Loyalty is dead. What's next?

1. Loyalty is dead. What’s next?
Brussels, December 2nd 2015

2. Presentation1 2
Nice to meet you!
Bert Van
Eeckhoudt
Senior Consultant
Karel Ingelbeen
Junior
Consultant
Nathalie de
Biolley
Junior
Consultant
Kristien
Schrauwen
Consultant
Eline Van
Hollebeke
Consultant
Valerie Vos
Consultant
Gregory Delens
Sr Business
Manager
Stephanie
Duchemin
Human Capital
Manager
Lies Taerwe
Sr Business
Manager
Frederik Sunaert
Junior
Consultant
Laetitia Gutierrez
Junior
Consultant

3. Presentation1
1. Introduction 5’
2. THoM’ster class 60’
LOYALTY is dead. What’s next?
3. Case - group discussion & presentations 30’
4. Wrap up 15’
5. Let’s have a drink! …
3
Welcome to our 3rd THoM’ster class!

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The House of Marketing as proud member of
the Quanteus Group

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Mission statement of The House of Marketing

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Our team projects combine a mix
of competences with varying
involvement in function of the
project stage
We work on exciting client projects –
in team or individual placement set-up
Our individual placements are
supported by the THoM
organizational structure
Tailored mix of:
Strategic marketing
Project management
Domain expertise
Consultant support
Core team set-up
YOU
Counselor
&
mentor
All other consultants
Knowledge base of The
House of Marketing

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No two assignments are the same at The House of Marketing
Elise is working as an
Online Content Manager
for a leading automotive brand
Thomas is working as a
Project Leader
for a media company
Lise is working as a
Junior Project Manager
for a FMCG brand
Laetitia is working as a
Cash Management Marketer
for a leading bank
Inge is working as a
Consultant on
brand positioning
for a pharmaceutical provider
Maxime is working as an
Innovation Manager
for a premium chocolate brand
Dennis Peeters is working as a
Digital Project Manager
for a leading bank
Caroline is working as a
MarCom Project Leader
for a human resources company

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3 Master Classes on 3 different marketing topics
Guiding you through the complete customer life cycle
Incl. real life cases from our THoM consultants
THoMers share a passion for marketing, and now it’s time to
share some of it with you

9. Presentation1
1. Introduction 5’
2. THoM’ster class 60’
LOYALTY is dead. What’s next?
3. Case - group discussion & presentations 30’
4. Wrap up 15’
5. Let’s have a drink! …
9
Welcome to our 3rd THoM’ster class!

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- What is your favorite chocolate spread brand?
- What is your favorite cola brand?
- What do these brands do to obtain your loyalty?
- Would you recognize your favorite brand in a blind test?
Let’s find out !
Question
s

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Context & Challenges of Customer Loyalty

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The Yearly Marketing Survey 2013 indicated that traditional
reward programs with points don’t do the trick anymore
12
Refine segmentation
Analyze customer needs
Focus on CLV
Personalize Communication
Improve customer
experienceMore relevant
products/services
Reward with incentive
Create dialogue
Review pricing strategy
Involve customers in
marketing projects
Invest in employees
0%
10%
20%
30%
40%
50%
60%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
NetSuccess
Usage
Source: The House of Marketing - Yearly Marketing Survey 2013
Which tactics do you use to obtain customer loyalty?

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-5%
-25%
-11%
-39%
-27%
-33%
-43%
-67%
87%
70%
67%
47%
44%
44%
40%
23%
The perfect combination for a marketer is being analytical and using intuition.
100% customer loyalty is out.
Creativity is highly appreciated by the CEO.
I have sufficient knowledge about my consumers to know how to react on them.
Instead of focusing on heavy users, marketers should focus on light users and the use of
a penetration strategy.
A personalized offering is more important than simplicity.
Marketers have enough knowledge about the existing media to be able to build the most
efficient media plan.
Innovation can only be about rational and relevant product features.
Marketers opinions towards Marketing trends
Disagree Agree
The Yearly Marketing Survey 2014 revealed that marketers
need to develop a strategy to cope with divided loyalty
13
N = 259

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Recent trends make traditional loyalty programs less
effective
14
Saturation &
commoditization
Explosion of
(customer) data
Emerging digital
channels
Better informed
shoppers

