1. Ikano on....
The future of loyalty
One survey
26,000 respondents
Three key trends for the future of loyalty

2. It’s estimated that around two
thirds of retailers operate a form
of loyalty programme.
(Source: Clark & Clark, The loyalty guide, Volume 5, 2012)

3. Introduction
Loyalty programmes are proving to be the smart choice for companies
looking to overcome the impact of the recession, as they battle to find new
ways to make their budgets drive better return on investment. Similarly
customers are seeking out loyalty as one way to make their money go
further as they become more select about who gets their share of spend.
Loyalty programmes provide the perfect opportunity to foster a win / win
situation for customer and marketer.
Customers are attracted to loyalty by the prospect of rewards, relevant
offers and information, in exchange for sharing a higher proportion of their
wallet with the chosen retailer. To the retailer, a plethora of benefits comes
from re-focusing their strategy towards their existing customers including:
• Increased frequency of customer visit and spend per visit –
increased sales
• Reduced advertising costs by focussing on rewarding the customers
that drive the most value
• Higher ROI on marketing spend
• Acquired customer insight
• Better customer satisfaction
Companies need to keep up with new technology
Smart phones burst onto the scene around 5 years ago and since then it’s
estimated that around half of the UK population now own and use one.
They are becoming central to the running of consumers’ lives and whilst
mobile as a platform for marketing is still relatively new, many brands
are using it to great effect as a brand engagement tool and to influence
customers’ purchasing decisions.
No company likes to be left behind, feeling the pressure to embrace a
platform that they have little or no experience in navigating. Knowing how
your own customers are embracing new technology is one step towards
embracing the technology in the right way and ensuring investment in
mobile marketing is a success.
Ikano’s 2012 loyalty survey
At Ikano, we work with multiple retailers to launch and run successful
loyalty programmes that drive profitable relationships with their customers
underpinned by promoting a trusting and relevant relationship.
Ikano monitor that the programme is meeting customers’ expectations
and is future proof. Earlier this year, we ran a survey on behalf of a major
high street retailer to establish their members’ level of loyalty programme
satisfaction and to ascertain the direction they wanted their loyalty
programme to take in future.

4. Key Findings
1) App is a growing mandatory requirement
52% of the respondents stated they want an app to replace their
loyalty card.
With, on average, 4.8 loyalty cards per household, customers have
limited capacity for loyalty cards in their wallets. Launching a programme
and producing the card collateral is no guarantee of the programme’s
success. You have to make sure your loyalty card gets a space in the
wallet and you can significantly increase this likelihood by launching
your loyalty programme with an app.
Loyalty apps significantly reduce card production costs, which for many
companies is one of the most significant portions of their loyalty budget.
2) Appetite for mobile account management
In addition to significant customer desire for an app to replace their
plastic, 34% of customers have indicated that they would like to use
their app to manage their loyalty account. This ensures that their details
and preferences are up to date and allows them to receive latest
information and offers wherever they are.
Smart phone based apps aren’t just a way for retailers to reduce
their collateral costs and increase loyalty spend, they allow
companies to push out relevant information and offers to their
customers – and this can now be based on their geographical location.
Imagine pushing out a relevant offer on a product that you know your
customer is interested in, when they walk past one of your stores?
3) Customers want to set their own expectations
We all have the experience of registering our information with a company
only to be bombarded with emails, postal mailings and SMS’s that are
not in any way relevant and far too frequent for our liking. Most of us
quickly unsubscribe from these communications or move the emails to
our spam box.
Customers are increasingly seeing their personal information as a
commodity, trading it in exchange for discount or reward from retailers.
Customers are communicated to far more frequently than ever before and
they only want what’s relevant to them. Asking customers upfront what
interests them and how best to communicate with them, means that retailers
don’t have to wait to monitor their spending patterns and response rates
and can even increase response rates to campaigns.
A recent survey of 26,000
customers by retail loyalty experts
Ikano, revealed 3 key indicators
for the future direction of loyalty.

