1. Market and Customer Management - Customer Loyalty 1 A PRACTICAL CASE FOR IMPLEMENTATION 1 Offering 1 Offering 7 Finance 7 Finance 2 Processes 2 Processes 8 Communication 8 Communication 3 Call Center 3 Call Center 5 Information Technology 5 Information Technology 4 Cards 4 Cards http://www./ Club Card ANNE S. MARTY 999 012 345 678 Key topics of the programme Key topics of the programme 6 Structure 6 Structure

2. 2 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Contents Page Overview3 Programme Offer4 Processes10 Call Center25 Cards30 Loyalty and Information Technology34 Structure43 Finance (Transfer pricing etc.)51 Communication55 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

3. 3 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland The Case for practical implementation - overview and objectives The case is designed out of a concrete loyalty programme developed by PricewaterhouseCoopers The case follows the rules for a programme in the telecommunication industry for retail customers with a point collection / redemption scheme. The case gives concrete answers in eight key areas and also provides tools, which support the design and the planning of a loyalty programme. 1 Offering 1 Offering 7 Finance 7 Finance 2 Processes 2 Processes 8 Communication 8 Communication 3 Call Center 3 Call Center 5 Information Technology 5 Information Technology 4 Cards 4 Cards http://www./ Swisscom Club Card ANNE S. MARTY 999 012 345 678 Key areas of the loyalty programme Key areas of the loyalty programme 6 Structure 6 Structure

4. 4 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 1. Programme offer Frequently asked questions: qWhat were the requirements for the offering? qHow does the offer look like? qWhich part of the offer influences which customer segment? qWhat about co-operations with other companies? qWhat are possible options for new offers after launch?   1 Offering 1 Offering 7 Finance 7 Finance 2 Processes 2 Processes 8 Communi- cation 8 Communi- cation 3 Call Center 3 Call Center 5 Information Technology 5 Information Technology 4 Cards 4 Cards Key topics of the programme Key topics of the programme 6 Structure 6 Structure

5. 5 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Requirements to the Offering Requirements from a customer point of view:  Benefits  Simplicity; Understandable  Transparency  others Requirements from a company‘s perspective point of view:  Attracting a broad amount of customers  Pushing additional sales, profitability and loyalty  Pushing cross selling/ up selling  Rising the image of the company  others Requirements from a market point of view:  Focusing on large market fields  Considering the competitor intensive market fields  Focusing on future market fields  No legal conflicts  others 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6 Requirements for the offering at launch time There are not just requirements from the internal optic but also requirements from the client and the business perspective to take into consideration. 1. Programme offer

6. 6 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland The programme is based on a set of point collection and point redemption offers and includes also win back offers Special campaigns for point collection Special campaigns for point collection Ongoing point Collection Ongoing point Collection Ongoing Point Redemption Ongoing Point Redemption Point redemption with club partners Point redemption with club partners Club Membership Joining offer: Win back offer: 100 points per fix line 100 points per mobile telephone 100points per pager 100points per internet access 200points for member get member double points for calls to Italy during summer double points for international calls during Christmas others 1point per $ turnover 1 point extra per $ turnover if fix line and mobile 500 points when returning within 30 days 1point = 3 cents 3000points: Special mobile phone 5000free access for one year 150030$ voucher for shop purchase 2500free friends and family programme <8000special agent of support 24h available others 2points for 1 frequent flyer mile 1000 points for one box of chocolate others Example 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6 1. Programme offer

7. 7 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland The loyalty programme has one offering but targets four segments in different ways. Premium Customer (over US$ 300.- per month) Strategy: Identify customers, VIP concept, keep the customer happy, retention what ever the costs are, improve cross- and upselling whenever possible Most of the very attractive rewards for these customers within 1 year of point collection Premium customers can profit up to 8% Profitable Customer (between US$ 150.- - 300.- per month) Strategy: Identify customers and make them loyal. Up- and cross selling Turnover per customer over the average, most of the very attractive rewards for these customers after 1.5 years of point collection. Profitable customers can profit between 3 - 7% Long collector (between US$ 100.- - 150.- per month) Strategy: Focused cross selling incentives for enhancement of turnover Probably profitable customer now A very attractive reward can be reached, if the annual turnover is substantial growing and points are collected over a period of 2 - 3 years Long collectors can profit between 2 - 6% Uninterested (between US$ 0.- - 100.- per month) Barely profitable customers Strategy: No additional discounts / benefits Hardly reach enough points within one year for a redemption possibility (with exception off the first year). Substantial growth of turnover is needed to reach the very attractive redemption possibilities. Long collectors can profit between 0 - 3% Customer structure: 8% Premium customer 21% Profitable customer 31%Long collector 40% Uninterested 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6 1. Programme offer

