What is loyalty? What are the different levels in loyalty? What is it all about? How do we measure loyalty?

1. the key
to
loyalty
Presentation made for the city of Antwerp
November 2008
Paul Van Lil
www.VanLil.be
This presentation is an extract of the presentation made for the marketing &
communication department of Antwerp.
The original presentation was given in Dutch during their internal customer day on
November 25, 2008, by Paul Van Lil (www.VanLil.be).

2. Lifecycle of the citizen
Value of the citizen
during the lifecycle
lifecycle of the
citizen
Loyalty systems are based on repetitive sale and thus a long term relationship. The
customer value is negative at the start of the relationship based on the investments
made to achieve the customer. During the lifecycle of the customer, this value
becomes positive. The same applies for cities: investments in sports, cultural and
other facilities need to be made in order to attract citizens.

3. financial loyalty
There are three levels of loyalty. The first level is financial loyalty, also called saving
systems.

4. x 10 =1x
In financial loyalty the customer is rewarded for every transaction. Every time the
customer buys goods or services, for instance flying from Antwerp to London, he/she
receives points. If the customer has cumulated a certain number of points (threshold),
than he/she will be rewarded, in this case he/she will get a ticket to a sunny place.
Thus, the customer needs to show his/her loyalty during a certain period before
getting the reward.

5. The most known loyalty systems are saving systems. This can be systems created
by one company so that the customer can only save points at that particular
company. Or it can be multi-brand systems, like AirMiles, where the customer can
save points with several companies.

6. high turn-over
the right partner
The most important reason for companies to set up financial systems is to get to
know their customer. Identification is important, but also turn-over and frequency of
transactions made.
For customers, saving systems are interesting if it is easy to cumulate quickly (high
turn over necessary) in order to achieve a gift with a high perceived value (you need
an airline company as gift partner).
Remember that financial loyalty systems do not create loyalty: take away the points
and you loose your customer.

7. social loyalty
Reason enough to introduce the second level: social loyalty.

8. passion, family, hobby, sport, work, …
In social loyalty, we learn to know our customer in order to use this information to get
through to him/her. One of the most common examples is to send a birthday card.
It is easy to find customer information. The difficulty is to filter the right information
which will help you in building up a relationship.

9. everybody is unique
Everybody is unique. It is not easy to get to know everybody and put the personal
touch in the communication.

10. split in groups
By asking the right questions (and based on inside information) one can split
customers in different groups. This makes it easier to approach them with the right
message.
The difficulty in segmentation is to identify the leader, the one who makes the
decisions and who ensures that the group moves.

11. structural loyalty
The third level, and probably the most binding one, is structural loyalty.
In structural loyalty there exists a structural link between the individual and the
company.

12. the bank account number is a very strong structural link
One of the best examples of a structural link is the banc account number: most
payments pass by the bank account number. For the customer it is difficult to break
this link as he/she might loose money or services.

13. … nevertheless, customers leave banks
Nevertheless, customers leave banks. This is not only due to the current financial
crisis, but has got everything to do with the fact that banks tend to forget the second
level, the social loyalty. They forget to build up the social relationship with the
customer. The result is that this undermines the trust customers have in their bank
and thus weakens the structural link.

14. most applications are written for Microsoft
Microsoft is an other example of a structural link: most of the PC applications are
written for windows or internet explorer. Someone who steps over to an other
operating system, risks to loose a lot of his/her applications.
A structural link is a knife that cuts at both edges: Microsoft must continue to deliver
the best software in order to respond to the needs of its customers.

15. a.o. Google attacks Microsoft with Google Chrome
The market share of Microsoft is attacked at a daily basis. OpenOffice is a well
known example. Firefox takes already 19,2% market share in the browser market
and GOOGLE, only since 10 years in the market, recently attacked Microsoft Internet
Explorer with GOOGLE Chrome.

16. the mobile number is an other strong structural link
Last example of a structural link: the mobile number. Again one needs to inform all of
his/her friends when changing mobile number. The danger of becoming
‘unreachable’ is huge.

17. Belgium counts more mobile numbers than Belgians
And yet, Belgium counts more mobile numbers than Belgians. Number portability has
weakened this structural link and customers hop from one promotion to the other.

