The power of coalition loyalty marketing

The power of coalition loyalty marketing By GABI KOOL CEO BalticMiles For once the secret recipe is shared on how BalticMiles is building the most beloved loyalty program in the Baltics region. August 26, 2011

In the next 20 minutes a quick review of: -1 The Loyalty Marketing landscape in the Baltics -2 The benefits of coalition loyalty marketing -3 BalticMiles: the secret recipe


The Loyalty Landscape in the Baltics...


Coalition programs – How do they operate?

Operate Program Open & manage customer accounts Manage rewards portfolio & redemption Manage the database Recruit new Partners Manage retailers relationships Manage all communication channels

Sign up own customers at POS Provide Manager with transactional data Issue Base Points all customers/ all POS/ all products Issue Bonus Points as per business objectives Promote the Program

Every household spender gets a card linked to one account Collect Base Points = everyday shopping Receive Bonus points = when respond to retailers’ offers Redeem Points for Rewards

Sell rewards to Manager Fulfill rewards to Customers

Customers Manager Partners Suppliers

Benefits of Coalition Loyalty Marketing - Partner Perspective

Benefits of Coalition Loyalty Marketing - Member perspective in Latvia: Larger Rewards

Spending categoryAnnual spend

per HH CI% Pay out, %

'Reward money' for member

Bank € 2 132 0,40% 0,24% € 5,12Grocery € 2 765 1,50% 0,90% € 24,89Fuel € 354 1,50% 0,90% € 3,19Telecoms € 445 2,50% 1,50% € 6,67Perfume ‐ Cosmetics € 157 3,50% 2,10% € 3,30Pharmacy € 211 2,00% 1,20% € 2,53Sports € 38 2,00% 1,20% € 0,45Home and furniture € 186 3,00% 1,80% € 3,35DIY € 319 2,00% 1,20% € 3,83CE € 254 1,50% 0,90% € 2,29Restaurants € 418 4,00% 2,40% € 10,04Clothing € 413 4,00% 2,40% € 9,91Footwear € 177 4,00% 2,40% € 4,26Culture € 81 2,00% 1,20% € 0,97Books € 29 3,00% 1,80% € 0,52Car service € 121 3,00% 1,80% € 2,18Toys € 19 3,00% 1,80% € 0,34Travel ‐ (excl. Business travel) € 40 2,00% 1,20% € 0,48Insurance € 78 3,00% 1,80% € 1,41Transport services € 166 3,50% 2,10% € 3,49OTHER € 1 932 0,00% 0,00% € 0,00TOTAL € 8 404 1,77% 1,06% € 89,22

Benefits of Coalition Loyalty Marketing - Member perspective in Latvia: Faster Rewards

Spending quintilesPotential universe

Revenue contribution,

%

Avg. annual spend /

Household

Weighted average Pay out

Avg points earned per year

Likely to earn EVERY Bonus

Annual Bonus Pts

Earned

Annual Points earned

Avg Point/ Week

Award Level 1

Award Level 2

Award Level 3

Award Level 4

Award Level 5

90 750 6 000 15 000 25 0001,06% 20% SONG CINEMA FLIGHT 2 FLIGHTS 4 FLIGHTS

Top Range HH 174 293 34,0% € 14 278 € 151,57 25 261 75% 3 789 29 050 559 1 2 11 27 45High Range HH 174 293 21,6% € 9 082 € 96,41 16 069 55% 1 768 17 837 343 1 3 18 44 73Middle Range HH 174 293 17,9% € 7 523 € 79,86 13 310 25% 665 13 975 269 1 3 23 56 94Lower Range HH 174 293 15,3% € 6 422 € 68,17 11 362 10% 227 11 589 223 1 4 27 68 113Lowest Range HH 174 293 11,2% € 4 717 € 50,07 8 346 10% 167 8 513 164 1 5 37 92 153

SPENDING BEHAVIOURS POINTS EARNING POTENTIAL AVG. WEEKS TO REACH GOAL

Young Single

Young Couple w/o kids

Couple with

young kids

Couple with

teenage kids

Empty Nesters –

Pre Retirement

Retired Couple

Retired – Living Alone

1 2 3 4 5 6 7

Youth

TELECOMMUNICATIONS

Young persons tend to be heavy users, though there is an increasing trend of usage across all life stages

