Don’t Push_CONNECT

2. Don’t Push_CONNECT • Key Services • Strategic Planning Data Analytics • ▪ Marketing plan development ▪ Database development • ▪ Market research ▪ Customer segmentation/valuation • ▪ Qualitative research ▪ Data enhancement • ▪ Quantitative research ▪ Data analysis, lists • ▪ Campaign management • Interactive Branding & Traditional • ▪ Web site development ▪ Brand development • ▪ Search strategies ▪ Brand communications • ▪ Web analytics, online reporting ▪ Advertising, collateral, creative • ▪ Email marketing, lists ▪ Media (offline and online) • ▪ Online surveys ▪ Direct response • ▪ Hosting, support▪ Public relation/crisis communications • Clients • Direct Agencies • ▪ Greenies/Mars ▪ Grey Direct • ▪ Fujifilm Sericol ▪ Ivie & Associates • ▪ Labette Health, Valley View Bank, ▪ Hart & Assoc., Azzam Jordan, Results Direct, • Westlake Hardware, Belfonte… Price Comm’s, Weintraub, Bakers Man…

3. Loyalty is an outcome, not a tactic. It is achieved through relevancy.

4. Agenda • The State of Consumer Loyalty • Changing the Approach to Loyalty • Examples • Recommendations • Q & A

5. The State of Consumer Loyalty Consumer loyalty is at an all time low. • Marketing channels and the market itself are fractured • Cultural shifts have decreased brand loyalty • Loyalty programs have saturated the market

6. The State of Consumer Loyalty • Marketing channels and the market itself are fractured • New channels and devices are changing consumer behavior: • Internet, broadband, mobile, blogs, RSS, TiVo, iPod • In 2007, 86 million US households have internet – 76% of them have broadband • Research shows that 75%-80% of the time, people with online access research products and services online vs. other resources. • In 2007, 93 million US households have a mobile phone • New behaviors threaten old norms . . . Mass media audiences fragment

7. The State of Consumer Loyalty • Marketing channels and the market itself are fractured • Sixty-eight percent of North American consumers say there are too many ads in the media today. • Only 10% think email is a good way to find out about products and services. • On average, North American online consumers receive 102 unwanted email messages per week. • Sixty-three percent of US households wish they got less direct mail.

8. 13.1 Watching TV 12.8 12.7 7.9 Listening to the radio 7.3 7.1 5.5 Using the Internet 6.1 7.4 Fractured Market “In a typical week, how many hours do you spend doing each of the following?” 2004 2005 2006* Gen Yers actually spend more time online than than watching TV.

9. The State of Consumer Loyalty • Marketing channels and the market itself are fractured • Cultural shifts have decreased brand loyalty • “Loyalty programs” have saturated the market

10. Price is more 50% important to me 48% 48% 47% than brand names. I would pay more 43% 42% for products that save me time and hassles. 34% 32% Price drives purchase The State of Consumer Loyalty 60% • Cultural shifts have changed focus from brand to price 50% 40% 30% 20% 2003 2004 2005 2006 Base: US households

11. The State of Consumer Loyalty • Cultural shifts have decreased brand loyalty Base: North American online consumers *Percentage represents those who ranked each statement as first in applying to their attitude toward private label

12. Factors that drive loyalty to retailers Base: US consumers who said they were loyal to one or more retailers Source: Consumer Technographics® Q4 2005 North American Survey

13. Consumers are loyal for different reasons . . . Base: US consumers who say they are loyal to retailer Source: Consumer Technographics Q4 2005 North American Survey

14. The State of Consumer Loyalty • Marketing channels and the market itself are fractured • Cultural shifts have decreased brand loyalty • “Loyalty programs” have saturated the market

15. So what builds and sustains loyalty?

16. They’re strongly motivated by money . . . “In general, how valuable are the following frequent shopper/loyalty program benefits to you?” Base: North American consumers (multiple responses accepted) Source: Forrester’s NACTAS Q2 2006 Survey

