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Customer Retention Powered by PACE Methodology Principles for Creating and Encouraging Valuable Customer Interactions NextBee Media [email protected]

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Page 1: Customer Retention Powered by PACE Methodology

Customer Retention Powered by PACE Methodology Principles for Creating and Encouraging Valuable Customer Interactions

NextBee Media [email protected]

Page 2: Customer Retention Powered by PACE Methodology

N e x t B e e C o r p o r a t i o n - F o l s o m , C A - U S A

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NextBee’s PACE Methodology is a systematic way of pursuing actions, which keeps focus where it

belongs: on your customers. The results of extensive field experience will be discussed throughout the

following pages. Best practices for achieving success and examples that demonstrate the methodology’s

use and practice will be offered. By following the principles laid out by the PACE Methodology, you can

expect to have a strong grasp on an action-oriented approach to your customers – an approach which

can be successfully implemented in nearly any situation, for nearly any type of business.

Contents

METHODOLOGY INTRODUCTION – PERSONAL. ADAPTIVE. CONTROLLED. EXCITING ................................... 3

CREATING A PERSONAL PROGRAM – WHY IT MATTERS, HOW IT’S DONE ..................................................... 4

DESIGNING YOUR PERSONAL APPROACH............................................................................................................................. 4

HOW TO KNOW WHETHER YOUR PROGRAM TRULY CARES .................................................................................................... 5

CREATING PERSONAL CONNECTIONS (THAT GROW WITH YOUR CUSTOMERS) .............................................................................. 6

Empathize (with your customers’ experience)........................................................................................................................ 6

Ask (your best customers why they support you) ................................................................................................................... 6

Respond (as your customers’ needs evolve, so should your program) ................................................................................... 6

KEY PRINCIPLES OF AN ADAPTIVE APPROACH .................................................................................................. 7

SEVEN KEYS TO AN ADAPTIVE PROGRAM ............................................................................................................................. 7

A SOLID STRUCTURE AND A MALLEABLE CORE ..................................................................................................................... 9

IMPLEMENTING CHANGE (EXACTLY WHEN NEEDED) ............................................................................................................. 10

Review (how your program is used)...................................................................................................................................... 10

Refresh (your approach to engaging your customers) .......................................................................................................... 10

Change (as you grow, and keep up with your program’s users) ........................................................................................... 10

SMART CONTROLS – HOW TO CREATE AND USE THEM ................................................................................. 11

CONTROLLING LIFETIME VALUE ....................................................................................................................................... 11

CHARACTERISTICS OF A WELL-CONTROLLED PROGRAM ........................................................................................................ 12

BEST PRACTICES (FOR INCREASING LIFETIME VALUE) ............................................................................................................ 13

Customize (for your customers as much as you can) ............................................................................................................ 13

Map (the journey of your best customer) ............................................................................................................................. 13

Plan (ahead, so you’re ready when it’s time to re-engage) .................................................................................................. 13

AN EXCITING EXPERIENCE AT EVERY TOUCH POINT ....................................................................................... 14

INCREASING CUSTOMER EXCITEMENT ............................................................................................................................... 14

THE PROGRAM STAYS EXCITING, YOU IMPLEMENT SOLUTIONS ............................................................................................. 15

YOUR CUSTOMERS’ EXPERIENCE (AND HOW TO ENGAGE IT) .................................................................................................. 16

Specify (the experience you expect your customers to have) .............................................................................................. 16

Executive Summary

NextBee

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Distill (your program goals into distinct retention activities) ................................................................................................ 16

Motivate (with incentives that provoke an intrinsic value) .................................................................................................. 16

A CUSTOMER RETENTION PROGRAM WITH PACE .......................................................................................... 17

YOUR CUSTOMER’S LIFETIME VALUE ................................................................................................................................ 18

TOP FOUR WAYS OF ENGAGING CUSTOMERS .................................................................................................................... 19

THE CHANNEL IN YOUR CUSTOMERS’ POCKET .................................................................................................................... 20

SOW THE SEEDS FOR YOUR SUCCESS ................................................................................................................................ 21

Appendix

NEXTBEE’S FEATURES ........................................................................................................................................... I

PRICING PHILOSOPHY ........................................................................................................................................ III

PROGRAM PRICING ............................................................................................................................................ VI

PROGRAM BENEFIT ANALYSIS .......................................................................................................................... VII

SOURCES ............................................................................................................................................................. IX

DOCUMENT LICENSE ........................................................................................................................................... X

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NextBee created the PACE Methodology to distill its experiences in the field into an easy-to-follow guide

for shaping the success of nearly any business, in nearly any situation. We know that every product,

service, and customer-base is unique. What is needed is not a marketing gimmick that will work in the

short term, but a method of approaching customers that will carry you through nearly any scenario.

This is what we have designed the PACE Methodology to provide.

NextBee has worked with over 300 leading brands, both large and small, to engage their customers,

employees, and affiliates, reward positive behavior, and create or increase a strong base of dedicated

program users. In the following pages, we will develop these points further to fully flesh out this

methodology, and then we will share a few real-world discoveries that have informed these methods.

Personal

•Nurturing a strong personal relationship through your program requires activecollaboration with your customers. This helps them establish emotional touchpointsand provides them with a sense of purpose, which will keep them feeling fullfilled.Offering a personal relationship through your program is one of the best ways toprovide a quality experience and earn support.

Adaptive

•Designing a structured program which can adapt as your customers progress leads toboth stability and growth. Listen as your customers' actions tell you what works.Discover the rewards and incentives that inspire them. Focus your best efforts onbringing the program to your customers. Both your program's functional operation andits design should continuously match the demonstrated preferences of your customers.

Controlled

•Extensive tracking of program user activity allows you to maintain momentum andcontroll over your customers' engagment in the most effective way possible. You cancontinually optimize the effects of customer activities while significantly increasingtheir lifetime value. This approach also ensures secure data with automated protectionprotocols to guarantee that the ingegrity of your program is never in question.

Exciting

•Keeping your program fresh, intuitive, and fun works to increase excitement and helpsyour program users remain engaged. Developing a strong focus on both how customersinteract with your program, and why, requires a constant dedication to clarity andconsistancy. By following how your customers use your program, you can developincreasingly addictive activities that your customers will return to again and again.

