Loyalty Matters

Why do loyal customers matter? Learn about the current issues driving loyalty marketing, why loyalty marketing works, and how to define measurable objectives, where and when to use promotional currency, and sure-fire enrollment tactics.

More CRM and Loyalty Marketing Resources

Loyalty Blog: http://www.customerinsightgroup.com/loyaltyblog/

eBooks: http://www.customerinsightgroup.com/white-papers

Loyalty Workshops: http://www.customerinsightgroup.com/custom-loyalty-workshops

Systematic New Loyalty Program Development: http://www.customerinsightgroup.com/systematic-new-loyalty-program

Pinterest: http://pinterest.com/engagekeepgrow/


Who is Customer Insight Group?

Customer Insight Group, Inc. leads the way in the evolution of how companies engage their customers, positively motivate them and earn their long-term loyalty. Our extensive client work is testimony to our depth of knowledge and ability to apply strategic insight and solutions to a wide variety of business objectives. Our team’s client experience includes: NHFA, Thomasville Furniture, The Maxim Group Carpet Franchise, Ashro, A&P, The Bon Ton, Crate & Barrel, Dick’s Sporting Goods, Edwin Watts Golf, GE Consumer Finance, Monroe and Main, Swiss Colony, Midnight Velvet, MySwingle.com, The Great Indoors, G.H. Bass, Golf Galaxy, Helzberg Diamonds, HSBC, Kohl’s, La-z-boy Furniture Franchise, MCI, Payless ShoeSource, Pier 1 Imports, Petco, Proflowers.com, Regis University, Ruby Tuesday, S&K Menswear, Sierra Trading Post, Stein Mart, Tommy Hilfiger, Ulta, as well as various other leading companies.

1. February 2, 2011 Loyal Customers: Why do they matter?  2010 Customer Insight Group, Inc. All rights reserved . • www .customerinsightgroup.com • +1 303.422.9758

2. 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

3. 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

4. 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

5. What is loyalty m arketing? 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. 5  2010 Customer Insight Group, Inc. All rights reserved . • www .customerinsightgroup.com • +1 303.422.9758

6. 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 6  2010 Customer Insight Group, Inc. All rights reserved . • www .customerinsightgroup.com • +1 303.422.9758

7. 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

8. What could a loyalty program do for your business? 8 Retain Customers Target Marketing Increase Spend & Frequency Build Brand Loyalty Build 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

9. 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

10. #1 Establish program objectives and metrics to measure success.

11. …customer retention …average profit per customer …frequency of purchase Increase

12. …in the number of profitable customers …in the number of new customers …in the number of brand advocates Growth

13. …number of product categories purchased …in average transaction size Lift

14. #2 Make the program part of the corporate strategy.

15. Industry Leaders Strategy Hallmarks Align program structure with goals. 15  2010 Customer Insight Group, Inc. All rights reserved . • www .customerinsightgroup.com • +1 303.422.9758

16. #3 Treat different customers differently.

17. 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% Purchases 19.2% Margin & 13.2 % Visits 11.8% Customers, 31.4% Purchases 32.1% Margin & 31% Visits Occasional 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

18. 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 18  2010 Customer Insight Group, Inc. All rights reserved . • www .customerinsightgroup.com • +1 303.422.9758

19. #4 Nurture customer loyalty.

20. Value to the Customer/Member Value to the Organization Unqualified Customer Prospective Customer Advocate Member & Customer Repeat Customer 20 Create strategy to manage customer lifecycle.  2010 Customer Insight Group, Inc. All rights reserved . • www .customerinsightgroup.com • +1 303.422.9758

21. 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

22. 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. 23  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

23. Always be relevant – understand how your customers define ‘value’. 24 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 Replenishment Right 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

24. #6 Monitor customer migration.

25. Monitor and proactively manage your customer’s migration.  2010 Customer Insight Group, Inc. All rights reserved . • www .customerinsightgroup.com • +1 303.422.9758

26. #7 Engage your customers.

27. Customer engagement, “r epeated 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

28. 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

29. Be responsive to your customers; let them tell you what they want. 30 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

30. 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

31. Questions? Sallie Burnett, CEO Customer Insight Group, Inc. Email: [email protected] Website: www.customerinsightgroup.com Twitter: @sallieburnett LinkedIn Group: Customer Relationships — Engage. Keep. Grow