17. . . . And they take their perks seriously

18. Agenda • The state of consumer loyalty • Changing the Approach to Loyalty • Examples • Recommendations • Q & A

19. Changing the Approach to Loyalty • No one tactic fits everybody — and power comes in using several tactics at once. • Every business needs loyalty, but not everyone needs a “program” to get it. • Loyalty is a complex relationship built with care over time — it shouldn’t be the goal of only one part of the organization. • How can you put customers in control of communicating your brand • Focus on relevancy

20. The tactics that support loyalty • Experience loyalty • Brand experience that is the same for all customers. • Does not differentiate between individual customers. • Relationship loyalty • Profiles interaction with individual customers. • Recognizes high-value customers and gives them a differentiated experience. • Company and customer both perceive benefits flowing to and from each other. High Brand experience • Price loyalty • Provides lowest perceived price for goods or service. Price is a strategic differentiator. • Maintains low cost to serve. • All customers get same price. • Programmatic loyalty • Rewards frequent customers with discounts and promotions. • Mines purchase behavior data to drive more purchases. Low Customer intimacy Low High

21. Agenda • The state of consumer loyalty • Changing the Approach to Loyalty • Examples • Recommendations • Q & A

22. Manufacturer of Pet Treats • “Smart treat” called Greenies (dental) • Problem: manufacturer sells to the channel (i.e. PetSmart) and doesn’t know their end users. • Research indicated pet owners both loved the product, would refer others and wanted savings • Goal: identify and build relationships with Greenies customers

23. Greenies Pet Treats

27. Greenies Pet Treats

28. Example Customer Segments Dog owner, large breed, use 6+ times per week referred others A A • Purchases 36 oz tubs • Referred 4 others • Shops at Petco • Prefers e-mail offers Owns 3 cats, new buyer, shops at Petsmart, salmon flavor B B Owns multiple pets, small breed dogs, redeemed first coupon • One large breed dog • Treats Greenies 3-4 times per week C Greenies Pet Treats

29. Program Benefits and ROI • Identified end users; started a permission-based, online relationship • Acquired customer understanding and created segments for future marketing, e.g. pet family profile, consumption habits, new products, stories about pets, etc. • Set the stage for an acquisition phase…emails and WebDecoder to dog owning households.

30. Many grocery shoppers are splitting their shopping between stores for reasons of convenience and category preferences (e.g. meat, produce, etc.) McKeever’s Price Chopper was challenged with new Wal-Mart stores entering the market Goal: to reduce split shopping and drive brand and store-specific loyalty. Solution includes: leveraging customer and transactional data offers relevant to shopping behaviors growing value of existing card Grocery Retail

34. Program Benefits and ROI • After only 8 weeks of the program • Activation levels met expectations • Click through rate from emails over 32% • Comparison to 8 prior weeks •  Number of transactions up significantly •  Average ticket down minimally, but total spend up •  Growing, online customer database/relationship • Ongoing customer understanding will allow even more family specificity in the future

35. Agenda • The state of consumer loyalty • Changing the Approach to Loyalty • Examples • Recommendations • Q & A

36. Recommendations • When loyalty initiatives fail – • Often designed without the customer in mind • Lack of intelligent use of collected data • Not focused or executed based on differing value of customers • Assuming the loyalty program itself is the end-all, fail to follow through with effective program management • Lack of measurement

37. Recommendations • Find the kind of loyalty your brand supports. • Build on the strengths you already have and leverage them for meaning. • Think of the end state more than the tactics that get you there.

38. Recommendations • Communicate to customers the way they want to be communicated to. Just ask. Then follow-through. • Make it a long-term commitment to relationships rather than a short-term search for sales. • Don’t Push_Connect

39. Brian Olson 913.341.1966 x101 brian@InQuestMarketing.com Dave Wilson 913.341.1966 x102 dave@InQuestMarketing.com