Growing Loyalty Beyond Traditional Reward Programs

TOWARDS REAL LOYALTY 12 steps to real customer engagement GROWING LOYALTY Beyond Traditional Reward Programs

2 LOYALTY IS AN EMOTION

…SO WHY DO WE TREAT IT LIKE A TRANSACTION?

WE HAVE BECOME VICTIMS OF HISTORY AND HABIT 1700s COPPER TOKENS 1800s COUPONS 1930s - 70s TRADING STAMPS 1980s DEREGULATION 1990s DIGITIZATION 2000s MOBILE TOOLS

WE CONTINUE TO INVEST…

IT MATTERS TO THE MARKET S&P 500 High Focus on Loyalty Programs Low Focus on Loyalty Programs Source: McKinsey Corporate Performance Analysis Tool – Returns on 55 major companies with a high/low focus on loyalty programs. Index SHAREHOLDERS HAVE REWARDED COMPANIES FOR HAVING A FOCUS ON LOYALTY

-1% revenue growth DONE WRONG =  RISK MARGINS -10% lower EBITDA

A DISCOUNT CARD IS NOT ENOUGH

ONE SIZE DOES NOT FIT ALL

LOYALTY NEEDS NURTURING

DOING THE SAME AS OTHERS LEADS TO FAILING IN THE SAME WAY Customer  engagement ROI over time

SO.. WHAT COULD BE DIFFERENT? HOW TO SHAPE YOUR FUTURE? WHERE DID IT GO WRONG?

HOWWHAT WHEN

HOW DO YOU USE WHAT YOU KNOW ABOUT ME?

ENTERTAIN EDUCATE ENGAGE

WHAT IF, INSTEAD OF BUYING LOYALTY, WE RECLAIMED WHAT CREATES IT? Quality Meeting Needs Consistency Availability Enjoyment Recognition Value EXPERIENCE

WHAT WOULD DIFFERENT LOOK LIKE? Connected PersonalRelevant Contextual Customer Centered

CONTEXTUAL

PLACE PURPOSE

PERSONAL

RELEVANT EXPERIENCES SERVICE ACCESS PRESTIGEPRODUCT PRICE

54%More spend 2xMore referrals 83%More Engaged

CONNECTED

LOYALTY IS AN EMOTION A crowd is a tribe without a leader. A crowd is a tribe without communication. Most organisations spend their time marketing the crowd. Smart organisations assemble the tribe. SETH GODIN

30 CUSTOMER-CENTRED

Big Data Ubiquitous Touch Cloud Insight Engage Anywhere Responsive Adaptable Data Ubiquitous Touch Cloud

SO.. WHAT COULD BE DIFFERENT? HOW TO SHAPE YOUR FUTURE? WHERE DID IT GO WRONG?

So how do you break the cycle of self-abuse?

1. CONTEMPLATE: WHAT IS YOUR WHY?1. CONTEMPLATE: DEFINE YOUR CUSTOMER’s WHY

2. PREPARE: DESIGN THE EXPERIENCE

BUILDING PROGRAM ELEMENTS THAT DELIGHT CUSTOMERS Functional Reliable Usable Pleasurable Meaningful YAY! Convenient Focused on experiences Focused on tasks FEW PROGRAMS CROSS THIS LINE

42 95% engagement rate

3. TAKE ACTION: TEST AND EXPERIMENT TIME DEGREEOFCOMMITMENT Traditional programs Experimentation Moments of delight

Standard, static program Long cycles, then relaunch 4. MAINTAIN: IT’S NOT JUST “ONE AND DONE” Today Future Vision IDEA  STREAMS INNOVATION CAPABILITY BUILD, TEST & LEARN GO STOP PIVOT

CREATE THE PLATFORM FOR EXPERIMENTATION Concept Ideas and prototypes Explore with customers Pilot Few segments/ sites Continue learning Scale up Refine and expand Manage capacity Rollout Loyal, free and paid Mainstream Evolve Becomes commodity Change the game

THE PATH TO CONTINUOUS LOYALTY Baking innovation into the mindset and culture of your brand and people Creating a capability that evolves with your customers over time

• Not all customers are created equal. Avoid over- investing by being all things to all people • Value is variable. Customers value more than money. Successful programs depend on understanding the right levers • Experience matters. Moments of connection and relevance drive repeat behavior • Test, learn, repeat. Design for iterative tests and take advantage of test data for continuous delivery and refinement TAKE-AWAYS

Dianne Inniss dinniss@thoughtworks.com THANK YOU Dan McMahon dmcma@thoughtworks.com

Growing Loyalty Beyond Traditional Reward Programs

ThoughtWorks

Growing Loyalty Beyond Traditional Reward Programs