COLLOQUY | India Loyalty Summit | February 1, 2012

The Experience of Loyalty:2011 Cross-Culture Study Insights

2

All information contained herein is confidential and/or proprietary information of Loyalty One, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 2

Who we areVoice of Loyalty Marketing

Since 1990

PublishingResearchEducation

Wholly Owned Subsidiary of

3

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 3

EXPECTATIONSEXPERIENCE “I’m Bored.”

“I’m Dissatisfied.”

“I’m Delighted.”

The Customer ExperienceDepends on expectations

EXPERIENCE

EXPERIENCE

EXPERIENCE

“I’m Satisfied”

4

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 4

Relevance

Recognition

Rewards

The Great DivideProfound Differences in Customer Experience

Engaged

Enthused

Excited

Tuned Out

Turned Off

Tired

5

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 5

CA

US

AUBR

INCH

2011 COLLOQUY Cross-Culture Loyalty StudySponsored by LoyaltyOne and Epsilon

• Six-nation study of loyalty attitudes and behaviors» Trust in businesses» Loyalty program participation» Privacy and data security

• Developed Economies» US, Canada, Australia

• Emerging Economies» India, China, Brazil

• Fielded in July 2011» Published Autumn 2011

6

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 6

7

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 7

Rewards Program PenetrationIndicates Upside in Emerging Economies

Source: COLLOQUY 2011 Cross-Culture Study• Q: Do you currently belong to any rewards program?• Rewards Program “refers to an program that offers points, airline miles, gift certificates, discounts off purchases or cash

rebates, or that requires you to keep, scan, or make purchases with a card in order to receive special benefits and rewards.”

8

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 8

The Meaning of “Loyalty” in India has Class NuancesRanking of factors that reflect “loyal behavior” by SEC

Non Price-Conscious

Willingness to Recommend

Staff Knows Them Well

Years/Tenure with Retailer

Receives Tailored Service

Familiar with Store Layout

Share of Spend with Retailer

Location Proximity

Sales Shopper

1

3

2 1

3 4

4

2

5

5

6

6

7

78

8

9

9

A B C SEC B/C do not equate loyalty with a willingness or ability to “pay-up” for quality.

Loyalty reflects far more practical concerns for SEC B/C, such as a store location being close to home.

1

2

3

4

5

6

7

8

9

A

9

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 9

?MAYBE

Willingness to Join Loyalty ProgramsIndians are more positive than negative, but still cautious.

India SEC A/B/C Total?

?

?

SEC A

SEC B

SEC C

52% 46% 1%

36% 58% 6%

12% 58% 29%

Source: COLLOQUY 2011 Cross-Culture Study• Q How likely are you to join a program (assuming one is made available)?• Asked of non-program members only• n = 270

YES NO

26% 57% 17%

10

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 10

SEC A/B Motivations to JoinPractical Utility and Aspirational Status

TOP3

Practical Utility:

1. Easy to Redeem 2. Good Time/Value3. Practical Rewards

Aspirational Status:

1. Recognition2. Special Tiered Levels3. Rewards to Dream

35%32%32%

39%29%28%

11

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 11

Classes Differ: Barriers to JoiningSEC B/C Concerned About Privacy and Rewards Attainability

12

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 12

Attitudes Towards the Role of Money

31% 29% 18% 15% 8% 66% 17%

5%

7%

Indians are far more diverse, and view money as a source of power regardless of SEC

13

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 13

Word-of-Mouth (WOM)Greater Importance in Emerging Economies

14

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 14

Electronic CommunicationsMore Use in Emerging Economies, Especially India

Source: COLLOQUY 2011 Cross-Culture Study• Q: What are your preferred channels for receiving information from your favorite companies?• Percentage indicating channel preference.

15

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 15

1. Relevance is a Moving Target Developed countries’ consumers are “Tuned Out”

WHY?

16

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 16

Needs Drive Economic ProgressionNo one really “needs” experiences…or do they?

COMMODITIES

PRODUCTS

SERVICES

EXPERIENCES

Adapted from Maslow’s Hierarchy of Human Needs

TIME

17

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 17

Nee

d St

ate

Time

* India * China

Brazil *

* Canada * U.S. * Australia

Easy, No Fuss Basics

Privacy & Security

Recognition

Insider Status

Customized Program

Rewards Program Benefits

Adapted from Maslow’s Hierarchy of Needs

Loyalty Program ProgressionNeeds migrate up over time. Are we meeting unmet needs?

18

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 18

What Do Elite Airline Travelers Want?Privilege, Preference, Perks…and free trips, too.

19

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 19

Recognition Fuels Emotional Loyalty

It seems that everywhere, we love to be recognized

(and love, of course, is the answer).

2.

20

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 20

Having Your Cake And Eating It, Too.Anuttara Tanishq celebrates customers’ birthdays in style

“I wonder what this cake will

end up costing me here

today…?”

21

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 21

Rewards: The Tangible Value PayoffSimple + Meaningful + Attainable = SuccessfulExample: “It pays to be loyal to your favourite brands” (Top 2 Box) “Strongly Agree”

12%

24%

Average U.S. Household Enrolled in 18 programs - Active in only 8.4

Earns Rs 31,100/year - Rs 10,250 unredeemed

Indicates Need forPartner/Coalition Models

3.

22

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 22

Coalition Effects on Fuel RetailerShare increased 3.7 points despite competitive program launches…

and a 20% site rationalization in the first 8 quarters after.

…

Coalition Sponsor ---- Competitor A ---- Competitor B ---- Launch Launch Launch

23

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 23

Final Thoughts

“ In the past two years, loyalty focus has changed from pure rewards to

differentiated experiences.

Companies may have understood only customer revenue; now they are

embracing customer knowledge.

That can’t happen if the loyalty card becomes just more plastic stuffed in the

wallet. “

--Vishal Hanmattekar, Director of Loyalty, IHC (Taj Inner Circle)

24

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 24

Announcing full media resources for India!

COLLOQUY India magazine and website

2011 COLLOQUY Cross-Cultural Study White PapersMore research to come.

COLLOQUY Loyalty Workshops begin in April 2012

Local presence from LoyaltyOne, Direxions, Epsilon

Jim SullivanPartner, COLLOQUYjim.sullivan@colloquy.com+01 614-207-4047

25

All information contained herein is confidential and/or proprietary information of LoyaltyOne US, Inc. and any unauthorized use and/or any disclosure is strictly prohibited.

COLLOQUY | India Loyalty Summit | February 1, 2012 25