igor marosa loyalty beyond cards
TRANSCRIPT
Loyalty beyond loyalty cards
Moscow, 3rd of February 2011
Igor Maroša
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Consumer loyalty
Consumer dynamics are driving retailers to focus to loyalty as one of the key growth drivers
Retailers recognize the importance of loyalty, the best of them are way beyond loyalty cards
Although even loyalty cards programmes are not yet used to its full extent
Loyalty can be expanded to various dimensions
Social media is not a mere trend – companies have to position themselves rapidly
Today, Fortune 100 companies are already using social media to a large extent
Social Media may be used along the entire Marketing & Sales funnel
Better understanding of consumer is the first step to start building on loyalty
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Retail Industry
Consumer GoodsIndustry
Consumer
Growing conflict potential and increasing necessity for cooperation
• Price competition
• Vertical
integration• Private label
growth
• Concentration
(horizontal
integration)
• Cost pressure
• Direct sales
• Sustainability
• Internationalization
• Increasing price
consciousness
• Declining
brand loyalty
• Stagnation of consu-
mer spendings (in
mature markets)
• Hybrid consumer behavior
• Communization
• Sustainability
• Internationalization
1
2
3
Consumer dynamics are driving retailers to focus to loyalty as one of the key growth drivers
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• Discount cards with
immediate discounts
or points collection
• Open membership
• Equal treatment, no
differentiation between
customers
• No targeted
communication
• No information base on
customer
• No customer segments
developed
Traditional
• Discount/reward based on
cumulative purchases
based on spend
• Basic consumer
information exists and is
mainly used for re-active
analysis
• No targeted
communication yet
developed
Emerging
• Customers divided into
segments
• Targeted communication
and offers for segment and
or individuals
• Add-on services like
banking services, travel &
tourism, mobile telephony
etc. Developed
• Add-on services offered
beyond loyalty card
holders, yet they have
special bonuses
Leading
• Consumers are invited to
co-create the offerings by
two way communication
via social networks
• Variety of clubs based on
focused customer
segmentation are
developed, joint events
and happenings are
organized
World class
Discount cards Loyalty schemes Add-on servicesTwo way
communication
Continuous improvement
Retailers recognize the importance of loyalty, the best of them are way beyond loyalty cards…
TechnologyBreakthrough
AnalyticsBreakthrough
CommunicationBreakthrough
Loyalty stages of excellence:
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… although even loyalty cards programmes are not yet used to its full extent
(1) % Participants answering “very important”(2) Among retailers with a Customer Loyalty ProgramSource: A.T. Kearney 2009 AERO Study
Importance of customer metrics1)
36%
57%
63%
74%
86%
88%
93%
Average amount of time customers spend in store
Average time between repeat customer visits
% of customers involved in loyalty programs
Number of units perchased
Number of store visits
Average in-store transaction size
Number of in-store transactions per store
Customer transaction metrics
Customer behavior metrics
Customer metric usage
% of retailers with customer loyalty
programs
Frequency of data mining2)
63%
No Customer
LoyaltyProgram
Customer Loyalty
Program
37%
Continious
or
Monthly
Quarterly or
Semiannually
Every
1 - 3 years
Less
than 3 years
or never
51%
10%
10%
29%
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Loyalty concept
“Currency“ Tier structure Redemption Ease of use Comments
Tesco Clubcard
1£ spend earns
1 Clubcard
point
• Points are stored and built up. Four times a year the holder receives a statement along withoffers & vouchers to the value of points they have saved, linked to the purchasing history
• Clubcard points can also be used to obtain discounted day trips and magazines
• Customers can also get double points on special offers and receive one point for every carrier bag they reuse (UK only) as part of Tesco's green initiative
• Easy:Vouchers can be spent in store on shopping or used on Clubcard deals where they are worth four times the value
• Lately Tesco has invested £150 mil. in the Clubcard
• The program is a great success factor due to its formidable use of data
• Cooperations with external partner companies like Eon
Tesco‘s Clubcard system is perceived as one of the leading loyalty card systems in the world…
Tesco Clubcard
Source: A.T. Kearney, Tesco
Back-Up
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…and consumer insight deriving from Clubcard represents an excellent base for expansion of services and geographies
Usage of consumer insights as a primary capability for expansion:
Example
Source: A.T. Kearney research
Consumer insights
Expansion into new consumer needs
• Insurance: Fortis, Tesco Bank• Telecoms mobile: Tesco/O2 with over 2m UK
subscribers• Telecoms Internet service provider: Tesco/
Cable & Wireless
1
Development of a leading online channel
• 1994: Tesco enters online retail• 2000: Tesco.com formally launched, largest online retailer in the UK (in 2008/9,
1.9bn£ in sales i.e. around 5% of UK sales, 5% EBIT)• 2010: m-commerce site, used by 4% of online orders by year-end 2010
2
US market entry with new format, Fresh & Easy
• Leverage of consumer insights expertise and fresh/cool-distribution/logistics operations knowledge
• 550m$ in revenue achieved in 3 years, more than 100 stores, gap to break-even remains due to heavy promotions to stimulate growth, lack of scale
3
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Additional services
• Travel, combined with segment clubs
• Financial services, mobile telephony
Channels serving particular segments
• Grocery internet
• Premium stores on premium locations formed in clubs
Assortment
• Premium private label brands with tradition
• Regular loyalty offers with points collection for attractive pieces of assortment, card holders have additional advantages
Customer segments
• Demographic (children, seniors…)
• Lifestyle (healthy living…) Loyalty card increases reward but
not a prerequisite
Loyalty can be expanded to various dimensions
Client exampleOverall loyalty scheme:
Constant communication, one and two-way supports the overall scheme
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Social media is not a mere trend – companies have to position themselves rapidly!
Social media today
Source: Deloitte "2009 Tribalization of Business Study", A.T. Kearney
Introduction to Social Media
In Jan 2010 more than 25 mnFacebook user have visited the site via a mobile device
More than 3 mn images are uploaded daily on
Flickr
Source: Flowtown; Seitwert; A.T. Kearney Analysis
Facebook gains 700 thsd. more members
each day
6000 Tweeds per minute on Twitter
In Germany, 2.4 mnpeople are using Micro
Blogging Services
14 mn Germans already have a
Profile on a Social Network
Worldwide 588 mnare using Social Networks/Tools
…and a lot more – in Germany~175 social networks
Social media "Stats" Global social media landscape
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Today, Fortune 100 companies are already using social media to a large extent
Source: The Global Social Media Check-up (January 2010); A.T. Kearney
Usage of social media among Fortune 100 companies(usage of Twitter, Facebook, Youtube and Blogs)
33
5054
65
BlogYoutubeFacebookTwitter
…at least one of them(in %)
Usage of social media(in %)
…all of them(in %)
28
Global 20
Asia 25
Europe 15
US
50
88
86
79
Ø number of accounts per company
1.64.2 2.1 4.2
…usually companies have more than one account per social network
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Social Media may be used along the entire Marketing & Sales funnel
Awareness InterestConside-
rationSelection
Satis-faction
Loyalty Advocacy
Source: SocialRep, A.T. Kearney
Forms of social media usage along the funnel
Targeting Viral marketingSocial video advertising
News Feeds
Social bookmarksPresence page
Widgets Social network fanpageIn-game
advertisingEngagement
advertising
Social search
Sponsored stories
Blogging Branded community
Cause-driven communities
SeedingMicro-blogging
Embedded storefront
Augmented reality
Embedded online store features
Video hyperlink ads
Social shopping Referral campaign
Evangelist communities
Blogging User community
Crowd sourcing/ voting
Self-service
communities Tweet-ups
Social media monitoring
Social network analysis
CRMSalesBrand management
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Blogging: Otto’s Two For Fashion
Source: Two for Fashion; A.T. Kearney
Commenting on
blogs and news
Two fashion
addicts reporting
about fashion in
New York, Berlin
and Hamburg
Topics around
trends, people and
events, including
videos
Managing the Brand in Social Media
Example
By blogging about fashion news, Otto improves its image as fashion expert
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Better understanding of consumer is the first step to start building on loyalty
Understand your consumer
• Set the infrastructure for data collection and mining
• Invest in analytics capabilities
• Understand spending habits
• Perform tailor made consumer segmentation
Strengthen your core business
• Optimize your existing offerings
• Prepare target offerings
• Introduce/strengthen 2-way communication
• Increase traffic and basket size
Increase loyalty and expand
• Detect spending patterns
• Based on detected spending patterns investigate expanding opportunities
• Expand the offering and services
• Attract consumer base to expanded offerings and services
Thank you!
Way forward in loyalty: