21st Century Loyalty

“Loyalty, by definition and in practice, is a concept
that suggests a kind of fidelity that transcends
personal advantage.
I am loyal to my country. If asked to defend it, I would
put my life at risk, as millions throughout history have
done.
I am loyal to my family. If they are threatened, I will
protect them at any cost, as many do every day…
But can I be similarly ‘loyal’ to a brand of toothpaste,
soap, beer, airline service or office equipment?
2
Not this side of a mental institution!”
Lester Wunderman

#1
Top Digital Network
in the World
3
#1
Top Mobile
Marketing Network
in the U.S.
#2
Top CRM/Direct
Network in the World
The intersection of digital, data and CRM

The intersection of loyalty and retail
4
LOYALTY
RETAIL
Identity/Proposition
Touch-points
CMS
Loyalty Rule Engine
CRM
SCV Database

82%
of CEOs are looking for new ways
to stimulate customer demand
and loyalty this year
(PWC, Global CEO Survey 2013)

Customer loyalty is an objective for
brands, not customers.
6
The Paradox
6
6

A Forrester report cites that 40% admit
that loyalty programs underperform or
produce erratic results, or do not know
how they perform. Yet according to a
recent survey by the CMO Council 65%
viewed loyalty program investments as
an essential part of the marketing mix.
7
The Paradox
27%
Enrollment* 4%
Participation
*COLLOQUY Loyalty Census, 2013

Hypothesis
8
What’s
going on?
Traditional, rewards based loyalty programs have
not evolved at the pace of consumer behavior
and new technologies.
Expectations of experiences are determined by
what have now become ubiquitous brands:
Social – personal – instant – designed for me and
my behaviors.
Designing a new program may be easier than
re-engineering an existing one.

9
Our core belief
Loyalty programs must be the best, most amazing
way for consumers to experience the brand

What if we were to start today?
10

Today, our clients have the opportunity to redefine what
a loyalty program can be…
11
Where Loyalty Has Been
Passive, single channel programs
Long timelines to earn + redeem
Complex to sign up and manage
Built for business partners, not consumers
Currency-centric
Individual and isolated
“I have to fit my process to the program”
Where Loyalty Is Headed
Active, contextual, intuitive, multi-channel
Near-instant redemption
Simple to sign up and actively participate
Personalized for me and my behaviors
Lifestyle-centric
Social and communal
“Program seamlessly folds into my everyday life”

In redefining loyalty, creating a delightful customer
experience is as important as optimizing operations
12
Operations
Right partners
Optimal reach
Maximum value
Profitable
Customer Experience
Unexpected/ disruptive
Easy + intuitive
Delightful
Member-centric
21st Century
Loyalty

In our experience with a range of loyalty programs and mechanics, we’ve learned
a few things about 21st Century Loyalty.
13
Over 100 million members
20 million 20 million
10 million
1.25 million 23 million
30 million
3 million 6 million
And many others….

And we’ve applied a range of capability and skill in bringing these programs to
market: we know what it takes
14
A continuum of services
STRATEGIC
CONSULTING
TECHNICAL
REQUIREMENTS
PROGRAM
ARCHITECTURE
NAMING AND
VERBAL
BRANDING
USER
EXPERIENCE
MOBILE/
SOCIAL
DEVELOPMENT
DATA AND
ANALYTICS
CHANNEL
DEVELOPMENT
PROGRAM
DEPLOYMENT
PROGRAM
IDENTITY AND
DESIGN

21st Century Loyalty: A framework for change
How might we move our clients from traditional to 21st Century Loyalty?
Members
Interact
15
Traditional Programs
Currency Centric
Earn/Burn mechanics
Members
Transact
Program
Recognizes
Program
Rewards
21st Century Loyalty
Behavior Centric
Iterative mechanics

5 Best Practices for 21st Century Loyalty
16

Mobile connects all media and channels and is on its way to
fundamentally transform how consumers interact with brands.
When informed by data, mobile can help motivate incremental
purchases through highly targeted offers, helping wean marketers
from one-size-fits-all points programs that reward existing behavior
and reduce profitability.
But mobile devices are more than promotional delivery channels.
Social media already are the dominant application on mobile
phones today, enabling consumer interaction at and on the way to
a buying decision. Location-based services help consumers find
information and interaction points with their preferred brands.
Augmented reality, today mostly a gimmick for promotions, can
enhance the product experience and provide valuable information
at the moment of truth.
And mobile devices will increase stickiness. If a car rental no longer
requires a trip to the counter but uses mobile technology to find,
activate, check and pay for the car, all from one mobile app,
loyalty gets baked into the very product experience.
17
Best Practice #1:
Think mobile first
With almost 100,000 customers using it, the prepaid Starbucks
Card was a massive hit in Singapore. But reloading the card
was a hassle because it could only be done at a Starbucks
outlet. Our solution: an iPhone app which allows customers
to reload their Starbucks Card. It also allows them to
customize their favorite drink, check out the latest promotions,
and find their nearest Starbucks outlets.
Benefits
By thinking mobile first, loyalty and continuous
consumer engagement gets baked into the
very product experience. Mobile becomes a
self service tool and can shift dollars away from
retail operational costs.
1

