loyalty

1. Juice it up!

2. Direxions
www.direxions.com
@2018 Direxions
Best Practices in Loyalty Marketing

3. Copyright © 2008, Direxions Marketing Solutions Pvt
Ltd
Marketing Tools & The Loyalty Ladder
Suspect
Prospect
Customer
Client
Advocate
StrategicValue
Consumers’ Switching CostsLow High
Tactical
Strategic
Price
Trade deals
Promotion
Advertising
Direct Marketing
Database Marketing
Loyalty Marketing
Area of
Relationship Marketing
One-to-one Marketing

4. Copyright © 2008, Direxions Marketing Solutions Pvt
Ltd
….this is also relevant in the e-world
Suspect
Prospect
Customer
Client
Advocate
StrategicValue
Consumers’ Switching CostsLow High
Tactical
Strategic
Price
Trade deals
Promotion
Advertising
Direct Marketing
Database Marketing
Loyalty Marketing
One-to-one Marketing
Abandonment
Attrition
Churn

5. Direxions
Marketing
Solutions
Pvt Ltd
Loyalty Programs
A strategic tool in good times and bad
Typically launched to
Increase sales i.e. growth
Reduce churn
Audiences include
Individual customers
B2B
Channel partners – dealers, distributors,
agents, resellers, retailers etc.
Influencers – doctors, chemists, architects, etc.
Employees
Can be used by practically any industry, for at
least one of the audiences

6. Direxions
Marketing
Solutions
Pvt Ltd
Customer Loyalty Programs
Large companies have millions of customers
Very expensive to maintain a relationship with all
A Loyalty Program identifies & rewards best
customers
Not an acquisition tool – although, a successful
program may attract new customers to the brand
Typically involves a loyalty card, offers members
points to be exchanged for rewards, and benefits to
members
Often has tiers – Blue/ Silver/ Gold etc.
Is different from a sweepstake/ cash back/ discount
Is more strategic in nature, more long term with
larger investments and potential returns

7. Types of programs….
Communication
•Use targeted information or
messages to deliver special
benefits and offers.
•Loyalty driven by frequency
of communication and
relevance / attractiveness
of offers
Points
•Promote customer retention
through the earning of points
for purchase of merchandise
or services.
•Points can be redeemed
for future discounts and
merchandise incentives.
Amenities
•Provide special treatment or
services to program members.
•Recognition is valued
•Heavy or frequent users also
need special treatment
Partnerships
•The primary benefits come
from participating program
partners
•Brand values can synergise for
many common segmentation
types
•Costs can be shared

8. ….And how companies participate
Stand-alone programs
Partners in other loyalty programs
Coalition programs

9. Direxions
Marketing
Solutions
Pvt Ltd
Benefits of loyalty marketing to a company
Loyalty
Marketing
Operations
Efficiencies
HRD
Employee
Involvement
Purchasing
Manage Costs
Finance
R-O-I
InfoServices
Customer
Information
CEO
Corporate Image
Customer Satisfaction
Marketing
Brand Share
Customer Retention
Sales
HigherRevenue

10. Do you really need to launch a
loyalty program?
Some questions that you need to ask
Is the product or service purchased regularly?
Does the product/service have an adequate margin to support the program?
Is the product/service a commodity?
Is there a significant difference between the value of a frequent customer and an
infrequent one?
Are sales easy to track?
Does the company and its top management have a long term vision for the
program?
Are there sufficient funds for the program?
Is the competition offering a program?
Will your needs be better met through a simple communication program, or
through targeted database marketing?

11. Not so good reasons to want a
loyalty program
We need to meet this quarter’s target
Everybody is doing it, so why shouldn’t we
I saw this great software demo this morning!
I want a cool card with my brand on it
There’s a management trainee sitting idle with nothing to do…

12. 6 Key Elements of a
successful loyalty
program

13. 1. Program Objectives
Mirror your business objectives

14. Direxions
Marketing
Solutions
Pvt Ltd
Typical Objectives
Increase growth/sales/purchases
Reduce churn
Improve disposition towards my
products and services (for
influencers)
Important:
Define measurement metrics at
the start of the program
30% increase in sales
20% reduction in churn….