5. The survey
Ikano conducted quantitative research via an online questionnaire.
Members were invited to participate by email.
The aim of the survey was to ascertain the level of programme
satisfaction among the loyalty programme’s members, focusing on
the following areas:
• What customers valued about their loyalty card membership
• How they rated the services and benefits
• What they would like from it in the future
The respondents
Over 26,000 members replied to the online survey. The majority
of respondents had been members for 6-months or longer and had
applied for their loyalty card in-store.
More than
12 months ago
37%
How long have customers been
loyalty card members?
How
loya
0-6 months
27%
6-12 months
36%
More than
12 months ago
37%
How long have customers been
loyalty card members?
How did customers apply for
loyalty card membership?
0-6 months
27%
6-12 months
36%
In-store
95%
Online
5%

6. Results
The programme and its benefits
Looking at what prompted members to join the loyalty programme, it is
unsurprising to find that the majority of members signed up for the reward
card to receive rewards, with 83% of respondents stating it as a reason
for signing up.
There is also a strong sense of brand loyalty among members, with
54% of loyalty card members stating it as reason they joined.
Other reasons, members signed up were in order to:
• Receive Pre-Sale Notifications
• Keep up to date with information about the brand
The programme that Ikano has set up with the retailer issues customers
with regular reward vouchers, based on their spend threshold. As well
as receiving regular reward vouchers, members receive exclusive pre-
sale notifications, information about new products and new range
launches and other exclusive member offers.
All communications are tailored specifically to the customer’s needs,
so that they only receive information and offers that are relevant to them.
This segmentation is reflected in response rates and incremental sales
driven by marketing campaigns and also in members’ responses in the
survey’s questions about communication.
It’s important to get the balance of communication right, to ensure the
brand reputation isn’t damaged. To mitigate this, Ikano uses advanced
segmentation tools to ensure that members receive communications that
are relevant to them. The effectiveness of these tools are reflected in
reduced cost of DM campaigns, higher ROI and now also in the survey
results, which indicate that members are satisfied with the level of
communication received.
Reasons stated for customers signing up to the loyalty programme
Other offers e.g. discounted magazine
subscription, cosmetics, spa days etc
In store events
Competitions/prize draws
Launch previews
Exclusive products
Free gift with purchase
Double/bonus rewards
Discounts
10%
12%
14%
21%
19%
52%
82%
90%

7. Customers enjoy the benefits of the rewards and discounts that they signed up for
In line with the reasons they joined the loyalty programme, members stated that the primary benefit
that they enjoy with the programme are the discounts they receive back for spending with the retailer.
Members also enjoy other discounts – in the form of bonus points and gifts with their purchases.
Ensure that you attract customers with a sustainable offering
What we often find is that companies who sign up customers with introductory offers to increase their
user base also increase the volume of members who become disengaged once they’ve received their
initial reward. This often comes at a significant cost to the retailer, in collateral, discounts and resource.
The company has to then work harder at reactivating these customers.
At Ikano we work with companies to maximise member activity by offering a long term sustainable set
of membership benefits that will keep them engaged with the programme and with the brand
long term.
Overall, Ikano’s survey indicated that members were positive about their programme and the brand,
and over 67% of them stated that they would recommend the programme to their family and friends.
I feel the rewards scheme
offers good benefits & offers
with regular information
Fantastic and a worthwhile
scheme for the whole
family to enjoy
Think it’s great to get
rewards for purchasing products
that are great quality so would
definitely recommend

8. The impact of membership
Among the primary aims of any loyalty programme is to generate more
spend from your existing customers. Aside from ongoing monitoring of
increases in sales over time, Ikano’s survey has highlighted to the retailer
that members are also noticing that they spend more as a result of
membership to the programme.
In particular 46% of members agreed that the card made them visit store
and website more frequently and 43% agreed that the card leads to them
considering the retailer first when looking for something new.
Increasing your share of wallet
With more loyalty card programmes in the UK market than ever before
and customers signing up to an average of 4.8 loyalty programmes
per household, the competition for ‘share of wallet’ comes not just from
increasing share of customer spend but actually getting your loyalty card
in their wallet in the first place.
A major proportion of annual loyalty budget is allocated to card production
and can become a costly waste if your card doesn’t make your customer’s
final selection.
Ikano found that 69% of its retailer’s loyalty members remembered to swipe
their card with every single purchase. The portion of members who do
forget to present their card in store, stated that they found reminders from
sales staff helpful but suggested that providing an alternative format for the
card would be preferred, with considerable support for a loyalty app.
I don’t always have it with
me - would be easier if it
was an app
I forget to put it in my purse
and I have too many loyalty
cards. Any chance of an app
for the phone?
As a result of having my loyalty card
I spend more
I am more likely to purchase from
the retailer than anywhere else
The retailer is always the first store or website
I visit when looking for something new
I visit the store or
website more frequently
24%
38%
43%
46%