18
Best Practice #2:
Design with social in mind
Enabling users to create content on their own and share that
with friends has changed how we work, play, shop, find jobs,
relax, find and keep friends.
Loyalty approaches can profit from this concept by putting a
passion for a topic or brand in the center of a program.
Consumer relationships are based on more than how much they
like or don’t like a product. Usually people do not collect
products, they collect experiences. Moments that are
connected to a personal passion or an attitude. Experiences
become the value exchange. Experiences are what unite us.
They offer social currency and value rooted in shared passions.
Loyalty programs need to create experiences from defining
moments, the ones we recognize, celebrate and share. So
everything we do needs to add value – whether it is
entertainment or utility – to integrate into our customer’s lives.
After 125 years of putting the same name on every bottle of
‘Coke’, we tried something new to drive loyalty and incremental
consumption of Coke in Australia. Consumers could create and
share virtual Coke cans bearing any name they wanted, and make
their own virtual TV ads starring their Facebook friends. “Share a
Coke” became the No. 1 most talked about Facebook page in
Australia (23rd globally) and most importantly, ‘Coca-Cola’ now has
a powerful, ongoing direct relationship with millions of Australians.
Benefits
By designing with social in mind, you can create
shareable experiences. The more social a
system is, the lower cost due to new options to
reduce or avoid points/ rewards all together.
2

Best Practice #3:
Connect the data for insights:
needs and motivations
The transactional data captured through rewards schemes are a key
reason why brands run and maintain programs. And the investment
pays off: data analytics separate the wheat from the chaff and give
marketers guidance as to who to contact and who to upsell. Or so
the wisdom goes. Think again.
Only the broadest reward programs, like those of airlines, credit cards
and some national retailers, generate sufficient data to optimize
customer targeting. Even the best struggle to estimate a consumer’s
share of wallet, which is a key indicator of who could buy more and
who is maxed out. And almost none of them have found an answer
for how to use their data to identify and target a competitor’s best
customers.
The reason is that even the most ardent data collectors see the
consumer only as he interacts with their own industry or brand. This is
rarely enough to adequately address the Whole Consumer, let alone
find others that look like him or her. We help clients shed light on
consumers’ decision-making process and understanding needs and
motivations by connecting data uniquely from diverse sources.
19
Previously, United Airline’s Mileage Plus program (the world’s largest
frequent flyer program) had a member segmentation strategy based
on travel and mileage earning behaviors. However, this strategy did
not fully provide the foundation required to engage members in a
meaningful way and build deep relationships. Through Connected
Data, we enhanced this segmentation with our proprietary data
assets to establish a 360 view of the consumer. We then developed
insights about member needs, interests, behaviors and motivations.
As a result we are able to develop customer journeys and tailor
content to win increased revenue and loyalty among the most
valuable segments.
Benefits
Connected data can generate insights to create
a valuable loyalty proposition and relevant
member benefits that extend beyond giving away
margin.
3

Customers don’t recognize organization silos like companies do – they
experience your brand regardless of who owns the media buy, the
customer service number, the retail store or the company website.
Getting to 21st Century Loyalty requires both a top down and bottom
up approach to organizational alignment and change management.
What are the objectives and goals for loyalty? Depending on which
department you ask, you will get a different answer. Alignment
around this very central question is often a good start. More often
than not, this requires an executive sponsor, early buy-in from key
loyalty stakeholders, and a cross-functional team to help drive
strategy and implementation. If there is not a dedicated loyalty
function within the company, the communications agency can help
steward the change management process, becoming an extension
of the marketing team. The goal is that all external-facing functions
in the company work together, breaking down the silos between
marketing, communications/PR, social responsibility, sales, operations
and finance. In 21st Century Loyalty, the Whole Consumer interacts
with the whole company.
20
Best Practice #4:
Break down silos: loyalty
is everyone’s business
The Nokia Organizational Change Management (OCM )program was
enabled by the creation of Nokia Digital U, designed to get every
Global Region on board in developing enterprise-wide digital
expertise including CRM and loyalty. Wunderman developed an
ongoing, multifaceted learning strategy to assess and develop
Nokia’s digital literacy/fluency to achieve primacy in the consumer’s
mind as a global digital brand. Over 3,300 Nokia employees around
the globe and across all functions took part in Nokia Digital U. Across
the global enterprise, Nokia marketing now engages and connects
with consumers and other participants through their evolving digital
behaviors in the online ecosystem.
Benefits
By making loyalty the business of all departments in
the organization, you can accelerate change in
becoming a more customer-centric organization
and drive efficiencies in delivering a great
customer experience.
4

21
Despite the popularity of loyalty programs and increasing levels of
investment, marketers still struggle to recognize the business value
and contribution of their loyalty programs. In addition, marketers
often wonder if they are rewarding or recognizing behavior that
would have otherwise happened.
To address this, we ensure that loyalty is mapped to overarching
organizational goals and that the operational and analytics
capabilities are in place for continuous optimization. For example,
by holding out control groups from loyalty communications and
engagement efforts, we can identify the incremental value that the
loyalty program delivers to the business – above and beyond simple
engagement metrics. Through integrated dashboards, we can
track key loyalty metrics and continually optimize the process and
the program.
Our solution for Club Matas, a leading retailer in Denmark, was to
re-imagine their existing loyalty program and go beyond traditional
engagement tactics like rewarding points, and find ways to make
Matas more relevant to customers’ needs. We created an
alternative customer club that offers more than just material
benefits: good advice, tailored to the specific club members. Most
importantly, by holding out control groups, we know that when
comparing “engaged” customers to control, we know that the
average basket size and same quarter sales are higher by double
digit % points.
Best Practice #5:
Measure the incremental
impact of loyalty efforts 5
Benefits
By measuring the incremental impact of loyalty
efforts, you can continually create a voice for
loyalty, rationalize current investment and earn
additional investments and commitment down the
road.

21st Century
22
In Summary
Think
mobile first
Design
with social
in mind
Connect
the data for
insights
Measure
incremental
Break
impact
down silos
Loyalty

Thank you.