1. The evolution of Loyalty schemes Planning implications for Automotive brands Prepared by Colin Gray June 2014

2. What is Loyalty? Some fans expressed their loyalty by funding the banner stunt, while others expressed theirs by booing it 3. A backdrop of change 4. Were living in an increasingly Mobile & Social World Source: YouGov 5. Weve become a nation of deal hunters we expect them and know where to seek them out, so happily switch brand and store them to take full advantage. 6. Leading some to talk about The death of Loyalty Since 2010, articles with titles such as The death of Loyalty programmes have been highlighting a shift in emphasis from transactions and discounts to engagement and emotion 7. Rory Sutherland Engaged consumers keep you front of mind 8. Lets have a look at some examples of how Loyalty schemes are evolving 9. Air Miles is the worlds largest loyalty programme with millions of members earning points towards high value/low frequency purchases 10. However, Airlines are increasingly shifting their efforts on to Social Media There are now more airlines on Twitter than with frequent flyer schemes 191 versus 179 Nearly 90% of frequent flyers use Facebook regularly 65% have liked an airlines FB page 11. 44% To get the latest info about deals & competitions 50% To stay updated with the latest news 14% To stay in contact with the brand 37% To affirm loyalty to the brand What are their customers expecting there? 12. Tesco pioneered the concept of high frequency/low value loyalty in the late 90s and the Clubcard is a key reason for their dominant mass market position After a growing challenge from low cost and premium brands, theyve invested over 1bn in a major overhaul of its stores, product ranges and staff However, Tescos UK sales are still declining 13. Even Tesco are rethinking their approach to Loyalty in the age of the Digital Wallet 14. my Waitrose Waitrose believed that the traditional customer loyalty model needed improvement Their answer? Offer members of their loyalty programme a free cup of coffee or tea anytime they visit Shoppers simply present their card and enjoy their beverage while shopping in-store or they can take it away In addition, customers who spend 5 or more can get a free newspaper Waitrose believe customers prefer instant gifts to collecting points for redemption at some point in the future 15. Considered by industry insiders to be one of the best schemes for one big reason: free stuff The single-minded focus on rewarding a consumer for frequent patronage, which is why entry-level perks like a free drink on your birthday and two hours of free Wi-Fi per day eventually grow into free syrup and milk options, free refills and free coffee 16. National Car Rental's Emerald Club = a fast lane for frequent renters that gets them from plane to car faster, but also gives renters their pick of any car on the lot once they arrive One rental = one credit with seven credits earning a free-car day, but the speed-through service is what their customers truly value 17. So what does this all mean? 18. 81% agree that point reward programmes are somewhat or completely out of touch with modern consumers Brands need to take a step back and potentially reframe the challenge Source: Retail Wire/Waitrose 19. Thankfully, Innovation is a source of Competitive Advantage The decision to focus on innovation as a core strength has had a direct influence on our performance. P&G has delivered 6% growth since the beginning of the decade driven by innovation AG Lafley, CEO, Procter & Gamble 20. So lets embrace the change We need to integrate Loyalty and Social Media efforts to optimise brand engagement and perceptions of an ongoing dialogue 40% of owners say that ongoing comms affect loyalty (Cap Gemini) 87% of New Car drivers say theyll buy the same brand next time, but only 56% do so (Google) We need to focus on our ongoing KPIs, but also consider the bigger picture as well 21. 1/3 of New Car owners have given a friend a test drive 14% have written an online review of their dealership 12% have shared pictures of their new car on Facebook 6% have become a fan of the brand on Facebook Is there an opportunity to create Advocacy? Source: Microsoft 22. Vauxhall are doing this already 23. Although Fiat are yet to integrate MyFiat, they have a mature social strategy with over 1.1m FB fans 24. Ford focus on hard to reach drivers of out-of- warranty vehicles and benefit from Nectars significant social footprint 25. Recommendations for discussion Build more of a community vibe Share news on any customer competition wins, track days and exclusive events via Facebook & Twitter Build more two-way dialogue 26. Recommendations for discussion Identify and target Moments of Need Bank Holiday weekends and severe weather warnings are the peak times that breakdown cover is purchased can this thinking be applied to Aftersales messaging? Test campaigns targeting amateur Owners Clubs? Launch a dedicated YouTube channel for owners? 27. Recommendations for discussion Allow owners to capture their requirements for their next new car and submit these to local dealers to compete for the business? Download an interactive / 360 test drive to view on a games console at home 28. APPENDICES 29. Theres no one size fits all in YouTube