15. Avoid having too many objectives,
no matter how good they sound
Identify best customers and
make them loyal and
make it easier for my sales guys to sell and
increase my brand equity and
integrate all my marketing efforts and
reduce marketing spends and
generate revenues through partners and…

16. 2. Defining the target audience
Who can best help us meet the
objectives

17. All Customers Are Not Created Equal and
therefore every relationship is different too
% of Total Customers % of Total Revenue
15
35
50
50
35
15
A company’s most valuable customers can easily
be worth 10 times as much, or more, as their least
valuable.

18. Its tempting to want a “large” program
Free and auto enrollment of customers:
leads to a large member base BUT
PITFALLS
Leads to low activity
High overhead in the program
If everyone is in, how does your best customer know this
program is for him?
Where is the Flaunt value? The Club appeal?

19. Wrong selection
A leading telecom company decided to enroll all customers
into their loyalty program
Industry was in a steep growth phase, and the numbers
mushroomed
At the same time, ARPUs dropped
Program became unremunerative
As a result, communication ceased to all members
Heavy churn among high value members to competition who
launched a program for only high value members

20. 3. Rewards
The reason customers become
members

21. @2018 Direxions
“As loyalty and rewards programs of
every type continue to saturate virtually
every consumer market, the key to
success for hotel loyalty programs is
variety of reward offerings,”
Rick Garlick,
Travel and Hospitality Practice Lead
J.D. Power.

22. Direxions
Marketing
Solutions
Pvt Ltd
Rewards
The key benefit of a loyalty program
For hospitality it has to be your resorts and
Sterling merchandise
Monogrammed Bathrobes and hand towels
Complimentary upgrade to luxury suite
Free night upon completion of x nights etc
Early check-ins, late check-outs,
Discounts on dining options,
Health club access and more.

23. Direxions
Marketing
Solutions
Pvt Ltd
More than just room nights..1
Frequent travelers want more than hotel stays: Hotel loyalty
members redeeming rewards are more satisfied (by 138 points)
than members who have not redeemed.
Satisfaction is higher for redemptions involving:
Special events (+124 points);
car rentals (+103 points); and
dining (+86 points).
Redeeming for hotel stays adds only 4 points, on average, to
loyalty members’ overall satisfaction with a program.
Source: http://www.jdpower.com/press-releases/jd-power-2017-hotel-loyalty-program-satisfaction-study

24. Direxions
Marketing
Solutions
Pvt Ltd
More than just room nights..2
Many customers do not understand how to redeem rewards:
Among customers who say they fully understand how to redeem their points,
overall satisfaction is 147 points higher than those who say they do not fully
understand the process.
Despite this powerful effect on satisfaction, nearly half of all loyalty program
members indicate a less-than-clear understanding of how to earn their points
and only 50% know how to redeem them.
Loyalty program satisfaction boosts brand loyalty: You knew this, of course!
Of hotel stays booked in the past 12 months, 47% were booked with a brand
affiliated with the member’s loyalty program. That percentage increased to 52%
among members who say they are delighted with their loyalty program.
Source: http://www.jdpower.com/press-releases/jd-power-2017-hotel-loyalty-program-satisfaction-study

25. Direxions
Marketing
Solutions
Pvt Ltd
And the Gold went to…..
Hotel Loyalty Program Rankings
Marriott Rewards ranks highest in the 2017 study,
and receives the Gold award for overall member
satisfaction with a score of 806.
World of Hyatt is the Silver award recipient with a
score of 805,
Hilton HHonors, the Bronze award recipient, with a
score of 793.
Source: http://www.jdpower.com/press-releases/jd-power-2017-hotel-loyalty-program-satisfaction-study

26. Special benefits
Sometimes valued more than rewards
Late checkout
Complimentary access to spa
Cocktails & dinner
Invites to special events…..