18. conclusion: loyalty does not exist !
Conclusion: loyalty does not exist!
If you want loyalty, buy a dog.

19. Loyalty does not exist ?!?
So, loyalty does not exist?
Stop! Time out!
Let’s start over.

20. what makes Antwerp unique?
These are 6 air pictures of cities at a river: Antwerp, Amsterdam, London, St-
Petersburg, etc..
What makes Antwerp unique?
It is possible to go fishing at the quay in all of these cities, so… what is it that makes
Antwerp unique?

21. Antwerp is a brand!
It is a brand!
Antwerp is a strong build brand.

22. relationship with ‘A’ is the most important
The civilians relationship with the brand ‘Antwerp’ is the most important thing.

23. the success of that relationship is loyalty
The success of that relationship is loyalty.

24. the key to loyalty is ‘reaching and understanding’
The way we reach the individual and understand his/her needs and desires is the key
to loyalty.

25. to mary you need to be with two
To mary you need to be with two.
Loyalty is not uni-directional: the citizen needs to be loyal to Antwerp.
Loyalty goes both ways: Antwerp needs to be loyal to its citizens.

26. loyalty (and trust) is mutual
Loyalty and trust go hand in hand. You need trust in order to get married.
Loyalty is mutual.

27. mutual respect
It starts with mutual respect. The ads say: ”every day I clean 2 football fields”; “every
day I run 2 marathons”; “every day I lift 7 tons”.
These people work hard for the citizens. Citizens may pay respect and say a friendly
‘hello’ to them.

28. personal contact
And it all boils down to personal contact. The advertising says: “the policeman is
there for A(ntwerp)” and “the city is from everybody”.
The people who work for Antwerp make the brand ‘Antwerp’. They ensure that
somebody likes to live in Antwerp.

29. personal contact mapped out
The company seen through the eyes of the customer
© 2008 Carlson Marketing. All rights reserved.
This is a view of all the contact moments a customer has with a single company. At
all these touch points, the company can confirm or fail the loyalty and trust.
There are more than a thousand places and moments where the citizen comes in
contact with Antwerp, touch points of personal contact, every day again.

30. building a relationship is complex
Nobody will say it is easy. A 1-to-1 relationship is linear: I ask a question, you
respond, we understand each other. The relationship is known.
If several persons are involved, than the relationship becomes complicated, but
knowable. We know what the group wants and we can try to respond.
If several groups and media channels are involved (as is the case in a city), than the
relationship is complex. The only thing one can do is to perceive and adapt.
Building a relationship is complex.

31. social media is the gateway to ‘reaching and understanding’
Social media makes it even more complex as it multiplies the number of touch points:
it gives the citizens a voice. And just that makes that social media becomes the
gateway to ‘reaching and understanding’ the citizen. One can find the key to loyalty,
reaching and understanding, in social media.

32. Guru Seth Godin about
the way ‘tribes’ work
http://www.squidoo.com/tribebuilding
This brings us back to segmentation. Seth Godin uses the word ‘tribes’. His book
about ‘tribes’ is a ‘must read’.
He claims that it is important to identify the leader within the group and to build a
strong relationship with him or her. If you can do this, then you ‘cement’ the loyalty of
the whole group.

33. Should
you
recommend
Antwerp
to
friends
or
family?
An other ‘must read’ is the book of Fred Reichheld: ‘the Ultimate Question’.
Fred Reichheld claims that you need only one question: “Should you recommend
Antwerp to friends or family?”
The answer should not be simply ‘yes’ or ‘no’, but a number on a scale from ‘1’ to ’10’
where ‘1’ is absolutely not and ’10’ is certainly yes.

34. promoter
neutral
detractor
Those who answer 7 or 8 are neutral.
Those who answer 9 or 10 are promoters. They are very satisfied and will promote
your service or product
Those who answer 6 or lower are detractors. They do not feel connected with your
product or service.

35. promoters will tell 6 of their friends
Why is the question ‘should you recommend Antwerp to friends or family?’ so
important? Promoters will tell 6 of their friends why they are happy. They will promote
your services and products without you asking them to do so.