9. Ikano wanted to gain member’s views on how they would like
to see their programme develop in the future.
Customers want to be proactive
Retailers often segment their communications by past customer purchasing
behaviour. Ikano’s research suggests that 59% of members want to be
proactive in setting their own communication preferences and set their own
channel preferences.
Loyalty on the go
There was continued support from members for an app to enable them to
service their account and use their card in one place, with 52% of members
stating they’d like to see an app to store their loyalty card, instead of carrying
a card in their wallet. Imagine reducing the cost of producing cards by a 52%?
More accurate and up to date customer information
Mobile Account Management was also a service that members stated they
would embrace. Mobile Account Management would enable members to
keep their details up to date and manage their rewards. This keeps
the loyalty database cleaner and reduces the volume of calls into the
customer services helpline.
App is a growing mandatory requirement
There was already an established appetite, from members who had
trouble remembering to bring their card on every store visit, for an app
to store their card details.
The rise of smart phones, tablets and app functionality is changing the
way consumers engage with brands. As the phone has become an essential
item for so many consumers that may soon even supersede the wallet, retailers
now have an opportunity to use the channel for their loyalty.
Whether your customer wants to register into the program, update their
details, use their phone as their loyalty card, find the local store or redeem
their rewards, Ikano can deliver this functionality across multiple platforms
including iPhone, Blackberry and Android.
The future
I often forget I have it and I have
lots of loyalty cards, if you could put
out an app for my phone I would
always be able to use it
How would customers
like to service their loyalty
card in the future
Live web chat (to resolve meber queries)
Mobile Account Management (to update
your details, view your rewards ec)
SMS alerts with reward information
Being able to use your mobile phone
to show your loyalty card details...
Product preferences (what product
information you would prefer..)
Communication preferences (how you
would prefe tobe contacted)
14%
32%
33%
52%
57%
59%

10. What can Ikano do for you?
Ikano as loyalty providers
Ikano are the retail loyalty experts. We have the skills and experience
to provide our retail partners with programs that provide insight which
makes their marketing budgets more effective.
Our modular approach means we can help you at whatever stage you
are at with your loyalty program, from data capture and value proposition
through to integration of sales promotions, behavioural segmentation
and communications.
Our partners use our loyalty programs to support their marketing
and merchandising approaches benefiting from customised marketing
information, the ability to track trends and minimise waste.
Most importantly our partners enjoy more profitable relationships with
their customers underpinned by promoting a trusting relevant relationship.
Ikano Insight
One thing is for sure; your loyalty program will generate data - lots of it.
For many retailers building this data rich asset is the primary reason to
run a program - it is the way to harvest significant information about your
customer base.
Turn data into insight
Collecting and storing data though, is only a means to an end. Insight is the
true reward for running a program. We understand the importance of this
and from the outset we work with our retail loyalty partners to design and
operate insight strategies that have a demonstrable impact on the bottom
line. We provide the skills and experience to turn raw data into action.
Benefiting from your data
We’ll guide you to use the insight we develop to deliver value through
• Targeted sales promotion activity (lifestage/shopping habits/location)
• Behavioural triggered communications
• Targeted sales promotions by customer segment

12. We would be happy to discuss how our products and services can help to improve
your customer loyalty and increase sales.
Contact us today and we will arrange a convenient time to meet and run through
our solutions in more detail. We look forward to meeting you soon.
Get in touch.
Call us: 0115 850 3545
Email us: enquiries@ikano.net
Visit our website: www.ikano.net