8. 8 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Possible special offers in combination with the launch for the club programme Below you will find a set of ideas for the launch of a loyalty programme. This special offers should be attractive, especially for the target groups, and should reflect the main offering of the programme. Ideas for additional offers for the programme start of the Telco loyalty programme “Follow the wire” Travel around the world Videoconference with friends Breakfast with famous people Back-Stage tickets for concerts Free health check The golden button Free ticket for cinema Prepaid cards / special edition Painting of a famous painter Combination with Smart-Cards Balloon Trip Flight Tickets Starring in a TV commercial / soap opera Right for getting new products first Full telecommunication equipment Limited Card Editions Early Bird (z.B. Prepaid card for the first 10’000 customers) 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6 1. Programme offer

9. 9 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Depending on the structure of the offer, the reaction of the customer and the impact for the company will be different. customer Each component of the offer lead to different reaction of the customers. On the one hand, they can reduce their costs. On the other hand, the offer is influencing the usage and convenience of their products and services. From the view of the Telco, the different offers will have different customer reactions. On the one hand, customer loyalty may increase. On the other hand, the profitable customers can be paid more attention. The offer in this Case for practical implementation has a balanced structure and covers all effects. Cost Reduction for Customer More Customer Usage/ Con- venience Effect on Profitability Effect on Loyalty High Impact Low Impact High Impact Low Impact High Impact Low Impact High Impact Low Impact Joining offer Offers of partners for redemption Offers in the point of sale Club Card Leverage of benefits Member gets members Additional products for bundling Redemption with different offers Telco 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6 different offers different offers 1. Programme offer

10. 10 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 2. Processes Frequently asked questions: qHow does the process model for a loyalty programme look like? qWhich processes need to be assessed / defined first? qDo the process fit with the IT systems? qDo the processes cover all aspects of the retention programme, defined by the marketing team?   1 Offering 1 Offering 7 Finance 7 Finance 2 Processes 2 Processes 8 Communi- cation 8 Communi- cation 3 Call Center 3 Call Center 5 Information Technology 5 Information Technology 4 Cards 4 Cards Key topics of the programme Key topics of the programme 6 Structure 6 Structure

11. 11 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Generic Process Model for this Case in the Telco Industry Management- Processes Programme ManagementMember Management Vision, Strategy Vision, Strategy Planning & Budgeting Planning & Budgeting Profitability Calculations Profitability Calculations Legal Campaign Management Campaign Management Collection Offering Redemption Model Formula Collection Portfolio Management Formula Redemption Portfolio Management Collection of Points Redemption of Points Ongoing Information Customer Registration Correction Cancellation Collection Formula Special Collection Offers Special Redemption Offers Redemption Formula Internal, Partners Selection of Partners Internal, Partners Selection of Partners 2. Processes 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

12. 12 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland The Process Mapping should focus on the most important activities listed below 1 Registration 2 Data correction 3 Cancellation, lock account 1-1Application via call center 1-2Validation of registered data 1-2-1 Online validation 1-2-2 Offline validation 1-3Rejection of application 1-4Shipment of welcome package 1-5Obtain client signature 2-1 Changes of client master data 3-1Cancellation of club membership at clients request 3-2 Changes or blocking of numbers by service provider 4 Collection of points* 5 Redemption of points* 4-1Collection of points 4-2 Collection of points for special offers 5-1Redemption of points for products / services of the own company 5-2Redemption of points for products / services of a partner company 2. Processes * This processes are not further detailed because of of the confidentiality of the programme itself 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

13. 13 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 1 Registration Application via call center 1-1 Validation of client portfolio 1-2 Rejection of application 1-3 No Shipment of Welcome Package 1-4 Validation OK? Yes Obtain client signature 1-5 2. Processes 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

14. 14 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 1-1 Application via call center 2. Processes 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

15. 15 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 1-2-1 Online validation of client portfolio (1/3) 2. Processes 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

16. 16 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 1-2-1 Online validation of client portfolio (2/3) 2. Processes 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

17. 17 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 1-2-1 Online validation of client portfolio (3/3) 2. Processes 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

