Masterclass loyalty 2015

Loyalty training

Loyalty is dead. Whats next?

Brussels, December 2nd 2015

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2Nice to meet you!

Bert Van EeckhoudtSenior Consultant

Karel IngelbeenJunior Consultant

Nathalie de BiolleyJunior Consultant

Kristien SchrauwenConsultant

Eline Van HollebekeConsultantValerie VosConsultantGregory DelensSr Business ManagerStephanie DucheminHuman Capital ManagerLies TaerweSr Business ManagerFrederik SunaertJunior ConsultantLaetitia GutierrezJunior Consultant

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Introduction5

THoMster class 60LOYALTY is dead. Whats next?

Case - group discussion & presentations30

Wrap up15

Lets have a drink!

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Welcome to our 3rd THoMster class!

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The House of Marketing as proud member of the Quanteus Group

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Mission statement of The House of Marketing

Presentation1Our team projects combine a mix of competences with varying involvement in function of the project stageWe work on exciting client projects in team or individual placement set-upOur individual placements are supported by the THoM organizational structure

Tailored mix of:Strategic marketingProject managementDomain expertiseConsultant supportCore team set-up

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No two assignments are the same at The House of Marketing

Elise is working as anOnline Content Manager for a leading automotive brandThomas is working as a Project Leaderfor a media companyLise is working as aJunior Project Managerfor a FMCG brandLaetitia is working as aCash Management Marketerfor a leading bankInge is working as aConsultant on brand positioningfor a pharmaceutical providerMaxime is working as anInnovation Managerfor a premium chocolate brand

Dennis Peeters is working as aDigital Project Managerfor a leading bank

Caroline is working as aMarCom Project Leaderfor a human resources company

Presentation1Example 1 about Strategic project

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3 Master Classes on 3 different marketing topicsGuiding you through the complete customer life cycleIncl. real life cases from our THoM consultants

THoMers share a passion for marketing, and now its time to share some of it with you

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Introduction5



Wrap up15

Lets have a drink!

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Presentation110 What is your favorite chocolate spread brand? What is your favorite cola brand? What do these brands do to obtain your loyalty? Would you recognize your favorite brand in a blind test?

Lets find out !

Questions

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11Context & Challenges of Customer Loyalty

Presentation1The Yearly Marketing Survey 2013 indicated that traditional reward programs with points dont do the trick anymore12Source: The House of Marketing - Yearly Marketing Survey 2013Which tactics do you use to obtain customer loyalty?

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The Yearly Marketing Survey 2014 revealed that marketers need to develop a strategy to cope with divided loyalty 13N = 259

Presentation1Recent trends make traditional loyalty programs less effective14Saturation & commoditizationExplosion of (customer) dataEmerging digital channelsBetter informed shoppers

Presentation11. Loyalty program abundance: cards are offered by lots of companies in all different sectors.Added value of rewards is questioned: perceived value is declining & lack of differentiationSaturated loyalty market & commoditization: Being enrolled in a loyalty program is a habit rather than influential in purchase decisions

2. Explosion of data & use of analytics to drive more targeted marketing

3. Social media & mobile ; Right use of social media drives loyalty & advocacy, but get it wrong, and social media drives brand defection

4. Savvy shoppers (Changing behavior of the consumers)They want more, and they want if nowPrice sensitive, but also value quality & serviceWant to be in control over their experienceSharing behavior

Better informed thanks to internetResearch & plan purchases more deliberatelyMulti-brand shoppers

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To next generation loyaltyFrom todays loyaltyFocus on interaction (loyalty extends beyond purchasing)Programs reach customers through traditional channelsChannel ubiquity loyalty is conveniently present wherever and across multiple vehiclesWe need to move from todays loyalty to the next generation loyaltyFocus on purchase-earn-redeemCustomized: personalized offers, differentiated experiences & relevant rewardsOne size fits allRelentless focus on the consumer,fueled by data and powered by reward & recognition

Presentation115CDJ: identify customer interactions of data touchpoints. Focus on in-program transaction data to reward target customers (purchase/earn/redeem)vs. Loyalty extends beyond purchasing and reward behaviors across the customer decision journey (focus on interaction)

3) Deliver value & relevance: customers have extremely high expectations of their brand relationships & demand immediate gratification from reward programsPrograms reach customers through traditional channels: a program website, call centers, e-mail or mail

16Definition Customer Loyalty

Presentation1Let them define loyalty, write keywords on a flipchart16

Definition Customer Loyalty17What is Customer Loyalty?Difference Retention Management and Loyalty Management

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18Behavioral loyaltyAttitudinal loyalty

A customer who stays (repeat purchase, renew contract,) is often seen as a loyal customer

Commitment to continue using a product or service, despite situational influences and marketing efforts of competitors, is true loyalty.

Watch out: This does not mean that these customers are loyal, because they might leave once the situation changesSource: Klantenloyaliteit, Marnix BgelCustomer loyalty is a behavioral and attitudinal tendency to favor one brand over all others

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Objective axis: Perceived effort, cost, time to switch / frequency of transaction

lowhighSwitching barrierslowhighInvolvement

Subjective axis: Perceived emotional, social, functional risk of switching

Source: THoM analysis of McKinsey Quarterly 2002 & Marketing NPV 2005

Switching barriers ONLY drive behavioral loyaltySwitching barriers drive only behavioral loyalty

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lowhighSwitching barrierslowhighInvolvementSubjective axis: Perceived emotional, social, functional risk of switching

We need to focus on involvement since this dimension drives both behavioral & attitudinal loyaltyInvolvement drives both behavioral & attitudinal loyalty

Source: THoM analysis of McKinsey Quarterly 2002 & Marketing NPV 2005

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Because once the switching barrier decreases you need to work in any case on involvement21

Nespressos switching barriers decreased: consumers can now easily switch between Nespresso and Douwe EgbertsNespresso will need to continue working on involvement

Illustration

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22Put the following brand logos on the right place in the loyalty matrix and explain your positioning.

Exercise

Presentation1Objective: Understanding the concepts of behavioral and attitudinal loyalty and the main dimensions of loyalty (switching barriers and involvement)22

Exercise: Put the following brand logos on the right place in the loyalty matrix and explain your positioning23



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Exercise: Put the following brand logos on the right place in the loyalty matrix and explain your positioning

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Definition Customer Loyalty25What is Customer Loyalty?Difference Retention Management and Loyalty Management

Presentation1Let them define difference loyalty vs. retention25

In contrast to retention management, loyalty management aims to increase both behavioral and attitudinal loyalty26

Get!Grow!Keep!Get (again)!AcquisitionDevelopmentWin-backRetentionLoyalty

MarginTime

Source: THoM analysis

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Loyalty management is often confused with retention in terms of objective, tactic and customer group27Loyalty management

Increasing involvement > Increasing behavioral & attitudinal loyalty

Long term

Focus on customers with high potential (customer lifetime value)

Aims at retaining and increasing customer value

Through building sustainable relationshipsRetention management

Focus on switching barriers, involvement is a secondary objective > Increasing behavioral loyalty

Avoid churn on short term

Focus on customers with high churn risk

Aims at reducing and preventing churn

Through fixing the basics

KEEPGROWGET

HighLowLowHigh

InvolvementSwitching barriers


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28Loyalty should be a mindset

Presentation1Loyalty as a mindset throughout the company and all marketing efforts a customer can be made loyal from the first encounter28

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Do you use all the loyalty cards in your wallet? Are you loyal to these companies?

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Presentation1Let them count/show cards in wallet (explain why they have it, if they use it, impact on loyalty)

Complicated benefits, not straightforward, a lot of effort to obtain rewards, not immediate. Use them because you are there already but is the card the loyalty driver??29

Customer loyalty is like an emotional bank account30

With every positive interaction, emotional loyalty currencies are depositedBut negative experiences debit the account

When it reaches a certain level, it pays back in true customer loyalty

Presentation1To understand loyalty you have to go back to the psychological aspects of loyalty said with a metaphor Loyalty is like an emotional bank account.

