2014 Customer Loyalty ASEAN Conference: Lassu (lassuloyalty.com)
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Transcript of 2014 Customer Loyalty ASEAN Conference: Lassu (lassuloyalty.com)
Philippines Loyalty Report
It may seem a bit simplistic to frame up this discussion based on a story forchildren but, just for fun, let’s see how customer loyalty marketing might playout if it were expressed in terms of the familiar story of Three Little Pigs.
After that, we will look at survey data from a cross-sectional household surveywe conducted.
The Competitor
He had dominant market share and growing, and had already locked up extremely favorable locations around the country. Many of his malls were in fact a destination for shoppers. He offered a full range of products and merchandising was good, plus some desirable items were exclusive. Pricing was market competitive. Because of his favorable brand position, he could charge prices that were slightly higher than others in some cases, thus ensuring a favorable profit position.
He had a very effective loyalty program with strong penetration and member engagement. Customer experience was good. And he was able to spend heavily on above-the-line advertising. This cost made sense for him, due to his wide geographic reach.
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Marketing Leader 1
In response, the first marketing leader gave almost all his focus to above-the-line advertising for mass consumer audiences. Most of his activity was promotion, especially sale events, which were advertised in newspapers and on billboards. Below-the-line efforts were mostly coupons, lamppost banners, in-store collateral, and email and text blasts to people who registered for raffle prizes. His agency recommended that approach, and his main competitor was doing it too.
The problem was, he spent too much, had a poor return on advertising investment, with flat or even declining sales, and no loyalty program. He was thinking about developing a program, but it seemed too complicated to figure out and he wasn’t sure whether he needed one.
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Marketing Leader 2
The second leader had rolled out a loyalty program. Members could earn points for purchases and then redeem them for merchandise. The program worked more or less like a deferred discount and all customers had the same deal. There was no segmentation and almost no soft benefits. With a few minor differences, he had merely copied what his main competitor was doing. He referred to this as benchmarking.
Although he had collected a lot of data about his customers, including contact information, he mostly used this just to send out text and email blasts about store-wide sale events. He was practically unable to send targeted communications because his transaction data was on one server and demographic data on a different system, with no data mart to pull it all together for segmentation and targeting. Most of the time, he was forced to do filtering in Excel.
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Marketing Leader 3
The third leader had an effective loyalty program, with good member penetration and engagement. Customer segments were defined, and he had identified his top customers. Benefits were structured to reward desired behaviors.
Above all, this leader recognized that a loyalty program is merely an enabler. The main purpose of his program was to enable targeted, relevant and meaningful communication with customers. His program was designed to identify, maintain and increase the yield from best customers through long-term, interactive, value-added relationships. His program structure, segmentation and IT systems were all designed with this end in mind.
Let’s see why this matters.
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Source: Marketing Sherpa, 2012
Conversion RateIs 208% higher for targeted
messages then for email
and text “blasting”
208% Higher
Customer Loyalty Marketing
Source: Nielson, Global Report of Loyalty Sentiment, November, 2013
Customers in
Asia PacificAre 92% more likely to
choose brands that offer a
loyalty program.
92%
Customer Loyalty Marketing
Customer Loyalty Marketing
Source: Michael Lowenstein, Customer Winback
Success Ratesfrom win-back campaigns
are 3-4X higher than for
acquisition campaigns.
3-4 X Higher
Customer Loyalty Marketing
Source: Loyalogy, Loyalty Pulse Study, 2013
65% AGREE:I would recommend a
brand to my friends if they
have a good loyalty
program.
65%
Customer Loyalty Marketing
Source: Bain & Company, Loyalty Guide 6, 2013
A 5% Reductionin customer defection will
bring as much as a 50%
increase in profits.
