Perks…and free trips, too.

19 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Recognition Fuels Emotional Loyalty It seems that everywhere, we love to be recognized (and love, of course, is the answer). 2.

20 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Having Your Cake And Eating It, Too. Anuttara Tanishq celebrates customers birthdays in style I wonder what this cake will end up costing me here today…?

21 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Rewards: The Tangible Value Payoff Simple + Meaningful + Attainable = Successful Example: It pays to be loyal to your favourite brands (Top 2 Box) Strongly Agree 12% 24% Average U.S. Household Enrolled in 18 programs - Active in only 8.4 Earns Rs 31,100/year - Rs 10,250 unredeemed Indicates Need for Partner/Coalition Models Indicates Need for Partner/Coalition Models 3.

22 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Coalition Effects on Fuel Retailer Share increased 3.7 points despite competitive program launches… and a 20% site rationalization in the first 8 quarters after. … Coalition Sponsor ----Competitor A ---- Competitor B ---- Launch Launch Launch

23 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Final Thoughts In the past two years, loyalty focus has changed from pure rewards to differentiated experiences. Companies may have understood only customer revenue; now they are embracing customer knowledge. That cant happen if the loyalty card becomes just more plastic stuffed in the wallet. --Vishal Hanmattekar, Director of Loyalty, IHC (Taj Inner Circle)

24 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1, Announcing full media resources for India! COLLOQUY India magazine and website 2011 COLLOQUY Cross-Cultural Study White Papers More research to come. COLLOQUY Loyalty Workshops begin in April 2012 Local presence from LoyaltyOne, Direxions, Epsilon Jim Sullivan Partner, COLLOQUY

25 All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. COLLOQUY | India Loyalty Summit | February 1,