NextBee

Methodology Introduction

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Designing Your Personal Approach Every retention program requires an emotional investment on the part of your customers. Your early

program adopters must be motivated to demonstrate a genuine passion in order to be effective. The

presence of the activities themselves will spark an interest. In order for that interest to develop into a

passionate commitment, the program must interact with your customers on a very personal level.

When your program demonstrates that you care, it encourages your customers to share the quality

experience that you provide to them with their friends, loved ones, and colleagues. The more personal

the experience you give to your customers, the more likely they are to share it with those nearest to

them as well as to the wider world around them.

Using your program to identify your customers’ preferences and favorite activities, and developing more

of the same, is how you prove that these relationships matter to both yourself and your base of

customers. It is how you maintain their interest and increase their activity on your behalf.

How responsive are your customers to email? How active are they on social media? When does their

engagement in a mobile game begin to trail off? When do they prefer to be contacted? Does offering a

discount for 20% off on the anniversary of their first purchase affect their actions? What about on their

birthday? When should the program forward a polite ‘thank you,’ and when should it trigger ad-hoc

points for remaining active in the program?

These questions delve into the personal nature of your program’s relationship with your customers by

placing the program even more firmly into their lives. An integrated process of reviewing the

effectiveness of your program’s functions is not intended to invoke reinvention. Your program will not

act like a traditional marketing campaign. It does not aim to bring a new message to a new audience.

Instead, it seeks to expand your audience through the natural interactions we all have every single day.

Your program is a personal approach meant to inspire your customers to think of the experience your

program provides them, as well as its incentives and rewards, whenever they think of their friends.

NextBee

Creating a Personal Program - Why It Matters, How It’s Done

“The will to win, the desire to succeed, the urge to reach your full potential...these are the keys

that will unlock the door to personal excellence.”

-- Confucius --

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Image attribution: ABC News

abcnews.com

How to Know Whether Your Program Truly Cares At first, it may seem odd to equate business goals with relationships. Extensive real-world experience,

however, demonstrates that doing so keeps focus where it belongs, which is on designing a program

that can interact with and motivate its users on a personal level.

As we will continue to state: the customers’ experience is key. Knowing what that experience is like

inside and out, and improving it at every possible interaction, is how you continue to innovate and

expand the ways your customers value your program.

A personal program is ready for deployment when it can demonstrate the following features and

approaches:

Memorable – You must always seek the details that can make a moment last. It is those

personal touches that always get noticed and embed themselves within our memories. They can

occur during any and every interaction.

Pleasant – Each experience must encourage the next. This is the heart any retention program.

They must all form a near-endless tapestry of positive interactions featuring favored products.

When your products become embedded into the positive memories of your program users, they

will remain committed to your program for a lifetime.

Addictive – You want your customers to spend more time taking part in activities that benefit

your product or service, and to engage those around them in doing so as well. Make your

program habit-forming, and they will do all of these things and more.

Sharable – Make every tool available to your customers to make sharing as effortless as

possible. Allow them to share a high score with just one click. Make it easy for them to generate

images to share with their friends. Allow them to track the progress of other players at a glance.

Every program’s primary objective is to increase sales, maintain customer satisfaction, and improve both

the quality and quantity of new leads. To gain the success you seek, you must also create an

environment which makes your program memorable, pleasant, repetitious, and sharable. This is how

your primary goals will be achieved.

To demonstrate how a program can effectively engage

with its users in a highly personal manner, we offer a

recent example of Twitter teaming up with NBC

Universal and Comcast on a remarkably innovative

approach to engaging and leveraging their users,

viewers, and customers.

1Launching in early 2014, the three technology giants

are enabling Comcast Xfinity cable subscribers to

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change the channel on their TV, and begin watching select NBC programming, by clicking on a tweet.

In addition to allowing viewers to quickly and easily tune into their favorite shows on television, this new

in-Twitter app, dubbed ‘See It,’ will make it easy for Comcast subscribers to watch live broadcasts on

their phones and tablets, as well as to set their DVRs to record.

Twitter fans will now be able to recruit their followers into watching their favorite shows with a simple

retweet. The potential for increasing viewership is enormous.

Creating Personal Connections (that grow with your customers) Making your program truly personal involves following three important steps:

Empathize (with your customers’ experience) Make every effort to walk in your customers’ shoes. Go through the process of purchasing a product,

joining the retention program, contacting customer service, and any other touch points where your

customers interact with your company. At each point, explore the different incentives and forms of

encouragement that could deepen the relationship.

Ask (your best customers why they support you) Think of your favorite customers. Whomever just came to mind, reach out to them. Offer 10% off their

next purchase if they’ll spend 10 minutes on the phone with you. Discuss their favorite features. Inquire

as to the effect these features have on their quality of life. Encourage open discussion. Let them tell you

what kind of engagement they need. As the program grows, regularly send special surveys to your top

program users to help maintain momentum and ensure a strong relationship with your brand.

Respond (as your customers’ needs evolve, so should your program) Seek out ways of demonstrating that you both listened and heard. If customers offer thoughtful

perspectives through a survey response, use them in your next promotional campaign. Thank your

customers, perhaps publicly, and offer a small reward. Nearly every action your customers take should

result in a response that recognizes their contributions.

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Seven Keys to an Adaptive Program Everyone constantly changes. Your customers’ preferences will be driven by both internal and external

factors that evolve over time. Adaptability means growing in a way that meets your customers where

they are, instead of asking them to come to you. The benefits are seen in a program that is able to

evolve to meet the expectations of an ever-growing base of enthusiastic customers. NextBee’s

experience finds that consistently designing a robust and adaptive program requires following seven

specific key principals.

1. Novelty People often find great enjoyment in a rewarding routine. An adaptive program understands

that leverage exists in popular rewards that can be used to encourage greater participation from

already active users. In other words, instead of merely providing rewards, use them to prod your

customers into taking action on your behalf.

You can even use this leverage to adjust retention activities in ways that provide for a new

experience. For example, a program could significantly increase the monetary value of a popular

reward while also turning it into a community achievement. Knowing that another program user

is relying on your actions in order to achieve a popular reward encourages effort and

commitment. A novel approach leads to an increase in your program users’ efforts.

2. Social Influence Beyond making everything your program does easy to share, it also must inspire your customers

to want to share. This is where your own expertise will come into play. Work to provide your

customers with valuable or interesting information. Develop story-form content that tells of the

journey of your company, and that of its products, and invite your customers to turn it into a

video. Keep an eye out for interesting information related to your industry, and offer customers

incentives to share.

