February 2, 2011
Loyal Customers: Why do they matter?
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
Presenter
Sallie Burnett
Strategist. Leader. Innovator.
President of Customer Insight Group, Inc., a leading strategic relationship-marketing firm
Digital marketing professor at prestigious Daniels College of Business
2009 Direct Marketer of the Year
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
Customer Insight Group, Inc.
• Systematic New Loyalty Program• Loyalty Audit• Loyalty Navigator• Custom Loyalty Workshop• Cause Marketing Exploration• Social Media Roadmap• Social Media Navigator• Custom Social Media Workshop
• Data mining• Market research• Modeling• Profiling• Response analysis• Segmentation• Social media
monitoring• Usage and attitudes
• Audience targeted creative• Blogs• Content• Direct mail• E-mail design• Landing pages• Manage online conversations• Mobile marketing• Program management• Social media• Website design and content
Insight Strategy Execution
Customer Relationships – Engage. Keep. Grow.
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
Agenda
What is loyalty marketing?
How is customer loyalty marketing evolving?
Where are loyalty programs today?
What are the key elements of success?
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
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What is loyalty marketing?
Loyalty:
Loyalty Marketing:
Customer’s faithfulness; advocacy, devotion; constancy
Discipline of identifying and nurturing the yield of best customers through a long-term, reciprocity, value-added relationship.
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
How is customer loyalty marketing evolving?
Development has been directly related to advances in IT an POS Future developments are supported by IT, specifically in the areas of:
Social media POS Web 2.0 (iAPPS — web content management solutions) Mobile Location or proximity Ubiquitous, wearable computing
1896 Today
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2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
Where are loyalty programs today?
CUSTOMER More demanding, more choices Trust is key to keeping customer
loyalty because people are seeking out cheaper private label options
Participation in loyalty programs increasing
COMMUNICATION Irrelevant, impersonal
messages Enrolled and forgotten No customer engagement plan
STRATEGY Me too value proposition Launch and put into “auto”
drive Measurement metrics not tied
to strategy
INSIGHT Manage defection, not migration Data used to run program, not
used to run the business Customer relationships are
“siloed” in the organization
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
7
What could a loyalty program do for your business?
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Retain Customers
Target Marketing
Increase Spend &
Frequency
Build Brand
LoyaltyBuild Customer
Relationship
Differentiate vs.
Competition
Acquire New
Customers
Gain Customer
Insight
Increased Revenue
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
What are the key elements of success?
Establish program objectives and metrics to measure success.
Make the program part of your corporate strategy.
Treat different customers differently.
Nurture customer loyalty.
Be relevant.
Monitor customer migration.
Engage your customers.
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
#1 Establish program objectives and metrics to measure success.
…customer retention…average profit per customer…frequency of purchase
Increase
…in the number of profitable customers…in the number of new customers…in the number of brand advocates
Growth
…number of product categories purchased…in average transaction size
Lift
#2 Make the program part of the corporate strategy.
15
Industry Leaders
Strategy
Hallmarks
Align program structure with goals.
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
#3 Treat different customers differently.
54.2% Customers, 0% Purchases.
0% Margin & 0% Visits
27% Customers, 30% Purchases
22.3% Margin & 44% Visits
Inactive
3.3% Customers, 21.4% Purchases, 26.2% Margin & 11.6% Visits
4.1% Customers, 16.9% Purchases19.2% Margin & 13.2% Visits
11.8% Customers, 31.4% Purchases32.1% Margin & 31% VisitsOccasiona
l
Frequent
Loyal
Infrequent
Know the customers value to you.17
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
Deliver value the way the customer wants it delivered. Customer Experiential Benefit Strategy is a customer-centric
approach to align and deliver value that is meaningful, timely and mutually beneficial to the customer and ultimately the company as well.
Initial participation and enrollment benefits
Cumulative benefits
Periodic benefits
Instant benefits
Mix of hard and soft service-related benefits Spend/earn rate, bonuses, capped/uncapped,
transferable points and rewards Flexibility for redemption, burn rate, channels Tiers and requalification Partners for earn/burn and special offers
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2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
#4 Nurture customer loyalty.
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Value to the Customer/Member
Valu
e t
o t
he O
rgan
izati
on
Unqualified Customer
Prospective Customer
Advocate
Member &Customer
Repeat Customer
Create strategy to manage customer lifecycle.
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
Grow new customers.
Goals Increase frequency of purchase Increase annual spend Get members to purchase a second time and sooner Increase number of departments purchased Increase in total retention rate of new members Increase in number of rewards issued and redemption rate
Strategy Score all new customers. Execute multi-channel contact strategy. After the 90 day process, customers are scored based on their level
of engagement. Based on the customers engagement score, you can tailor your
communication strategy to focus resources to increase sales and retention.
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
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Be relevant.
59% Most marketing and advertising has very little relevance to me.Source: Yankelovich Consumer Trust Study
60%
companies are failing to send welcome emails to new subscribers, according to a study of major brands in the US.
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
75% respondents said that irrelevancy is the main reason for unsubscribing from a company‘s email program. Source: Merkle 2008
15% retailers used data they received during the purchase process to target promotional messages to buyers. Return Path, March 2009
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Always be relevant – understand how your customers define ‘value’.
Understand Customers
Align Marketing Investment
Deliver Relevant Messages
Customer Statistics
Average Annual Spend
Average Annual Transactions
Average Transaction Amount
Average Margin Percent
Demographics
Financial Statistics
Sales Contribution
Margin Contribution
Right Offer
Complimentary Product
Extended Financing
Product ReplenishmentRight Time
Top: March & April
Secondary: July & August
Right Product
Ping
Nike
Taylor Made
Titleist
Golf Enthusiast
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
#6 Monitor customer migration.
Monitor and proactively manage your customer’s migration.
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
#7 Engage your customers.
+ Customer engagement, “repeated interactions that strengthen
the emotional, psychological or physical investment a customer has in a brand,” supports loyalty goals.
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
Engaged customers buy more and refer more.
The attribute of an engaged customer seen as most important is “recommends product, service or brand” (58% of company respondents).1
Other attributes regarded as very important are: Engaged customers are “more likely to
convert more readily (44%) Engaged customers “purchase regularly”
(36% Engaged customers “less likely to switch
supplier” (30%)1) E-consultancy Engagement Report 2009
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
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Be responsive to your customers; let them tell you what they want.
When you know what your customers are saying and what they want and value, you can create a more
meaningful connection.
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
Remember the seven key elements of success.
Establish program objectives and metrics to measure success.
Make the program part of your corporate strategy.
Treat different customers differently.
Nurture customer loyalty.
Be relevant.
Monitor customer migration.
Engage your customers.
2010 Customer Insight Group, Inc. All rights reserved. • www.customerinsightgroup.com • +1 303.422.9758
Questions?Sallie Burnett, CEOCustomer Insight Group, Inc.Email: [email protected]
Website: www.customerinsightgroup.com
Twitter: @sallieburnett
LinkedIn Group: Customer Relationships — Engage. Keep. Grow