The Future of Retail Loyalty

2012: The Year of Engagement It is no longer just about enrolling customers and getting their address: Programs will have to find innovative ways to engage with all members, both new and existing Engagement will move beyond the store and successful programs will integrate into our daily routines Companies that do well will have made a human connection with their customer base - creating a lasting relationship New channels for earning and redemption will create opportunities to monetize retail loyalty programs One of the biggest future changes for retail loyalty programs will be an increased focus on member engagement – interacting in ways we have never seen before. “This is the Dawn of the Relationship Era”* *AdAge Magazine, 2012

Three Key Themes of Greater Engagement Alternative Distribution Increased Utility Program Monetization Movements towards greater engagement can be categorized in three main themes:

Alternative Distribution SoLoMo = Social, Location and Mobile Social Media Retail loyalty programs will learn to leverage brand promoters Use of social media will become more creative – not just pages and posts Social media as an extension of customer service channel Location Based Marketing Leverages member location to push relevant offers through mobile Retail programs will integrate with LBS for instant member acquisition Mobile Mobile wallets and mobile coupons will create instant gratification Applications will provide greater access, connecting members with loyalty programs and stores Use of new mobile tracking solutions, in-store customer analytics and insights Retail loyalty programs will acknowledge that consumers are now in charge of when, where and how they want to receive content.

Alternative Distribution “A customer’s mobile number will become more valuable than an or a phone number” John Orlando, EVP Worldwide Marketing and Business Development, Sixth Sense Media* *Loyalty 360 Survey “Where is Loyalty Marketing Headed in 2012”

Alternative Distribution Daily Deals Intelligent use of and collaboration with Daily Deal sites Not just for customer acquisition but targeting existing customers to get them more engaged Integrated with SoLoMo strategies for increased social ROI Partnerships Retail loyalty programs will partner with other programs and retailers to enable earning and redemption outside of the store Creates new ways for members to engage in the program and earn faster Feed into Program Monetization

Increased Utility More Relevant Communication More intelligent data will allow programs to deliver more effective and relevant messaging - enhance member’s lives at each touchpoint Instant Gratification Create utility through automatic earning and redemption opportunities creating a frictionless experience Perceived Value of Retail Currency Programs will address the retail challenge of transparent currency value by creating more redemption options that are not just cash-back, but will include unique experiential rewards Gamification Use of game thinking and mechanics to acquire and engage members Everything a retail loyalty program does, should create utility and enhance the member’s experience in-store and in every day life.

Program Monetization Partnerships With Everyday Merchants Gas, Grocery, subscription services - new earning and redemption opportunities outside the store Partnerships With Other Loyalty Programs Mutual exchanges between programs E.g. My Coke Rewards and Best Buy “Coalition” Style Offers For consumers or for employee recognition Gamification Retail points for online/social gaming Retail loyalty programs will move towards becoming a profit center and not an expense. Retail loyalty programs will start to generate revenue through the sale of their currency to other loyalty programs and businesses.

Other Changes to the Future of Retail Loyalty New Industries in the Retail Loyalty Space Utilities like cable companies, telecom companies with retail outlets Restaurants Cause Related Redemption Options Options to use retail currencies to donate to social causes and charities Greater Segmentation of Member Base More like airlines, retail loyalty programs will start rewarding best customers by creating tiers within the program

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