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To next generation loyaltyFrom today’s loyalty…
▪ Focus on interaction (loyalty extends beyond
purchasing)
▪ Programs reach customers through
traditional channels
▪ Channel ubiquity – loyalty is conveniently
present wherever and across multiple vehicles
We need to move from today’s loyalty to the next generation
loyalty
 Focus on purchase-earn-redeem
▪ Customized: personalized offers, differentiated
experiences & relevant rewards
 One size fits all
Relentless focus on the consumer,
fueled by data and powered by reward & recognition

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Definition Customer Loyalty

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Definition Customer Loyalty
17
What is Customer Loyalty?
Difference Retention Management and Loyalty Management

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Behavioral loyalty
Attitudinal loyalty
A customer who stays (repeat purchase, renew contract,…) is often
seen as a loyal customer
Commitment to continue using a product or service, despite situational
influences and marketing efforts of competitors,
is true loyalty.
Watch out: This does not mean that these customers are loyal, because they might
leave once the situation changes…
Source: Klantenloyaliteit, Marnix Bügel
Customer loyalty is a behavioral and attitudinal tendency to
favor one brand over all others

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Objective axis: Perceived effort, cost, time to switch / frequency of transaction
low high
Switching barriers
lowhigh
Involvement
Subjectiveaxis:Perceivedemotional,social,functionalriskofswitching
Source: THoM analysis of McKinsey Quarterly 2002 & Marketing NPV 2005
Switching barriers ONLY drive behavioral loyalty
Switching barriers drive
only behavioral loyalty

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Objective axis: Perceived effort, cost, time to switch / frequency of transaction
low high
Switching barriers
lowhigh
Involvement
Subjectiveaxis:Perceivedemotional,social,functionalriskofswitching
We need to focus on involvement since this dimension
drives both behavioral & attitudinal loyalty
Involvement drives both
behavioral & attitudinal
loyalty
Source: THoM analysis of McKinsey Quarterly 2002 & Marketing NPV 2005

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Because once the switching barrier decreases you need to
work in any case on involvement
21
• Nespresso’s switching barriers decreased:
consumers can now easily switch between Nespresso and Douwe Egberts
• Nespresso will need to continue working on involvement
Illustration

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Put the following brand logos on the right place in the loyalty matrix
and explain your positioning.
Exercise

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Exercise: Put the following brand logos on the right place in
the loyalty matrix and explain your positioning
23
Objective axis: Perceived effort, cost, time to switch / frequency of transaction
low high
Switching barriers
lowhigh
Involvement
Subjectiveaxis:Perceivedemotional,social,functionalriskofswitching

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Objective axis: Perceived effort, cost, time to switch / frequency of transaction
low high
Switching barriers
lowhigh
Involvement
Subjectiveaxis:Perceivedemotional,social,functionalriskofswitching
Exercise: Put the following brand logos on the right place in
the loyalty matrix and explain your positioning

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Definition Customer Loyalty
25
What is Customer Loyalty?
Difference Retention Management and Loyalty Management

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In contrast to retention management, loyalty management
aims to increase both behavioral and attitudinal loyalty
26
Get! Grow! Keep! Get (again)!
Acquisition Development Win-backRetention
Loyalty
Margin
Time
Source: THoM analysis

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Loyalty management is often confused with retention
in terms of objective, tactic and customer group
27
Loyalty management
• Increasing involvement
> Increasing behavioral
& attitudinal loyalty
• Long term
• Focus on customers with high
potential (customer lifetime
value)
• Aims at retaining and
increasing customer value
• Through building sustainable
relationships
Retention management
• Focus on switching barriers,
involvement is a secondary
objective > Increasing
behavioral loyalty
• Avoid churn on short term
• Focus on customers with
high churn risk
• Aims at reducing and
preventing churn
• Through fixing the basics
KEEP
GROW
GET
High
Low
Low High
Involvement
Switching barriers
Source: THoM analysis

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Loyalty should be a mindset

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Do you use all the loyalty cards in your wallet?
Are you loyal to these companies?
Question

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Customer loyalty is like an emotional bank account
30
With every positive interaction, emotional
loyalty currencies are deposited
But negative experiences debit the
account
When it reaches a certain level, it pays back in
true customer loyalty

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Example emotional bank account
Customer looking for
flatscreen but living
room has unusual light
and dimensions
“Anyone knows
anything about flat-
screen televisions?”
Best Buy reacts, helps
and together they find
the perfect flatscreen.
In the end he buys at
Amazon where the
price was lower
Through this service a LASTING relationship was formed.
A genuine affection that results in a feeling that he is ought to pay back.