36. detractors share their grieves with 10 friends
Detractors share their grieves with 10 of their friends.
When you can identify these customers, it is absolutely necessary to ask them why
they detract. This way, you can try to recover them and/or use the information to
improve your services and products.

37. Net Promoter Score
NPS = % promoters - % detractors
Example
total segment = 125 or 100%
promoters = 30 or 24%
neutral = 75 or 60%
detractors = 20 or 16%
NPS = 24% - 16% = 8%
The Net Promoter Score or NPS is the way to follow up on results. You become the
NPS by detracting the percentage of detractors from the percentage of promoters.
By comparing the different scores, you can use the NPS to become insight in your
retail points, the time of transaction, the different segments, staff, etc.

38. Where is north?
Last question: where is north?

39. Where the citizen of Antwerpen says it is !
Answer: north is where the citizen of Antwerp says it is.
It is very important to go and have a look there, because that is the place where it all
happens.

40. … and maybe you do not always agree
… and it is very well possible that you do not always agree. But your citizen has
always the last word.

41. you make the difference
The final message: treat every customer as customer of the year
… because you make the difference.

42. acknowledgements
1to1 touch point mapping
Browser and OS stats for July 2008 Gertjan Keg
Malta Euro coins Brian - Cybernetnews Carlson Marketing Group
Meliticus - Flickr
The conversation prism
Roatan Connected people Brian Solis
Janusz I - Flickr bratan - Flickr http://www.briansolis.com/
Hotel Kamp Desktop
Globalist360 - Flickr Cellphone man Radical Mobilis
gringogidget - Flickr Teemu Arina - Slideshare.net
The Florida Keys
Key West Baseball - Flickr
Dueling Bandwagons Speaker's Corner, Hyde Park
Eric Kilby - Flickr Pixelsnap - Flickr
Holding hands
Casey Keith - Flickr
Time Out HZZ
Two three nine - Flickr David Brussee - Flickr
A face in the crowd
P. Van Allen - Flickr London Speaker Corner
Under construction II Rüdis Fotos - Flickr
morpace.com Miss waterlau - Flickr
Valentijn – Zot van A Een tevreden bezoeker
The weakest link
Stad Antwerpen - Flickr Basgoodpeople - Flickr
Darwin Bell - Flickr
Complain
Eiko’s credit card Cathy Rucsi - Flickr
Eikootje - Flickr F. Frederick - Flickr
Compass rose
Stoffel’s place Harper Wray - Flickr
photographe de mariage à montreal
http://kristofvds.wordpress.com/2007/08/28/
Seby - Flickr Pierre shows the way to success
Life and its little pleasures Bart Azare - Flickr
http://claudiaschiepers.typepad.com/claudi Bridal party Trickster shot
as_blog/reclame/ Kelvin Ong - Flickr Street spirit
Abre/tus/ojos - Flickr
Day34 - 02.03.08 www.trust-emun.org
On the bandwagon - Flickr Christians, Jews, and Muslims bond
during some enriching downtime at a
multi-faith conference in Petra, Jordan.

43. special thanks to
Richard Rosen
who brings brand and
direct together through his
Brand Interactive Model
RICHARD G. ROSEN is founder, President, and CEO of ROSEN, a global
consultancy that specializes in transforming marketing and advertising campaigns
into cost-effective business models. He speaks to and consults on convergence
marketing with recognized brand-name clients around the world. His firm has
received twenty-eight Echo Awards, and Richard has received the Caples
Organization’s Emerson Award and the first ever “B-to-B Marketer of the Year Award”
from the International Direct Marketing Association. To get in on the dialogue, visit
www.rgrosen.com.
I attended Richard's speech on Convergence Marketing in October 2008 at the
Distance Selling Show in Lille. He gave me the quote on what loyalty is all about. In
his book he continues to explore this topic. Through his Brand Interactive Model he
brings brand and direct together.

44. Paul Van Lil
www.VanLil.be
paul@vanlil.be
www.linkedin.com/in/paulvanlil
Do not hesitate to send your questions by mail. You will always get an answer.
If you want to keep in touch, then send me an invitation through LinkedIn referring to
this presentation.
Thank you.