18. 18 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 1-2-2 Offline validation of entered telephone numbers 1st NumberEvery additional number 2. Processes 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

19. 19 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 1-3 Rejection of application 2. Processes 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

20. 20 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 1-4 Shipment of welcome package 2. Processes 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

21. 21 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 1-5 Obtain client signature 2. Processes 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

22. 22 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 2-1 Change of client master data 2. Processes 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

23. 23 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 3-1 Cancellation of club membership at clients request 2. Processes 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

24. 24 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 3-2 Change or blocking of numbers by service provider The numbers should be check in a specific periode according to the validation during the application phase As soon as the client pays, the membership can be reactivated by a telephone call The scores are again available Administrative charges will be deducted to the club member (if legally permitted) 2. Processes 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

25. 25 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 3. Call Center Frequently asked questions: qWhat are the assumptions for the estimated volumes in call center and the back office? qDo you want to outsource call center and back office functions? qWhat are the activities in the call center and the back office? qWhat capacity do you need in the call center and in the back office? qAre there already existing call centers in the company, what capacity do they have? qWhat are the costs for the call center and the back office?   1 Offering 1 Offering 7 Finance 7 Finance 2 Processes 2 Processes 8 Communi- cation 8 Communi- cation 3 Call Center 3 Call Center 5 Information Technology 5 Information Technology 4 Cards 4 Cards Key topics of the programme Key topics of the programme 6 Structure 6 Structure

26. 26 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland For the planning of the call center and back office capacity, it is important make several assumptions The call center and back office in this case are the only channels for the handling of the retention programme. Inbound and outbound campaigns (phone) will be handled by the call center agents, E-Mail, internet, mail and fax will be handled by the back office. The call center and the back office is closely linked with one or more fulfillment centers. All standard letters, booklets, etc. will be printed and mailed through theses fulfillment centers. Call center and back office are centralized (one site) and split along the necessary languages. The validation of the registered numbers is done in an offline process by the customer loyalty system. Call center route plan: Percentage based on assumptions about the distribution of incoming applications -> dependent on internal/ external capabilities Client Undefined contacts Outbound Shop visits E-Mail, internet Mail, Fax Client Other Channels Other call centers Back office Fulfillment Center Shops Registration Forward to call center Forward to back office Print and mail Inbound Registration Changes Cancellation Information Redemption of points 40% 60% Call Center (One site) Registration Changes Cancellation Information Redemption of points Call Center Complaints Changes 3. Call Center 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

27. 27 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland PRO Outsourcing No bottle neck in capacity No problem with low performance of agents in smooth hours No internal political issues Professional relationship with provider No hiring of additional personal needed CONTRA Outsourcing Better performance of the existing call centers Keep know how within the firm Agents know the firm better and therefore can better inform the customer (cross selling) Existing Infrastructure can be used Skill of agent (under control) Outsource everything Outsource nothing Outsource the overflow during the start up phase Outsource the services out of office time (Mo - Fr: 21:00 - 07:00, Sa, So,) Outsource parts of the services (e.g. points redemption and collection) Options for call center and back office outsourcing Possible options for outsourcing the call center or the back office 3. Call Center 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

28. 28 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland For the planning of the required capacity of the call center and the back office certain assumptions need to be taken 3. Call Center 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

29. 29 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland The start up phase lasts 12 months. During this period, the assumed growth of the members will then be as follows: The calculation is on a monthly basis and gives just a rough estimate. A detailed calculation on a daily basis (incl. advertising, etc.) must be done during the set up of the call center and the back office. For the calculation of the capacity on a daily basis, a “Call Center Simulation Tool” is provided on this CD-Rom. For the capacity planning there is also a growth scenario needed 3. Call Center 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

30. 30 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 4. Cards Frequently asked questions: qWhat’s the difference between a magnetic stripe card and a smart card if it is used as a loyalty card? qWhat different cards are available in the telecommunication industries? qHow can this cards be used as an added value for loyalty cards?   1 Offering 1 Offering 7 Finance 7 Finance 2 Processes 2 Processes 8 Communi- cation 8 Communi- cation 3 Call Center 3 Call Center 5 Information Technology 5 Information Technology 4 Cards 4 Cards Key topics of the programme Key topics of the programme 6 Structure 6 Structure