27. 4. Communication
Make sure you interact with
your selected members

28. Direxions
Marketing
Solutions
Pvt Ltd
Communication: A necessary investment
Communicate regularly with valuable members
Planned communication calendar
Standard program communication: Welcome kit, points
statements, upgrades, downgrades, redemption etc.
Occasions: Birthdays, anniversary, festivals etc.
Campaigns and offers
Behavioral: Communication to clusters showing specific
behavior
Eg. Active members who lapse, new members who don’t activate
etc.
Use new cost-effective media
Typically, each member receives 4 to 18 pieces of
communication annually, depending on value and
interaction

29. Direxions
Marketing
Solutions
Pvt Ltd
Standard letters – use of analytics
Petrobonus
Single Sale No repeat
Enrolled 3 months prior has done only a single sale
transaction in the 3 months
Load but No Sale
Enrolled 3 months prior has done a single load
Inactives
Enrolled 3 months prior and has done no transaction
High value Members
Members who have not transacted in the recent 3 months
and have an average monthly sale of Rs 2,500 or more in
the 6 months prior to inactivity
Constant testing and tracking
45 standard communications developed

30. 40% of the target base got
activated
Standard letters were sent to 24,273 Customers of which 9,793
(40%) customers were activated in the year
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Dec04
Jan05
Feb05
Mar05
Apr05
May05
Jun05
Jul05
Aug05
Sep05
Oct05
Nov05
Dec05
Jan06
First Active Last Active

31. An activated member stays active
for an average period of 7 months
On An Average a member remains active for 7 months (based on the
Sale transactions)
Overall
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Activity Period in Months
Members

32. Re-activated members do higher sales after
receiving a Standard letter
16038
17933
18839
14500
15000
15500
16000
16500
17000
17500
18000
18500
19000
19500
Pre HiVal Post
AverageSale/Month(Rs.)
The Average Value per member per month in the post period is
greater than that in the hi value period with a 95% Confidence level

33. 5. Technology- an
enabler
Deploying the right technologies to
manage your loyalty strategies

34. Direxions
Marketing
Solutions
Pvt Ltd
Loyalty Programs are complex - hundreds of
decision points
Program Objectives
Measurement metrics
Membership criteria
Membership duration
Data strategy
Enrollment process
Need and effect of tiers
Points strategy
Points conversion
Points and membership validity
Points liability
Rewards strategy, Benefits
Type of rewards
Redemption process
Communication strategy
Program branding options
Communication elements
Partnerships
Program Terms and conditions
MIS Reports and Frequency
Sizing and ROI for 3 years
Customer service set-up
In-house training
Management structure
Likely competitive response
Technologies

35. Copyright © 2008, Direxions Marketing Solutions
Software – the arms & legs of
loyalty programs
Each loyalty program is different : customised software
CRM software does not have all features
Loyalty modules of POS systems are inadequate
Should integrate with existing systems
Should be scalable and flexible
Ensure multiple functionality, ease of installation and
integration with web and mobile
Can allow integration across divisions, group companies,
countries and continents

36. Data - A most valuable asset
Your loyalty database holds rich information about your best
customers, their profile and behavior.
Technology that can handle sufficiently large data sets in a
secure manner.
Enhance the data with deeper profile and disposition
information
Use the information to add value to members
Several data analytics tools available for reporting,
segmenting, mining and predicting behaviour

37. 6. In house training
A last mile problem that can really hurt
your program

38. How much do your front liners know?
In house training is one of the most critical tasks in program
implementation
Training is at implementation, followed by refreshers to ensure
that the program experience is delivered as designed
What can happen without training:
Your helpdesk calls your program a “discount scheme”
Your dealer tells your customer to not bother enrolling because it isn’t
worth his time
Your best member asks about the new double points scheme and your
staff tells him there’s no such thing

39. @2018 Direxions
Highlights for hospitality

40. Colloquy’s recommendations..1
#1 Create loyalty to your brand, not just your
program.
There is still a big disconnect in loyalty. Many brands
understand that they need to create an emotional connection
with their customers — and even believe they are doing so. Yet
most of the time, they’re merely creating a transactional
relationship.
https://www.colloquy.com/resources/pdf/reports/COLLOQUY_2017_Loyalty%20Census.pdf
#2 Make the redemption itself an experience.
Some of the top motivators that drive customers to participate in their most active program
focus on rewards:
a. The program gives me great discounts.
b. I can get to the reward I want within a reasonable amount of time
c. The program gives me ways to earn rewards faster.
d. The program makes me feel like a valued member.

