Covering DAC and Coalition loyalty . Not for distirubution

1. Muang Thai: A Digital Workshop

2. 2
1. Introductions: Muang Thai Life and Direct Money
2. Direct Money: Background and the business model
3. Digital and Affinity: Muang Thai Life’s current strategy, initiatives and
capabilities
4. The Digital Insurer: The future of digital insurance
5. Digital Affinity Company (DAC): Opportunities for Muang Thai Group
and Kbank, and the operating model
6. Break-out session: other opportunities, priorities and next steps
A Digital Workshop for Muang Thai:
Agenda

3. 3
The digital affinity company:
A “Direct Money style operation” that would focus
on affinity marketing and loyalty programs for
your Group and contacts. This could become a
major business over time and is an approach we
are progressing with some major groups in other
countries. We would ideally like to work with one
major group per country.

4. 4
• to create a new and separate company controlled by your
Group
• to use modern digital techniques to market your Group
products across multiple databases both within and
outside your Group; in particular becoming the leader in
virtual advice and selling.
• to introduce a coalition loyalty program, attracting other
organizations to join, and thus increase your marketing
reach
• to attract new affinity customers to your Group
In short, to be a trailblazer in the financial services
industry and be a step ahead of the competition
The opportunity in summary

5. 4. The Digital Insurer
5

6. 5. The digital affinity company
6

7. Strategic Framework: Many “Skins” and a “Digital Affinity Co”
Agent digital Skin
Muang Thai
Group
Digital Affinity Co
• Maintain skins
• Provide digital marketing ,virtual
sales and customer facing services
• Integrate to Muang Thai
Bank digital Skin Telco Skin
• Governance
• Compliance
Existing Agents
Customer choosing to engage via digital channels
• Product design
• Back-end
Existing Banca
Consultants
Other Skins
Assumed new
capabilities

8. 8
How Direct Money perceived Muang Thai Life
 Incredibly successful in recent years,
particularly in bancassurance
 But still not capitalising fully on the
cross-selling opportunities
 Could do more on digital
 Smile Club loyalty programme may not
be fully delivering the desired results

9. The future winners will be....
9
User Friendly Digital
….those who are positioned to offer financial
products in a user-friendly and digital way

10. Example 1: The Virtual Adviser
10

11. The evolution of life insurance distribution:
11

12. The evolution of life insurance distribution:
Before the laptop
 The agent tries to predict the products the
client may want and prints off some
illustrations in his office
 The agent visits the client and tries to sell a
product to the client using the illustrations et
al
 If the client agrees, the agent then helps the
client to fill in a paper application form
12

13. The evolution of life insurance distribution:
With the laptop
13
 The agent takes his laptop to see the client
 They do a fact find and needs analysis on the
laptop
 The agent then shows some illustrations on
the laptop
 The agent then pre-fills the application form
on the laptop and prints it for the client to
sign

14. The evolution of life insurance distribution:
With the tablet
14
 The agent has a database of all his
clients and prospects on his tablet
 The agent takes the tablet to see the
client
 They do a fact find and needs analysis
on the tablet
 The agent then shows some
illustrations on the tablet
 The agent then pre-fills the application
form on the tablet and the client e-
signs on the screen (regulations
permitting)

15. The evolution of life insurance distribution:
The Virtual Adviser
 Agent has already developed a rapport with the
client
 Encourages his clients to download the
customer-facing app onto their mobiles, and to
register.
 Agent/client agree to discuss via audio/video
going forward (no need to meet - massive
improvement in agent efficiency)
 Where the client wants advice/info from the
agent (i.e. his adviser), the client can tap a
button on his mobile app to 'call' the agent.
(Likewise, the agent can make contact with the
client this way.)
 The communication could be audio with one-
way video (i.e. only the agent's face is seen). 15

16. Introducing FinAssist from Direct Money
16

17. FinAssist will…
17
Allow the benefits of 'face-to-face' without the time/cost of
meeting up physically
Allow closing of sales without a physical meeting
Open up scope for a truly all-round financial services adviser Increase the professional image of the organisation

18. Just imagine…
Everyone having a virtual relationship officer across all of banking, life, personal lines
18

19. The future winners will be operating a virtual adviser model
offering the full range of personal financial services
19

20. 20
Digital Everyday Life Services

21. 21
Digital Everyday Life Services

22. 22
Digital Everyday Life Services

23. 23
Digital Everyday Life Services

24. Vinaphone Viva App
24

25. 25
Vinaphone Viva App

26. The future winners will be:
26
• Achieving considerable mobile
engagement
• Making the greatest possible use of
mobile technology for:
• Marketing
• Sales
• Superior service

27. 27
Virtual Advisers
Digital Sales
Leading-edge mobile tech
The digital affinity company:
Would utilize….

28. 28
Would sell…
…and would hold a composite insurance broking license
Life Products Non-Life Products Retail Banking
Products
The digital affinity company:

29. 29
The digital affinity company:
Would maximize opportunities to:

30. 30
The digital affinity company:
Would establish and operate Thailand’s first and leading coalition loyalty
program.