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31Example emotional bank account

Customer looking for flatscreen but living room has unusual light and dimensionsAnyone knows anything about flat-screen televisions?

Best Buy reacts, helps and together they find the perfect flatscreen.In the end he buys at Amazon where the price was lowerThrough this service a LASTING relationship was formed. A genuine affection that results in a feeling that he is ought to pay back.

Presentation1https://www.linkedin.com/today/post/article/20140626101047-17102372-that-old-time-customer-loyalty-feeling?trk=nus-cha-roll-art-title

Customer looking for flatscreen but living room has unusual lightening and dimensionsAnyone know anything about flat-screen televisions?Best Buy reacts and helps and together they find the perfect platscreen.In the end the sale is done at Amazon where the price was lowerConsience pained him tweetet Best Buy to let them knowWere glad we could help. Maybe next timeEver since: He goes to the Best Buy store for routine things, even when its out of his way. He recommends Best Buy to friends who are in the market for electronics. And tells this story everywhere he goes.So was it smart to spent time helping this customer because in the end there was no sale? If this is the perspective then you are missing the point that while helping they also created a bond/relationship. And now the customer feels an obligation. It wasn't a legal or contractual obligation, but a social one. It was just a feeling. He feels he is ought to repay Best Buy.A genuine affection for you, they simply want you to succeed as a business, then ultimately it's more likely you will.

Loyalty in the long term not in the short term once off sale!

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Of course brand loyalty is only possible if loyalty is a mindset throughout the whole organization 32

Presentation1Explain orally in English32

Loyalty appears when customer experience matches at least expectations and loyalty drivers are met correctlyEach individual will have specific expectations and drivers influencing attitudinal loyalty33LOYALTY DRIVERSSource: Klantenloyaliteit, Marnix BgelTrustSatisfactionQuality of competitive alternativesInvestment in relation+++-ExpectationsExperiencesLOYALTY

Presentation1With delivering on promises you have to make sure that the experiences match the expectations. The expectations that you create and that the customers automatically conceive. This match results in different loyalty drivers which can be different for each individual. The type of drivers can be different but also the importance of each driver. For example people who are more sensitive to alternatives.

WHEN THE CUSTOMER EXPERIENCE DELIVERS ON YOUR BRAND PROMISE, CONSUMERS FEEL SAFER & ARE MORE LIKELY TO FEEL & ACT MORE LOYAL

Basic loyalty drivers: - Quality of products/services vs competition Service provided by front-office employees The experience customers undergo Value: price of products/services vs competition reflective of other 3 drivers

Remarks to the above: Trust is crucial for loyalty: e.g. recent problems in bank sector created mistrust and churn in impacted banks (Fortis, Dexia) Satisfaction is also a minimum condition for loyalty, but satisfaction does not necessarily imply loyalty: a satisfied customer may switch when getting a better offer from competition. Balance between expectations and experiences: e.g. a restaurant with very good critics will raise high expectations, if not all goes 100% well clients may become dissatisfied, whereas they might be more satisfied with less good service in a simple restaurant. Quality of competitive alternatives Investment in relation: financial investment or time & efforts a client has invested in relationship with a company: e.g. given opt-in and filled in interest survey for getting adequate offers, modem installed for Internet connection33

Customer experiences can be divided into 4 types34RelationalRelationshipsTransformationalActualizationsAspirations

TransactionalProductsServicesInformationExperientialSensesEnvironmentMoments

EmotionalEmotionsFeelings

Source: Qblog - A series on customer experience: Types of customer experience

Presentation1+ voorbeelden34

TransactionalProductsServicesInformationBuilding a relationship with the customer over a longer term than one purchase moment35RelationalRelationshipsTransformationalActualizationsAspirations

ExperientialSensesEnvironmentMoments


PersonalizeLong term focusAdded value services

Source: Qblog - A series on customer experience: Types of customer experience; THoM analysis

Presentation1Ikeas sleep like a princess contestEngaging loyalty members and raising awareness36

Relational

Only for Ikea's Facebook page fans &"Ikea Family Members. Not a member? join IKEA FAMILY