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Of course brand loyalty is only possible if loyalty is a
mindset throughout the whole organization
32

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Loyalty appears when customer experience matches at
least expectations and loyalty drivers are met correctly
Each individual will have specific expectations and drivers
influencing attitudinal loyalty
33
LOYALTY
DRIVERS
Source: Klantenloyaliteit, Marnix Bügel
Trust
Satisfaction
Quality of
competitive
alternatives
Investment in
relation
+
+
+
-
Expectations
Experiences
LOYALTY

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Customer experiences can be divided into 4 types
34
Relational
Relationships
Transformational
Actualizations
Aspirations
Transactional
Products
Services
Information
Experiential
Senses
Environment
Moments
Emotional
Emotions
Feelings
Source: Qblog - A series on customer experience: Types of customer experience

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Transactional
Products
Services
Information
Building a relationship with the customer over a longer term
than one purchase moment
35
Relational
Relationships
Transformational
Actualizations
Aspirations
Experiential
Senses
Environment
Moments
Emotional
Emotions
Feelings
 Personalize
 Long term focus
 Added value services
Source: Qblog - A series on customer experience: Types of customer experience;
THoM analysis

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Ikea’s sleep like a princess contest
Engaging loyalty members and raising awareness
36
Relational
Only for Ikea's Facebook page fans &"Ikea Family Members“.
Not a member?  join IKEA FAMILY

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Changing the customer as a result of the experience
(behavioral, physical, intellectual,...)
37
Relational
Relationships
Transformational
Actualizations
Aspirations
Transactional
Products
Services
Information
Experiential
Senses
Environment
Moments
Emotional
Emotions
Feelings
 Transform the customer’s behavior, appearances, lifestyle,...
 Teach the customer something
Source: Qblog - A series on customer experience: Types of customer experience;
THoM analysis

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Becel and Lidl support the ‘Week of the Heart’ of the Belgian
Heart League
38
Transformational
Changing consumer behavior: advice, tips and tests for a healthy heart, in-store
as well as online and mobile

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Relational
Relationships
Experiences with regard to the exchange of products,
services and information
39
Transformational
Actualizations
Aspirations
Experiential
Senses
Environment
Moments
Emotional
Emotions
Feelings
Transactional
Products
Services
Information
Source: Qblog - A series on customer experience: Types of customer experience;
THoM analysis
 Ease the customer journey
 Facilitate the search
 Clear information

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Best Buy introduced “Best Buy unboxed” for an optimal
customer service which kicks-off the loyalty loop
40
Transactional
Join & engage in conversations by answering the issue of techno-stress.
Pre & post purchase support.

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Transactional
Products
Services
Information
Transformational
Actualizations
Aspirations
Relational
Relationships
Experiences that impact the human sensory system of
sight, hearing, touch, taste and smell
41
Emotional
Emotions
Feelings
 Play with the senses
 Make interactions fun
 Create a “wow” factor
Experiential
Senses
Environment
Moments
Source: Qblog - A series on customer experience: Types of customer experience;
THoM analysis

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Ray Ban uses relevance to create valuable customer
experience
4242
Experiential
Bright Light & Sun Walk App

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Transformational
Actualizations
Aspirations
Relational
Relationships
Every kind of experience has an emotional aspect, which
can be positive, negative or neutral
43
Transactional
Products
Services
Information
Experiential
Senses
Environment
Moments
Emotional
Emotions
Feelings
Source: Qblog - A series on customer experience: Types of customer experience;
THoM analysis
Customer’s feelings about the interactions with the company:
What I get / What I expect = How I feel

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Loyalty tools & tactics

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Customer experience
45
Savings programs are often seen as good loyalty initiatives,
though these are only a small part in the loyalty chain
Customer data
Loyalty savings
program
Loyalty
X

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Loyalty initiatives can be ranked on 3 axes: reward
moment, required counteraction & customer initiative
46
Immediate Postponed
Transaction based Not transaction
based
No initiative
Initiative
Contest
Participation Events Customer Adv.
Program
Savings ProgramDirect Advantage
Offering
Relationship
Building
Customer
initiative
Counteraction
Reward-moment
2
1
3