Social influencers value their positions within the personal networks a great deal. Your

program’s activities should be designed to encourage the expansion of both their personal

networks and the perceived value of that network. When a customer needs your program in

order to sustain their social standing, they will remain loyal for a lifetime.

NextBee

Key Principles of an Adaptive Approach

“You have to be fast on your feet and adaptive or else a strategy is useless.”

-- Charles de Gaulle --

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3. Program Lifecycle Market conditions change. Customer attitudes change. Your program’s goals do not change.

Your program does not have to either. Remember, a quality program is not about reinvention

and marketing ploys. It is about forming those deep relationships that can adapt, and even

grow, when conditions beyond our control forces change.

With a program that regularly adapts its incentive structure, including which events trigger

rewards, you are better positioned to anticipate disruptive change. Your program makes you

ready for anything the market throws your way. Adaptation in nature is about resiliency and

growth. This is how a robust program benefits you and your business as well.

4. Product Purchase History Adaptation makes your program approachable and intelligent. It is what allows you to use your

program to anticipate the need to change incentives and rewards, in order to keep pace with

customer expectations.

What is it about your product that attracts your customers to begin with? Is it the products

utility and design? Is there a perceived social benefit to being associated with a brand? What is

the essence that sparks their interest? Keeping focus on what already captures your customers’

loyalty helps ensure incentives and rewards remain based on their preferences.

5. Customer Profiles Use your program to develop a robust customer profile that identifies the preferred incentives

and rewards of your top program users. Providing exactly the right encouragement, in the

manner most likely to be acted upon, is where adaption proves its worth. It’s a process that

begins with a program user survey, and lasts through the life of the program.

Many of the most effective segments are created by leveraging key characteristics of your top

customer profile. Recognizing and acting on which segment of customers prefers an incentive

during the shopping experience, to encourage a sale, and which segment responds to a reward

after the sale; is an example of adaptation in action.

6. Pricing and Margins Customers who interact with a responsive program know their activities are being valued,

because the incentives adjust in response to their activities. You can use your program to find

the value that excites your program users the most, and mimic it when developing new

products, especially under brands where they are already loyal.

Discover popular product bundles, and even product/rewards bundles, by analyzing your

product sales in conjunction with program rewards data. With product bundling, you can often

spend a small amount of margin dollars on one product, while increasing the overall profit

margin of the bundled product.

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7. Incentive Responsiveness For a program to engage customers and generate loyalty, it must structure its incentives around

future actions, accomplishments and goals. Unlocking a program level that allows access to

better rewards might include a new profile badge, and should include 3-5 tasks that follow a

progressive path towards the next level, and greater recognition.

The path the program takes must be customized to reflect your product and services, program

goals and the profile of your top program users.

This also requires an understanding of what incentives are not – compensation. Incentives are

meant to motivate future behavior. Compensation is merely payment for past activity. The

difference can become slight, but it is important to note.

A Solid Structure and a Malleable Core Within your overall program’s architecture, you must adapt at the personal level previously discussed.

Far from being a challenge that must be overcome for your program to be successful, adaptation should

be an integral part of the approach itself. It should be seen as the end result and primary benefit of the

program’s features, while expressing the following characteristics:

Flexible – As your customers interact with your program, elements should change and evolve to

meet their needs. The acceptance and use of both retention activities and rewards should be

automatically analyzed for patterns of preferences, while it should be understood that a

meaningful reward for a new customer is different than for someone with a much longer

relationship.

Inquisitive – Using surveys and contests, program users should be allowed to choose their next

reward from a selection of options. Other innovative ways of exploring core desires should

motivate user-behavior to ensure that your program remains ahead of the curve.

Alert – Regular updates and program adjustments should continually fine-tune your program’s

approach to your customers to encourage, in turn, a robust response. The more you use your

program to react to your customer’s needs and wants, the greater their loyalty and willingness

to act.

Approachable – Adaptation is serious business. The program, overall, still needs to maintain a

friendly demeanor. Though you must respond to your customers with haste, never lose track of

your program’s voice. Be polite during all interactions and learn to deploy humor effectively,

when appropriate.

For an illustrative example of a company proving the ethos of adaptability, consider Netflix. This is a

company that started a mail-order DVD business which became so successful that it drove the iconic

Blockbuster rental chain out of business. It has since transformed itself into a content creator that

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develops and streams its own programming, along with that of other partners, on a platform available

nearly anywhere there’s a screen.

2In 2013, Netflix surpassed HBO in number of subscribers at 30 million and

its programming was nominated for, and won, a slew of Emmy awards and

Golden Globes. So how did this mail-order business turn itself into a major

Hollywood playmaker to the delight of its millions of subscribers?

They accomplished this by never resting, always testing, and staying

focused on their subscriber’s quality of experience. The path was not

always smooth, but their success is undeniable.

3Netflix began research and development of video streaming services in

2001. It was not until a full decade later that streaming was finally offered

as a standalone product completely separate from its mail-order offering.

Throughout that decade of development, Netflix continuously tested its services and abilities on small

segments of customers. Once quality streaming became a reality, Netflix continued to follow their

customers where they wanted to go: content, content and a lot more content.

Implementing Change (exactly when needed) An adaptive program gives you the insight needed to know when to move, where to go, and how your

customers currently prefer to be engaged. Building your program from the ground up, so that it always

contains elements in transition in support of greater growth, helps ensure that your program remains

relevant for the long-term. Keeping your program fresh and adaptive means developing it from the

beginning around a framework of best practices:

Review (how your program is used) Schedule at least one hour per week to review all relevant data regarding your customers with your

team. Include information beyond program activity data, such as interactions tracked through your CRM

or POS system.

Refresh (your approach to engaging your customers) Aggressively schedule program updates. If an initial test of a new message, incentive, or reward on a

particular segment demonstrates a potential for success, quickly implement it across every channel and

segment. Encourage all stakeholders to pursue ways of reducing friction and increasing engagement.

Change (as you grow, and keep up with your program’s users) Always have your program doing something, even if it means going with your gut. This does not mean

inventing busy-work. Change should be highly automated. It does mean taking risks in pursuit of

optimization, but of course you should always minimize exposure whenever possible by testing ideas on

segments before introducing them to a broader audience.

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Controlling Lifetime Value Program growth is regularly generated through a careful balance between the creativity and initiative of

a program’s users, and the needs of the business. A balance maintained through smart program controls

that influence the interactions of multiple stakeholders to encourage the continued use of activities that

benefit your brand. This allows program managers to use incentives as leverage to gain desired

behaviors and activities.

