growing loyalty beyond traditional reward programs

TOWARDS REAL LOYALTY12 steps to real customer engagementGROWING LOYALTYBeyond Traditional Reward Programs

2

LOYALTY IS AN EMOTION

…SO WHY DO WE TREAT IT LIKE A TRANSACTION?

WE HAVE BECOME VICTIMS OF HISTORY AND HABIT

1700sCOPPER TOKENS

1800sCOUPONS

1930s - 70sTRADING STAMPS

1980sDEREGULATION

1990sDIGITIZATION

2000sMOBILE TOOLS

WE CONTINUE TO INVEST…

IT MATTERS TO THE MARKET

S&P 500

High Focus on Loyalty Programs

Low Focus on Loyalty Programs

Source: McKinsey Corporate Performance Analysis Tool – Returns on 55 major companies with a high/low focus on loyalty programs.

Index

SHAREHOLDERS HAVE REWARDED COMPANIES FOR HAVING A FOCUS

ON LOYALTY

-1% revenue growth

DONE WRONG =RISK MARGINS

-10% lower

EBITDA

A DISCOUNT CARD IS NOT ENOUGH

ONE SIZE DOES NOT FIT ALL

LOYALTY NEEDS NURTURING

DOING THE SAME AS OTHERS LEADS TO FAILING IN THE SAME WAY

Customerengagement

ROI over time

SO.. WHAT COULD BE DIFFERENT?

HOW TO SHAPE YOUR FUTURE?

WHERE DID IT GO WRONG?

HOWWHAT WHEN

HOW DO YOU USE WHAT YOU KNOW

ABOUT ME?

ENTERTAINEDUCATE

ENGAGE

WHAT IF, INSTEAD OF BUYING LOYALTY, WE RECLAIMED WHAT CREATES IT?

Quality

Meeting NeedsConsistency

Availability

Enjoyment

Recognition

ValueEXPERIENCE

WHAT WOULD DIFFERENT LOOK LIKE?

Connected

PersonalRelevant

Contextual

Customer Centered

CONTEXTUAL

PLACEPURPOSE

PERSONAL

RELEVANT

EXPERIENCES

SERVICEACCESS

PRESTIGEPRODUCT

PRICE

54%More spend

2xMore referrals

83%More Engaged

CONNECTED

LOYALTY IS AN EMOTIONA crowd is a tribe without a leader.

A crowd is a tribe without communication. Most organisations spend their time marketing the crowd.

Smart organisations assemble the tribe.SETH GODIN

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CUSTOMER-CENTRED

Big Data

Ubiquitous Touch

Cloud

Insight Engage Anywhere

Responsive Adaptable

Data Ubiquitous Touch

Cloud

SO.. WHAT COULD BE DIFFERENT?

HOW TO SHAPE YOUR FUTURE?

WHERE DID IT GO WRONG?

So how do you break the cycle of

self-abuse?

1. CONTEMPLATE: WHAT IS YOUR WHY?1. CONTEMPLATE: DEFINE YOUR CUSTOMER’s WHY

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2. PREPARE: DESIGN THE EXPERIENCE

BUILDING PROGRAM ELEMENTS THAT DELIGHT CUSTOMERS

Functional

Reliable

Usable

Pleasurable

Meaningful

YAY!

Convenient

Focused on experiences

Focused on tasks

FEW PROGRAMS CROSS THIS LINE

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95% engagement

rate

3. TAKE ACTION: TEST AND EXPERIMENT

TIME

DEG

REE

OF

COM

MIT

MEN

T

Traditional programs

Experimentation Moments of delight

Standard, static program

Long cycles, then relaunch

4. MAINTAIN: IT’S NOT JUST “ONE AND DONE”

Today Future Vision

IDEASTREAMS

INNOVATION CAPABILITY

BUILD, TEST & LEARN

GO

STOP

PIVOT

CREATE THE PLATFORM FOR EXPERIMENTATION

Concept Ideas and prototypes

Explore with customers

Pilot Few segments/

sites

Continue learning

Scale up Refine and

expand

Manage capacity

Rollout Loyal, free and paid

Mainstream

Evolve Becomes

commodity

Change the game

THE PATH TO CONTINUOUS LOYALTY

Baking innovation into the mindset

and culture of your brand and people

Creating a capability that

evolves with your customers over

time

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• Not all customers are created equal. Avoid over-investing by being all things to all people

• Value is variable. Customers value more than money. Successful programs depend on understanding the right levers

• Experience matters. Moments of connection and relevance drive repeat behavior

• Test, learn, repeat. Design for iterative tests and take advantage of test data for continuous delivery and refinement

TAKE-AWAYS

Dianne Inniss dinniss@thoughtworks.com

THANK YOU

Dan McMahon dmcma@thoughtworks.com