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When JBC wants to reward its best customers with a
styling day, they can consider different loyalty initiatives
Immediate Postponed
Transaction based Not transaction
based
No initiative
Initiative
Contest
Participation Events Customer Adv.
Program
Savings ProgramDirect Advantage
Offering
Relationship
Building
Customer
initiative
Counteraction
Reward-moment
2
1
3
Example
Clients who buy something of the
JBC-collection, receive an invitation
for the styling day

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Immediate Postponed
Transaction based Not transaction
based
No initiative
Initiative
Contest
Participation Events Customer Adv.
Program
Savings ProgramDirect Advantage
Offering
Relationship
Building
Customer
initiative
Counteraction
Reward-moment
2
1
3
On specific days, clients of JBC
receive styling advice when trying
clothes in the fitting rooms
When JBC wants to reward its best customers with a
styling day, they have different optional loyalty initiatives
Example

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Immediate Postponed
Transaction based Not transaction
based
No initiative
Initiative
Contest
Participation Events Customer Adv.
Program
Savings ProgramDirect Advantage
Offering
Relationship
Building
Customer
initiative
Counteraction
Reward-moment
2
1
3
Clients who collected 50 points are
invited to the styling day
When JBC wants to reward its best customers with a
styling day, they have different optional loyalty initiatives
Example

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Immediate Postponed
Transaction based Not transaction
based
No initiative
Initiative
Contest
Participation Events Customer Adv.
Program
Savings ProgramDirect Advantage
Offering
Relationship
Building
Customer
initiative
Counteraction
Reward-moment
2
1
3
Clients can participate in a contest
with a code on their bill to win a
styling day
When JBC wants to reward its best customers with a
styling day, they have different optional loyalty initiatives
Example

51. Presentation1
Immediate Postponed
Transaction based Not transaction
based
No initiative
Initiative
Contest
Participation Events Customer Adv.
Program
Savings ProgramDirect Advantage
Offering
Relationship
Building
Customer
initiative
Counteraction
Reward-moment
2
1
3
Clients receive a VIP-invitation
so they can subscribe
for a styling day
When JBC wants to reward its best customers with a
styling day, they have different optional loyalty initiatives
Example

52. Presentation1
Immediate Postponed
Transaction based Not transaction
based
No initiative
Initiative
Contest
Participation Events Customer Adv.
Program
Savings ProgramDirect Advantage
Offering
Relationship
Building
Customer
initiative
Counteraction
Reward-moment
2
1
3
By shopping clothes, recommending
JBC & writing online reviews, clients
can earn points which can be
redeemed for a styling day
When JBC wants to reward its best customers with a
styling day, they have different optional loyalty initiatives
Example

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To develop a valuable loyalty initiative you need to use a
number of building blocks
REWARDS
PERSONALIZATIO
N
& TARGETING
AWARENESS/WO
M
RULES
MEDIA CHANNELS

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54
REWARDS
PERSONALIZATIO
N
& TARGETING
AWARENESS/WO
M
RULES
MEDIA CHANNELS
Evolve from rewards easy to translate to
monetary value towards rewards with a
higher perceived value
To develop a valuable loyalty initiative you need to use a
number of building blocks

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Starwood members bid in online auctions for access in
once in a lifetime events with their ‘usual’ saving points
55
SOURCE: starwoodhotels.com
REWARDS

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Delta goes beyond the transaction and gives elite members
500 bonus miles if they are “caught in the middle” on
a Monday flight
REWARDS

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REWARDS
PERSONALIZATIO
N & TARGETING
AWARENESS/WO
M
RULES
MEDIA CHANNELS
• Evolve from one-size-fits-all towards
personalization
• Do smart targeting
To develop a valuable loyalty initiative you need to use a
number of building blocks

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Great customer personalization can be offered by
cocreation, making it a perfect loyalty tool
58
PERSONALIZATION

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REWARDS
PERSONALIZATIO
N & TARGETING
AWARENESS/WO
M
RULES
MEDIA CHANNELS
Evolve from functional value proposition with
little user adoption towards high awareness
and adoption among general public
To develop a valuable loyalty initiative you need to use a
number of building blocks

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Coca Cola creates awareness and WOM by a contest to find
a Belgian ‘Coca Cola Light man’
60
WOM

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Samsung succeeded in creating awareness and WOM by
engaging their biggest fans
61
WOM

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REWARDS
PERSONALIZATIO
N & TARGETING
AWARENESS/WO
M
RULES
MEDIA CHANNELS
Keep it simple. Many rules, no glory!
To develop a valuable loyalty initiative you need to use a
number of building blocks

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REWARDS
PERSONALIZATIO
N & TARGETING
AWARENESS/WO
M
RULES
MEDIA CHANNELS
Evolve from traditional media channels
towards interactive and cross-channel media
To develop a valuable loyalty initiative you need to use a
number of building blocks

64. Presentation1 64
REWARDS
PERSONALIZATIO
N & TARGETING
AWARENESS/WO
M
RULES
MEDIA CHANNELS
How to integrate all these building blocks into your initiative?

