1 Offering Market and Customer Management Customer Loyalty

1 Offering Market and Customer Management - Customer Loyalty 8 Communication 5. Loyalty and Information Technology 7 Finance 2 Processes Key topics of the programme 6 Structure Frequently asked questions: 3 Call Center 4 Cards 5 Information Technology What is a customer loyalty system (CLS)? What are the different customer loyalty tools available in the market? How do the current IT environment and the CLS fit together; is it possible to integrate these two systems? What are possible vendors of CLS-Software? How should a CLS-System be linked with a corporate IT environment? What is the relation between loyalty systems and campaign management? 05 IT. ppt 1

Market and Customer Management - Customer Loyalty 8 1 2 7 5. Loyalty and Information Technology 6 3 5 4 For the administration of the loyalty programme, a customer loyalty system (CLS) is required. The CLS needs to be integrated with the operational systems of the company For each customer retention programme three main systems should be taken into consideration: A data warehouse, a campaign management system and a customer loyalty system. n The Customer Loyalty System (CLS) administers the bonus points (collection and redemption) and the members. The call center and the back office agents are working mainly with this operational system. n The Data Warehouse (DWH) is collecting the data out of the different operational systems and provides this data in the required format to the Customer Loyalty System. n A Campaign Management System provides a database marketing environment and enables the company to get the customer information. xx xy yy User: Club management and marketing Data Warehouse (DWH) User: Call center and back office Partnersystems 05 IT. ppt User: Marketing and communication Campaign Management System Customer Loyalty System (CLS) Fulfillment. Center 2

Market and Customer Management - Customer Loyalty 8 1 2 7 5. Loyalty and Information Technology 6 There are several suppliers of customer loyalty systems (1/2) 05 IT. ppt 3 5 4 3

Market and Customer Management - Customer Loyalty 8 1 2 7 5. Loyalty and Information Technology 6 There are several suppliers of customer loyalty systems (2/2) 05 IT. ppt 3 5 4 4

Market and Customer Management - Customer Loyalty 8 6 Customer data and information Customer information systems can be seen in three generations 2 7 5. Loyalty and Information Technology A loyalty programm enables the company to get new information about the customer behaviour 1 3 5 4 n The following information categories can be distinguished when launching a loyalty programme: n Basic information about the customer (eg. age, profession) n Potential information about the customer (eg. customer satisfaction) n Action information about the customer (eg. contacts, activities) n Reaction information from the customer (eg. response; usage) First Generation GOAL ACTIVITIES TOOLS DATA EARLY ADOPTERS MODELING SYSTEMS IMPLEMENTATION DRAWBACKS BENEFITS Second Generation Enhanced List Selection and Management Systems Customer Information Repository Direct Mail Telemarketing Field Sales All Marketing Activities Campaign Management Market Research Media Planning Marketing Customer Files Support Bureaus Flat Files Merge/Purge Name & Address Demographic Overlays Limited Transaction Data Airlines Banks / Credit Cards Relational Database Analytical Tools Data Warehousing Transaction History Marketing Communications All Customer Interactions All Operational Data Financial Supports Airlines / Travel / Hotels Telecommunications Direct Mailers / Catalogs Telecommunications Statistical & Nonlinear Statistical Techniques Regression Neural Networks Genetic Algorithms Fractals Unix Servers LAN / WAN Eight - Twelve Months Stand-Alone PC Mainframe Six Months Ease of Use / Fast Counts Quick Installation Externally Managed Stand-Alone / Proprietary Tactical Improved Response Rates Reduce Cost of Direct Marketing Third Generation Enterprise-wide Relationship Management System Enterprise-wide; All Contact Customer Support New Product Development Finance Manufacturing Middleware Scaleable Hardware Integration Data Mining / Visualization Functionality Performance Migration / Support Strategic Allocation of Marketing Resources Increase Marketing Effectiveness Self Adjusting Algorithms Advanced Pattern Recognition MPP Systems Two Years + Interoperability Robustness Scalability Cost / Complexity Competitive Advantage Optimize Allocation of Enterprise Resources Accelerate Revenue Growth Source: Gartner Group; 1996 05 IT. ppt 5

Market and Customer Management - Customer Loyalty 8 6 A Data Warehouse environment is also essential to getting the information needed Financial Systems Query Data Integration and Cleansing Process e. g. Validity EIS Data Warehouse 4 MARKET. Design… Select. . . Segment. . . MARKET. SALES EXTERNAL DATA Source Data 5 Campaign Management Customers Locations 3 n Best practice companies feed their transactional data into a data warehouse and use different tools and instruments for analyzing the data. The position of a data warehouse is showed below. Metadata Operations OLTP 2 7 5. Loyalty and Information Technology A Data Warehouse links the existing operational systems to into one database 1 ETC. Transformations Execute. . . Score. . . Quality Assurance Process Source: Price Waterhouse 05 IT. ppt 6

Market and Customer Management - Customer Loyalty 8 2 7 5. Loyalty and Information Technology 6 A Data Warehouse environment is also essential to getting the information needed The Data Warehouse uses customer information in an closed loop. 1 3 5 4 n The usage of customer information in a closed loop enables the company to improve their target marketing on an ongoing basis. Data warehouse, campaign management and customer loyalty systems play an important role in that. Optimise return on data enhancement and prospecting Integrate new Media Record Customer Contact Segmentation & Targeting Create Offer Communicate Offer Manage integrated customer database Refine Offer Derive customer profitability & LTV, & report on marketing effectiveness Data Warehouse Service Offer Measure Results Fulfill Offer Mine Data Analyse data to reveal Segmentation and Targeting Opportunities Capture customer and transaction data Provide Customer Service Fulfill on a one to one basis Manage Inbound and Outbound Telemarketing activities Source: Price Waterhouse 05 IT. ppt 7

Market and Customer Management - Customer Loyalty 8 2 7 5. Loyalty and Information Technology 6 A Campaign Management Tool supports a company in building up their database marketing capabilities. What is a campaign management tool 1 3 5 4 n A campaign management tool enables the coordination and tracking of several marketing campaigns (eg. mailing to 100’ 000 customers) concerning the response and the following activities for the contacted customers. n A campaign consists normally of several activities and focuses on a clearly defined customer segment. The future activities for a customer in a campaign often depend from the past responses of this customer. A database support therefore is very important. Typical functionalities of a campaign management tool: Design campaign Select campaign universe Target segments Execute Measure and record Iterate Source: DWH Issue campaign management or leading process 05 IT. ppt 8

Market and Customer Management - Customer Loyalty 8 2 7 5. Loyalty and Information Technology 6 With a clearly structured campaign management process it is possible to properly coordinate different campaigns and to set priorities Example of a campaign management process 1 3 5 4 • For a campaign concept (planning and co-ordination of different campaigns) a campaign management process is needed. • The campaign concept builds the basis to position the different campaigns, to set priorities and to assign budgets. Campaign Management Process Collect ideas and inputs Set targets and target groups Provide concept to board Set priorities Detailed planning 05 IT. ppt Run campaign Collect feedback Evaluate overall campaign 9