Presentation1DESCRIPTION

Ikea ran a Facebook competition which was only open to loyalty card holdersUsers had to upload a photo of a friend who was having a napThen Facebook users voted for the best picturePrize = a bed worth up to 1,500

Results:44,000 YouTube views13,650 Facebook visitors Almost 4,000 new fans

OBJECTIVES

Increase engagementWOM & Awareness of Ikea as the expert in sleepCreate advocatesBuild a relationship with the customer

http://www.brandchannel.com/home/post/2012/04/05/Ikea-Facebook-Snap-Napper-040512.aspxSource: Six awesome examples of Facebook campaigns by Ikea

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Changing the customer as a result of the experience (behavioral, physical, intellectual,...)37RelationalRelationshipsTransformationalActualizationsAspirations



Transform the customers behavior, appearances, lifestyle,... Teach the customer something


Presentation1Becel and Lidl support the Week of the Heart of the Belgian Heart League38

Transformational

Changing consumer behavior: advice, tips and tests for a healthy heart, in-store as well as online and mobile


During the week of the heart, Belgians could get advice, tips and tests for a healthy heart in front of six different Lidl storesBecel provided an online tool and app to stimulate all Belgians to take more exercise Lidl brought healthy products more forward and gave healthy food advice

OBJECTIVES

Added Value ServiceIncrease awarenessIncrease WOM


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RelationalRelationshipsExperiences with regard to the exchange of products, services and information39TransformationalActualizationsAspirations

ExperientialSensesEnvironmentMoments


TransactionalProductsServicesInformation

Source: Qblog - A series on customer experience: Types of customer experience; THoM analysisEase the customer journeyFacilitate the searchClear information

Presentation1Best Buy introduced Best Buy unboxed for an optimal customer service which kicks-off the loyalty loop40

Transactional

Join & engage in conversations by answering the issue of techno-stress.Pre & post purchase support.


2009: the rise of Twitter made Best Buy opt for Twelpforce, i.e. a team of 3000 Best Buy employees that are responsible for instant customer service via all channels (phone, mail, twitter, etc.)

2013: introduction of Best Buy Unboxed, i.e. online community that provides deep customer service including blog, twitter, videos, forum,

OBJECTIVES

Create buzz and awareness around unique customer serviceGET new customers as they are answering general technical problems as well

http://community.lithium.com/t5/Social-Customer-Excellence/Best-Community-ROI-Usecase-Best-Buy/idi-p/562840

TransactionalProductsServicesInformationTransformationalActualizationsAspirations

RelationalRelationshipsExperiences that impact the human sensory system of sight, hearing, touch, taste and smell41


Play with the sensesMake interactions funCreate a wow factorExperientialSensesEnvironmentMoments


Presentation1Ray Ban uses relevance to create valuable customer experience

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42Experiential

Bright Light & Sun Walk App

Presentation1http://designtaxi.com/news/352428/Ray-Ban-App-Helps-You-Get-The-Most-Out-Of-The-Sun-Your-Sunglasses/

DESCRIPTION

Called Bright Light, the app identifies the position of the sun throughout the day and highlights sun spots, areas where you can enjoy the sun without any shade from tall buildings.Another useful function is called Sun Walk, which directs you to any sun spot, taking the sunniest route to your destination!

OBJECTIVES

Uses relevance to create experienceIs aligned with core values of the brand Creates value for the customer

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TransformationalActualizationsAspirations

RelationalRelationshipsEvery kind of experience has an emotional aspect, which can be positive, negative or neutral43



Source: Qblog - A series on customer experience: Types of customer experience; THoM analysisCustomers feelings about the interactions with the company: What I get / What I expect = How I feel

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44Loyalty tools & tactics

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Customer experience45

Savings programs are often seen as good loyalty initiatives, though these are only a small part in the loyalty chain Customer dataLoyalty savings programLoyaltyX

Presentation1Loyalty initiatives can be ranked on 3 axes: reward moment, required counteraction & customer initiative 46ImmediatePostponedTransaction basedNot transaction basedNo initiativeInitiative

