simon rowles conference presentation september 2010
TRANSCRIPT
Customer Loyalty ProgrammesThe need for customised communications
24th September 2010
Simon RowlesVice President Asia Pacific
The information contained in this document is confidential and proprietary to Carlson Marketing Group. Carlson Marketing Group shares this document with the understanding that it will be held in strict confidence, and will not be disclosed, duplicated or used in whole or part, without the prior knowledge and approval of Carlson Marketing Group.
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Carlson Marketing New Zealand :
Financial Services
Channels EmployeesCustomers
*HSBC owns remaining 40% of Air Miles Middle East. **Oney Banque Accord owns the remaining 25% of Nectar Italia.
U.K. Italia Chile
We manage over 1,5 million Kiwi programme members
Our sister companies in Groupe Aeroplan
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Marketing spend continues to shift from Above The Line to Direct To Customer
Spend by channel type, top 100 USA advertisers, 2004 – 2008 CAGR %
Above the line
Below the line
Source : McKinsey research
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Customers don’t listen to or trust marketers.
Beer
Soft drinks
Drug
Clothing
Home Products
Fast food
Pet related
5%
22%
32%
33%
42%
45%
56%
Companies social networking sites
Friends social networking sites
Online content sites (eg:TVNZ)
Consumer product ratings/reviews
Direct mail from a company
Email from a company
Email from people I know
0.18
0.390000000000001
0.25
0.28
43%
60%
77%
Customers are electing to actively ignore adverts
% of adverts actively ignored
32%
83%
46%
62%
90%
96%
82%
% of adverts skipped with DVR (eg: MySky, Tivo)
And they don’t believe what they’re being told. The believe each other.
How much do you trust the following information sources
2006
2004
2002
6%
9%
13%
I believe companies generally tell the truth in ads
Source : Forrester Research, eMarketer, BusinessWeek
>
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And. Facebook.
5Sources : Experian Hitwise, "New Zealand Data Center," May 18, 2010 and comScore World Metrix April, 2010(Penetration is 15+, home and work) - IAB and Comscore. Data is from the February 2008 "Hitwise Asia Pacific Social Networking Report.”
Facebook has the highest market share of visits in New Zealand (May 2010)
4.5%
Monthly increase in user base
…and is still growing the user base (millions of users)
63.6%
Current penetration
36% -8%
In February of 2008 – Bebo had 42% of the market, Facebook 35%, MySpace 9%
…early leader Bebo has conceded defeat (and AOL’s trying to sell it or shut it down))
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Loyalty. Works for Tesco.
SOURCE: Company websites; Press search; McKinsey Retail practice
The merchandisin
g analytics trend is now spreading to US and other
marketsEYCEYC
dunnhumby
dunnhumby
EmnosEmnos
1990s2000-
052008-
092006-
07
Tesco attributes its success to merchandising analytics and dunnhumbyTesco UK market share, percent
11%13% 18%
25%
1990 1994 2000 2005 2009
Loyalty programme launched
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21.3% 19.3%34.3%
79.0% 77.3% 80.2% 75.0% 80.4% 77.6% 74.2% 73.1% 73.7% 75.1% 72.0% 71.4%
a b c a b c d a b c d a b c d
<3 years in programme 3-4 years in programme 5 years in programme >5 years in programme
Loyalty. A regional case study
% of customers taking up offer and doing so within predicted days
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In mature markets – growth comes at the expense of your competitor. Our results : loyalty programs drive market share gains for our clients.
Not in program
In Program
$1
$3.00
2 – Spend more Result – loyalty program customers spend 300% more
3 – RecommendResult – loyalty program customers are 70% more likely to advocate for the brand
1 – Remain a customer longerResult – loyalty program customers stay customers twice as long
Year 1 Year 2 Year 3 Year 4 Year 5
80%
39%
Not in program
In Program
32%55%
Joins program 1st redemption 2nd redemption
Enterprise A - share of customer’s wallet through program.
Competitor’s wallet shareEnterprise A – current share of customer
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Increasing degrees of customisation together with increasing relevance drives increasing value.
Low Degree of customization High
High
RelationshipStrength
Low
Low Degree of relevance High
High
Relationship Strength
Low
35% 39%
.
Customisation of communications Customisation of offer
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The virtuous circle of loyalty program operation ®
Points, status, credits
Remain a customer longer Spend more
Contact centre
DM, EDM, Website
Enterprise goalsWhat the Enterprise wants from it’s
customers
Relevant
Rich
Customer goalsWhat customers want from the Enterprise in exchange.