31. 31 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland All customer data are stored centrally incl. the point account All data are stored in a central IT system Online transfer POS terminal Loyalty card All data relevant for customer loyalty are stored in the central IT System Offline transfer POS terminal Point account is on the chip itself ______________________________ ______________________________ offline transfer Magnetic Stripe CardSmart Card The relevant customer information is stored in a central IT-System Data relevant for customer loyalty is stored in the POS terminal and per upload transferred to the central IT- System The identification of the customer is made offline with a barcode or magnetic stripe. The PIN is stored on the chip of the card The point account is managed from the chip of the card The customer data are managed online from a central IT-System. The identification of the customer is made online via the magnetic stripe on the card (and PIN if necessary) The account information (point account, etc.) is stored on the central server and transferred online to the POS The difference between a loyalty card with magnetic stripe and a loyalty smart card 4. Cards 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

32. 32 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Possible combination of loyalty cards with cards in the telecommunication industry 4. Cards A good loyalty card provides added value and should not just be a white plastic card with the name and account number on it (e.g. in combination with other cards like credit or debit cards) The following table shows the available cards in the telecommunication industry that can be used in combination with a loyalty card A good loyalty card provides added value Possible combination of a loyalty card with other cards in the telco industry 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

33. 33 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Approach In order to reduce administrative costs and to offering greater convenience to the consumer by streamlining reservation, check-in and boarding procedures as Lufthansa offers to their Frequent Traveller and Senator Card holders over their affiliate Lufthansa Airplus following card options: ETIX: Electronic check-in and seat reservation, for this the card is equipped with a contact less chip. Credit card: Processed by Airplus (separate cards for VISA and Euro/Mastercard), for this purpose the cards are equipped with a magnetic stripe. Telephone card: With these cards customers can use credit card phone boxes worldwide. In Germany, card holders can use more than 90.000 phone boxes of Deutsche Telekom enabled by an additional contact chip. Further more these cards can be equipped with a calling card function provided by Executive TeleCard which requires no hardware. All calls and the basic fee are charged to the credit card bill. The latter two were introduced in order to increase user acceptance by making the card multifunctional. Therefore Lufthansa adopted a hybrid card (dedicated technologies for each function, see above). The entire card processing is being conducted by Airplus (a company specialised on credit cards in the air travel industry). Results Lufthansa surveys indicate general satisfaction with the pilot smart-card project. Customers were least impressed with the multi functionality associated with the card‘s different features. Successfully implementing a multifunction card has been a problem for several proposed cards schemes. Lufthansa avoided the majority of these problems by using a hybrid card approach. Finally, the scheme can be evaluated as a success, even though the implementation is relatively unambitious technologically (as opposed to a integrated card approach). An other example - Lufthansa Frequent Traveller Card Source: Price Waterhouse, Gartner Group, Jan. 1997 4. Cards 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

34. 34 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 5. Loyalty and Information Technology Frequently asked questions: qWhat is a customer loyalty system (CLS)? qWhat are the different customer loyalty tools available in the market? qHow do the current IT environment and the CLS fit together; is it possible to integrate these two systems? qWhat are possible vendors of CLS-Software? qHow should a CLS-System be linked with a corporate IT environment? qWhat is the relation between loyalty systems and campaign management?   1 Offering 1 Offering 7 Finance 7 Finance 2 Processes 2 Processes 8 Communi- cation 8 Communi- cation 3 Call Center 3 Call Center 5 Information Technology 5 Information Technology 4 Cards 4 Cards Key topics of the programme Key topics of the programme 6 Structure 6 Structure

35. 35 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland For the administration of the loyalty programme, a customer loyalty system (CLS) is required. The CLS needs to be integrated with the operational systems of the company For each customer retention programme three main systems should be taken into consideration: A data warehouse, a campaign management system and a customer loyalty system. Customer Loyalty System (CLS) Customer Loyalty System (CLS) xy xx yy Partner- systems Fulfillment- Center The Customer Loyalty System (CLS) administers the bonus points (collection and redemption) and the members. The call center and the back office agents are working mainly with this operational system. The Data Warehouse (DWH) is collecting the data out of the different operational systems and provides this data in the required format to the Customer Loyalty System. A Campaign Management System provides a database marketing environment and enables the company to get the customer information. Data Warehouse (DWH) Data Warehouse (DWH) Campaign Manage- ment System Campaign Manage- ment System 5. Loyalty and Information Technology 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6 User: Club management and marketing User: Club management and marketing User: Marketing and communication User: Marketing and communication User: Call center and back office User: Call center and back office

