Presentation conducted in March 2011 in Sydney covering the topic of Loyalty based on two bits of research - Qualitative research conducted by the Ipsos Mackay team and quantitative research conducted by the Ipsos Loyalty team

1. Where Our Loyalties Lie Rebecca Huntley Director, The Ipsos Mackay Report Brett Tucker MD, Ipsos Loyalty

2. Where Our Loyalties Lie Presentation What’s on for today… Themes from The Ipsos Mackay Report research findings Loyalty is about relationships Review Where Our Loyalties Lie Survey companion piece from the Ipsos Loyalty team Section 1 – Customer, Employee and Personal Loyalty Section 2 – The Economics of Loyalty Q&A and discussion

3. Meet the Presenters Ipsos Loyalty MD with 12+ years of MR experience with focus on customer satisfaction and loyalty research Prior to Australia, Brett was with Ipsos Loyalty in the US designing, implementing and managing Loyalty programs for companies like Microsoft, US Bank, Diners Club, MSN and Yahoo!. Prior to joining Ipsos, Brett was a Senior Consultant with Harris Interactive’s Customer Loyalty division BS from the Univ. of Washington (United States) with emphasis in marketing and org behavior. Brett Tucker Dr Rebecca Huntley is a researcher and author with a background in publishing, academia and politics. She holds degrees in law and film studies and a PhD in Gender Studies. Rebecca is the Director of The Ipsos Mackay Report, now in its 33rd year. She is the author of two books, The World According to Y: Inside the New Adult Generation and Eating Between the Lines: food and equality in Australia. She is a sought after commentator on social trends on radio, in print and on television Dr. Rebecca Huntley

4. Ipsos in Australia In Australia, Ipsos opened its doors in 1999 Since then, Ipsos has acquired TQA, Mackay Report, and Eureka Strategic Research Ipsos Australia also owns the largest fieldwork company in Australia, I-View. I-View employs over 1000 qualified market research interviewers with expertise in Door-to-Door, Central Location, Telephone, Mystery Shopping and Audits. ISO 20252 for Market Research Ipsos publishes the widely publicised Ipsos Mackay Report and has recently been selected to conduct Australia’s second major readership survey Ipsos now has four offices in Australia (Sydney, Melbourne, Brisbane and Canberra) and approximately 130 full time employees.

5. Where Our Loyalties Lie Rebecca Huntley Director, The Ipsos Mackay Report

6. Themes from our research findings

7. Loyalty is about relationships ‘The only thing you feel obliged to be 100% loyal to is your family.’

8. Intimate relationships set the benchmark Against which all other forms of loyalty are measured Endures through thick and thin I’ve got a friend that I went to school with and we might not see each other for forever. But when we get back together it’s like we never left, we pick up the threads instantly. If you come back to where loyalty is in your everyday life, it’s your family. That’s the only loyalty you can really trust. It’s the one that doesn’t shift. Periods of adversity or absence the greatest test of its strength

9. What can Corporate Australia learn from the local café? You go back to the same café when you know them and they know you. I’m loyal to my local café. I’ve been going to the same one for over six years. The thing about a business, like my café, knowing your name is really important to me. It makes people feel good so they’ll keep coming back. I have some friends who go to the same café even though the food and coffee is terrible, but they keep going back because they’re loyal. The owners are really nice and know them.

11. Reciprocity and trust are key It’s a two way street [Loyalty] has to benefit both parties to some degree. It doesn’t have to be financial or whatever, but it has to be some benefit. Being trustworthy underpinned this reciprocity Trust and loyalty and respect. You can’t have one without the other really. You need both to have loyalty. This mutual exchange brought with it comfort and security It gives you a good feeling, satisfaction. A level of comfort and security.

12. This elasticity of loyalty also extends to … The church Local businesses I like to be loyal to my church because it is where I grew up, where my spiritual family is, where my interest is. I want to be loyal to my church. I’ve decided it is my spiritual house and I will be loyal to the end. I go to my local greengrocer, not the supermarket. You pay more, but you get conversation so you stay loyal. Cafes, pubs & restaurants I’m loyal to my local coffee shop. They know me there.

13. Loyalty to brands varied enormously Cars Some people are loyal to cars. My neighbour will only ever buy Holdens. Won’t buy Ford. Hates Fords. Actually hates them. Technology I’m loyal to my Mac. I’ve had like four iPods. My loyalties have changed. I used to be a Playstation man but then Xbox brought out Fable and I have been Xbox ever since.