50%
5%
Goals of Loyalty & CRM
1. Satisfaction & Advocacy
• Recognition
• Convenience
• Personalization
• Problem Resolution
• Consistency Across Channels
• Engagement, Fun, Surprise, Delight
Goals of Loyalty & CRM
2. Customer Retention
• Reactivation
• Win-Back
• Competitive Defense
• Satisfaction is a Key Driver
Goals of Loyalty & CRM
3. Customer Development
• Basket Size
• Up-Spend
• Frequency
• Cross-Shopping
• Relevant Offers
• Best Customer Programs
Goals of Loyalty & CRM
4. Customer Acquisition
• Referral
• Activation
• Trial
Goals of Loyalty & CRM
5. Cost Reduction
• Optimize ATL v BTL
• Better Targeting
• Higher Conversion
• Optimize Rewards Cost v Perceived Value
• Simplification, Reduced Admin Waste
• Fraud Prevention
Goals of Loyalty & CRM
6. Derivative Value
• Monetize Loyalty Data
• Multi-Partner Agreements
• Supplier Funding
Cross-Sectional Survey
570 Households, Philippines
41%
25%
19%
9%
4%2%
<1%
Original Research: Cross-Sectional Survey, 570 households, Philippines
Are you aware of any programs that give points or rewards for buying?
1.1 programs cited on average per household
Distribution of Mentions
0
50
100
150
200
250
0 1 2 3 4 5 7
Nu
mb
er o
f R
esp
on
den
ts
Number of Programs Cited
27.4%
Original Research: Cross-Sectional Survey, 570 households, Philippines
27.1%
Which ones?
Program Types
Grocery GeneralRetail
DrugStores
Banks SpecialtyRetail
Government Gasoline Air Miles
% o
f M
enti
on
s
24.1%
12.4%
3.6% 3.4%
1.2% 0.8%
27.4%
Original Research: Cross-Sectional Survey, 570 households, Philippines
27.1% Program Types
24.1%
12.4%
3.6% 3.4%
1.2% 0.8%
Grocery GeneralRetail
DrugStores
Banks SpecialtyRetail
Government Gasoline Air Miles
% o
f M
enti
on
s
Top 2 ProgramsSM Advantage + Suki Card = 47% of Mentions
221 Other Programs Cited = 53% of Mentions
Other Challenges
Experienced Loyalty Heads
are Hard to Find
Other Challenges
Rapid Changes
in Technology Options
Other Challenges
Increasing
Competitive Sophistication
Other Challenges
Changing
Regulatory Environment
Other Challenges
No Local Community
Devoted to Loyalty
Even Fundamentals are Sometimes Missing
Not Collecting
Demographic Data
Case 1
FMCG
2012-13... Social Focus was facebook
170,000 Fans so far
(after 2-1/2 years)
1-2 Posts per day, themed
2012-13... Social Focus was facebook
BUT
Agency Cost was P13 Million
Only 12.7% of target is online
1-2% are fans, if lucky
facebook – Declining Organic Reach
16.0%
12.6%
10.2%
7.8%6.5%
Source: edgerankchecker.com
Feb 2012 Sept 2013 Nov 2013 Dec 2013 Mar 2014
facebook Filtered Feed
60% Decline in Reach
in the Past Year alone
facebook – Declining Organic Reach
16.0%
12.6%
10.2%
7.8%6.5%
Source: edgerankchecker.com
Feb 2012 Sept 2013 Nov 2013 Dec 2013 Mar 2014
60% Decline in Reach
in the Past Year alone.
It means that of the
170,000 customers who
liked the page, only about
11,000 see each post.
Question:
What is the business case?
2014-15... More Focus on Mobile
Members per year
On Pack (mobile) vs. facebook
68,000
253,000
On Pack
But then... 40% Opt-Out
68,000
253,000
On Pack
40% Opt-Out Rate due to
sending “tips”
(Content was not relevant.)
Some Good Questions...
• What behavior is desired?
• How can we track behavior?
• How to make it easy?
• Is the reward worth the effort?
• What are the segments?
• What do we say to each?
Case 2
Retail
Program Relaunch
44.4%
18.5%
11.1%
7.4%
18.5%
Rewards and Benefits
Points not Awarded
Long Wait for Card
Points not Known or Verified
Other
Sources of Dissatisfaction
Program Relaunch
44.4%
18.5%
11.1%
7.4%
18.5%
Rewards and Benefits
Points not Awarded
Long Wait for Card
Points not Known or Verified
Other
Sources of Dissatisfaction
Fixed
Points will buy anything in the store.
