21st Century Loyalty

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“Loyalty, by definition and in practice, is a concept that suggests a kind of fidelity that transcends personal advantage.

I am loyal to my country. If asked to defend it, I would put my life at risk, as millions throughout history have done.

I am loyal to my family. If they are threatened, I will protect them at any cost, as many do every day…

But can I be similarly ‘loyal’ to a brand of toothpaste, soap, beer, airline service or office equipment?

Not this side of a mental institution!” 

Lester Wunderman

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#1 Top Digital Network in the World

#1 Top Mobile Marketing Network in the U.S.

#2 Top CRM/Direct Network in the World

The intersection of digital, data and CRM

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The intersection of loyalty and retail

LOYALTYRETAIL

Identity/Proposition

Touch-points

CMS

Loyalty Rule Engine

CRM

SCV Database

82%of CEOs are looking for new ways to stimulate customer demand and loyalty this year(PWC, Global CEO Survey 2013)

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The Paradox

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Customer loyalty is an objective for brands, not customers.

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A Forrester report cites that 40% admit that loyalty programs underperform or produce erratic results, or do not know how they perform. Yet according to a recent survey by the CMO Council 65% viewed loyalty program investments as an essential part of the marketing mix.

27%

Enrollment* 4%

Participation

*COLLOQUY Loyalty Census, 2013

The Paradox

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What’s going on?

Traditional, rewards based loyalty programs have not evolved at the pace of consumer behavior and new technologies.

Expectations of experiences are determined by what have now become ubiquitous brands:

Social – personal – instant – designed for me and my behaviors.

Designing a new program may be easier than re-engineering an existing one.

Hypothesis

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Our core belief

Loyalty programs must be the best, most amazing way for consumers to experience the brand

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What if we were to start today?

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Today, our clients have the opportunity to redefine what a loyalty program can be…

Where Loyalty Has Been

Passive, single channel programs

Long timelines to earn + redeem

Complex to sign up and manage

Built for business partners, not consumers

Currency-centric

Individual and isolated

“I have to fit my process to the program”

Where Loyalty Is Headed

Active, contextual, intuitive, multi-channel

Near-instant redemption

Simple to sign up and actively participate

Personalized for me and my behaviors

Lifestyle-centric

Social and communal

“Program seamlessly folds into my everyday life”

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In redefining loyalty, creating a delightful customer experience is as important as optimizing operations

OperationsRight partners

Optimal reach

Maximum value

Profitable

Customer ExperienceUnexpected/ disruptive

Easy + intuitive

Delightful

Member-centric

21st Century Loyalty

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In our experience with a range of loyalty programs and mechanics, we’ve learned a few things about 21st Century Loyalty.

Over 100 million members

20 million20 million

23 million1.25 million

10 million

3 million 6 million

30 million

And many others….

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And we’ve applied a range of capability and skill in bringing these programs to market: we know what it takes

A continuum of services

STRATEGICCONSULTING

TECHNICALREQUIREMEN

TS

PROGRAMARCHITECTUR

E

USER EXPERIENCE

MOBILE/SOCIAL

DEVELOPMENT

DATA AND ANALYTICS

CHANNELDEVELOPMEN

T

PROGRAMDEPLOYMENT

NAMING ANDVERBAL

BRANDING

PROGRAM IDENTITY AND

DESIGN

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21st Century Loyalty: A framework for change

MembersInteract

Traditional ProgramsCurrency CentricEarn/Burn mechanics

MembersTransact

ProgramRecognizes

ProgramRewards

21st Century LoyaltyBehavior CentricIterative mechanics

How might we move our clients from traditional to 21st Century Loyalty?

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5 Best Practices for 21st Century Loyalty

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Mobile connects all media and channels and is on its way to fundamentally transform how consumers interact with brands. When informed by data, mobile can help motivate incremental purchases through highly targeted offers, helping wean marketers from one-size-fits-all points programs that reward existing behavior and reduce profitability.

But mobile devices are more than promotional delivery channels. Social media already are the dominant application on mobile phones today, enabling consumer interaction at and on the way to a buying decision. Location-based services help consumers find information and interaction points with their preferred brands. Augmented reality, today mostly a gimmick for promotions, can enhance the product experience and provide valuable information at the moment of truth.

And mobile devices will increase stickiness. If a car rental no longer requires a trip to the counter but uses mobile technology to find, activate, check and pay for the car, all from one mobile app, loyalty gets baked into the very product experience.

Best Practice #1: Think mobile first

BenefitsBy thinking mobile first, loyalty and continuous consumer engagement gets baked into the very product experience. Mobile becomes a self service tool and can shift dollars away from retail operational costs.

With almost 100,000 customers using it, the prepaid Starbucks Card was a massive hit in Singapore. But reloading the card was a hassle because it could only be done at a Starbucks outlet. Our solution: an iPhone app which allows customers to reload their Starbucks Card. It also allows them to customize their favorite drink, check out the latest promotions, and find their nearest Starbucks outlets.

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Enabling users to create content on their own and share that with friends has changed how we work, play, shop, find jobs, relax, find and keep friends.

Loyalty approaches can profit from this concept by putting a passion for a topic or brand in the center of a program. Consumer relationships are based on more than how much they like or don’t like a product. Usually people do not collect products, they collect experiences. Moments that are connected to a personal passion or an attitude. Experiences become the value exchange. Experiences are what unite us. They offer social currency and value rooted in shared passions.