41. Colloquy’s recommendations..2
https://www.colloquy.com/resources/pdf/reports/COLLOQUY_2017_Loyalty%20Census.pdf
#2 Make the redemption itself an experience.
Some of the top motivators that drive customers to participate in their most active program
focus on rewards:
a. The program gives me great discounts.
b. I can get to the reward I want within a reasonable amount of time
c. The program gives me ways to earn rewards faster.
d. The program makes me feel like a valued member.
57% left a program because it took too long to earn, and 53% left because a program
did not provide rewards they were interested in.

42. Colloquy’s recommendations..3
#3 Keep the friction out.
Loyalty programs must be a tool for eliminating friction in the customer experience (CX).
Successful programs bridge the gap between loyalty and great customer experience.
Starbucks is a great example of frictionless CX. It created a loyalty program out of an
existing CX issue: long customer lines. Starbucks created a prepay option to eliminate that
barrier (purchase on your phone through the Starbucks app: pick up your order at the
nearest Starbucks shop).
https://www.colloquy.com/resources/pdf/reports/COLLOQUY_2017_Loyalty%20Census.pdf

43. Colloquy’s recommendations..4
#3 Push your loyalty program to be better.
Create short-term promotional sales by leveraging loyalty for everyone while also focusing
targeted investment on the best customers. For example, companies can create an
emotional connection by unpacking which attributes are important to the best customers,
such as a special night of shopping or other experiential rewards.
https://www.colloquy.com/resources/pdf/reports/COLLOQUY_2017_Loyalty%20Census.pdf

44. Sterling sizzlers:
1. Sterling Brand goodness on steroids
2. In room differentiators
3. Personalization
4. Sharing economy
@2018 Direxions

45. Within the Sterling Bouquet…
@2018 Direxions
While all resorts will showcase the ‘Sterling’ness, each one can
have a different brand spin!
Sportspitality
Hi-end gym with experts like Micky Contractor associated, Zumba
session etc
Organic
Food all organically sourced
Farm to table concept, Masterchef classes
Only vegetarian by choice
Supporting locals
All staff are locals who have been trained
Solar driven etc
Weddings
Whats your
‘Sterling’ness
Quotient?
SQ

46. In room differentiators
@2018 Direxions
In the rooms:
Can we have mouthwash provided in the washroom?
Laundrywash facility –self service with charge
Chargers available on request
Small
things

47. Personal milestones
@2018 Direxions
Birthdays could be the graveyard for brands. Why?
The customer gets to experience the different brand
messaging at the same time…think about it.
Personalisation!
Taking the cake
in loyalty

48. Reimagining the concept of the birthday reward
Process driven. Efficient. Collaborative
If there is one go-to strategy loyalty marketers use to turn occasional shoppers into
rapt customers, it is evidently through enhanced birthday presence.
The Sterling Holidays difference!
Note all customer birthdays that fall on weekends and holidays
Communicate at least 6 months in advance and tell them why!
So, they can book their airtickets and make it happen!
Tell friends and family join them
Select the Sterling vacation of their choice.
Bring guests along for two more rooms and your room
is complimentary!
A Birthday photograph framed!
By inviting the member into the process early on, you build a sense of anticipation
and excitement
Its more than a birthday discount, it’s a memory!
@2018 Direxions

49. Sharing economy
@2018 Direxions
The fun in this pic is the ‘going dutch’ concept
Allow for a group to split ‘ pay per use’ concept
Should I pay for my friends alcohol when I am into fruit juices
and detox!
Cutting Chai

50. To summarise
Loyalty program can be a strategic tool, in good times and bad
Typically launched to increase sales or reduce churn
Need to be customized for each company
Improper design could cause the company to lose thousands of
dollars, and result in unhappy customers
6 key elements – define program objectives, target audience,
rewards, communication, technology and training
Relationships built during good times come to the aid in bad
times

51. Thank you