Customer Experience Is The New Loyalty: Or is it the Other Way Around?

(c) 2016 rDialogue LLC. All rights reserved.

Customer Experience Is The New Loyalty:Or Is It The Other Way Around?NOEW March 17, 2016

CONFIDENTIAL INFORMATION2

“If you're competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering.”

− Jeff BezosCEO, Amazon

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Why are you in business?

“The purpose of a business is to create a customer”

“Nothing happens in a business until somebody sells something.”

Peter Drucker knew the answer

The purpose is also then, to retain that customer.

The Age Of The Customer Is Here

“What’s the top imperative at your company? If it’s not a transformation to make the company more customer-focused, you’re making a mistake.”

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What’s Your Definition?

Customer Experience Loyalty

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=Great customer experiences turn occasional customers into loyal customers, and ultimately into brand advocates.

Customer Experience

New Loyalty

Promise

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The reality today is that most customers have low expectations from brands. And with good reason.

=Customer Experience

New Loyalty

Promise

There’s no shortage of marketing “words du jour” aka bright shiny objects

Customer Experience =

Sum total of all customer interactions, at all touch points, both online and offline, throughout the customer

lifecycle

Why pursue a “Great CX” strategy?

Own the customer relationshipDrive organic growthRelevance (differentiation) vs. mass promotionValue of Big DataFewer technology gapsAlign investments with value

Loyal Customers Make A Business Great

Economics

Loyalty impacts merchant after merchant, well beyond a single brand

Average Sales Lift Per Loyalty Member

Retailer 3Retailer 1

36% 56% 70%

Retailer 4

140%¹

92%98% 121% 151%

Retailer 2 Retailer 5Retailer 6 Retailer 7

Source: ¹Huffington Post, 2014, Other Retailers: rDialogue Proprietary Data

On par with Amazon Visa cardholders1

Deliver three times the value to the

brand a year

3X5X

Source: Rosetta Customer Engagement 2014

Engaged and loyal customers make a business grow

More likely to indicate it is the only brand they purchase in the future

“We will continue to focus relentlessly on our customers.”

For Jeff Bezos, the “Age of the Customer” started last century, professing to “Obsess over customers”

Start with a vision for customers: What is your goal?A single purchase? A community of buyers? A long-term relationship? Wildly devoted customers who…Drive an extra mile? Have your app on their home screen? Will buy full price without a second thought? Get excited when they talk and share – with friends, with strangers?

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“What we really need is a mind-set shift that will make us relevant to today’s consumers, a mindset shift from ‘telling and selling’ to building relationships.”

− Jim StengelFormer CMO, Procter & Gamble

For CX and loyalty, brands need a 180° turn

Today Tomorrow

Brands should be loyal to customers

LoyalCustomers

LoyalBrands

The quid pro quo of CX and loyalty

The BrandThe Customer

“Allow us to pay attention to you and we’ll

make it worth your while.”

“If I share my data and let you track me,be relevant, make it

worth my while,and don’t waste

my time.”

A differentiated experience is unique and relevant to each customer

“Customers will not tolerate companies that have amnesia when it comes to remembering them and their preferences for recognition.[They] ...believe that they have a relationship with a provider once they have transacted with that provider...the experience should be mutually beneficial, and therefore designed with them in mind – similar to most relationships.”

CX and Loyalty work hand-in-glove with relationship marketing to fuel the brand experience

Delivery Data

RelationshipMarketing & Delivery

Brand PromiseCX/Loyalty

Measurement

CX / LoyaltyDrives enrollment and opt-in

Provides a reason to identify, explore and trial

Builds the emotional brand relationship

Relationship Marketing Drives brand vs. transactional loyalty

Allows flexibility to deliver by segment

Drives profit and prevents entitlement

Data collected via CX raises the bar for relevance

Explore/ Browse

Opt-In / Opt-Up

Shop

BuyUse

Repair

Advocate

At the center of CX and Loyalty is ongoing data collection

Segment / Model

Assignment

Channel Preferences

Demographic NPS, Profile

Explicitly Gathered Data

Implicitly Gathered / Created Insights

Product & Services

Bought/Used

Wish List, Shopped /

Gifted Items

Purchase Patterns &

Preferences

Service Needs & Channels

Competitive Threats

Loyalty (at brand, via card)

Value / Response

Drivers

Research / External Data

Engagement – Social,

Mobile, etc.

Transactions & Payments

CRM Database + Personalization Rules + Campaign Mgmt. Tools

Owned & SharedSocialStore, EventsPartners

OwnedEmail, Web Brand, MobileProductServices

“You can’t have everything. Where would you put it?”

- Steven Wright

CX investment should be appropriate to the economics and opportunity for each segment

Value per Consumer

Not Ready: Treat Promo-tionally

Engage Quickly: Selectively & Cost Effectively

Prioritize Segment: Oppor-tunity & Volume Ideal

Upside Limited: Focus is to Protect, Not Grow

# of

Cus

tom

ers

The Pittsburgh Steelers: Recognition calibrated by segmentFan segments, needs, economics and priorities are the drivers of a differentiated experience

Season Ticket Holder

Game Attendee The Steelers Nation

Club Level MembersHigh Frequency

Low Incremental ValueExclusive stadium experiences and

product

Direct, 2nd and 3rd party purchasers

Mid FrequencyMid Incremental ValueGame day and stadium

experiences

Local, National, International Fans

Low-Mid FrequencyMid-High

Incremental ValuePart of the Steelers

Family

Delta Air Lines: A model for leveraging CX to transform and grow a business

Customer Inputs (Value Drivers) • Ticket Data,

Class of Service + Extras

• Travel Routes • Preference Data• Social / WOM

Activity• Booking Channel• Form of Payment• Spend and yield

Business Outputs (Business Tools) • Reserved seat / seat

quality• Seat Upgrade• Waived baggage fee• Security clearance• Lounge access• Boarding group• Thank you (explicit,

personal)• Tier Status

Airport Experience

Onboard ExperienceSkyMiles Credit Card

Digital & SocialPartners

Delta Call Center

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Starbucks uses its tender to drive the CX and loyaltyCard registration drives customer addressability

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Starbucks was ahead of the curve in being mobile first

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...card registration ties to the Starbucks app

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The app integrates Starbucks CX and loyalty propositionRewards are secondary to payments, store experience and MOPIS

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The app enables a Starbucks CX that serves allGood for customers, good for SBUX, good for associates

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Answering the ultimate question...

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+223% +226%

+398%

Loyalty Leader 5-year Stock Performance vs. S&P 500as of 16 March 2016

AMZNSBUX

S&P 500 +54%DAL

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The “How To”

CX has an essential role in driving business growth, regardless of the model

 Type of Experience Examples

Personalized store experience driven by data

Enhanced customer experience driven by new technology

Expanded product experience and brand interaction

Brick and mortar store experience that extends the brand

Content-driven shopping experience

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Developing and delivering a great customer experience, and engendering loyalty, is a disciplineDon’t solve for every customerExploit scarcityCollect and use dataNavigate for customers, set their path(s)Measureand most importantly,Leadership

Whether you call it CX or loyalty marketing, they both mean:

Pay attention to customers and act accordingly

This is where they unify

Thank You

For more information about rDialogue, please contact:

Phil RubinCEO

404.475.5801 office404.272.6400 mobile

115 Perimeter Center Place, Suite 945Atlanta, GA 30346

http://www.rDialogue.com/expowww.relevantdialogue.com (blog)

@rDialogue @phil_rubin

phil@rDialogue.com