“ American business has developed an insane imbalance between obsessive customer acquisition and
Basic objectives for Loyalty programs • Retain best, most profitable customers • Make good customers better • Acquire customers with potential to become best customers • Reconnect lapsed users with the brand • Revitalize the brand’ s relationship with its core franchise
Appropriate question is not will a loyalty program attract new customers or will it increase our retention rates. But will it grow
Principles of Loyalty Marketing • Relevance is the key to Loyalty Marketing - The magnitude of the reward is less important that the perceived value of the reward •Benefits - Intermittent scheduling of rewards (“ surprises” ) can be more effective than regular scheduling •Special treatment •Recognition
• Loyalty Marketing reduces the consumer’ s decision-making complexity • Loyalty Marketing reinforces the rightness or wrongness of the consumer’ s choice • Loyalists represent an incremental sales force • Loyalty Marketing is information-dependent
What is Loyalty? The consumer is loyal to you is s/he frequently buys your product
Desired Behaviour Low
High
Loyal Behaviour
The consumer is not necessarily desirable... Desired Behaviour Low
Loyal Behaviour High
• If you have had to subsidize their purchases • If s/he buys your product because of inertia or absence of an alternative
High
Potentially Loyal Behaviour
Actively Loyal Behaviour Passively Loyal Behaviour
Low
Commitment
Commitment is an emotional bonding
Low
High Desired Behaviour
The actively loyal customer is the only (long term) profitable customer
Commitment High Low
Extend the relationship from Product to Brand
Depth of Involvement reflects moving from a t narrow relationship with n e Low High m an individual product to e t v c l u o Desired Behaviour d broad usage of the v o n r I P f full range of o h t products p e D d marketed n a r B under the brand
High
Low
Commitment
Actively Loyal to the Product
De
o h pt
d n a Br
o v n I f
m e lv
t n e
t c u d o r P
Low
Actively Loyal to the Brand
High Desired Behaviour
AMEX
Low
Commitment
High
An index of behaviours that reflect a CM’ s attachment to AMEX - Tenure of membership -Total number of trans. per month - Months active - Total number of services currently active - Share of plastic spending - Survey responding and responses
De
o h pt
o v n I f
d n a r B
m e lv
t n e
Total $ revenue from all AMEX products and services - Total $ spending across all AMEX cards - Total $ annual card fees - Total revolving balances on Optima
t Low High c u d o Desired Behaviour Pr
An index of the number of points of connection with AMEX - Total number of types of cards held - Total number of basic cards - Total number of services currently enrolled in