Pay P 434.00
Program Relaunch
44.4%
18.5%
11.1%
7.4%
18.5%
Rewards and Benefits
Points not Awarded
Long Wait for Card
Points not Known or Verified
Other
Sources of Dissatisfaction
Fixed
Fixed
Simplified point rules
Program Relaunch
44.4%
18.5%
11.1%
7.4%
18.5%
Rewards and Benefits
Points not Awarded
Long Wait for Card
Points not Known or Verified
Other
Sources of Dissatisfaction
Fixed
Fixed
Fixed
Permanent cards printed in the store real time
Program Relaunch
44.4%
18.5%
11.1%
7.4%
18.5%
Rewards and Benefits
Points not Awarded
Long Wait for Card
Points not Known or Verified
Other
Sources of Dissatisfaction
Fixed
Fixed
Fixed
FixedReal-time points calculation
on the receipt+ website
Lassu
www.lassuloyalty.com
Program Relaunch
44.4%
18.5%
11.1%
7.4%
18.5%
Rewards and Benefits
Points not Awarded
Long Wait for Card
Points not Known or Verified
Other
Sources of Dissatisfaction
Fixed
Fixed
Fixed
Fixed
Fixed
Live customer service line with email and chat
support
Program Relaunch
7%
28%
50%
9%6%
E D C B A
Classifications derive from• Member Income• Occupation• Automobile Y/N• Household Staff
3,240 possible combinations each maps to a socio-economic class.
THENMember data could not describe profile
of shoppers.
and NOW
The Results
Member Base Loyalty Sales
95%Growth
22%Growth
Prior Year Prior Year RelaunchRelaunch
The Results
Member Basket Size
2.4X Non-Member Basket
2.4X
79% of Cards are Active
79%
The Results
Payback on
P16 Million Investment
Incremental Sales per Month*
* At 95% significance vs. control group.
24 Millionper Month 2.8 Months
Great!
So where does that position the program so far?
Good penetration. Good Engagement.
No segmentation.
No data mart to enable targeted communication.
Ready to start next phase now...
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None of the loyalty heads we interviewed claim
that they are doing a “great job”
Delivering a personalized
customer experience, with
highly-relevant, targeted offers
based on RFM and customer
demographic profile.
What is Usually in Place
Advertising Agency
of Record
aor
What is Usually in Place
Social Media
(Hygiene Factor)
What is Usually in Place
Loyalty Program
with Scale
What is Usually in Place
Partner to
Push Campaigns
the Gap
The Agency has established brand position and creatives
The tech partner is able to push campaigns
... but what exactly to communicate, to whom, and when?
. . . . . . .
Tying it all Together
About Lassu
Lassu is the ASEAN partner member of
Customer Strategy Network. Collectively,
the members of our global team have
launched or helped to reengineer well over
100 loyalty programs around the world,
including most of the top global brands.
Working with a CSN partner like Lassu, gives
you access that network. We bring this
expertise to your doorstep.
Optimized Program Design
• Benchmarking, Voice-of-Customer
• Customer Value Proposition
• Financial Model
• Program Mechanics & KPIs
• Best-Customer Marketing
Mike AtkinChairman, CSN
Jim GriffinFounder, Lassu
Lassu is connected to faculty at the
University of the Philippines, Graduate
School of Statistics. We have experience
with nationwide household surveys, and
the head of our statistical practice is a
consultant for measurement science at
Nielsen Media Research, SAS and McCann
Worldgroup, among others, including a
wide variety of marketing initiatives at top
companies in the banking sector, FMCG and
other verticals.
Customer Knowledge
• Single Customer View
• Segmentation
• Analytics
• Event Detection
• Campaign Management
• Serving the Right Content
Francisco de los ReyesProfessor, Statistics
University of the Philippines, Diliman
Lassu is the ASEAN distributor and reseller
of Loyalty Prime – a complete enterprise-
class loyalty platform. We offer full CRM
and loyalty management, and excellent
integration to backend systems, like POS,
reservations, and ERP. With our platform,
you can easily segment your customers, and
then build engagement using social, mobile,
website, email, SMS and marketing
campaign automation. Or we can handle it
for you.
Delivery Platform
• Integrated Loyalty & CRM
• Member Engagement via SoLoMo
• Campaign Automation
• Reporting & Analytics
Kunal MohiuddinCofounder
Creatives and Launch
Metro Rewards Card II
Launch Campaign
Creatives and Launch
Metro Rewards Card II
Launch Campaign
Creatives and Launch
Metro Rewards Card II
Launch Campaign
The Campaign
Relaunch
Creatives and Launch