In other words, mostly use carrots, but don’t be afraid of a little stick.

A smart program focuses on building the relationships that lead to a lifetime of value. It means using

your customers’ first names at every opportunity, knowing when major anniversaries might soon be

approaching, and inserting the date of their first purchases in every email you send (and thanking them

each time). A well-controlled program can even recognize the birthdays of customers’ extended

families, which can play a role when planning targeted promotions.

These features encourage greater engagement from your customers and encourage a lifetime of long-

term program buy-in, as does insisting on a series of 3-5 tasks before promoting customers to a higher

program level with more prestigious rewards. The same goes for polite messages informing customers

that bonus points await them with every third activity complete, especially when they already have two.

Smart controls provide just the right type of push, exactly when needed.

Customer-tracking abilities have grown enormously in just the past few years, creating an opportunity

for developing highly specialized segments of customers and channel sales in a way that simply was not

possible just a very short while ago. These capabilities allow you to control the growth and momentum

of your program by offering targeted and timed incentives and rewards to keep your customers excited

and engaged.

There always remain market forces beyond the reach of any data analysis. There is no amount of data

that will allow your program to anticipate every potential occurrence. Fortunately, this inherent truth

also illuminates a valuable aspect of any well designed program.

Going through the process of personalizing your program and keeping it adaptive also serves to

strengthen the relationship you have with your customers. You can always exert influence and control

over the relationship by keeping your program engaged. This approach to retention can help those

relationships endure during more challenging times.

Smart Controls – How to Create and Use Them

“If you can't control your peanut butter, you can't expect to control your life.”

-- Bill Watterson --

NextBee

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Individually, attention to the types of details that allow you to exert ever-greater control over your

program may seem no more than a polite way to conduct business. As the number of customers

participating in your retention program increases, patterns will begin to emerge that can help illuminate

the most valuable direction a program can take, as well as offer insights on how to encourage your

customers to take you towards growth. While the value of a controlled program can be immediately

apparent, its true worth becomes demonstrated over time.

Characteristics of a Well-Controlled Program Taking advantage of the opportunities these patterns represent requires a systemic approach to

program control. This means agreeing to guidelines on what does, and does not, qualify as actionable

information that can be used to direct to program’s growth:

Tracked – Whether through a robust, tagged, tracking system, or advanced browser-based

tracking, you must always make every effort, within reason, to expand the number of ways you

follow your customers as they interact with your brand. Though assumptions can often prove

correct, it is better to not have to make them at all.

Persistent – Though a small bump in activity from one-off promotions can certainly prove

valuable, real momentum is created with consistency. A strategy must not only work to be

effective, it must work repeatedly. Otherwise, the needed ROI simply will not break through.

Sustainable – Some aspects of your program will be set on auto-pilot from the moment it is

initiated, such as a brief ‘thank you’ message for joining the program. Others will require a

greater level of attention from the program administrator or other team members. As new

opportunities create new tasks, you must ensure the resources are available to ensure their

success.

Reliable – When program customers see that their actions have an impact, they will stay

engaged long-term. Through their actions, they demonstrate a desire to form a strong

relationship with your product or service. So long as the program stays relevant, they will

actively seek to nurture the relationship’s growth themselves.

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Best Practices (for increasing lifetime value) Knowing which tracked information is valuable, and which represents a momentary spike that will not

be repeated, is often referred to as ‘Hearing the signal through the noise.’ By developing and following

guidelines for reviewing your customers’ activity data, you can understand the difference between those

signals for yourself. From customers who indicate action should be taken, to the statistical noise that

represents momentary concerns, but no long-term pattern.

Observing how your customers interact with your program, and creating guidelines for using relevant

program activity data, requires the complete integrity of your program, including the security of your

customers’ information and data. Following industry-standard security protocols and exceeding best

practices guarantee that you will make program decisions based on accurate data, while assuring your

customers that you value their information and protect it.

Developing and using you own guidelines is how program control can be maintained. Those guidelines

should, in general, follow three important tenets:

Customize (for your customers as much as you can) You should consistently be looking at your segments and discovering more. Basic demographics are both

the standard and just the beginning. Segmenting by rewards preference may indicate something

interesting that can be further explored. You simply do not know until you try, and segments allow you

to always be trying, without the risk of testing new ideas on your entire customer base.

Map (the journey of your best customers) Know the path you want your customers to take. Sketch out how they join the program, what they do

first, what they do next, how long you expect it to take to gain the first reward, and more. Create unique

incentives for each interaction, and know that not every interaction requires one.

Plan (ahead, so you’re ready when it’s time to re-engage)

A controlled response is always a well-prepared one. Familiarity breeds acceptance, and success leads to

even more support. It is easy to find fans of a sports team when the team is winning. Likewise, many of

those customers who demonstrated little interest during your program’s launch will become much more

interested as the program’s success becomes more and more apparent. As your base of customers

continues to expand the use of the engagement tools available to them, seek to leverage their activity

by returning and re-engaging your original base of customers.

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Increasing Customer Excitement Every program involves tasks in pursuit of a goal. Both the design of the tasks, and the rewards,

contribute to the overall enjoyment of the program. The best programs make all of their tasks so fun

and exciting that completing them becomes addictive.

Effectively using your program to generate excitement is part learned intuition and part smart design. In

many ways you already know how. Whenever you interact with one of your best customers, that person

usually knows it. Your approach, demeanor, and behavior changes to fit the preferences of the

important person before you.

From your program’s perspective, every customer should be afforded the same attention, not just your

best. Each customer holds the potential to be a fantastic advocate on your behalf. The significance of

engaging with customers appropriately is clear since their lifetime value to the company is so great.

When you engage your customers on this intimate level, they become excited.

Do your customers mostly communicate with their friends through email or social media? Would they

prefer a coupon on a future purchase, a discount on the current purchase, or points towards a larger

reward? Do they interact more with a clean interface with different sections behind different tabs, or do

they want just one big page with all the information they could possibly need readily visible?

With the understanding of these questions firmly in hand, you can build a strong base of customers who

are demonstrably excited to actively engage their friends, families, and associates for the benefit of your

product or service.

