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The Loyalty Program: A Recipe for Success

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The Loyalty Program: A Recipe for Success

  1. 1. The Loyalty Program: A Recipe for Success Stuart Kiefer Vice President, Loyalty Solutions First Data Corporation
  2. 2. What we’re going to talk about today <ul><li>Market / Business / Practices / Innovations / Programs </li></ul>
  3. 3. <ul><li>Loyalty programs help you better understand customer preferences and spending habits , while monitoring, reinforcing and rewarding desired behaviors. </li></ul>
  4. 4. The loyalty market today <ul><li>The Loyalty Program: A Recipe for Success </li></ul>
  5. 5. Loyalty memberships are growing <ul><li>1.3 billion loyalty memberships in the United States in 2006 </li></ul>Source: Colloquy ® talk™ Censustalk April 2007, pp. 3-6 2000 973 million 2006 1,139 million
  6. 6. Loyalty memberships are growing <ul><li>85% households participate in at least one reward program* </li></ul><ul><li>12 loyalty programs per household on average** </li></ul><ul><li>40% participation in active loyalty programs** </li></ul>Sources: * Loyalty & Rewards: A Market Overview , Aite Group, January 2007 ** Colloquy ® talk™ Censustalk , April 2007, pp. 3-6
  7. 7. Restaurant loyalty is a sliver of the pie Source: Colloquy ® talk™ Censustalk April 2007, pp. 3-6
  8. 8. Loyalty is growing in many industries Source: Colloquy ® talk™ Censustalk April 2007, pp. 3-6
  9. 9. Loyalty is growing in many different verticals so you are competing for share of customer mind across all verticals .
  10. 10. How a loyalty program helps your business <ul><li>The Loyalty Program: A Recipe for Success </li></ul>
  11. 11. Loyalty programs… <ul><li>… move you beyond transactions, enabling you to monitor , reinforce and reward consumer behavior. </li></ul><ul><li>… help you build program campaigns and promotions that resonate with each customer. </li></ul><ul><li>… help increase revenue potential by building customer relationships through targeted , valuable and relevant promotions and rewards. </li></ul>
  12. 12. Loyalty programs… <ul><li>… provide a return on the capital investment of your POS system. </li></ul><ul><li>… build visibility and advocacy for your brand. </li></ul><ul><li>… differentiate you from your competition. </li></ul>
  13. 13. Where do your loyalty needs fall? <ul><li>Electronic punch card </li></ul>
  14. 14. Where do your loyalty needs fall? <ul><li>Single promotion </li></ul><ul><li>Single message at POS </li></ul>
  15. 15. Where do your loyalty needs fall? <ul><li>Multiple targeted promotions </li></ul><ul><li>Product specific offers </li></ul><ul><li>Customized, multi-channel messaging </li></ul><ul><li>Web site registration </li></ul>
  16. 16. Where do your loyalty needs fall? <ul><li>Multi-purse, targeted promotions </li></ul><ul><li>Analytics/modeling </li></ul><ul><li>Segmentation </li></ul><ul><li>Customized messaging </li></ul><ul><li>Additional Web site data capture </li></ul><ul><li>Payment-enabled phone </li></ul><ul><li>Tied to gift card </li></ul>
  17. 17. Loyalty helps grow your business Increased Revenue Retain Customers Target Marketing Comms. Increase Spend & Frequency Build Brand Loyalty Build Customer Relationship Differentiate vs. Competition Acquire New Customers Gain Customer Insight
  18. 18. Increase… <ul><li>… visits per customer </li></ul><ul><li>… spend per visit </li></ul><ul><li>… number of purchases </li></ul>
  19. 19. Growth… <ul><li>… in the number of loyalty members </li></ul><ul><li>… in the number of new customers </li></ul>
  20. 20. Lift… <ul><li>… product specific sales </li></ul><ul><li>… sales during slow periods </li></ul>
  21. 21. <ul><li>Following loyalty best practices can help deliver more than 15% in annual improvement in return on gross revenues, customer retention rates and marketing investment. </li></ul>Source: Clark, Robin and Clark, Peter. The Loyalty Guide , The Wise Marketer, Wise Research 2006, p. 26
  22. 22. Value to customers Effective & relevant offers Recognition as a valued customer Perceived value of membership Immediate gratification Ongoing communication
  23. 23. Best practices in loyalty <ul><li>The Loyalty Program: A Recipe for Success </li></ul>
  24. 24. Five key elements for success <ul><li>Target your offerings </li></ul><ul><li>Offer the right mix of rewards </li></ul><ul><li>Understand your customers </li></ul><ul><li>Communicate effectively </li></ul><ul><li>Measure the results </li></ul>
  25. 25. Loyalty program offers <ul><ul><li>Recency, frequency, monetary, day part, points </li></ul></ul>Velocity programs <ul><ul><li>POS receipt, e-mail/SMS, Web site </li></ul></ul>Messaging programs <ul><ul><li>SKU-based </li></ul></ul>Product-based programs <ul><ul><li>Exclusive campaigns </li></ul></ul>Special promotions
  26. 26. Best practice: Member engagement <ul><li>Increase customer frequency </li></ul><ul><li>Retain existing customers </li></ul><ul><li>Attract new customers </li></ul>