31. The coalition loyalty programme should include….
31
Coalition Loyalty
Including 3rd party affinities across sectors
And progressively extend to many more companies in Thailand

32. Coalition Loyalty
Including 3rd party affinities across sectors
32
Airlines Telcos Retail

33. 33
Inter-company Co-operations
Including these organisations for coalition
loyalty could be combined with strategic co-
operations on affinity financial distribution.

34. 34
Re-capping the opportunity
• to create a new and separate company controlled by your
Group
• to use modern digital techniques to market your Group
products across multiple databases both within and outside
your Group; in particular becoming the leader in virtual advice
and selling.
• to introduce a coalition loyalty program, attracting other
organizations to join, and thus increase your marketing reach
• to attract new affinity customers to your Group (including
through the coalition loyalty program)
In short, to be a trailblazer in the financial services industry
and be a step ahead of the competition

35. 6. Break-out session
35
• Cross-sell / up-sell
• Other affinity ideas
• Digital bancassurance
• Coalition loyalty
• Virtual adviser
• Apps with lifestyle, eg ‘keep me safe’ services
• Anything else
Opportunities, priorities, challenges

36. LOYALTY PROGRAMS
A BEST-PRACTICE OVERVIEW FOR MUANG THAI

37. Loyalty programs aren’t free:
• Cost of setting up
• Cost of operating
• Cost of rewards provided
Loyalty programs are not suitable for every
organisation.
SHOULD YOU CONSIDER A LOYALTY PROGRAM?
37

38. When your objectives are limited to one of
the following:
• Increasing revenue
• Maximising market share or customer base
WHEN YOU SHOULD NOT CONSIDER A LOYALTY
PROGRAM
38

39. When your objectives include:
• Optimising profitability over the long term,
and/or
• Deriving maximum synergy from a
conglomerate of businesses
WHEN YOU SHOULD CONSIDER A LOYALTY PROGRAM
39

40. How do you make yours succeed?
Many competitors have loyalty programs; and consumers
can't be loyal to all of them.
40

41. JUST A FEW POINTERS ON HOW TO
ENSURE YOUR PROGRAM
SUCCEEDS
41

42. Objective should not include:
• Increasing revenue
• Maximising market share or customer
base
Be clear on your objective.
42

43. Your objective should be to optimise long-term profitability via
some/all of:
• retaining best customers
• making these customers better
• acquiring customers with potential to become best
customers
• re-connecting lapsed customers
• deriving synergy across the group
Be clear on your objective.
43

44. Some customers constantly shop around looking for discounts,
or buying thin-margin products.
Better customers are those that:
• are less price-sensitive, and/or
• are consistently buying higher-margin products, and/or
• are returning more frequently, and/or
• are driven by things other than price (e.g. service levels,
‘face’, etc.)
WHAT DO WE MEAN BY GOOD OR BEST CUSTOMERS?
44

45. Be prepared to lose the less good
customers. (For most businesses, these
are unprofitable customers.)
You MUST focus on these better customers.
45

46. HOW CAN A LOYALTY PROGRAM
“DERIVE SYNERGY ACROSS THE
GROUP”?
46

47. What would an individual prefer?
a) Separate loyalty arrangements/cards for each business he deals with?
b) One loyalty arrangement that applies to all the businesses he buys
from?
A conglomerate/organisation like the Muang Thai Group/Kbank has the
opportunity to make available one coalition loyalty program that operates
in all its businesses.
This way, there’s every chance that your program becomes ‘top of wallet’.
Each business involved in the program is a ‘loyalty partner’.
DERIVING SYNERGY ACROSS THE GROUP – 1
47

48. A coalition loyalty program enables, for each business within
the group, a much greater picture of its customers (not just
from purchases of its products, but from purchases of
group companies too).
DERIVING SYNERGY ACROSS THE GROUP – 2
48

49. Via a coalition program, good customers
of group companies are more likely to
become customers of other group
companies.
DERIVING SYNERGY ACROSS THE GROUP – 3
49

50. • Be open to the idea of designing the program to de-
motivate bad customers, so that you lose them.
PROGRAM DESIGN - I
50

51. • Be open to the idea of designing the program to de-
motivate bad customers, so that you lose them.
• Ensure good customers would see the program as:
o Simple/understandable
o Of value/beneficial to them
PROGRAM DESIGN - I
51

52. • Be open to the idea of designing the program to de-
motivate bad customers, so that you lose them.
• Ensure good customers would see the program as:
o Simple/understandable
o Of value/beneficial to them
• Consider ways that the design can attract new
(good!) customers
PROGRAM DESIGN - I
52

53. • Consider including certain benefits (bonuses) that
vest in the future, depending on on-going loyalty: to
maximise retention, minimise switching to
competitors…
PROGRAM DESIGN - II
53

