1. The Increasing Importance
of Online Strategies for Loyalty Programs
- BalticMiles Case Study -
Gabi Kool – CEO BalticMiles SIA
Chairman of the Board Коалишн Ревордс OOO (Coalition Rewards)
Riga, iLive Conference 2013
May 9, 2013

2. INTRODUCTION TO BALTICMILES

3. • Global award winning loyalty program
• Leading Loyalty Management Company in N&E Europe, based in Riga
• Founded in 2009, fast growing and profitable
• First pan-Baltic coalition loyalty program with multiple partnerships
• 600 000 loyalty members
• 2/3 of transactions generated by non-airline partners
• Rewards portfolio offering free flights and 3 000+ redemption items
• 200+ global partners (95 new ones in 2012), representing 20 000 Points of
Sales, resulting in 40% revenue growth from non-airBaltic partners in 2012
• Three banking agreements signed in Finland and Russia, including first white
label program. Revenue growth of 400% forecasted for 2013
BALTICMILES INTRODUCTION
Loyalty 2013 Global Winner
-Innovation in Technology-

4. 1. airBaltic is the shareholder of BalticMiles
2. Points issuing partnership to help drive customer acquisition and retention
(airBaltic pays BalticMiles)
3. Points redemption partnership to provide flight rewards
(BalticMiles pays airBaltic)
4. BalticMiles is an independent company with its own management team,
supporting 220 additional partners with their loyalty marketing efforts
within the coalition
Vision statement for BalticMiles Ltd.:
Be the leading loyalty marketing company in North & Eastern Europe,
supporting leading airlines, retailers and financial institutions
RELATIONSHIP BALTICMILES - AIRBALTIC

5. Tickets on airBaltic flights
BalticMiles on-line web shop
>3000 products, worldwide delivery (Money + Points)
– Experiences – SPA treatments, dance lessons, cooking
lessons, wine school, horse riding, hot air balloon
flights etc.
BalticMiles Music shop (Universal Music artists)
Lux Express bus tickets
Donations
Auctions – experiences money can’t buy
REWARDS IN PROGRAM

6.  Operate Program
 Open & manage customer accounts
 Manage rewards portfolio & redemption
 Manage the database
 Recruit new Partners
 Manage retailers relationships
 Manage all communication channels
 Sign up own customers at POS
 Provide Manager with transactional data
 Issue Base Points
 all customers/ all POS/ all products
 Issue Bonus Points
 as per business objectives
 Promote the Program
 Every member gets a card for free
 Collect Base Points = everyday shopping
 Receive Bonus points = when respond to
offers
 Redeem Points for Rewards
 Sell rewards to Manager
 Fulfill rewards to Customers
Members
ManagerPartners
Suppliers
Roles within coalition
WHAT IS A COALITION PROGRAM?

7. HOW LOYALTY COMPANIES FUNCTION
Point Earned by
Member
Time: Life of a Point
~ 2 years
Point Redeemed
by Member
Point Activity
Cash Impact
Accounting
Treatment
Operating
Costs
Points Earned
Points Added to Point Pool
Cash Received (Billings)
Fair Value of awards deferred
Margin component
recognized
Points remain in Pool
Positive Working Capital
Deferred revenue liability
maintained for fair value of
awards expected to be
redeemed
Points Redeemed from Points
Pool
Cash Outflow to Purchase
Rewards
Points Liability Reduced;
Redemption Revenue &
Redemption Costs
Recognized in P&L
Sources of Value
Gross Margin on Points + Working Capital + Breakage (Expiry)
Salaries, IT, Service centre, admin etc

8. GLOBAL COALITION LOYALTY MAP

9. THE CONTEXT OF THE OPPORTUNITY
US$ 2.3 bln (MktCap)
US$ 2.6 bln (MktCap)
AU$ 417 mln
(PBT 1H 2011)
UK:
GBP 368 mln
(Acquisition price)
EUR 496 mln
(Acquisition price)
....... Northern / Eastern Europe loyalty market still largely untapped..........
US$ 7.7 bln
(MktCap ADS)

10. 7 mln 143 mln
46 mln
5 mln
CORE FOCUS MARKETS

11. LOW
LOW
LOW
HIGH
HIGH
HIGH
Find new customers
Ability to engage members
Investment required
COALITION VS. STAND-ALONE
Stand-alone program Coalition program
Stand-alone program Coalition program
Coalition program Stand-alone program

