. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
‘CREATING CUSTOMER LOYALTY’‘CREATING CUSTOMER LOYALTY’
A Paper byMr. Adekolapo Ademola
CEO, Loyalty Solutions Limited
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Loyalty Solutions LtdLoyalty Solutions Ltd
A PARADIGM SHIFTA PARADIGM SHIFT
Buy a car, choose
your color
Buy any car you want, as long as its ‘black’
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Loyalty marketing
Loyalty Marketing
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
CREATING CUSTOMER LOYALTY:THE IMPACT ON BUSINESS
CREATING CUSTOMER LOYALTY:THE IMPACT ON BUSINESS
The handle of the process is the “driver” of the corporate strategy that gives the “direction” to the company. In turn, the strategic direction moves the two “enablers”: people and technology. The “interaction” of thoseelements is the business processes that sit behind successful customerrelationship management & customer loyalty.
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
THE STRATEGIC NEEDS:THE STRATEGIC NEEDS:
• Management Commitment
• Defined Objectives
• Measurable Criteria
• Long term outlook
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
HOW CUSTOMER LOYALTY DEVELOPSHOW CUSTOMER LOYALTY DEVELOPS
By Steve Hoisington & Earl Naumann
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Continuous Customer DevelopmentContinuous Customer Development
CustomerMember
Collaborator
Advocate
TotalRevenue
Share of customer
TIME
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
The Customer Purchase Cycle
Re-purchase Decision to re-purchase
The Re-Purchase
Loop
Post purchase evaluationFirst Time purchaseAwareness
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
CUSTOMER LOYALTY:How To Identify It
CUSTOMER LOYALTY:How To Identify It
• Transactional Behavior
• Transactional Value
• Communication behavior
• Cost to Serve
RFMRFM
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
CUSTOMER LOYALTY:WHY ITS IMPORTANTCUSTOMER LOYALTY:WHY ITS IMPORTANT
• Enhances Cross-Sell & Up-Sell opportunities
• A 5% improvement in retention rate can equal an 85% increase in PROFITS from yourcustomer base
• Improves Customer LTV
• Enhances customer feedback & interest
• Generates higher patronage & transaction values
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
The Retention Effect
Costs
Growth
Impact of a 5% improvement in retention rate on Customer Net Present Value (Total Lifetime Value)Source: Frederick Reichheld – The Loyalty Effect
Used by permission of Harvard Business School Press
Bank Cards
Bank Branch Deposits
86%76%
96%
Advertising
Agency
90%
Life Ins.
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
The Retention Effect
GrowthNumerical Example: 10% vs 20%
Costs
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Customer Lifetime Value (CLV) simple
Growth(AVT * NT) * L
CostsAVT = Average Value of Transactions per year
NT = Number of Transactions per year
L = Length of Relationship
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Customer Lifetime Value (CLV) complex
Costs
Growth
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Average LoyaltyLeader
100%85%
0
50
100
150
200
250%
Average LoyaltyLeader
100%
220%
0
50
100
150
200
250%
Loyalty Leaders: Lower Costs, Higher Growth
Costs
Growth
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
CUSTOMER LOYALTY:How To Create It
CUSTOMER LOYALTY:How To Create It
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
The Route to Customer Loyalty
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
©Peppers & Rogers
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Loyalty Solutions LtdLoyalty Solutions Ltd
DialogueEngage, Exchange, Evolve
DialogueEngage, Exchange, Evolve
Incentives, Rewards,Access, Service,etc.
Engage
Dialogue
Incentives, Rewards,Access, Service,etc.
Evolve
ExchangeChanging needs, attitudes, etc.
Relationship100101100101101010101100101101010101100101101010101100101101010101100101101010101100101101010101100101101010101100101101010101100101101010101100
Data
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Loyalty Solutions LtdLoyalty Solutions Ltd
The Strategic MixThe Strategic Mix
Compelling Hard Benefits
Promotional CurrenciesTangible Rewards
Price Tiering“I get my money’s worth”
Defining Defining Soft BenefitsSoft Benefits
RecognitionPersonalization
Access“They know I’m important”
Create The Value Proposition
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
The Customer Loyalty Relationship ChainThe Customer Loyalty Relationship Chain
Add Value Add Value
Dialogue Dialogue
InsightInsight
AdvantageAdvantage
ProfitsProfits
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
CUSTOMER LOYALTY:The Benefits
CUSTOMER LOYALTY:The Benefits
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
. Acquisition . Retention . Frequency .
Loyalty Solutions LtdLoyalty Solutions Ltd
Thank You!