By designing your program to engage early and often with early adopters, in an effort to excite those

who demonstrate an active willingness to support your program, you lay the groundwork for aggressive

expansion and growth. These early program adopters typically demonstrate an influence that matches

their number of contacts. Friends, and many others, often look to these types of program users for

information, ideas, and products that can genuinely add value to their lives. Their opinion is held very

highly among those in their networks. When they get excited, so do their friends.

We do not mean to suggest that you should seek to become friends yourself with active program users.

Generating excitement must be smart if it is to be successful. Though some individual interaction may

occur - such as a direct follow-up to a survey response - individual interaction is not the goal. The goal is

to make the program better.

An Exciting Experience at Every Touch Point

“Life is an exciting business, and most exciting when it is lived for others.”

-- Helen Keller --

NextBee

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Typically, a user reaches VIP status, or its equivalent, through regular purchases. In other words, those

who spend the most money receive the most attention and get the best deals. Your program offers the

ability to engage with a different VIP. Someone who may not regularly commit to outsized purchases,

but who does demonstrate an outsized influence.

Leveraging this influence on your behalf, and being rewarded for it, achieves the same effect as the

traditional VIP – only instead of one person making many purchases, it is several people making several

purchases. Many of these customers will also demonstrate an ability to influence the preferences of

their friends, thereby creating virtuous cycles of new customers who become active referrers, leading to

higher sales, greater program growth, and more new customers – which continues the cycle.

The Program Stays Exciting, You Implement Solutions Understanding the need to engage more directly with those program users who demonstrate preferable

attributes, and defining what those attributes are, can be two very different things. Often created from

a mixture of demographics and activity data, the segment that represents your VIP customers regularly

shares the following characteristics:

Social – Your top program users will engage across two or more social networks in addition to

regular email. They may not be heavy users in all of them, but they do demonstrate a regularity

that shows a high comfort level with each. Your program must meet them where they are,

everywhere.

Positive – Top program users always go above and beyond with regularity. They’re always up for

a good time with their friends. They fill out surveys, take an active role in contests and

sweepstakes, drive group achievements, and go out of their way to encourage others to do the

same. Use their responses to understand which activities will be broadly popular.

Engaged – Top program users will often make the effort to add additional information in

comment boxes. In fact, the purpose of comment boxes in surveys may be solely to identify

those who are likely to become power users of your program. Those who use comment boxes

indicate a willingness to be more involved with the growth of the program.

Consider the popular subscription program, Amazon Prime. Typical subscription models of retention

offer a discount on a product or service if the customer agrees to a regularly occurring purchase. The

value is in the product. The value of the subscription for the customer is the product at a cheaper price,

plus the ease of a regular schedule managed by someone else.

Amazon did not follow this model when developing their Prime program. Instead, they viewed the

entire customer experience holistically. Customers were already receiving a discount on most items

when compared to traditional brick-and-mortar stores. Doing more of the same – providing a greater

discount – was viewed as providing a reward for behavior that was already occurring, instead of an

incentive that would encourage greater engagement.

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Instead, Amazon placed its incentive in the

context of what would excite their

customers the most: time. By offering

“free” two-day shipping on most items,

they created a successful engagement

program that placed its value in the online

shopping experience, and then offered an

incentive that increased the attractiveness

of that experience.

6Amazon’s Prime program has been an

enormous success since its launch in 2005.

By the end of 2012, it had an estimated 10 million users. Amazon reports that its members are their best

customers, regularly purchasing twice the number of products when compared to the company’s non-

Prime member customers.

Every business is, of course, unique. No one will be able to replicate Amazon’s, or anyone else’s exact

path to success. Nor does anyone need to try. You are already well aware of the process involved with a

new customer who is making a purchase, since you already know the steps they have to take and the

overall experience they have while making a purchase.

Your Customers’ Experience (and how to engage it) You know your customers’ experience already. By making use of their activity data, you can come to

understand what, within that experience, they value. Creating this opportunity for a systemic increase in

customer engagement generally requires following three important steps:

Specify (the experience you expect your customers to have) Make certain that you retain complete focus on the value you want to bring to your customers’

experience. Explore where that experience can be improved. Always ask yourself, and your top program

users, how the essential elements of the experience you offer can be leveraged for greater engagement.

Distill (your program goals into distinct retention activities) Focus the goals of you program and separate each of them into different engagement points. Develop,

deploy, and test different incentives for each engagement point. As you continue to progress and

engage across multiple platforms, and in multiple ways, look for methods of streamlining your approach.

Motivate (with incentives that provoke an intrinsic value) Provide incentives that invoke an intrinsic value you share with your customers. If unsure, then make

this a point of inquiry when asking your favorite program members. Then combine that intrinsic value

with the inherent value of the incentives you choose. It is often a balance between the intrinsic value

and perceived monetary value of different incentives and rewards that drives customer activities.

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You already know you can’t simply succeed by competing on price alone. It’s establishing a relationship

that creates loyal, repeat, customers who are excited every time they engage you.

Customers can only leave on a whim when

there is no future to consider. Creating that

future, and continuously making it an enviable

place to be, will help you realize the full

lifetime value of each of your customers.

Before they even make their first purchase, you

can connect with them and lay the groundwork

for a powerful relationship that will only

continue to increase in value.

A smart customer retention program deepens

the relationship you have with your customers

by tracking and recognizing their

communication preferences, which social

media platforms they are actively involved

with, the types of engagement activities they

like to participate in, and much, much more. It can also do the same with the incentives and rewards

options. Making it possible to create an irresistible combination of message, activity and incentive that

your customers will respond to again and again.

Your customers will know they are valued when you proactively engage with them. When you ask for

their opinion instead of waiting for it to be offered, your customers will know you’re listening. When you

offer a discount towards a future purchase for sharing their experience on social media, your customers

will know their loyalty matters to you. When you reward them for referring your product or service to a

friend, your customers will understand that you value them. Do all of these things and they will know

that you share a common outlook on the world, as members of a community often do.

Traditional marketing programs can expand your number of new customers, but they do little for the

customer experience. By having a retention program in place, you can be sure to capture every

customer for the long-term.

A Customer Retention Program with PACE

“Caring for your customers should be as important as the quality of your product or service. You

define how much you care by the experience you provide. You demonstrate it when you follow

through and exceed all expectations. That’s how long-lasting relationships are built.”

-- NextBee --

NextBee

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A Customer’s Lifetime Value When a program automatically reacts to your users’ activities, by either thanking them, requesting they

do it again, or offering a more valuable reward, that user knows their participation mattered.

