Loyalty Programme Offering Strategy for Telco Customers

1. 1 Offering 8 Communi-cation 2 Processes 1. Programme offer 7 Finance Key topics of the programme 3 Call Center 6 Structure 4 Cards   5 InformationTechnology Frequently asked questions: • What were the requirements for the offering? • How does the offer look like? • Which part of the offer influences which customer segment? • What about co-operations with other companies? • What are possible options for new offers after launch?

2. Requirements from a customer • point of view: • Benefits • Simplicity; Understandable • Transparency • others • Requirements from a market point of • view: • Focusing on large market fields • Considering the competitor intensive market fields • Focusing on future market fields • No legal conflicts • others • Requirements from a company‘s • perspective point of view: • Attracting a broad amount of customers • Pushing additional sales, profitability and loyalty • Pushing cross selling/ up selling • Rising the image of the company • others Requirements to the Offering 1 8 2 1. Programme offer 7 3 6 4 5 Requirements for the offering at launch time • There are not just requirements from the internal optic but also requirements from the client and the business perspective to take into consideration.

3. 1 8 2 1. Programme offer 7 3 6 4 5 The programme is based on a set of point collection and point redemption offers and includes also win back offers Example 1 point = 3 cents 3000 points: Special mobile phone 5000 free access for one year 1500 30$ voucher for shop purchase 2500 free friends and family programme <8000 special agent of support 24h available others 2 points for 1 frequent flyer mile 1000 points for one box of chocolate others Point redemption with club partners Win back offer: Ongoing point Collection Ongoing Point Redemption Club Membership Joining offer: 500 points when returning within 30 days 100 points per fix line 100 points per mobile telephone 100 points per pager 100 points per internet access 1 point per $ turnover 1 point extra per $ turnover if fix line and mobile Special campaigns for point collection 200 points for member get member double points for calls to Italy during summer double points for international calls during Christmas others

4. 1 8 2 1. Programme offer 7 3 6 4 5 The loyalty programme has one offering but targets four segments in different ways. • Premium Customer (over US$ 300.- per month) • Strategy: Identify customers, VIP concept, keep the customer happy, retention what ever the costs are, improve cross- and upselling whenever possible • Most of the very attractive rewards for these customers within 1 year of point collection • Premium customers can profit up to 8% • Profitable Customer (between US$ 150.- - 300.- per month) • Strategy: Identify customers and make them loyal. Up- and cross selling • Turnover per customer over the average, most of the very attractive rewards for these customers after 1.5 years of point collection. • Profitable customers can profit between 3 - 7% Customer structure: 8% Premium customer 21% Profitable customer 31% Long collector 40% Uninterested • Long collector (between US$ 100.- - 150.- per month) • Strategy: Focused cross selling incentives for enhancement of turnover • Probably profitable customer now • A very attractive reward can be reached, if the annual turnover is substantial growing and points are collected over a period of 2 - 3 years • Long collectors can profit between 2 - 6% • Uninterested (between US$ 0.- - 100.- per month) • Barely profitable customers • Strategy: No additional discounts / benefits • Hardly reach enough points within one year for a redemption possibility (with exception off the first year). Substantial growth of turnover is needed to reach the very attractive redemption possibilities. • Long collectors can profit between 0 - 3%

5. 1 8 2 1. Programme offer 7 3 6 4 5 Possible special offers in combination with the launch for the club programme • Below you will find a set of ideas for the launch of a loyalty programme. This special offers should be attractive, especially for the target groups, and should reflect the main offering of the programme. Prepaid cards / special edition Free ticket for cinema Painting of a famous painter Combination with Smart-Cards The golden button Free health check Back-Stage tickets for concerts Balloon Trip Starring in a TV commercial / soap opera Breakfast with famous people Flight Tickets Right for getting new products first Videoconference with friends Full telecommunication equipment “Follow the wire” Travel around the world Early Bird (z.B. Prepaid card for the first 10’000 customers) Limited Card Editions Ideas for additional offers for the programme start of theTelco loyalty programme

6. 1 8 2 1. Programme offer 7 3 6 4 5 Depending on the structure of the offer, the reaction of the customer and the impact for the company will be different. • Each component of the offer lead to different reaction of the customers. On the one hand, they can reduce their costs. On the other hand, the offer is influencing the usage and convenience of their products and services. • From the view of the Telco, the different offers will have different customer reactions. On the one hand, customer loyalty may increase. On the other hand, the profitable customers can be paid more attention. • The offer in this Case for practical implementation has a balanced structure and covers all effects. different offers different offers CostReduction for Customer Effect on Profitability Leverage of benefits Additional products for bundling High Impact Offers in the point of sale Joining offer High Impact Redemption with different offers Member gets members Low Impact Offers of partners for redemption Club Card Low Impact More Customer Usage/ Con-venience Effect on Loyalty Low Impact Low Impact High Impact High Impact customer Telco