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© 2016 eMarketer Inc. Loyalty Marketing: Creating Stickiness in a Mobile World Yory Wurmser Retail Analyst January 28, 2016 Made possible by

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Page 1: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Loyalty Marketing: Creating

Stickiness in a Mobile World

Yory Wurmser

Retail Analyst

January 28, 2016

Made possible by

Page 2: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Agenda

Trends in loyalty marketing

Drivers of consumer loyalty

Mobile’s effects on customer expectations

Tactics to communicate with loyal customers

Page 3: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Trends in Loyalty Marketing

Page 4: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Three major trends in loyalty marketing:

Companies are spending more on loyalty programs

Loyalty program membership is growing

Active loyalty program membership is decreasing

Page 5: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

1. Companies

are spending

more on

loyalty

programs

Page 6: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Increased spending on loyalty in part reflects a

better understanding of customer retention

Over a third of marketing

executives see improved

visibility of customer

retention and lifetime

value (LTV)

Page 7: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Better CRM and analytics capabilities allow for a

broad range of applications for loyalty data

Leading use of

loyalty data is in

marketing

campaigns

Page 8: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Loyalty marketing produces better results than

acquisition marketing

“We have found most marketers do

best when they spend about 70%

of their marketing dollars talking

to actual buyers, 20% of those dollars

talking to people new to the brand and the

remaining 10% on people that just happen

onto their website that they’ve never tried

to acquire.”

—Ric Elert, President, Conversant

Page 9: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Loyalty is fleeting for the majority of customers

Less than half

of customers

stayed loyal to

US CPG brands

over the course

of a year

Page 10: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Levels of loyalty vary only slightly by age cohort

Baby boomers

are slightly less

loyal to brands

than millennials

Page 11: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Roughly

75% of US

loyalty card

holders say

they are more

likely to shop

at stores that

offer loyalty

points

Page 12: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Four reasons for increased marketer spending on

loyalty programs:

1. Better CRM and analytics systems make the data

benefits for businesses larger

2. Better capabilities in targeting customers directly

3. Better understanding of the importance of retention

marketing

4. Programs succeed at drawing people into stores

Page 13: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

2. Loyalty program membership is growing

In 2014, there

were 3.3 billion

memberships in

the US—roughly

10 per resident

Page 14: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Rising loyalty

program

membership

is occurring

across most

sectors

Page 15: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Two reasons for increased loyalty program

membership:

1. Companies are spending more to establish programs

and entice users to join

2. Signing up has become easier with mobile apps and

point-of-sale (POS) systems

Page 16: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Two reasons for increased loyalty program

membership:

1. Companies are spending more to establish programs

and entice users to join

2. Signing up has become easier with mobile apps and

point-of-sale (POS) systems

NEITHER HAS TO DO WITH TRUE CUSTOMER LOYALTY

Page 17: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

3. Active participation in programs is falling

In 2014, 71.5%

of US loyalty

program

memberships

were “active”

In 2015, it was

roughly 50%

Page 18: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Drivers of Consumer Loyalty

Page 19: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Loyalty is a product of two components:

Value

$

Transactional

Rational

Customer Experience

At points of engagement

Emotional

Page 20: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

The value side is important: Discounts are a cost

of entry

“There are certainly

rising expectations

today around

discounting as the

cost of entry for

loyalty programs.”

—Jeff Berry, Research

Director, Colloquy

“Never discount …

the transactional

side. While it is

perhaps not the most

important thing, it is

still a very important

concept and a part of

most every program

out there.”

—Geoff Smith, CMO,

CrowdTwist

Page 21: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Saving money is the most common reason for

joining a loyalty program, including for millennials

Page 22: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

But discounts without a deeper connection

actually reduce loyalty

“For far too long, ‘loyalty programs’ have

really just been a mechanism for distributing

price discounts, which really has virtually

nothing to do with loyalty. It frankly can

create precisely the opposite

behavior of loyalty. It can create loyalty

to the lowest price, wherever that lowest

price can be found.

—Katie Casavant, CEO, Kantar Shopcom

Page 23: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Consumers

join loyalty

programs for

discounts,

stay for

relevance of

rewards and

simplicity

Page 24: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Loyalty is an emotional state and depends on the

customer experience

“Loyalty is an emotional state. The way to

drive real loyalty is to create

engagement through experiences.