Such examples of controlled interaction have proven to be major drivers of increased participation. The

program’s rewards will almost always get the most attention from your customers. By adding a layer of

interaction that adapts to the evolving needs of your customers, you create additional value that did not

previously exist.

Your program users will also quickly grow fond of favorite activities, look forward to doing them and

expect to be rewarded for their participation. Use their demonstrated desire as leverage to motivate

behaviors and activities that help you meet and exceed your program’s goals. Control the direction of

your customers’ energy and harness it to be as effective on your behalf as possible by structuring the

program’s approach as follows:

Goal: Measurably increased engagement

Method: Do it, do it again, do it more – When you see a pattern that indicates a popular

activity, encourage its expanded use. If your users enjoy posting images to

Twitter, tweak the incentive so they post to Pinterest as well.

Goal: Development of user-directed advocacy

Method: Follow the follower – Demonstrate program leadership by delegating to your

users. Regularly post an image of one of your products and hold contests for

creating the official product slogan. By following the lead of your users, you will

create greater buy-in from all of your customers.

Goal: Expansion of your customer base

Method: Do what your data tells you – Your customers will naturally migrate to new

activities, communication methods and social media platforms. When your

program demonstrates the adaptive ability to react and grow along with your

customers, they will increase their advocacy on your behalf and earn you a large

number of new customers.

Developing a truly robust program is a primary key to success. It is what will establish emotional touch

points that lead directly to brand advocacy program users taking action.

Customers know that personal service is better service. They value it a great deal. When they know that

their activities and actions have a real impact on their own experience, and not just your bottom line,

they react. We all find activities more worthwhile and fulfilling when we receive both a response and a

reward. Your customers benefit both emotionally and financially from participating in an advocacy

program with you. The more they become involved, the more likely they are to remain valuable

customers advocating on your behalf for a very long time.

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Top Four Ways of Proactively Engaging Your Customers Ready to move beyond growing a large number of followers and start converting customers? A robust

retention program helps you learn your customers’ preferences while deepening your relationship with

them. To begin, follow these four suggestions for activating your customers.

1. Encourage the Sharing of Personal Opinions Develop a testimonial contest where you choose the winners and every entry leads to a

sweepstakes drawing. This can be an energetic driver of customer engagement. It also helps

create the perfect face of your company – that of your customers. Consider a rolling monthly

contest where new testimonials are solicited and publicly displayed.

2. Adapt Quickly to New Social Networks Follow your fans wherever they go. Do not concern yourself with the size of a new network.

Arriving early on a new platform allows you to establish your presence ahead of your

competitors, and likely earn followers you may not have otherwise. Remaining engaged with

your followers is always key. If they demonstrate an interest in taking part of activities on other

platforms, your response should be encouragement.

3. Use Social Engagement to Control Program Growth From small birthday celebrations to national events, social media is the perfect place to

celebrate. By using analytics to closely track the preferences of your customers, you can

anticipate which events are likely to trigger engagement, and even plan targeted incentives for

specific segments and channels. Every day is special to someone. Now you can know who.

4. Generate Excitement through Immediate Impact Put a spin on the one-question survey by creating voting opportunities using social media’s

functionality. Place a pro/con or this/that argument on one of your social media feeds. Invite

followers to ‘share’ if they want to vote one way, or ‘like’ if they want to vote another. For

example, they could ‘share’ if they enjoy Coca-Cola, or ‘like’ if they prefer Pepsi. Your customers

will be able to see the impact of their vote immediately, encouraging greater participation. Be

sure to thank everyone, and perhaps offer a coupon code for participating.

The most important thing you can do is ‘something.’ The vast majority of activity taking place on social

media is the sharing of content generated by others. The number of those actually creating the content

can be few, particularly within a specific market or industry.

Merely by contributing meaningful content, you increase the likelihood of creating a new customers

through engagement. You also intensify the value of your brand’s identity by establishing yourself as an

expert on popular public forums. Leading to the likelihood of others viewing your products and services

as the premier offerings within your field.

The PACE Methodology is always focused on the experiences of your customers.

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The Channel in Their Pocket Push notifications are set to drive engagement and interaction like never before. The power of placing

your program in the purse and pocket of every one of your customers cannot be overstated. By pushing

your message directly to the most compelling screen in use today – our phones – engagement has

become more direct, personal and relevant than ever before.

Providing a branded engagement app that automatically integrates with every popular social media

platform increases the reach your customers have with their followers and places your products and

services onto the largest number of screens possible.

Now, when you send an important message out to all of your fans and followers, including content on

new products and services, push notifications provide greater promotion penetration than ever before.

Beyond superior promotion control, a branded mobile app with push notifications gives you the ability

to interact with your program users in a highly personalized manner. Allowing your program to leverage

an entire community of engaged customers.

Stay in touch across multiple platforms – send automatic notifications when a customer’s

program related post on social media is liked and shared by their friends, family and colleagues

Push motivational updates – automatically inform every program member whenever there’s a

change in the top 5 leaderboard positions of a contest

Creatively use innovative features – develop geo-targeting related activities and games, such as

rewarding customers merely for checking into a certain store or area on social media

Program customers rely on their smartphones to keep them connected to the most important people,

activities and events in their lives. It’s the best platform for fostering a close personal relationship that

will provide a lifetime of value for both the customer and your program. Instead of encouraging your

program customers to interact with the program through your website, you can push important

information and activities directly to them.

When new rewards are added or earned, you can automatically push an image of the reward out to your

customers. When their one social engagement away from earning bonus points, your program can push

a one-click method for achieving the incentive. If you want to form your customers into teams and

entire cities into game boards, you can push your imagination to the limit of the possibilities that mobile

enables.

Mobile platforms continue to develop innovative ways of facilitating activities and tracking your

program user’s preferences. By relying on an equally adaptive cloud-based platform, and by designing

many brand advocacy program features as plug-and-play software modules, NextBee remains well-

positioned to continue to merge the newest technologies with advanced features.

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Sow the Seeds for Your Success Many of the suggestions offered above track closely with the first-quarter action plan NextBee provides

to all their clients. Many more strategies remain for promoting your program to a growing community of

dedicated customers. No matter the strategy, we often encourage our clients, as well as ourselves, to

keep the following points in mind:

Display a Sense of Humor – Note: this is different than, ‘Be Funny.’ It essentially means

provoking laughter while also being nice. Humor that mocks can, and will, quickly backfire.