36. 36 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland There are several suppliers of customer loyalty systems (1/2) 5. Loyalty and Information Technology 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

37. 37 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland There are several suppliers of customer loyalty systems (2/2) 5. Loyalty and Information Technology 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

38. 38 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Customer data and information A loyalty programm enables the company to get new information about the customer behaviour Customer information systems can be seen in three generations The following information categories can be distinguished when launching a loyalty programme: Basic information about the customer (eg. age, profession) Potential information about the customer (eg. customer satisfaction) Action information about the customer (eg. contacts, activities) Reaction information from the customer (eg. response; usage) 5. Loyalty and Information Technology 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

39. 39 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland A Data Warehouse environment is also essential to getting the information needed A Data Warehouse links the existing operational systems to into one database Best practice companies feed their transactional data into a data warehouse and use different tools and instruments for analyzing the data. The position of a data warehouse is showed below. 5. Loyalty and Information Technology SALES ETC. MARKET. Data Warehouse Quality Assurance Process Metadata Source Data Transformations EIS Query Customers Locations EXTERNAL DATA Data Integration and Cleansing Process e.g. Validity Operations OLTP Financial Systems Campaign Management Design… Select... Segment... Execute... Score... MARKET. Source: Price Waterhouse 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

40. 40 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland A Data Warehouse environment is also essential to getting the information needed The Data Warehouse uses customer information in an closed loop. The usage of customer information in a closed loop enables the company to improve their target marketing on an ongoing basis. Data warehouse, campaign management and customer loyalty systems play an important role in that. Segmentation & Targeting Create Offer Service Offer Measure Results Mine Data Fulfill Offer Provide Customer Service Refine Offer Optimise return on data enhancement and prospecting Capture customer and transaction data Integrate new Media Fulfill on a one to one basis Manage Inbound and Outbound Telemarketing activities Analyse data to reveal Segmentation and Targeting Opportunities Derive customer profitability & LTV, & report on marketing effectiveness Record Customer Contact Manage integrated customer database Data Warehouse 5. Loyalty and Information Technology Source: Price Waterhouse 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6 Communicate Offer

41. 41 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland A Campaign Management Tool supports a company in building up their database marketing capabilities. What is a campaign management tool A campaign management tool enables the coordination and tracking of several marketing campaigns (eg. mailing to 100’000 customers) concerning the response and the following activities for the contacted customers. A campaign consists normally of several activities and focuses on a clearly defined customer segment. The future activities for a customer in a campaign often depend from the past responses of this customer. A database support therefore is very important. Typical functionalities of a campaign management tool: Design campaign Select campaign universe Target segments Execute Measure and record Iterate 5. Loyalty and Information Technology 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6 Source: DWH Issue campaign management or leading process

42. 42 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland With a clearly structured campaign management process it is possible to properly coordinate different campaigns and to set priorities Example of a campaign management process For a campaign concept (planning and co-ordination of different campaigns) a campaign management process is needed. The campaign concept builds the basis to position the different campaigns, to set priorities and to assign budgets. 5. Loyalty and Information Technology 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6 Campaign Management Process Evaluate overall campaign Evaluate overall campaign Evaluate feedback Evaluate feedback Collect feedback Collect feedback Run campaign Run campaign Detailed planning Detailed planning Provide concept to board Provide concept to board Set targets and target groups Set targets and target groups Collect ideas and inputs Collect ideas and inputs Set priorities

43. 43 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 6. Structure Frequently asked questions: qWhat is a possible project organisation structure when setting up a loyalty programme? qWhat is a possible organisation structure for the operation of a loyalty programme? qWhat is a loyalty organization responsible for?   1 Offering 1 Offering 7 Finance 7 Finance 2 Processes 2 Processes 8 Communi- cation 8 Communi- cation 3 Call Center 3 Call Center 5 Information Technology 5 Information Technology 4 Cards 4 Cards Key topics of the programme Key topics of the programme 6 Structure 6 Structure

44. 44 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Example of a project organisation structure Project Sponsor Client Project Sponsor Client Project Management Marketing & Communication Processes IT / Logistik Project Planning Financial Business Case Steering Group Programme Management External communication Internal communication Business processes Call Center / Back Office processes Rollout & Training Club Management Customer Loyalty System Client legacy systems Fulfillment Call Center systems Design Internet Cards Concept and Interfaces to other units Evaluation of card suppliers 6. Structure 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