14. Service keeps us loyal I have loyalty, in terms of products or consumables, if in the service I get something back that I think is above and beyond. Loyalty is to individual sales staff I think lots of companies don’t nurture that loyalty [to staff]. Because you are more loyal to a person than you are to a product. You might shop at Target because you have had a good experience in the past. But I went in there to buy a few things and got shocking service. So they are on the blacklist now. One bad experience could dismantle previous loyalties

15. Now let’s look at some data… Brett Tucker MD, Ipsos Loyalty

17. How loyal are you to your employer?

18. Do you have the propensity to be a loyal customer?

20. What did we find?

21. When thinking about loyalty… family, friends and Australia clearly rose to the top Country before brands If you come back to where your loyalty is in your everyday life, it’s your family. That’s the only loyalty you can really trust. It’s the one that doesn’t shift. My mum only buys orange juice that’s made with Australian oranges. She feels like even though she’s not being loyal to a particular brand, she feels like she’s been loyal to the Australian orange growers Family first

22. And the top 10 are…

23. From an overall loyalty perspective… politics & politicians rate poorly With politics, my family used to vote a certain way and then I voted that way out of loyalty. And then I realised I needed to think for myself and process these issues for myself. We need to reconsider why we are loyal. Has loyalty to politics changed?

24. And the bottom 10 are…

25. How do our loyalties lie together? Primary wealth management firm or fund Particular beer Print news source Australia Federal political leader Particular butcher Online news source Friends Grocery store brand Particular wealth manager Pets Family State political leader Television news source Grocery store location Spouse/partner Main superannuation fund Radio news source or talk show Political party Department store brand Mobile phone handset brand Main financial institution

26. Does loyalty to family & friends = loyalty to employers and products? Loyalty to family is the real thing. So when you are talking about loyalty to makeup and credit cards, it is meaningless. It’s all marketing. It’s all about people trying to tap into something that has real meaning to try and sell a product I’m loyal to my friends and family. I’m also fiercely protective. I’m not the same with products.

27. The answer is no… looking at the different forms of loyalty Personal loyalty 3% Our loyalties to other people, employers and products are unique Employee loyalty 4% 2% Customer loyalty

28. Generational differences regarding loyalty? Opinions differ… A new generation? There’s no loyalty in the ‘me, me generation’. A generation like any other? I see with my kids they are loyal to their parents. And to their employers as well. Loyal to friends, not sure. It’s a transitional stage so they flit from group to group.

29. The concept of loyalty

30. The concept of loyalty across generations

31. The value proposition is different by generation…

32. Do the forms of loyalty decline with age?

33. Loyalty differences between men and women... Bunch of blokes I’m loyal to my husband because I wouldn’t want another man to see me naked at this age. Man 1: Can you guys say your loyal to girls, apart from family members? Man 2: Nope. Man 3: No. Man 4: But with girlfriends it’s a bit different. But it’s still bros before hoes!! Woman in her 40’s

34. No gender difference really…

35. The economics of loyalty

37. Banking

38. Insurance

39. Grocers

40. Mobile services

43. I said I’d recommend… but will I?

44. Are NPS and Actual Advocacy the same thing? Mean number of recommendations

45. Linking intent to advocacy to acquisition Likelihood to recommend (NPS) Actual recommendation Acquisition

46. Reasons for choosing your current car Friends or family recommended it to me Loyalty/rewards scheme

47. Reasons for choosing your primary bank Friends or family recommended it to me Loyalty/rewards scheme

48. Reasons for choosing your insurance provider Friends or family recommended it to me Loyalty/rewards scheme

49. Reasons for choosing your primary grocery store Loyalty/rewards scheme Friends or family recommended it to me

50. Reasons for choosing your mobile provider Friends or family recommended it to me Loyalty/rewards scheme

52. Customer retention is about Attitudesand Behaviour Brandpreference Attitudinal loyalty Likelihood to remain a customer (repurchase brand) Share of wallet Behavioural loyalty Trend in recent behaviour

53. We use our Ipsos Loyalty Index to understand customer retention Ipsos surveyed 10,000 customers of different brands in different sectors; and surveyed them again a year on. The variables that best predicted Loyalty were used to create the Ipsos Loyalty Index. Only 24% of those who were classified as High Loyalshad changed providers 12 months later Loyalty Index has strong ties to retention

54. Shall we look at some of the results?

55. Banking loyalty – Key Measures - 2009 vs 2011 Ipsos Loyalty Index figures are available in industry reports

56. A company level view – Retail Banking Ipsos Loyalty Index figures are available in industry reports

57. A company level view – Grocery Ipsos Loyalty Index figures are available in industry reports

58. A company level view – Mobile Ipsos Loyalty Index figures are available in industry reports

59. A company level view – Insurance Ipsos Loyalty Index figures are available in industry reports

60. Going a level deeper – Experience Drivers - Grocery

61. Going a level deeper – Brand Drivers - Grocery

63. Share of wallet models Coles monthly spend Grocery Coles monthly spend Wealth management Customers with 1 product Customers with 2+ products

64. Applying this approach to your business

65. Copyright Ipsos Loyalty © 2010

67. The reports will cover:

68. Acquisition and advocacy

69. Loyalty

70. Customer satisfaction

71. Drivers of loyalty

73. Questions & Discussion

74. Thank you For more information contact: Brett Tucker +61 2 9900 5130 brett.tucker@ipsos.com Rebecca Huntley +61 2 9900 5100 rebecca.huntley@ipsos.com