… Consumers are looking for a seamless

and pleasant experience with companies,

more than they’re looking for some kind of

future discounts.”

—Mark Taylor, Senior Vice President, Digital

Customer Experience, Capgemini Consulting

Page 25: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Four key elements of an engaging experience:

1. Relevant offers

2. Alignment with lifestyles

3. Exclusivity

4. Gamification

Page 26: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

1. Relevance: People expect an even value

exchange for their data

“A huge frustration for customers [is that]

they’ve given you all this data. They’ve

stated they’re interested in your brand.

They’re shopping physically there and

they’re willing to download an app and opt in

to the various relationships with you, and

you’re still not using the data.”

—Gabe Weiss, Digital Customer Experience

Strategy Lead, SapientNitro

Page 27: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Lack of relevance is the biggest complaint about

loyalty programs

Page 28: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

2. Alignment

with lifestyle

Page 29: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Successful loyalty programs align benefits with

brand positioning

Page 30: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

‘Aspirational’ consumers want brands aligned

with their values

“Aspirationals are most driven to the

brands that are delivering

innovation, embedding purpose and

positive impact ... in a way that is on

performance or better, and on price parity or

better. It informs purchase decisions,

purchase intent, loyalty and evangelism.”

—Raphael Bemporad, Founding Partner and Chief

Strategy Officer, BBMG

Page 31: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Significant portion of consumers want programs

to align with their personal values

Percentage of internet users in North America who

consider donations to charities an important loyalty

program benefit:

Millennials: 30.0%

Gen X: 30.0%

Baby Boomers: 31.5%

Source: CrowdTwist, June 2015

Page 32: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Brands increasingly incorporate social

responsibility into branding—and loyalty

Source: Toms.com

Page 33: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

3. Exclusivity: Strongest impact with younger

consumers

25% of millennials joined a program in the past year to attend a

members-only event, compared with 16% for the US

population

Source: Colloquy

Page 34: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Pepsi lets members cash in points for exclusive

experiences

Members can earn

points for hanging out

with other members

Members get access

to exclusive events,

concerts and trips

Source: iTunes

Page 35: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

4. Gamification: Turning participation into the

reward

“[Loyalty marketing] needs to really help you

create that sense of accomplishment and

that sense of progress, and give you

meaningful feedback, but most programs

these days don’t because they’re

essentially the same, exact

program over, and over again.”

—Ankit Shah, Managing Director, Dopamine

Page 36: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Starbucks and

Target create

loyalty

experiences

that reward

participation

Starbucks Target

Source: iTunes Source: Cartwheel app

Page 37: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Mobile’s Effect on

Consumer Expectations

Page 38: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

1. Consistent experience across channels

67% of US consumers in an iVend study said that it was “very

important” or “somewhat important” for retailers to have

an integrated view of them across channels

Source: iVend, December, 2015

Page 39: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

2. Immediacy

Real-time reward

redemption can run as

high as 70% to 80%, a

figure that drops in half

when it’s offered in a

follow-up email two hours

later (Source: Ifeelgoods)

“Customers are willing

to even pay more in

points than they

typically would in order

to receive them

instantly.”

—Sean Claessen,

Executive Vice President,

Strategy,

Bond Brand Loyalty

Page 40: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

3. Real-time relevance

“The messages we deliver with the highest

engagement rates are those data-driven

messages that have a personalized

context, that are based on both the

historical profile of the customer

and what are they doing in real

time.”

—Lars Albright, CEO, SessionM

Page 41: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Mobile Loyalty Channels

Page 42: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

1. Email: Still the leading channel for loyalty

marketing

Nearly three times

as many US

retailers use email

marketing as offer

official loyalty

programs

Page 43: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Majority of

smartphone

owners use email

daily on their

phones

Page 44: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Dynamic content is gaining traction in email

marketing

32%of US marketers use dynamic content

Source: The Relevance Group, December 2014

Page 45: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Email works well when geared toward personal

preferences and points in the customer lifecycle

“The odds of opening an email right then when you’re

at the store is probably a little lower than a push

notification on a smartphone. [But] keeping that

overall customer lifecycle in mind and the

touchpoints that you’re creating along the way, I don’t

think it necessarily takes away from the power that

email has.”