Provide an Ego Boost – Go out of your way to design a program that reminds customers what a

great decision they made by joining the program. When customers consider your brand, it

should work as a mirror which reflects their best characteristics back to them.

Remain Useful – Offer important information, and keep your customers updated on current

trends. Work to develop a program that becomes a true resource for your customers by helping

them to remain up-to-date and connected with what matters in their lives.

Controversy –A program that is afraid to ruffle feathers in pursuit of its goals does not inspire

confidence from its customers. Make bold decisions and stand by them.

Be Dramatic – Especially on social media posts. Write with a flair you normally wouldn’t and

reference events in flamboyant terms. It’s amazing!

Aim for the Heart – Humor works well because it provokes socially acceptable emotions. Pulling

the heart strings with a touching message can have a similar effect.

You do not need to take this general approach and posture always, though it is often effective to deploy

a healthy mix of many of these suggested items. If you have solid messaging that works, but suddenly

starts to go stale, it’s a good list to remember to ensure you are still following core principals.

Preferences, however, change over time. Some segments of customers will always prefer to

communicate through email. Others will migrate to social media platforms and expect their favorite

brands to meet them there. You return your customer’s demonstrations of loyalty when your program

establishes the adaptive ability to react positively to change and grow along with your customers.

Excitement in affiliate programs often centers on the rewards. Whether a grand prize, or public

recognition, it is the incentives that your program deploys that will maintain your customers’ excitement

for as long as your program runs.

An incentive does not necessarily have to translate into something with a clear monetary value. The

right incentive, or series of incentives, involves three primary characteristics:

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Thoughtfulness – The incentive should express a deeper than casual knowledge, much like

choosing a gift for a significant other.

Understanding – A shared point-of-view demonstrates empathy beyond the mere knowledge of

what your customers’ value. An incentive can demonstrate an outlook on the world that you

and your customers share. Sometimes, the real reward is helping others.

Reflection – Your customers, clients, and employees must see themselves in the incentive. The

rewards must invoke those values you actively wish to see expressed in this world.

Incentives are an investment. They induce future behavior that will be profitable. Keeping your

incentives fresh is how your affiliate program will remain relevant in the lives of your customers.

Again, this does not mean providing always-greater rewards with an increasingly expensive price tag. An

engaging incentive can be a badge on a profile, special access to VIP offers, public acknowledgement

and encouragement, or something as simple as a one-phrase, hand-written, thank-you note sent to a

single random program user each and every month.

An abundance of attention to detail is typically required when designing a new program. It needs to be

technically integrated and aesthetically pleasing; it needs to offer initial messaging and include

incentives that grab the attention of casual customers and long-term customers.

When designed well, a program will almost always create excitement and gain some of the needed

attention on its own. A strong plan and solid execution will accelerate results.

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NextBee’s Customer Retention Program Features

Key Motivators for Program Participants

Use our easy-to-follow, in-app activity panel to make program adjustments that increase retention rate by demonstrating your interest in every users’ experience

Provide a choice of rewards for successful engagement activities and keep your customers returning through recognition of what they want

Provide feedback and respond to it for any product, and generate custom responses focused on retention

Use your retention program to offer early access to new features and even seek out design input from key influencers and advocates

Keep track of every customer’s place along their customer lifecycle and offer special discounts and rewards that encourage longevity

Reward positive behavior with auto-triggered engagement credits that activate when a user follows the suggested application usage

Guaranteed Results through Smart Controls

Configurable onboarding checklist for all new customers ensures a consistent and high quality experience

One-on-one offers and rewards using personalized account management tools that adjusts the incentives based on each customer’s profile

Smart incentives designed to meet the program’s goals, with rewards tied to specific steps or based on completing multiple steps

At-a-glance analysis with easy discovery and tracking of any ‘at-risk' accounts through customized customer retention program reports

Weekly auto-triggered messages based on the activity level of your customers that encourage continued engagement

A retention program structure that fits your current sales process with easy segmentation of account managers, account types, and acquisition channels

Appendix

NextBee

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Best of the Breed Technology Platform

Single Sign-On integration with current customer accounts, no matter the account system, already baked into your customer retention program

SSL-based asynchronous tracking with double redundancy included as standard in all program designs and promotional activities

Automatic high-level encryption of all sensitive data ensures the integrity of your customer’s personal information

Automatic synchronization with your CRM and ESP System of all tracked customer retention data, compatible with all major systems

Quick and easy data posting allows you to give rewards as service credits or coupons to help maintain quality customer relationships

Customized notifications and auto-triggered alerts to account manager based on your own defined criteria, with standard alerts already included

Commitment to Success of the Program

Configurable onboarding checklist for a consistent experience for every customer in the program

Easy configuration of data-backed customer retention and re-activation offers match the right incentive to the right profile

Expert review and analysis of each incentive’s ability to influence preferred activities and behaviors within the customer retention program

Experienced guidance and assistance with segmenting and identifying patterns of user groups that impact customer retention rates

Analysis of any new feature's roll-out effect on adoption of new customers and retention of current customers

Identifying accounts that meet the necessary criteria for assisting in the new product design process, including beta-testing of new features

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Pricing Philosophy

How Do You Measure Potential? It can be hard to account for the cost of a customer or client that is not there, just as it can be difficult to

ascertain how much more valuable a skilled employee or team might become with the right incentives.

A comparison between the value of a repeat customer and someone one who only buys once is slightly

more straightforward. Even then, however, the definition of ‘repeat’ must be carefully considered or the

average value risks becoming meaningless.

When NextBee is approached, the question forms in many ways. How does NextBee structure its

programs to ensure the investment is worth the cost? What methods are used to measure success?

When can the company expect to see a return on its investment?

No matter how it may be framed, how quickly our programs becomes ROI positive is the most important

question we are ever asked.

No one can see the future, and there are always risks to any endeavor. However, we hope to provide a

‘behind-the-scenes’ look at the value received when compared to the costs of deployment, as well as

the additional value you should expect to receive from the implementation of the programs themselves.

The NextBee Guarantee

Unlimited Tech Support – Days, nights, weekends, and holidays: we’re here for you, always, at

no extra cost.

One Platform, Forever – All upgrades, enhancements, and new features can be made

continuously available for your program’s use.

No Price Increases – Stay within your program and most new benefits become yours at the

monthly price you pay now.

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Pricing Considerations

NextBee looks at a variety of factors when determining the cost of a program. Every client is unique.

