Presentation on theme: "REWARDS AND INCENTIVES WHAT’S NEXT?"— Presentation transcript:
1 REWARDS AND INCENTIVES WHAT’S NEXT? OCTOBER 6, 2011The “Rewards” of Keeping Debit Loyalty Programs Post-DurbinREWARDS AND INCENTIVES WHAT’S NEXT?PW NOTES: We will put the final presentation in our format – RewardsNOWOn title slide add:Presented by RewardsNOW, Inc. & PYMNTS.comPanelists: Steve VanFleet, President + CEO of RewardsNOW; Tim Kolk, President, TRK Advisors, LLCModerated by: Margaret Weichert, CEO, Marketing Dynamics & Sr. Editor PYMNTS.com
2 Macro forces are changing the financial services landscape on many levels INNOVATION MEGATRENDSGeneration “Ready Access” – customers prefer paying with “ready funds” (debit, prepaid, cash)Mobile Revolution – mobile technology is changing consumer behavior and payment business modelsBlurring of Online and Offline – most consumers want multi-channel experiencesDDA Disintermediation – bank accounts are less critical to many payments innovationsNew Customer Information and Incentive Paradigms – data is enhancing rewards, deals and customer experienceOpen Platforms – customers expect interoperability and plug & play solutionsREGULATIONDEMOGRAPHICSECONOMY
3 A range of new players are getting involved Traditional FIs & ProcessorsRetailersMobile OperatorsHandset mfgs.Social NetworksRegulators & Consumer AdvocatesAlternative Payment Co’sMedia/Digital Content CompaniesInformation CompaniesPW’s notes: Handset mfgs.? Also does this get down too much in the weeds?Observation – Traditional players are at the center of the landscape, but emerging players are introducing innovation and market disruptionImplicationsThe challenge for traditional players in an ecosystem that is being reshaped by these new emerging players is how to avoid being marginalized and dis-intermediated, and preserve margins and returns to shareholders.This means making key decisions about where and how to innovate, where to milk assets, where to partner/enable disruptors and where to compete head-on given its assets and comparative advantage.There are several macro forces, including regulation, that complicate this decision-making, influencing the innovation landscape and the activities of both traditional and emerging players.Emerging Players
4 Incenting and rewarding consumer behavior is more important than ever Attracting new customersRetaining existing customersIncenting profitable behaviorUse of low cost channels (ATM, online, mobile)Electronic statementsDirect depositCard spendSavingsRelationship deepening/product cross-sellPW notes – I think this is good, because it leads into the Loyalty Discussion – do we want to talk about Durbin in one slide before this?
5 A range of interesting models challenge traditional thinking BEHAVIOR-BASEDPROGRAMSBroad-based programs reward a set of desired behaviorsExamples: PNC PointsMERCHANT-FUNDED REWARDSRewards associated with spend at specific merchants that are funded in part or in total by the merchantExamples: Wells Fargo Earn More Mall, BAC Add it Up, RewardsNOW ShoppingFLINGINSTANT POS REDEMPTIONReal-time ability to use accumulated rewards for purchases or benefits in the physical world via “virtual gift cards” or other POS redemption optionsExamples: Carlson Marketing Instant Mobile RewardsNEW CHANNELS & FLEXIBLE REWARDSNew ways to interact with customers and allow broader earning and redemption options in the context of specific segmentsExamples: American Express Facebook Points App and iTunes App and redemption; Best Buy/Citi Mobile App
6 How has loyalty been impacted? As Illustrated, there a great number of significant environmental factors— legislative, economic, behavioral, and technology-driven—that are impacting what a loyalty program needs to look like in the future.The underlying purpose of loyalty programs remains, and, in fact, is stronger than ever—driving profitable customer behavior!!!!Consumers expectations are high – What’s in it for me?Consumers want value and flexibility, choice and options.Consumers are also looking for control – instant rewards with long-term incentives – delivered up digitally.
7 Loyalty more relevant than ever…to the consumer In light of all these market forces and heightened consumer expectations, what will successful “loyalty” programs look like in the near and longer term?Ultimately the goal must be providing value in meaningful, targeted, relevant and profitable ways:Must address, in a targeted manner, the broader customer relationship and the behaviors desired. (Earn side of the equation)Must provide meaningful incentives to drive the desired behavior. (Burn side)Must utilize all available channels to engage the customer-relevant in both method and time.Must be YOUR program—built for you and targeted to your goals, now and in the future.Must contribute to profitability.
9 For a free copy of today’s presentation email us at: Thank you!For a free copy of today’s presentation us at:Questions • Discussion • FeedbackSteve VanFleetPresident and CEO of RewardsNOWMargaret WeichertManaging Director atMarket Platform DynamicsTim KolkPrincipal and Consultant at TRK Advisors