Contest ParticipationEventsCustomer Adv. ProgramSavings ProgramDirect Advantage OfferingRelationship BuildingCustomerinitiativeCounteractionReward-moment213

Presentation1Direct discountService related & other advantagesSaving points for gifts via transactionAdvantage won through contestEvent invitationSaving points for gifts via initiative

An additional difference can be made between paid and free membership

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When JBC wants to reward its best customers with a styling day, they can consider different loyalty initiatives 47ImmediatePostponedTransaction basedNot transaction basedNo initiativeInitiative


Example

Clients who buy something of the JBC-collection, receive an invitation for the styling day

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48ImmediatePostponedTransaction basedNot transaction basedNo initiativeInitiative


On specific days, clients of JBC receive styling advice when trying clothes in the fitting rooms

When JBC wants to reward its best customers with a styling day, they have different optional loyalty initiatives

Example

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Clients who collected 50 points are invited to the styling day


Example

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Clients can participate in a contest with a code on their bill to win a styling day


Example

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Clients receive a VIP-invitation so they can subscribe for a styling day


Example

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By shopping clothes, recommending JBC & writing online reviews, clients can earn points which can be redeemed for a styling day


Example

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53To develop a valuable loyalty initiative you need to use a number of building blocksREWARDSPERSONALIZATION& TARGETINGAWARENESS/WOMRULESMEDIA CHANNELS

Presentation154REWARDSPERSONALIZATION& TARGETINGAWARENESS/WOMRULESMEDIA CHANNELS

Evolve from rewards easy to translate to monetary value towards rewards with a higher perceived value

To develop a valuable loyalty initiative you need to use a number of building blocks

Presentation1A difference can be made between HARD and SOFT rewards; between IMMEDIATE and POSTPONDED rewards; between TRANSACTION and NON TRANSACTION BASED rewards

In all cases, the rewards have to have significant value for the consumer>> engage in innovative marketing and ongoing communication with the customer.

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Starwood members bid in online auctions for access in once in a lifetime events with their usual saving points55

SOURCE: starwoodhotels.com

REWARDS

Presentation1Description: Starwood Preferred Guest rewards are earned through hotel stays and use of SPG American Express Card. SPG points can be redeemed for hotel nights and airline miles.

Main benefits: Members bid in online auctions using their SPG points for access to once in a lifetime events like concerts, sports events, fashion shows, and movie premiers

Impact: For anyone that hesitated to bid on this auction, you missed out on a once-in-a-lifetime experience. I've been to many events run by professional outfits, but I have to say 'Nobody does it better than SPG!'SPG Member who won a tennis clinic with James Blake & luxury suite at US Open

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Delta goes beyond the transaction and gives elite members 500 bonus miles if they are caught in the middle on a Monday flight

REWARDS

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57REWARDSPERSONALIZATION & TARGETINGAWARENESS/WOMRULESMEDIA CHANNELS

Evolve from one-size-fits-all towards personalization Do smart targeting


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Great customer personalization can be offered by cocreation, making it a perfect loyalty tool 58

PERSONALIZATION

Presentation1Converse All Stars: December 2011Facebook applicationDesign own converse shoes and sell them through friends on social network and virtual storeFree pair of shoes when enough pairs are sold

Relevant Emotional involvment Insight provider Social media/community

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Evolve from functional value proposition with little user adoption towards high awareness and adoption among general public


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Coca Cola creates awareness and WOM by a contest to find a Belgian Coca Cola Light man60

WOM

Presentation1Meedoen is even spannend als simpel. Upload op www.coca-colalight.be een foto van je knapperd, met een woordje uitleg waarom hij jouw ideale Belgische Coca-Cola lightman is. Een jury selecteert vervolgens de top 20 uit de 50 meest populaire kandidaten, waarna de wedstrijd verdergaat viawww.coca-colalight.be. De tien mannen met de meeste stemmen nemen het in de finale op 10 juli tegen elkaar opEn de uiteindelijke Belgische Coca-Cola lightman? Die gaat lopen met onbetaalbare vrouwelijke aandacht maar ook met 10.000 euro, een duoticket naar New York en een hoofdrol in een nationale campagne voor Coca-Cola light. En omdat hij nergens zou staan zonder diegene die hem selecteerde, krijgt de winnende meter/peter een citytrip voor vier personen naar New York cadeau inclusief shoppingbudget van 5.000 euro.