45. 45 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland The operational organisation should be assigned to the Marketing & Products unit of the company. Allthough, certain services are handled from current units with the most experience (e.g. IT structure, card processing, and others) Example of a organisation structure for operation (Example for a Telco operator) Club Management Back office Back office Leader of Club Call Center 6. Structure Operations / Campaigns Operations / Campaigns Programme Design Programme Design Controlling and Finance Controlling and Finance IT 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6 Club Call Center

46. 46 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Tasks: Responsibilities: Club Management Club Management Short, middle and long term planning Control of service level agreements with the provider for the club offer Negotiation with third party providers Co-ordination of the corporate identity and the corporate communication Financial planning and budgeting Definition of the service level in the call centre and the IT-Systems Interface to the legal department Interface to the press / TV Co-ordination of the internet appearance Financial budget Programme offer Strategic fit of the programme Performance and balanced scorecard Internet page Legal approval of the programme through the legal department Skills: Knowledge of product portfolio and internal structure and processes Marketing and finance skills Able to lead a team and to motivate staff Able to plan and to set priorities Description of tasks, responsibilities and skills of the different organisation units (2/4) 6. Structure 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

47. 47 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Description of tasks, responsibilities and skills of the different organisation units (2/4) Evaluation and Definition of retention programme Planing and execution of events Co-ordination of the program with other product portfolios Market researches Set requirements for data warehouses, customer loyalty system and other marketing support systems Marketing of card functions to club members in collaboration with Card Processing Co-ordination of the planned actions with IT / logistics in advance. Design of an attractive and target group specific Club offering Communicate latest findings about client behaviour within the company Co-ordination and collaboration with IT and logistics regarding changes in Club programme Preferably experienced in product management Marketing experienced Knowledge of the product portfolio of the company Able to make financial calculations about the club programme Able to formulate marketing requirements for the potential IT-systems (e.g. DWH) Tasks: Responsibilities: Skills: Programme Design Programme Design 6. Structure 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

48. 48 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Description of tasks, responsibilities and skills of the different organisation units (3/4) Planing and realisation of newsletter Planning and execution of point calculations Planning and execution of club billings Planning and execution of additional campaigns Co-ordination of communication (incl. specific campaigns) Editing newsletter, preparation of club invoices, point reports and mailings to clients Guarantee a market appearance consistent with company’s image and policies Campaign specific internet appearance Knowledge of database marketing Knowledge of journalism Knowledge of collaboration with PR and advertisement companies Knowledge of editing and printing of mailings Tasks: Responsibilities: Skills: Operations / Campaigns Operations / Campaigns 6. Structure 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

49. 49 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Description of tasks, responsibilities and skills of the different organisation units (4/4) Calculation of key performance indicators for operations and management Booking of SAP procedures for the club Continuous reporting on financial performance of the club Guarantee accurate club accounting Guarantee accurate calculation of key performance indicators and provide an controlling system to club management Insight into business administration and capability to perform financial and marketing calculations and evaluations Familiarity with the company’s financial systems and capability to perform evaluations using them (e.g. Data Warehouses, CLS) Controlling Know-How and capability to build a controlling system for the club Insight into accounting and capability to perform SAP evaluations Tasks: Responsibilities: Skills: Controlling and Finance Controlling and Finance 6. Structure 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

50. 50 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Organisation structure of the Call Center Back office Teamleader primus inter pares Teamleader Team A Administration Team B Member Service Team C Changes in the Source System Teamleader primus inter pares Call Center Leader Teamleader primus inter pares Enter applications into the system Send letters Validation of numbers Call transfer to the club card members Reporting Sort and classify messages Solve error message Number is not valid anymore No legal unit Wrong / fault data Unreadable data No signature Send letters, Information, etc. Periodically update and chase customers Reporting Sort and classify changes in the host system Definition of the mater address Change of wrong names / addresses Inform clients Reporting Ev. more teams 6. Structure 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

51. 51 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 7. Finance Frequently asked questions: qWhat are the most important financial processes? qWhat are the cost drivers? qHow can you measure a loyalty programme? qWhat performance measures are important? qWhat would you report to the management?   1 Offering 1 Offering 7 Finance 7 Finance 2 Processes 2 Processes 8 Communi- cation 8 Communi- cation 3 Call Center 3 Call Center 5 Information Technology 5 Information Technology 4 Cards 4 Cards Key topics of the programme Key topics of the programme 6 Structure 6 Structure