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Starbucks started from scratch to assure a qualitative
database to focus on tailored customer experiences
through different kind of media
65
EXAMPLE

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1. Introduction 5’
2. THoM’ster class 60’
LOYALTY is dead. What’s next?
3. Case - group discussion & presentations 30’
4. Wrap up 15’
5. Let’s have a drink! …
66
Welcome to our 3rd THoM’ster class!

67. Presentation1
How should Quick increase students’ loyalty?
Students are an important target for Quick. The Student Special menus
represent an average of 7% of their tickets.
Nonetheless, students don’t seem to be loyal to Quick.
67
What should Quick do to gain the loyalty of students?

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Quick’s student offering has to be better aligned with the
particular student needs, so let’s start by defining our target
group & their lifecycle
Monday
Weekend
Tuesday
Thursday
Friday
Having arrived in its ‘habitat’ the previous evening,
the student is rested and well packed with weekend
leftovers.
After a long and busy day acquiring knowledge
and engaging with peers, the student has limite
time to provide its own food.
Group work day, the student will meet its peer community to
work on group assignments, catch up on daily news and enjoy
each others company in a quiet environment with plenty of
snacks and refreshments
Party night; after days of hard work, it is time for some
entertainment. With a long night of dancing and
socializing ahead, the student has to load up on energy to
make it through the night.
The student returns to its home nest,
travelling cross country while still
recovering from last night’s
celebrations, the student can sure use
some extra energy.
The student is back to its nest where it is
smothered by its parents
Friday
MG 2015

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Taking into account the weekly student lifecycle,
a diversified, student-centered strategy is needed
69
Daily student offers
& Dedicated in-restaurant
group working areas
& Digital integration
Offering dedicated menus for students based
on the day of the week, e.g.:
• THURSDAY = a solid pre-party XL-menu
• FRIDAY = a snack & soda on-the-go
option on Friday and Sunday
• A dedicated Facebook page showing the
daily deals
• A dedicated app with digital student card
(QR-Code)
• Creation of dedicated student ‘group working
areas’ in the student restaurants
• Offering high speed internet and electronic
device charging facilities
Quick Student
card
Rather than just offering discounts when
showing a regular student card, a ‘Quick
Student card’ will appeal to their
community sense, increasing brand
loyalty
MG 2015
The Quick Student card

70. Presentation1
1. Introduction 5’
2. THoM’ster class 60’
LOYALTY is dead. What’s next?
3. Case - group discussion & presentations 30’
4. Wrap up 15’
5. Let’s have a drink! …
70
Welcome to our 3rd THoM’ster class!

71. Presentation1 71
We are looking for (digital) Marketers
Down-to-earth
Discipline
&
Gut
Master
degree
Trilingual
(FR/NL/EN)
Driving
license
Computer
literate
(MS Office)
In line with
the THoM
values

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STEP 3STEP 2STEP 1
72
From graduate to… marketing consultant?
Deadline: 07/02/2016 26th of February 2016 September 2016
CV
Cover letter
One-page paper
Case day! Start your career
at THoM

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Want to be part of the 2016 prom?
You? You?
You?
 Yes!
Great! Find out more about our
recruitment process in our brochure
 I’m not sure
Don’t hesitate to ask all your questions
to the THoMers

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Your point of contact
74
Valerie Vos, Consultant
valerie.vos@thom.eu
Interested in joining us? CV, cover letter, paper &
questions can be sent to: startcareer@thom.eu
The House of Marketing
Culliganlaan 2
B-1831 Diegem
Belgium
www.thehouseofmarketing.be
Follow us on Facebook: www.facebook.com/Thehouseofmarketing
Follow us on Twitter: www.twitter.com/THoM_news

75. Thank you for your attention!
(and now it’s time for a drink...)