54. • Consider including certain benefits (bonuses) that
vest in the future, depending on on-going loyalty: to
maximise retention, minimise switching to
competitors…
• … but balance this with some instant gratification,
in particular to maximise good customer buy-
in/adoption (e.g. via tempting offers for sign-up)
PROGRAM DESIGN - II
54

55. • Consider including certain benefits (bonuses) that
vest in the future, depending on on-going loyalty: to
maximise retention, minimise switching to
competitors…
• … but balance this with some instant gratification,
in particular to maximise good customer buy-
in/adoption (e.g. via tempting offers for sign-up)
• Implement tiers and other tools to encourage
increased (profitable) spending
PROGRAM DESIGN - II
55

56. • Although planned for long term success,
recognise it may need terminating one day
so legal docs should allow for this.
PROGRAM DESIGN - III
56

57. • Although planned for long term success,
recognise it may need terminating one day
so legal docs should allow for this.
• Determine suitable points expiry rules
• Determine the points spread carefully
PROGRAM DESIGN - III
57

58. WHAT IS THE POINTS SPREAD?
58

59. 59
A TRANSACTION LEADING TO POINTS ACCUMULATION
FOR THE CUSTOMER
59
 The customer transacts (e.g. buys
a product or service); and the
service provider/loyalty partner
grants some points
 The service provider/loyalty partner
buys some points from the loyalty
operator, at a price of $P per point.

60. 60
REDEMPTION OF POINTS FOR A REWARD
60
 The customer redeems points with a
(different) service provider/loyalty
partner, who provides the reward
 This service provider/loyalty partner
sells the points back to the loyalty
operator, at a price of (1-X%) of $P per
point.
X% is the points spread, which allows for
the cost of operating the program.

61. PROGRAM PARTNERS (i.e. businesses within the program)
61

62. • Look to make as broad a range of partners as possible,
in terms of relevance for individuals (e.g. airlines, retail,
hospitality, financial, etc.)
• Obviously focus on group companies first…
• …. but be prepared to add in suitable/friendly third-
party companies to complete the spectrum (ideally
leading players in their sectors).
• But before bringing in a new partner, construct a
proforma P&L for that partner - to ensure the expected
outcomes are favourable.
PROGRAM PARTNERS (i.e. businesses within the program)
62

63. REWARDS TO BE OFFERED
63

64. • Ensure 'top of wallet' is maintained by a broad range of rewards that
appeal to good customers, and differentiation of offerings
• Maximise the difference between perceived value and real cost (e.g. a
hotel room during quiet periods costs near to nothing but has high
perceived value)
• Make sure the benefits are truly better than can be obtained by other
consumers (don't allow non-members to get the benefits via another
route)
• Link rewards to profit optimisation (e.g. not simply to miles flown or
customer spend)
REWARDS TO BE OFFERED
64

65. • Those not capturing/utilising the big data will
lose.
• Implement via an app:
o to move away from 'another card'
o to align with/appeal to good customers
o to capture data
DIGITISE!!
65

66. • What core platform should be used?
• Who should be the program operator?
A big/specialised job; we recommend a stand-alone
operator business that focusses just on this.
HOW SHOULD THE PROGRAM BE OPERATED?
66

67. Direct Money is happy to be involved, and has
its own core loyalty platform, FideliSys
(www.fideli-sys.com).
67

68. Don't expect instant changes -
building loyalty takes time.
SO WHAT BENEFITS CAN YOU EXPECT?
68

69. Over time, you should enjoy the following benefits:
• Retention of good customers for longer
• Less spent on new customer acquisition (as a % of revenue, due to the
increased % of business coming from repeat customers)
• Creating strong loyalty of good customers will lead to referrals of those with
similar profiles: so new good customers
• Increased information of customers, allowing more targeted marketing: so
improved product mix and increased profitability
• Using the increased data from the loyalty program allows development of
profitable products that appeal to good customers => improved product mix
• Beneficial geographic expansion achieved by observing the demographic
profile of good customers.
A well-designed/managed loyalty program leads to significant increase in
long-term value.
SO WHAT BENEFITS CAN YOU EXPECT?
69

70. Confidentiality
The information and opinions contained in this document are strictly confidential. The contents of this
document and any other information or opinions subsequently supplied to you constitute “Confidential
Information” as defined in the Confidentiality Agreement between you and Direct Money and,
accordingly, may not, without the written consent of Direct Money be published, reproduced, copied or
disclosed to any other person other than your employees, who should be made aware that the contents
of this document are confidential, nor used for any purpose other than in accordance with the
Confidentiality Agreement and in connection with the proposals contained within this document. You
shall be responsible for any losses in the event of any unauthorized disclosure.
By receiving this document, you agree that you will, pursuant to the Confidentiality Agreement, on
request return or procure the return of the document and all further information and material sent or
made available in connection with proposed business without retaining any copies in whatever form and
shall destroy notes, analyses or memoranda and other stored information of any kind prepared by you
or on your behalf to the extent that they contain or are based on such information.