Overview of all the parameters that should be adjusted in order to tailor a loyalty program according to the strategic needs of a company

1. Tailoring Loyalty Programs to
strategic objectives
Benjamin Filaferro – filaferro@yahoo.com – May 2013

2. Typical Objective: Rewarding Most Valuable
Customers
2
0.45%
6.19%
0.01%
0.29%
0.01%
0.56%
90.00%
91.00%
92.00%
93.00%
94.00%
95.00%
96.00%
97.00%
98.00%
99.00%
100.00%
Subscribers ARPU Out
Subscribers vs. ARPU Out
Potential Cutoff Point #1
ARPU Out > 15 900 X$
1,074 Subscribers
Leverage = 42
Potential Cutoff Point #2
ARPU Out > 13 300 X$
863 Subscribers
Leverage = 27
Potential Cutoff Point #3
ARPU Out > 5 600 X$
36 199 Subscribers
Leverage = 14
Disguised Example
Benjamin Filaferro – filaferro@yahoo.com – May 2013

3. Designing or Revewing a Loyalty Strategy
3
Current State
&
Corporate Strategic Alignment
Loyalty Program
Objectives and
Loyalty Strategy
Explorations
Market Dynamics1
Customer Dynamics2
Pain Areas3
Capabilities & Initiatives4
Benchmarks5
Internal Loyalty Expectations6
Benjamin Filaferro – filaferro@yahoo.com – May 2013

4. Environmental
Factors
Regulation
Regional Specificities
Competitive Outlook
Loyalty Benchmarks
Branding Strategy
Brand Perception
Brand Awareness
Internal Pain Areas
Network Quality
Back-end Processes
Billing
Payment & Queuing
Tenure recognition
Customer Analytics
Revenue distribution
vs Service Type
ARPU National vs
International
Potential Value
realization
Behavioral
Segmentation
Geographical
Distribution vs ARPU
Customer
Researches
Customer
Demographics
Customer Social
Dimension
Customer Dynamics
Company
Capabilities
Organization
Information
Technology
Processes
Existing Loyalty
Constraints
Points vs Affinity
Program
communication
Key program feature
Ad-hoc Rewards
Integration with
Corporate Program
Sample of Factors used to review an Existing
Program
4
Disguised Example
Benjamin Filaferro – filaferro@yahoo.com – May 2013

5. Main Rules Defing a Loyalty Program
5Benjamin Filaferro – filaferro@yahoo.com – May 2013

6. Sample of Rationales behind the Rules of a Given
Program
6
Main Rules Rationales
Line Level Membership
• All residential lines are
eligible
• 1 membership per line
In order to avoid bias of
SMB having multiple
residential lines
3 Tiers Based on Status
Points Accrual
• Customers will cumulate
status points based on
their eligible revenues
• When a customer reach
a specified number of
status point he is
upgraded
• Status points will expire
after one year and each
tier is valid for one year
To differentiate
customers and
encourage them to
spend more
Existing and new customer
will be automatically
enrolled to the program
• Limited need of
demographic/
psychographic
information collection
• Limitation of the
burden of the Shop
and CC channels
• Avoid non-enrollments
due to difficulty to use
self-service channels
Customer tier at launch will
be defined based on
customer historical
spending, also at launch,
customers will get extra
bonus points for each year
of tenure
Reward tenure and
previous spending levels
Main Rules Rationales
Prepaid customers will get
points according to the
spent Customers should earn
points based on the
value they bringPostpaid customers will get
points according to their
payments
The number of points given
will be calculated by
multiplying the generated
revenue by a tier specific
fixed ratio (i.e. 1€ gives 1
point for Bronze)
Points will be credited every
month
Each point given to the
customer for his generated
revenues will also give him
one status point
Customers can earn points
by purchasing or getting a
service at partner premise
Will affect customer
behavior and
satisfaction positively
by rewarding him in
several aspects of his
life (not only mobile
communications)
Main Rules Rationales
Customers in higher tier will
earn more points
Customer spending
more should be more
rewarded
At line anniversary,
customers will get an
amount of bonus points
according to the tier and the
tenure (in years)
Reward and celebrate
customer tenure and
occasions
Reward selected groups of
customers on an ad hoc
basis with goodwill points
Damage control on
satisfaction level after
SLA breach, network
issue, complaint, etc.
Customers will get extra
points if they use specific
Products/ Services
Support product
launches
Customer will get points
based on their network
usage (days connected to
the network per month, calls
made during off-peak time)
• Multi-simmers should
increase their wallet
share
• Network traffic
optimization
Customers will get more
points based on the channel
they interact through
Decrease cost to serve
Members will get points for
referring customers
Word of mouth is a
powerful tool to
acquire customers
Customer will get points if he
answers a list of questions
on the web
Use loyalty program to
collect or refresh
customer data
Main Rules Rationales
Customers will redeem
points to get:
• Telecom rewards (minutes,
SMS, MMS, data, VAS)
• Non-telecom rewards
• Partners voucher and
points exchange
The ratio between the asked
number of points for
redemption of a rewards and
its commercial value will be
different for each reward
(burn ratio) and the burn
ratio will be more beneficial
for telecom rewards
Give relevant benefits
and at the same time
lower costs
Possibility to transfer fixed
amount of points (not status
points) between lines against
an amount of points as
charge
Good for families and
SMBs
The number of points
required to redeem a
selected non-telecom reward
can be decreased on an ad
hoc basis (ex: less points
require to redeem a 3G
handset)
Push a certain non-
telecom reward that
can drive telecom
behavior)
Customers can exchange
points for points from other
loyalty programs
Appeal for high-end
customers accruing
points in other
programs
Eligibility & Enrollment Earn (1/2) Earn (2/2) Burn
Disguised Example

7. 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, An
alytics, Logistics, & Partnerships)
2 Point Programs and 1 Prepaid
Stimulation Game 7Benjamin Filaferro – filaferro@yahoo.com – May 2013

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