14. ONLINE STRATEGIES IN GLOBAL LOYALTY

15. LEADING TECHNOLOGY INFRASTRUCTURE
iLoyal loyalty engine
Partner integration solution – direct integration, web, POS
Multilingual Loyalty web solution with CMS, including smartphone and tablet solution
Multilingual, multicurrency Reward shop, worldwide delivery, slider, auctions
E-mail marketing platform
Crowdsourcing tool
B2B sales and CRM tool
BI tool
BSC tool

16. INTERACTIVE PARTNER LOCATOR
Where can I
earn points?
One common
points
currency
across all
partners
INSPIRED BY:

17. PERSONALISED E-COMMUNICATION
Please send
me relevant
information
INSPIRED BY:

18. IMPROVE THE ONLINE EXPERIENCE

19. ONLINE REWARDS CALCULATOR
How fast can
I earn my
reward?
Offer full mix of pragmatic/
cash rewards and more
aspirational rewards
INSPIRED BY:

20. USE DATA INSIGHTS
Data mining within a
coalition program reveals
surprising insights and
marketing opportunities
INSPIRED BY:

21. MY OFFERS
• Personalized by
country and gender
• 30 000 page views per
month
• Monthly promotions
via e-mail campaigns
INSPIRED BY:

22. E-MAIL COMMUNICATION - SILVERPOP
Coalition Personalized newsletter
Sent to all opt in coalition members
Twice each month
Based on reading behaviours
Coalition Targeted newsletter
Sent to a particular segment depending on
campaign offer
Open rate 18%
CTR 1.5%
Coalition trigger-based e-mails
Behaviour triggers the campaign
and determines timing
Open rate 35%
CTR 8%
Coalition Account statement
Sent to all non-subscribers
Last Tuesday of every quarter
Personalized newsletter
Sent to all opt in coalition members
Twice each month
Based on reading behaviors
Targeted newsletter
Sent to a particular segment depending on
the campaign offer

23. E-MAIL COMMUNICATION LIFECYCLE
Welcome
message Personalized
newsletter
Not active
for 90 days
Welcome
message Quarterly
account
statement
Enough
For Super
Saver
Close
to VIP
Close to
Executive
After
spending
all Points
Targeted
newsletter
YES
NO
Educational
trigger
Subscribed
to e-mail
communication
General communication
Targeted communication & Triggers

24. TRIGGER BASED CAMPAIGNS
Deliver more effective
communications
Reward the behaviour
you seek:
Low base points,
aggressive bonus points

25. An opportunity to have
a ‘flight’ in a realistic
Boeing 737 simulator
together with the CEO
of airBaltic who is also
a certified pilot.
Sold for a record
number of 211 000
Points
A custom made
wedding dance by the
most famous dance
instructor in Latvia
An upscale wine
tasting
A business class dinner for
2 delivered to your home
and served by a flight
attendant
ONLINE AUCTIONS

26. LINK TO BELOVED APPS

27. DETAILED CASE STUDY:
ONLINE CAMPAIGN
‘WE LOVE TO GIVE YOU MORE’

29. 1. What should our new membership level be called?
2. What should members do to reach this level?
3. What privileges should these members enjoy?

30. HOW MANY IDEAS
DID WE RECEIVE?

31. ?

32. How we segmented
BalticMiles users
How we created the
individual tasks
TOP20 clients by
total spending in
each category
Active in past 6
months with more
than 1000 points
accrued
Reach a personal
target and get +50%
of points
Visit 5 partners
and get +500 points
Reach a personal
target and get +50%
of points
0.1%
12.9%
87%
Less than 1000
points accrued in
past 6 months

33. 500 000
UNIQUE
WELCOME
VIDEOS

34. Alex
ALEX

35. ⚔
THE RESULTS

36. 0.1%
12.9%
87%
22
%
opene
d
7%
CTR
53
%
opene
d
16
%
CTR
48
%
opene
d
22
%
CTR
HIGHEST
CONVERSION
RATES
IN THE HISTORY OF
BALTIC MILES
5%OF THE ACTIVE
DATABASE SEGMENT
MULTIPLIED THEIR
ALREADY HIGH
NUMBER OF POINTS
EARNED BY
3.5 TIMES

37. Gabi Kool
CEO BalticMiles
Riga International Airport
Ziemelu street 4
Marupe, LV-1053, Latvia
Phone: +371 6778 8363
E-mail: gabi.kool@balticmiles.com
Web: www.balticmiles.com
Thank You