[4]Comms
[2]Spend
[3]Earn
[1]Enrol
[5]Redeem
Social Media
Recommend to friends and
family Publicmessages
Customisedmessages
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Printed communications are a critical part of the communications mix
Year 1Frequent Customised Printed Communications
Year 2Less Frequent Customised Printed Communications (lesser stock and design)
Year 3No Printed Communications
Year On Year Monthly increase in redemptions
Average27%
Average18%
Average2%
And : Fly Buys wins international award for statement
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Loyalty programme adoption
CPG / FMCG
Retail
Credit &
debit cards
HotelsAirline
s
Retail banki
ngTelco
10% +10% +1% 5% 15% +
1% 5%
New Zealand % of the customer base penetrated
Global benchmark% of the customer base penetrated
Value% of sale value returned to customer
Emerging Mature
Key issues Churnreductio
n
Relationship
Marketing over mass
Customer data
Share of wallet
Share of wallet
Share of wallet
Products per
customer
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Points values have declined
AIRLINES : creating cynicism
2.5c 1.1c
20 trillion
5 trillion
1981 1991 2005
CAGR4.43 %
CAGR42.4 %
2000
Source :The Redemption Dilemma - Strategic Considerations of Dynamic Rewards - FFP Conference 2008 – Istanbul – Craig Landry AeroplanSource : Airline’s New Cash Cow: Frequent Flyer Programs” - International Herald Tribune April 2008Source : Aeroplan Global FFP Benchmarking Survey 2006Source : Bain & Co
RPKs – Revenue Passenger Kilometers
3% of RPKs = FFP redemption volume
ASKs - Available Seat Kilometers
Points
Seats
The new Qantas business model
15 Source : Qantas Supplemental Information – Investor Presentation 17th August 2009 - http://www.qantas.com.au/infodetail/about/investors/qffSupplementaryInformation.pdf (6m members)Source : Raymond James, Carlson Analysis
Jetstar's EBIT was $131 million, Qantas Frequent Flyer EBIT was $328 million
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2005 2007 September 2007 April 2009 Today
Woolworths Australia’s journey
Fuel dockets cents per litre offers.
Convert the dockets to a card with online
account
Launch an online community
Community drives Qantas Frequent Flyer
loyalty program alliance with Twitter
support.
7.2m customers (auto-enrolled all of QFF).190,000 community
members
Manage the burn or redemption proposition – have Qantas points
used in store
Competitor – Coles and Fly Buys
“At the Caltex Woolworths…sites there has been an
average 80% increase in petrol sales”
“When the offer is 12 cents, sales go through
the roof” *
Card links the customer transaction. Customer
transactions now tracked, customers
known. Register customers addressable.
50,000 members of online community
Link transactions to attitudes. 1:9:90 rule holds. In Woolworths
parlance : MFC’s (“most frequent contributors”),
responders and lurkers.
90,000 members of online community
3.8 million Everyday rewards card
customers (1 in 6 Aussies)
4th quarter Woolworths sales rose 5.4 %
Carlson’s view: Qantas points are a currency
for Woolworths – danger is the points
being burned outside of the network.
Woolworths need them to be burned in store
bringing customer back
Fuel dockets
* Source : “Petrol Price Discounts: the new pull” Australian Convenience Store News March/April 2005
Convert the dockets to a
card with online
account
Launch an online
community
Community drives Qantas
Frequent Flyer
alliance
Attract Qantas points
redemption proposition
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Future: Interactions count as much as transactions
EVOLUTION 1.0 EVOLUTION 2.0 EVOLUTION 3.0 EVOLUTION 4.0
PROGRAM MODEL
Points & Prizes+ Engagement,
Sub-clubs+ Relationships,Segments of One
+ Marketing Networks
CONSUMERSWANTS
Rewards and discounts
+ Information, Access, Status
+ Choice, Control, On-demand dialogue
+ Partners, Peers, Real-time,
Location-based
DATAMass Targeting(One Size Fits
Most)
Segments(One to Some)
Enabling CRM(One to One),
increased modelling
Multi-party collaboration, rapid
application of predictive analytics
COMMS Mass DMWave-Based Campaigns
(email heavy)
Integrated multichannel,
(w/Digital +Mobile), Social
Everywhere the Customer Is,
Customer Experience
Management
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Conclusion
• Sophisticated analytics are available to all industry sectors – now they need to be able to communicate the messages– Some use them more (retail) than others (telco)
• Customised communications drive predictable, quantifiable revenue and margins gains– The business case is clear and you can take risk in it
– There’s low adoption of customised communications (retail)
– There’s reticence to use electronic channel (bank)
• Right message, right offer, right channel right time - print has a part to play