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The Future of LoyaltyRupert Duchesne

President & C.E.O. Groupe Aeroplan Inc.

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Today’s TalkTrends that are shaping our collective futures

The Rise of the Datarati

The Evolution ofBest Customers

Credit Card Rewardsunder Pressure

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CoalitionProprietary Loyalty Services

Data Analytics

2007• Long term

relationships with Sainsbury’s & over 100 FMCGs participants

• New CVS relationship in US

• Over 130 based in 7 countries

• Territory: UK, US with international expansion plans

1984• Over 4M active

members, • Over 75 earn /

150 brands • Over 600 non-air

rewards• More than 1,200

Employees• Customer level

insights• Multi channel

communication

1938

2009 2007 2001 2007 2007

NewNe...

Investments

20101996

• Operating in Mexico

• GrupoAeroMéxicopartner and majority shareholder

• Major Amex relationship

• 2.5M members

1938• Loyalty

Marketing services

• Events and Entertainment

• Reward program operations

• Decision Sciences

• Over 2000 employees

• Territory: Global

NewNe...

2010

Groupe AeroplanNow more than an FFP

GA Ownership GA Ownership GA Ownership GA Ownership 75% GA Ownership 60% GA OwnershipMinority GA Investment

2002• 17M collectors /

over 50% UK HH• 14 earn partners

& 450+ online • 16 burn partners• Unique 360°

customer insight• Multi channel

communication

2010• 5.7M 1st swipes

by end of year 23% of Italy HH

• 8 earn partners (now Unicredit)

• Grocery, gas, bank, electronics, financial, car rental

• Strong eStoresproposition and Quixa (insurance)

2001• Operating in 7

countries• 130 partners• HSBC core

partner and 40% shareholder

• Multi channel communication

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Groupe Aeroplan Retail & FFPAeroplan Canada Carlson Marketing

Global Business PortfolioOver 3,500 people in more than 15 countries

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•“Datarati are companies that have the edge in consumer data insight”

•“Data is ubiquitous & cheap, analytical ability is scarce”

•“The sexiest job in the next ten years will be statistician”

Why is data so important to Google?

The Rise of the Datarati

Hal VarianGoogle Chief Economist

ad with highest click through

your query data gathered about youbid pricing

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The Rise of the DataratiAggregating your behaviour

Other companies are hot on Google's heels

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Good News

• Other companies envy the amount of customer data available to an airline

• Unlike Facebook and Google, airlines have permission to use their customers’ data

Do not remain on the sidelines.

The Rise of the DataratiWhy is this trend so important for airline loyalty marketers?

Bad News

• Airline legacy systems make it difficult and expensive to aggregate

• The Datarati companies are already considerably further advanced in the application of consumer insights

If you do not use your data to talk to your customers, others will.

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The Rise of the DataratiWant to become a Datarati?

Hire many, many more“sexy” statisticians

(No, really!)

Invest in the aggregation of all your airline’s data in

a customer centric manner

Use data in day to daydecision making:

Meaningful customer segmentation

Behaviour prediction

Product design

More relevant offers

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Credit Card Rewards under Pressure

Three converging trends

Recession

Regulation

Innovation

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Consumer Revolving Debt

-9.6%

2009 2010 - May

-10.5%

(Annualized)

Retail Sales

3.1%

All data for the United States

(Annualized)

MC Usage 2010 vs. 2009

Credit Card Rewards under Pressure

Recession

-4.9%

2009 2010 - June

Credit Cards Debit Cards

10.5%-13%

Source: MasterCard annual report, US Federal Reserve

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Credit Card Rewards under Pressure

Regulation

2010 consumer protection guidelines• more transparency• reasonable fees• further government evaluations

2004 regulation+47-77% annual feeson rewards cards

Changing reward value propositions

Shift in preferred payment form

Anticipate & mitigate potential regulatory changes

Potential

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Efficient new forms of payment cutting out credit card infrastructure

$50bn / y paymentsoutside traditional networks

Transfer money via phoneusing only a PIN

On-line purchase chargeto mobile phone bill

Credit Card Rewards under Pressure

Innovation

Virtual currenciesfor virtual services

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Don't be shy –investigate new payment

method opportunities

Evolve co-branded productswith unique soft benefits

Credit Card Rewards under Pressure

Implications

Evolve your financial card strategies

Work with financial partner to strengthen relationship with your collective customer

Expand coalitionvalue proposition

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Redefine who your most important customers are:Value = RFM + social influence

Evolution of Best CustomersLoyalty in the hands of your customer

Identify, attract and reward customers based on proximity to points of sale

Track online / offline conversionUse smartphones for relationship building

Clare M. in Glasgow City:wrote a tip @ Boots: Always busy. Be prepared to wait at least 10 mins for a prescription, but the staff are lovely

Recognize word of mouth, reward promoters and monitor detractors

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Evolution of Best CustomersImplications

Focus on customer experience

• Re-engineer your business• Compelling member experience through all channels• Listen to your customers' reaction!

Don't forget the basics• Loyalty marketing has 30 year track record and its principles remain true today

Temper innovation with strong measurement• Social media activity alone does not bring revenues

• Demand solid plans and KPIs, not just concepts

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The Future of Loyalty…Next 25 years won't be more of the same!

Keep finding innovative ways

to use your FFP currency

Keep pulse on changes

Spot new behaviours throughcorrelations in your data and use them to predict

your customers’ future behaviour

Remain flexible and nimble

Join the tribe ofthe Loyalirati!

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