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Samsung succeeded in creating awareness and WOM by engaging their biggest fans61

WOM

Presentation162REWARDSPERSONALIZATION & TARGETINGAWARENESS/WOMRULESMEDIA CHANNELS

Keep it simple. Many rules, no glory!


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Evolve from traditional media channels towards interactive and cross-channel media


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64REWARDSPERSONALIZATION & TARGETINGAWARENESS/WOMRULESMEDIA CHANNELSHow to integrate all these building blocks into your initiative?

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Starbucks started from scratch to assure a qualitative database to focus on tailored customer experiences through different kind of media 65

EXAMPLE

Presentation1http://www.starbucks.com/card/rewardshttp://www.qsrmagazine.com/news/starbucks-shifts-loyalty-program 65

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Wrap up15

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How should Quick increase students loyalty?Students are an important target for Quick. The Student Special menus represent an average of 7% of their tickets.

Nonetheless, students dont seem to be loyal to Quick. 67

What should Quick do to gain the loyalty of students?

Presentation1Let them raise the hand to see who remember the question from Quick67

Quicks student offering has to be better aligned with the particular student needs, so lets start by defining our target group & their lifecycle

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MondayWeekendTuesdayThursdayFriday

Having arrived in its habitat the previous evening, the student is rested and well packed with weekend leftovers.

After a long and busy day acquiring knowledge and engaging with peers, the student has limited time to provide its own food.Group work day, the student will meet its peer community to work on group assignments, catch up on daily news and enjoy each others company in a quiet environment with plenty of snacks and refreshments Party night; after days of hard work, it is time for some entertainment. With a long night of dancing and socializing ahead, the student has to load up on energy to make it through the night.The student returns to its home nest, travelling cross country while still recovering from last nights celebrations, the student can sure use some extra energy.The student is back to its nest where it is smothered by its parents

FridayMG 2015

Presentation1Who is this species called student and what keeps him busy?Competitors limit their student offering to the discount pricing strategy offering limited added value to the students habitat

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Taking into account the weekly student lifecycle, a diversified, student-centered strategy is needed

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Daily student offers & Dedicated in-restaurant group working areas& Digital integrationOffering dedicated menus for students based on the day of the week, e.g.:

THURSDAY = a solid pre-party XL-menu

FRIDAY = a snack & soda on-the-go option on Friday and Sunday

A dedicated Facebook page showing the daily deals

A dedicated app with digital student card (QR-Code)

Creation of dedicated student group working areas in the student restaurants

Offering high speed internet and electronic device charging facilities

Quick Student card

Rather than just offering discounts when showing a regular student card, a Quick Student card will appeal to their community sense, increasing brand loyalty

MG 2015The Quick Student card

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We are looking for (digital) Marketers

Analytical&CreativeDown-to-earthDiscipline&GutBusiness driven&Passionate about Marketing

Generalist&Curious about specializationMaster degreeTrilingual (FR/NL/EN)Driving licenseComputer literate (MS Office)In line with the THoM values

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STEP 2

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72From graduate to marketing consultant?

Deadline: 07/02/201626th of February 2016September 2016CV Cover letter One-page paperCase day! Start your career at THoM

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Want to be part of the 2016 prom?You?You?You? Yes!Great! Find out more about our recruitment process in our brochure Im not sureDont hesitate to ask all your questions to the THoMers

Presentation1Your point of contact74Valerie Vos, [email protected]

Interested in joining us? CV, cover letter, paper & questions can be sent to: [email protected]

The House of MarketingCulliganlaan 2B-1831 DiegemBelgium

www.thehouseofmarketing.be

Follow us on Facebook: www.facebook.com/ThehouseofmarketingFollow us on Twitter: www.twitter.com/THoM_news

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Thank you for your attention! (and now its time for a drink...)

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