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Understanding Customer Loyalty Key highlights Warsaw, 27th February 2013.

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Presentation on theme: "Understanding Customer Loyalty Key highlights Warsaw, 27th February 2013."— Presentation transcript:

1 Understanding Customer Loyalty Key highlights Warsaw, 27th February 2013

2 22 Präsentationskennung Agenda A. What is loyalty? B. What do Polish consumers expect? C. How to create value? 2

3 33 Präsentationskennung A. What is loyalty? 3

4 4 Well-designed loyalty activities lead to generating extra value to business Customer loyalty efforts aim at: understading customers not receipts increasing no. of customers increasing depth of relationship (repeat purchase) increasing breadth of relationship (cross- category purchase) through providing extra benefit to customers LOYALTY = VALUE

5 5 No. of active customers is one of key goals for any loyalty-building efforts New Active Unknown ProspectKnown Prospect Churning

6 6 Loyalty efforts support closing "customer purchase cycle" in addition to providing extra strength at each stage Analysis where to purchase Awareness where to purchase Purchase transaction Post- purchase evaluation Purchase need Customer purchase cycle

7 7 Moreover, loyalty efforts deliver extra reason for cross- category purchases

8 8 Every business runs numerous loyalty efforts... Order-value-based discounts Card-based discunts -50% Sales Buy 2 for a price of 1 Differentiated service levels Gifts Contest/competition Card-based points program Coalition scheme Free samples Exclusive offers First-minute sales Collectibles Subscription sales Mobile app Facebook fanpage Charity/CSR

9 9...moreover, each has its own design with many questions to be answered All details must fit one another perfectly! Can IT support this? How many base points should we offer? How to target promo offers? What assortment should we have in our reward store? How to communicate the program? Should we have cards? What's the right incentivization level? Whom do we want to offer our program to?

10 10 Key thought: loyalty efforts need to be aligned across complete business value chain LOYALTY IS......INTEGRATED CUSTOMER-CENTRIC APPROACH...LONG-TERM JOURNEY THAT NEVER STOPS...INTEGRAL PART OF YOUR COMMERCIAL STRATEGY...EVERY BUSINESS' DAY-TO-DAY JOB...END-RESULT YOU ACHIEVE

11 11 In principle there are two types of loyalty schemes... Standalone loyalty programCoalition loyalty program heavy buyersmedium buyerslight buyers visit at partner A stores visit at other PB partner Customers Mid- and low-frequency of shopping at partner companies makes their standalone program relevant only for heavy buyers Coalition loyalty scheme ensures program relevancy for all customer segments – also medium- and light- buyers at partner 20% 30% 50%

12 12...offering different business benefits Customer acquisition Customer loyalty Standalone loyalty programCoalition loyalty scheme 1 2 Direct marketing Marketing efficiency 3 4 Customer insight 5 OVERALL low impact high impact

13 13 Präsentationskennung B. What do Polish consumers expect? 13

14 14 Two thirds of Polish consumers participate in one of three loyalty schemes: PAYBACK, Clubcard or Vitay MEMBERSHIP IN LOYALTY PROGRAMMES [ % ] TOTALPAYBACK membersPAYBACK non-members P4. Are you a member of any of the following loyalty/bonus programmes? Base: Total: total sample, N=1000, PAYBACK members, N= 239, PAYBACK non members N=761 CAPI Omnibus

15 15 Most important features of an attractive loyalty programme are: possibility to quickly redeem and the possibility to use the card in different stores – clear vote for coalition-type schemes ATTRACTIVE FEATURES OF LOYALTY PROGRAMS [ % ] A3. What should an attractive loyalty program look like in your opinion? TOP2BOXES: 2009* vs 2012 75 70 76 69 72 67 -- 65 64 60 56 57 53 61 51 65 48 Base: Total: total sample, N=500 *CEM

16 16 Präsentationskennung C. How to create value? 16

17 17 Customer value increases in line with customer's engagement All Customers Active Participants ( Registered customers ) Potential ( Customers with cards ) Users ( Coupon/promotion users ) Business Impact $

18 18 There are three important challenges each scheme needs to face and find a solution to All Customers Active Participants ( Registered customers ) Potential ( Customers with cards ) Users ( Coupon/promotion users ) Business Impact $ Awareness 1 2 3 Acknowledgement Attractiveness

19 19 Attractiveness is usually the most difficult part... EffortBenefitCostImpact Customer's perspectiveBusiness's perspective Effort required from customer to receive extra benefit Value of Benefit as perceived by the customer Cost of Benefit paid by the business to customer Monetary value generated by consumers meeting the required effort

20 20...with three potential outcomes "Customer Wins" 1:0 ineffective incentive "Win-Win" 1:1 MAX IMPACT "Business Wins" 0:1 too difficult to bring impact Customer's perspectiveBusiness's perspective Effort Benefit Cost Impact Cost Impact Effort Benefit EffortBenefit Cost Impact

21 21 Finding balance requires proper analysis to derive relevant customer insight... Segmentation A ○Who are our customers? ○What objectives do we want to achieve with each of segments? ○What do these customers seek? Targeting B ○Which segment is relevant for our business objective? ○What is the right size of our target group to receive the offer? Communication C ○How to communicate value to these customers? ○How do they read information? Customer Insight DWH Segmentation of customer base Identify relevant customers Define relevant communication approach Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 run costs revenues

22 22...to enable relevancy and personalized communication ABCD Define business objective Select target group Select channel Select timing Design offer 1 2 3 4 5 22

23 23 Customer insight is a continues process ○High flexibility in adjusting to current business needs ○Maximization of cost efficiency based on campaigns customization and targeting ○Continues improvement and learnings based on facts and data analysis ○Measurability of effects and more adequate business case planning ○High control and coordination efficiency – comprehensive solution delivered by one provider Analyze sales/ purchase patterns Design adequate marketing campaigns Implement and communicate to target audience Reward changed behaviours Loyalty Partner cooperation modelKey benefits for our clients Customer Lifecycle Management 23

24 payback.pl PAYBACK Polska SkyLight Building ul. Złota 59 00-120 Warszawa biuro@payback.net www.payback.pl www.payback.net Phone: +48 22 212 51 00


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