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Making money out of loyalty

Making money out of loyalty. 22 nd April, 2014 / Tero taskila. The purpose for the Loyalty programs is to make money. Extension of the marketing approach One-off or Limited time-only promotions (acquisitions) Rewards for the purchase (growth)

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Making money out of loyalty

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  1. Making money out of loyalty

    22nd April, 2014 / Tero taskila
  2. The purpose for the Loyalty programs is to make money Extension of the marketing approach One-off or Limited time-only promotions (acquisitions) Rewards for the purchase (growth) Tiered and / or points based program (retention) Potentially making money through partnerships and selling points Aim to increase foot traffic or website visits to generate more repeat purchases Does not replace #1 reason for being loyal – product and service
  3. Points programs generate the most cash and loyalty, but require investment high Points program Requires investment and set up Balance sheet implications Generates cash Struggle to remain relevant Discount program Many forms / typically “buy 10, get 11th free” Easy to implement Challenging to increase frequency and upsell Partnership requirement Subscription Easy to implement Difficult to sell Very specific and narrow clientele low low high Earning potential
  4. How does the point sale work? Loyalty program makes money – mechanism same as currency trading
  5. Some findings on loyalty programs Customers prefer to have tier levels (and recognitions which comes with it) Remember to communicate if your top tiers are about to lose status! People tend to increase frequency or amounts their spending when the reward is getting closer Opposite is true as well – if the rewards are far away (or perceived that way), you will not get users If using points based program – big numbers work better than small ones Give people opportunities to fast-track getting the status for example Aadvantage Challenge
  6. Loyalty programs struggle to stay relevant
  7. Promotions are important
  8. Larger partner footprint will increase your wallet share
  9. Loyalty programs possess wealth of information which can be monetized
  10. Improve the yield by utilising loyalty programs Targeted communication for better conversions and upsell People pay more on experiences – analyse what matters Monetize the data
  11. Mobility is changing customer behaviour
  12. Customers want engagement 50% of companies use gamification in 2015 30% of all e-messaging by 2016 5.5 Bn USD business by 2015 Most applicable for Loyalty and Marketing AMEX, airBaltic etc. are using it
  13. Case example / BalticMiles airBalticchanged ownership structure – altering the financial conditions to maintain an existing Frequent Flyer Program We did not want to have just another Frequent Flyer Program Did not want to just offer discounted tickets Low Cost airline pricing promotes loyalty better than miles issuance We wanted to encourage loyalty The Baltics did not have any consumer loyalty program worth mentioning We set our sights to learn from the best (aeroplan, nectar)– and be the best
  14. Strategy and Planning Program parameters identified Supplier strategy outlined Staffing requirements defined Implementation Results Delivered on time and within budget Program parameters delivered 9 Core Markets 7 Languages 7 Currencies to support core markets Local team in place (Latvia) Shared services structure with rewards partner (Loylogic) for support Program Launch Contract signed February March April 2010 January 2010 Designed, implemented and launched a global rewards and loyalty program within 4 months Local Market Coverage Plan Recruited new partners and brands Locally sourced rewards Determined launch campaign One year after launch – 850 000 members in 163 countries
  15. Loyalty programs should make money Increasing revenue should be the aim Higher yield, more frequency, commitment, partners Acquiring and managing partners for better footprint in customers’ daily life Managing and monetizing data is the key Instant gratification and gamification will come with increased mobility
  16. Sports and loyalty have one things in common – both try to maximise fans to attract partners Thank you!
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