Loyalty programs need to create experiences from defining moments, the ones we recognize, celebrate and share. So everything we do needs to add value – whether it is entertainment or utility – to integrate into our customer’s lives.

Best Practice #2: Design with social in mind

BenefitsBy designing with social in mind, you can create shareable experiences. The more social a system is, the lower cost due to new options to reduce or avoid points/ rewards all together.

After 125 years of putting the same name on every bottle of ‘Coke’, we tried something new to drive loyalty and incremental consumption of Coke in Australia. Consumers could create and share virtual Coke cans bearing any name they wanted, and make their own virtual TV ads starring their Facebook friends. “Share a Coke” became the No. 1 most talked about Facebook page in Australia (23rd globally) and most importantly, ‘Coca-Cola’ now has a powerful, ongoing direct relationship with millions of Australians.

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The transactional data captured through rewards schemes are a key reason why brands run and maintain programs. And the investment pays off: data analytics separate the wheat from the chaff and give marketers guidance as to who to contact and who to upsell. Or so the wisdom goes. Think again.

Only the broadest reward programs, like those of airlines, credit cards and some national retailers, generate sufficient data to optimize customer targeting. Even the best struggle to estimate a consumer’s share of wallet, which is a key indicator of who could buy more and who is maxed out. And almost none of them have found an answer for how to use their data to identify and target a competitor’s best customers.

The reason is that even the most ardent data collectors see the consumer only as he interacts with their own industry or brand. This is rarely enough to adequately address the Whole Consumer, let alone find others that look like him or her. We help clients shed light on consumers’ decision-making process and understanding needs and motivations by connecting data uniquely from diverse sources.

 

Best Practice #3: Connect the data for insights: needs and motivations

BenefitsConnected data can generate insights to create a valuable loyalty proposition and relevant member benefits that extend beyond giving away margin.

Previously, United Airline’s Mileage Plus program (the world’s largest frequent flyer program) had a member segmentation strategy based on travel and mileage earning behaviors. However, this strategy did not fully provide the foundation required to engage members in a meaningful way and build deep relationships. Through Connected Data, we enhanced this segmentation with our proprietary data assets to establish a 360 view of the consumer. We then developed insights about member needs, interests, behaviors and motivations. As a result we are able to develop customer journeys and tailor content to win increased revenue and loyalty among the most valuable segments.

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Customers don’t recognize organization silos like companies do – they experience your brand regardless of who owns the media buy, the customer service number, the retail store or the company website. Getting to 21st Century Loyalty requires both a top down and bottom up approach to organizational alignment and change management.

What are the objectives and goals for loyalty? Depending on which department you ask, you will get a different answer. Alignment around this very central question is often a good start. More often than not, this requires an executive sponsor, early buy-in from key loyalty stakeholders, and a cross-functional team to help drive strategy and implementation. If there is not a dedicated loyalty function within the company, the communications agency can help steward the change management process, becoming an extension of the marketing team. The goal is that all external-facing functions in the company work together, breaking down the silos between marketing, communications/PR, social responsibility, sales, operations and finance. In 21st Century Loyalty, the Whole Consumer interacts with the whole company.

 

Best Practice #4:Break down silos: loyalty is everyone’s business

BenefitsBy making loyalty the business of all departments in the organization, you can accelerate change in becoming a more customer-centric organization and drive efficiencies in delivering a great customer experience.

The Nokia Organizational Change Management (OCM )program was enabled by the creation of Nokia Digital U, designed to get every Global Region on board in developing enterprise-wide digital expertise including CRM and loyalty. Wunderman developed an ongoing, multifaceted learning strategy to assess and develop Nokia’s digital literacy/fluency to achieve primacy in the consumer’s mind as a global digital brand. Over 3,300 Nokia employees around the globe and across all functions took part in Nokia Digital U. Across the global enterprise, Nokia marketing now engages and connects with consumers and other participants through their evolving digital behaviors in the online ecosystem.

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Despite the popularity of loyalty programs and increasing levels of investment, marketers still struggle to recognize the business value and contribution of their loyalty programs. In addition, marketers often wonder if they are rewarding or recognizing behavior that would have otherwise happened.

To address this, we ensure that loyalty is mapped to overarching organizational goals and that the operational and analytics capabilities are in place for continuous optimization. For example, by holding out control groups from loyalty communications and engagement efforts, we can identify the incremental value that the loyalty program delivers to the business – above and beyond simple engagement metrics. Through integrated dashboards, we can track key loyalty metrics and continually optimize the process and the program.

Our solution for Club Matas, a leading retailer in Denmark, was to re-imagine their existing loyalty program and go beyond traditional engagement tactics like rewarding points, and find ways to make Matas more relevant to customers’ needs. We created an alternative customer club that offers more than just material benefits: good advice, tailored to the specific club members. Most importantly, by holding out control groups, we know that when comparing “engaged” customers to control, we know that the average basket size and same quarter sales are higher by double digit % points.

Best Practice #5:Measure the incremental impact of loyalty efforts

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BenefitsBy measuring the incremental impact of loyalty efforts, you can continually create a voice for loyalty, rationalize current investment and earn additional investments and commitment down the road.

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In SummaryThink

mobile first

Design with social

in mind

Connect the data for

insights

Break down silos

Measure incremental

impact21st Century

Loyalty

Thank you.