Description of the 6 main types of loyalty programs with a focus on Telecom Operators examples

1. Main types of Loyalty Programs
Benjamin Filaferro – filaferro@yahoo.com – May 2013

2. Objectif
Objectif
Main Types of Loyalty Programs
2
Community
based
Coalition
Pure point
based
Redistribute
Value
Affinity
based with
tiers
Pure
lifestyle
Make
Customers Feel
Different
Hybrid
point and
lifestyle
Benjamin Filaferro – filaferro@yahoo.com – May 2013

3. Pure Point Based Programs
3
Based on their spending, Customers accumulate points
that they can redeem to get free Services/ Products
Historically Operators are using Pure point based programs
with different levels of complexity
Pros Cons
The entire range of mass
customers can receive points
Difficulty for the lowest and
highest customer to use their
points
Tangible value which
customers can sense,
cumulate and monitor
High Cost of points
Flexible and can be used to
drive desired behaviors
Heavy to operate
Examples
Belgacom gives points to its top customers. Points can be
reddemed for free communications or physical goods
Verizon Small Biz Rewards program provides businesses
with points that can be redeemed against business-
related freebies
Benjamin Filaferro – filaferro@yahoo.com – May 2013

4. Pure Lifestyle Programs
4
A specific group of customer is targeted (e.g. Youth,
Women, etc.) and is offered very targeted deals
Pure life style programs offer endless possibilities of
partnerships generating revenues with a high churn impact
Pros Cons
Targeted life style deals
create a real “addiction” and
forbid customers to leave the
program
No impact on customers that
are not in the targeted
segment
Developing partnership is
really easy with companies
targeted the same segments
Important difficulties to
design a life style program
for the “Average Joe”
Possibility to create
additional non telecom
incomes
Examples
Turkcell has two Lifestyle programs:
one for youth customers and another
for women. Each lifestyle benefits
from discount at Turkcell and
partners
Benjamin Filaferro – filaferro@yahoo.com – May 2013

5. Affinity Based Programs with Tiers
5
Customers are selected based on their spending and
are offered gifts, free products, and privileges
Affinity based with tiers are also used to target efficiently
Prepaid and Postpaid customers at the same time
Pros Cons
Allows higher churn decrease
of the most valuable
customers
No impact on customers that
are not in the targeted
segment
Limited cost due to no
investment on low-end
customers
Not suited for mass
customers who require more
value than differentiated
treatment
Easy to implement and
operate
Examples
According to their price plans, SFR offers systematic
benefits to its customers. For example, Platinum
customers benefit from:
• Possibility to renew their mobile phone every 18
months while benefiting from the same level of
subsidization than new customers
• Home delivery of an emergency replacement mobile
phone in case of technical issue
• Immediate exchange of the ADSL modem in case of
technical difficulties
• Lending of a 3G USB Stick in case of issue with the
landline
• Direct access to a CC agent (no IVR)
• Possibility to have an appointment in a shop (no
queuing)
Benjamin Filaferro – filaferro@yahoo.com – May 2013

6. Hybrid Point Based and Lifestyle Programs
6
Programs offering points together with segmented deals
This type of program is useful for example to reward VIP
Customers with something more relevant than additional
points
Pros Cons
Cumulate “Pros” of both
programs
Partially mitigate “Cons” of
both programs
Is relevant to both value
oriented customers and
lifestyle/services oriented
customers
Can be complicated to be
launched at once, where it
can confuse the customers
Can be implemented in
phases
Examples
Oreddo, in parallel with its
Nojoom Point Program has
an invitation only VIP Club
called Al Nokhba.
Al Nokhba customers
benefit from higher point
earning rates within the
Nojoom program, but also
they have access to:
• Specific Redemption
Partners
• Dedication Account
Management Team
• Etc.
Benjamin Filaferro – filaferro@yahoo.com – May 2013

7. Community Based Programs
7
Point based programs rewarding an entire community
Community Based Loyalty Program are used to decrease
the churn likelihood of group of customers
Pros Cons
Limit churn of individual
customers (the entire group
has to churn)
High Cost
The entire range of mass
customers can receive points
Difficulty for the lowest and
highest customer to use their
points
Can be used to affect the
behavior of a whole
community
Do not fit all types of social
structures
Difficult to be understood by
population
Examples
Vodafone Cyprus customers can
create communities that will have
discounted communications between
its members and discount on telecom
services. Discounts increase with the
number of people in the community
Benjamin Filaferro – filaferro@yahoo.com – May 2013

8. Coalition Programs
8
Coalition of a group of brands
Coalition Programs are used to share operating costs, to
generate new sources of revenues (i.e. sell points to partners),
and to maximize impact on customer everyday life
Pros Cons
Possibility to create
additional non telecom
incomes with redemption of
points given by partners
High Cost
The entire range of mass
customers can receive points
Risk of having giving more
points to customers than
they are redeeming with the
company
Share operation costs
Examples
In Moscow, Beeline as well as 14 other retail and service
brands are providing Malina Points to their customers.
1.85 million Moscow families have at least 2 Malina cards,
and 3.8 million Malina cards have been issued.
$100 million worth of rewards redeemed by members,
over 1,000 items (goods, services, experiences).
Benjamin Filaferro – filaferro@yahoo.com – May 2013

9. Benjamin Filaferro – Independant Customer Strategy Advisor
I have been a Strategy Consultant for
the last 10 years at first for Banks and
then for Telecom Operators, and I have
specialized myself in Customer Strategy
over the last 6 years.
I have especially assisted Fixed and
Mobile Operator CMOs on the design
and the implementation of:
• Segment Strategies (ATL, BTL,
Touchpoint Experience, etc.)
• New products
• Retention Strategies (Loyalty
Programs, Winback, etc.)
In the specific field of Loyalty Programs,
my experience covers:
• The design, the implementation,
and the launch of 2 Point
Programs, 2 Affinity Programs, 1
Enterprise Affinity Program
• The supervision of an
outsourced team managing
from end-to-end (Marketing,
Communication, Analytics,
Logistics, & Partnerships) 2
Point Programs and 1 Prepaid
Stimulation Game
9Benjamin Filaferro – filaferro@yahoo.com – May 2013

10. Benjamin Filaferro – filaferro@yahoo.com – May 2013
Thank you