—Cynthia Price, Director of Marketing, Emma

Page 46: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

2. Loyalty apps:

More than a

third of US

smartphone

users planned to

use apps to link

to a loyalty

account for

holiday shopping

Page 47: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Most consumers do not use a retailer app

25% of US internet users use a retailer app (excluding Amazon)

Source: TSYS, June 2015

Page 48: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

It’s very hard for retailers to break into

consumers’ app rotation

The largest

share of US

smartphone

owners use only

four to six apps

per day

Page 49: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

3. Mobile wallets: Simplified loyalty membership

management and wide-scale push platform

“In terms of adoption, we are hoping that it’s

much easier to get people on board with

passes [than apps] because they don’t

have to download anything. It’s one

touch. These are people who have already

opted in to email, so this is just incremental.”

—Jonathan Wall, CTO and Co-Founder, Index

Page 50: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

A majority of US smartphone owners express an

interest in storing loyalty cards in mobile wallets

Page 51: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Mobile wallets are still early in their adoption life

cycle

Page 52: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

4. Social

media: Nearly

a third of US

loyalty card

members

follow the

brand on

social media

Page 53: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Social

networks

draw the

biggest share

of US users’

time spent

with mobile

apps

Page 54: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Facebook Messenger has added new business

messaging tools

“This is a unique

opportunity for businesses

to interact with

people both where

they’re already

spending their time

and … also in this context

of one to one.”

— Benji Shomair, Director of

Product Marketing for Pages,

Facebook

Source: Facebook

Page 55: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

5. Clienteling

Only 6% of

retailers in

North America

can identify a

customer on

store entry, but

nearly 40%

expect to be

able to by

mid-2017

Page 56: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Many consumers want more in-store

personalization

23% of North American consumers wish the personalized experience

they have online could be replicated in-store

Source: iVend, December 2015

Page 57: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Recap

Marketers are spending more on shoring up the loyalty of fickle

customers

Loyalty program membership is increasing, but active

participation is decreasing

Although value considerations are important, lasting loyalty is a

more emotional connection

Mobile has raised consumer expectations for channel

consistency, immediacy and real-time relevance

Email is the leading loyalty channel, but apps, mobile wallets,

social media, and mobile-enabled clienteling can deliver real-

time engagement

Page 58: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

Built On

Page 59: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

Often challenges with executing loyalty

strategies get in a marketer’s way…

Silverpop Customers Drive Personalized

Interaction Strategies Every Day

• CRM Synch

• Data Integrations

• Useable Insights

• Capturing Behaviors

• Scoring Activity

• Segmenting Individuals

• Organized Content

• Dynamic Rulesets

• Marketing Automation

Getting access to critical data

Building a single view of the customer

Delivering relevant content to each customer

Providing a consistent customer experience

Interacting with customers in real time

Page 60: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

Client Case Studies

Synching CRM Systems

Develop Contact Insights

Leverage Marketing Automation

Implement Web Tracking

Listen to Customer Behaviors

Create Scoring Models

See For Yourself… Silverpop.com/behavioral-marketing

Page 61: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

Quickly design and automate consistent

cross-channel experiences

Make better decisions and deepen customer

engagement with purpose-built analytics

Increase marketing agility with a platform

that easily integrates with other customer

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Gain faster time to ROI through a

comprehensive set of cloud-based marketing

solutions built on Silverpop Engage

With Silverpop & IBM Marketing Cloud you can:

Page 62: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

Agility to Innovate

Analytics for Impact

A New Way to Work

The IBM Marketing Cloud built on

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Page 63: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

ibmmarketingcloud.com

or silverpop.com

Thank You

Page 64: eMarketer Webinar: Loyalty Marketing—Creating Stickiness in a Mobile World

© 2016 eMarketer Inc.

Learn more about digital marketing with an

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Yory Wurmser

Loyalty Marketing: Creating

Stickiness in the Mobile World

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(Forthcoming, February 8, 2016)

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