52. 52 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Welcome package and PIN-Code Cards (also what type) and their carriers Frequency of point statements and newsletters Frequency of special mailings Depending on the size of the customer base, postage is a major cost driver Integration of own IT Integration of partner IT Depending on type of application, an upgrade of IT and other systems is necessary Card processing/ management Help desk / call center Telecommunications links and infrastructure (for all on- line applications) Number of card features/ applications Point redemption rate (How many % of the collected points will be redeemed) Number off call center agents, depending on the complexity of the programme Turnover margin Up selling / Cross selling Number of defecting customers % of customers not defection due to loyalty programme Average turnover per club member per month number of customers in the relevant product / service POS turnover Average discount rate in the shops for club members Salary for marketing and management per year and person Number of customers per employee in marketing / management Customer churn rate Number of new members through “member get member” campaigns Discount factor Training, consulting and div. Costs per month Point redemption rate (How many % of the collected points will be redeemed) Cost driversAssumptions Cost drivers and assumptions for the financial planning 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6 7. Finance

53. 53 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Cost structure of the retention programme Overall cost structure Operations IT & Fulfilment Call Centre Communication Management / Divers Mobile turnover Joining offer Fix line turnover Special campaign bonus Heavy user bonus Bundling bonus Costs for redeemed points 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6 7. Finance

54. 54 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Benefit Structure of the retention programme Overall benefit structure Retention of basic turnover Cross selling Reducing of win back costs Retention of basic turnover –Due to the loyalty programme customers don’t defect so rapidly. Probability of retention is higher and therefore generation of turnover. Reducing of win back costs –If less customers defect, activities and costs for winback programms and campaigns are not necessary / less expensive. Cross selling –Due to the loyalty programme, the customer habits and behaviour is known. Marketing and communication will be more focused and efficient. –Cross selling through bundling offers Explanation 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6 7. Finance

55. 55 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland 8. Communication Frequently asked questions:  Do you plan an internet page?  What objectives do you have with your internet page?  How should the web page look like?  What are the steps to design a web page?   1 Offering 1 Offering 7 Finance 7 Finance 2 Processes 2 Processes 8 Communi- cation 8 Communi- cation 3 Call Center 3 Call Center 5 Information Technology 5 Information Technology 4 Cards 4 Cards Key topics of the programme Key topics of the programme 6 Structure 6 Structure

56. 56 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Objectives of the Internet appearance The Internet Homepage of a loyalty scheme has following primary objectives: –Customer Service Channel - the Internet can be used as a new channel for customer service where the customer can apply for the membership, get information about the own activities within the programme, can complain etc. –Communication Channel - the Internet can be used as a new channel for customer service where the customer can get information about the company and the programme as well as chat with other club members etc. –Logistic Channel - the Internet can be used as a new logistic channel where the customer can order goods or even download files/ offers Apart from the primary goals, there are secondary objectives (eg. financing of the programme by banner promotion), which need to be addressed at a later stage of such a project. Some state of the art web pages can directly be visited from this CD. Pro-actively using the Internet for the interaction with the customer increases the success of the programme 8. Communication 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

57. 57 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Learn from other sites: Swissair Qualiflyer http://www.swissair.com Lufthansa Miles & More http://www.lufthansa.com Omnitel One scheme http://www.omnitel.it MCI Bonus programmes http://www.mci.com AT&T Web Page http://www.att.com Telecom New Zealand http://www.telecom.co.nz Internet pages of different loyalty programmes can give important input for the own loyalty scheme page 8. Communication 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6

58. 58 05 Practical Case.ppt Market and Customer Management - Customer Loyalty © MCM Switzerland Internet home page: A state of the art web site for the loyalty programme can be developed in two stages Infopage Personalized, interactive site Scheme section of the company’s homepage as Infopage with information about Contact points (addresses, telephone numbers, fax numbers etc.) application form to print out (for a written application, not online application) Online application Frequently Asked Questions (FAQ) Outline of options to collect points Outline of options to use the collected points Point statement collected points (when, where, what for) redeemed points (when, where, what for) Redemption through the Internet Links to partners Extension to a personalized, interactive scheme-Page Chat for programme members Interactive window of the programme in Call Center Online shopping One-to-one dialog (push-technology) Banner promotion (dependant on the secondary objectives) Stage 1Stage 2 8. Communication 1 1 2 2 3 3 4 4 5 5 8 8 7 7 6 6