Some are quite capable of handling their own customization needs, while other clients rely on NextBee’s

expertise extensively. Either way, you will only pay for what you need, nothing more. NextBee is focused

on what works – for our clients and for ourselves.

Campaign Duration (numbers quoted are leveled to $100 for comparison)

Short Term - 75% less than the cost of doing it yourself*.

Long Term - Equal to 25% of your first year returns.

Customization (numbers quoted are leveled to $100 for comparison)

We provide the API for you to customize for FREE.

Back End Customization - 75% less than the cost of doing it yourself*.

Front End Customization - 90% less than the cost of doing it yourself*.

Service Level (numbers quoted are leveled to $100 for comparison)

Accessing and using our tools after training is FREE

Monthly Checkpoint Program Management - 90% less than the average salary of a Marketing

Manager**.

Weekly Checkpoint - a dedicated Account Manager providing status reports as frequently as you

want them - 75% less than the average salary of a Marketing Manager**.

A clear understanding of your own goals in any program is necessary for a true cost analysis to be

conducted. NextBee prides itself on working closely with its clients to help ensure ROI expectations are

met and exceeded.

By keeping the implementation costs low, the additional value generated by increased sales, more

frequent sales and more productive employees occurs quickly. The growth is often measurable in a very

short period of time.

*NextBee has a team of highly skilled in-house programmers. We know the general cost of an experienced programmer and

make use of economies of scale to greatly reduce this cost for our clients. The cost comparison is based on our experience and

experiences may vary. In fact, that’s why we offer you the API for free.

**The average salary of a Marketing Manager in the United States as reported by Salary.com on 01/15/2014

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The Value Received

NextBee’s pricing structure must reflect more than the base cost of deploying a program. It needs to

encompass the full value of the service NextBee provides, as well as the considerable time, effort, and

talent demonstrated daily by NextBee’s employees. Consider the following:

A study conducted by Goethe University’s School of Business and Economics found the average

value of a referred customer to be 16% higher than a comparable customer.

Inc.com recently ran a report noting that repeat, loyal customers spend 67% more on average

than new, first-time customers.

A similar study conducted by Mainspring on behalf of Bain & Co. concluded that it was actually

impossible for ecommerce companies to earn a profit from one-time shoppers.

CBS reported on a review of 31 case studies that showed the average cost of replacing an

employee to be the equivalent of 20% of their base salary.

An analysis of a business survey conducted by Gallop found a 50% increase in productivity for

companies that engaged their employees with incentives the most vs. those that did the least.

NextBee’s programs can create repeat customers and clients made more valuable through regular,

repeat, purchases, along with engaged employees proactively improving the company’s bottom line. All

programs include baked-in tools designed for quick and easy analysis, allowing you to see exactly how

well your program is working in real time. These are the benefits NextBee considers when designing our

pricing philosophy.

How those benefits translate to your specific situation and unique business depends on an open and

honest discussion of your current abilities, limitations, and goals. NextBee prides itself on the flexibility

of its approach and the scalability of its software. We remain committed to providing incentive solutions

to companies of all sizes, in every industry and market.

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NextBee Pricing The following pricing reflects general categories and does not represent the specific build that will be

required for your program. Please visit NextBee.com to contact one of our Senior Sales Executives for

further details on our competitive pricing structure.

Standard Access This license suits the needs of most businesses that have a presence across multiple channels (such as

web, social, and mobile) but whose marketing initiatives are managed by central marketing teams.

Program with Web Only Integration $1500/per month

Program with CRM Integration $2400/per month

Program with Channel Specific Settings $3600/per month

Program based on a Custom Build $6000/per month

Teams Edition This license is built for the needs of organizations that have multiple brands or agencies responsible for

managing multiple accounts, each with its own technology stack and targeted audience.

1 to 3 Portals $5400/per month

3 to 10 Portals $9600/per month

10 to 25 Portals $15,000/per month

25 to 50 Portals Custom Quote

Corporate Bundle This license caters to the specialized requirements of businesses with franchises, or organizations where

regional or vertical industry specific marketing teams operate independently.

For 1 to 5 Command Centers $8400/per month

For 5 to 50 Command Centers $12,000/per month

For 50 to 300 Command Centers $18,000/per month

For 300+ Command Centers Custom Quote

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Program Benefit Analysis No two clients are alike, and neither is their base of users. That does not mean it is impossible to know

the value your program provides. Efforts to retain your customers and grow their engagement will

depend on where each customer is within their lifecycle. Each lifecycle stage will have its own focus. Any

ROI analysis should focus on three specific impacts that will actively contribute to your program’s

success.

*1st Impact – Attention

Current number of customers active on social media _____

Combined number of social media actions (likes, shares, etc.) per engagement activity _____

Impacted by Promotions

Additional number of social media actions (likes, shares, etc.) taken by influencer followers

2x

Percentage of total social media actions that lead to brand engagement or product usage

10%

Percentage of total social media actions that lead to a purchase by new customers

5%

*2nd Impact – Activation

Opt-In to Gamification Program 60%

Percentage of users who complete tier one activities _____% Impacted by 1st Reward

Increase in lifetime value of users completing first tier 1.5x

Percentage of users who complete tier two activities _____% Impacted by Promotions

Increase in lifetime value of users completing first tier 2x

Percentage of users who complete tier three activities _____% Impacted by Engagement

Increase in lifetime value of users completing first tier 5x

*3rd Impact –Optimization

Annual increase in gameplay and activity engagement 10%

Percentage annual decrease in customers becoming inactive

(_____%) Impacted by Promotions

Regular increase in wallet share of customers active beyond one year

1.15x

*Figures used for illustrative purposes only and are not intended to reflect the performance of any particular program. Results

vary based on market conditions and program features.

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Page iii

Document Sources

1http://a.abcnews.com/images/Technology/ht_twitter_comcast_ll_131009_16x9_992.jpg 2http://www.inc.com/peter-cohan/3-start-up-lessons-from-netflix-master-of-adaptation.html

Netflix Graphic:

http://online.wsj.com/news/articles/SB10001424052702303902404579149883903402974 3http://www.forbes.com/sites/chunkamui/2011/03/17/how-netflix-innovates-and-wins/ 4http://www.emarketer.com/Article/Twitter-Use-Rises-Across-US-Age-Groups/1010119 6http://www.geekwire.com/2013/amazon-prime-10m-members-counting/

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