0

Benefits of Coalition Loyalty Marketing - Member perspective: Relevant throughout life

Young Single


Couple with

young kids

Couple with

teenage kids

Empty Nesters –

Pre Retirement

Retired Couple


1 2 3 4 5 6 7

Youth

PETROL

Heavy usage was found amongst couples with kids

Starts with young singles with strong aspirations of owning the 1st car

0


Young Single


Couple with

young kids

Couple with

teenage kids

Empty Nesters –

Pre Retirement

Retired Couple


1 2 3 4 5 6 7

Youth

GROCERIES

Starts with the ownership of a household

Heavy usage was found amongst couples with kids, especially teenage kids

0


Young Single


Couple with

young kids

Couple with

teenage kids

Empty Nesters –

Pre Retirement

Retired Couple


1 2 3 4 5 6 7

Youth

BANKING

Starts with youths – limited contact: mainly cash needs Heavy needs were found during the ‘Age of Commitment’

• Car, House, Credit Card needs/loan products

• Savings, Investment

• Children’s needs

0


Young Single


Couple with

young kids

Couple with

teenage kids

Empty Nesters –

Pre Retirement

Retired Couple


1 2 3 4 5 6 7

Department Store

Similar trend to the Telecommunications industry, but spending gets less when older

DEPARTMENT STORE

0

Youth


Benefits of Coalition Loyalty Marketing - Member perspective

Coalition Loyalty Marketing – global leaders

Coalition Loyalty Marketing: Criteria for Success

1. First to Market


2. Rapid Market penetration


3. An attractive partner portfolio that is dictated by the sectors in which consumers spend their money rather than any preconceived ideas of brand synergy


4. Strategic partners have to convince through their sheer market size and premium image


5. Very attractive rewards portfolio


6. Simplicity


7. Well balanced approach to branding of program and partner brands and educating the members on the concept of coalition loyalty


8. Targeted and Personalised offers, executed in highly creative ways


• Launched in October 2009 • Vision:

– To be the most successful loyalty company in North and Eastern Europe, supporting leading airlines, retailers and financial institutions

• Mission: – To grow our coalition partner’s businesses by bringing

exceptional value to BalticMiles members by rewarding their loyalty

BalticMiles

BalticMiles • First pan-Baltic coalition loyalty program with multiple partnerships

in service and retail industries • Large and trusted brands participate into coalition • Most advanced loyalty rewards platform in Baltic market • Affordable and attractive airline rewards • Attractive communication platform for engaging new customers,

retaining existing ones and increasing revenues

2 card swipes each minute across the Baltics

BalticMiles members 500 000 members Stable growth each month Represented in 40 countries

Partners Members BM web

Member service

http://www.saliena.com/

BalticMiles partnership strategy Key sectors ranking

Banking Hyper/Supermarket Petrol stations Telecom Airline Restaurants Department store Textile and sports Pharmacy Home improvement Perf. & cosmetics

Consumers spending per sector – Baltics 2010

FINANCE

RETAIL

TRAVEL

DINING

HEALTH & BEAUTY

HOSPITALITY

BalticMiles partners (more than 10 000 POS)

43 Targets and 34 Projects............

Member related: Easy to earn rewards Many places to earn points towards rewards Rich reward choices Relevance in all interactions

Partner related: Partners receive great ROI Great partner business support

Image / Brand

Targets – Customer Perspective

Business Development: Planning Prospecting Sales

Partner launch management: Planning IT design IT implementation Project Management

Account Management: Collaborative campaign management Reporting

Targets – Internal Perspective

Member operations Points processing Applications Customer service Fulfillment Member communications Rewards management Data richness, quality and insights

Marketing Campaign management Member events PR Member acquisition

Targets – Internal Perspective

Strategic Job families Skills Knowledge Values

Strategic systems portfolio Data warehouse Transaction system Business Intelligence and Balanced Scorecard tools Website

Organization Culture Leadership Teamwork Alignment

Targets – Resource Perspective

A sneak preview of a few of our projects......

Partner locator

Brand Positioning

Geo overlay / visualisation of data

Trigger Based Campaigns

Personalised coupons / My Offers