  27. 27. Best practice: Program goals <ul><li>Establish defined program objectives and metrics to measure success </li></ul><ul><li>Make the program part of the corporate strategy </li></ul><ul><li>Give front line employees the skills to perform — they are your program advocates </li></ul>
  28. 28. Best practice: Loyalty program <ul><li>Loyalty program rules should be easy to understand </li></ul><ul><li>Always be relevant – understand how your customers define ‘value’ </li></ul>
  29. 29. Best practice: Customer knowledge <ul><li>Treat different customers differently: deliver value the way customers want it delivered </li></ul><ul><li>Understand the needs of your target audience, then deliver simple, effective offers </li></ul><ul><li>Pay attention to your most profitable customers but don’t neglect the rest </li></ul>
  30. 30. Best practice: Effective communication <ul><li>Be responsive to your customers; let them tell you what they want </li></ul><ul><li>Know what is or isn’t working, change as needed </li></ul><ul><li>Use multiple touch-points – e-mail, Web site, etc. </li></ul><ul><li>Provide relevant and concise follow-up communication </li></ul>
  31. 31. Best practice: Data analysis <ul><li>Creating value and loyalty success depends on how effectively customer data is managed and implemented. </li></ul><ul><li>There is intelligence in every transaction. </li></ul>
  32. 32. Innovations in loyalty programs <ul><li>The Loyalty Program: A Recipe for Success </li></ul>
  33. 33. Innovations in restaurant loyalty Form Factors Payment Customer Service Employees Supply Chain
  34. 34. Innovation in form factors <ul><li>Technology can enable real-time rewards, offers and messaging </li></ul><ul><li>More convenient forms like contactless Go-Tags can increase visits </li></ul>
  35. 35. Innovation in payments <ul><li>Tie your loyalty program to multiple forms of payment </li></ul><ul><li>Credit/debit, prepaid cards, ACH </li></ul>
  36. 36. Innovation in customer service <ul><li>Use data from loyalty program to drive excellent service </li></ul><ul><li>Tie in customer service with your loyalty program </li></ul>
  37. 37. Innovation in employee programs <ul><li>Rewards programs are not just for your customers </li></ul><ul><li>Increase acquisition and retention </li></ul><ul><li>Deepen relationships with employees </li></ul><ul><li>Increase customer value </li></ul><ul><li>Reduce costs </li></ul>
  38. 38. Innovation in the supply chain <ul><li>Increase opportunities for inventory management </li></ul><ul><li>Understanding customer purchasing behavior helps you make decisions that can reduce inventory costs </li></ul><ul><li>Reward and manage SKUs better </li></ul>
  39. 39. Components of an industry-leading loyalty program <ul><li>The Loyalty Program: A Recipe for Success </li></ul>
  40. 40. Industry-leading solutions Real-time Tender-neutral Any loyalty identifier Targeted comm. CRM Targeted offers & rewards All program types Flexible reporting Web-based pgm mgmt Back office capability
  41. 41. Case Study: Compass Group Zipthru Rewards <ul><li>The Loyalty Program: A Recipe for Success </li></ul>
  42. 42. Zipthru Rewards innovations <ul><li>Technology: Contactless key fob tapped at POS </li></ul><ul><li>Real-time: Receipt is printed with total points or a coupon </li></ul><ul><li>Program types: Time of day and frequency rules </li></ul><ul><li>Rewards: free meals, discounts, event tickets </li></ul><ul><li>Communications: Promo and reward notifications by e-mail </li></ul><ul><li>Web site: View account balance, points earned and rewards redeemed </li></ul>
  43. 43. Zipthru Rewards transactions <ul><li>75,000 loyalty transactions </li></ul><ul><li>3,000 loyalty redemptions </li></ul><ul><li>2+ visits per day on average </li></ul>
  44. 44. Zipthru Rewards results so far <ul><li>82% all day participation </li></ul><ul><li>29% higher average check than all day average </li></ul><ul><li>26% café transactions from loyalty rewards </li></ul><ul><li>34% café revenues from loyalty transactions </li></ul>
  45. 45. Wrapping up <ul><li>The Loyalty Program: A Recipe for Success </li></ul>
  46. 46. Five key elements for success <ul><li>Target your offerings </li></ul><ul><li>Offer the right mix of rewards </li></ul><ul><li>Understand your customers </li></ul><ul><li>Communicate effectively </li></ul><ul><li>Measure the results </li></ul>
  47. 47. <ul><li>Loyalty programs help you better understand customer preferences and spending habits , while monitoring, reinforcing and rewarding desired behaviors. </li></ul>
  48. 48. <ul><li>Innovative loyalty programs are tied in to payment , marketing , customer services , supply chain and employees . </li></ul>
  49. 49. <ul><li>There is an opportunity for restaurants to develop profitable loyalty programs . </li></ul>
  50. 50. The Loyalty Program: A Recipe for Success <ul><li>Stuart Kiefer Vice President, Loyalty Solutions First Data Corporation [email_address] </li></ul>

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