Loyalty programme objectives Market and Customer Management Customer

Loyalty programme objectives Market and Customer Management - Customer Loyalty Customer Behaviour Objectives of a Good Loyalty Programme Loyalty programmes normally have several objectives Targeting Good loyalty programmes normally have one or more objectives. These are official objectives, which the management board have to commit for. Turnover growth (rising share of wallet) with cross selling offers and full service package Growth in customer retention with offering a attractive programme and rising the barriers of exit Objectives Cut costs with target marketing campaigns based on the customer behaviour knowledge and the customer portfolio Some loyalty objectives are derived from the competitive situation Positioning Programme structure & offers Cost and benefit structure Communicating the Loyalty programme Creating a customer master view for all products and services and getting additional customer buying behaviour. Source: Price Waterhouse 1998 In highly competitive markets, the decision to launch a loyalty programme is often driven by threats of competitive parity. The programme therefore often has additional underlying objectives such as … to pre-empt a competitor from introducing a similar loyalty scheme … to differentiate a brand to avoid parity … to pre-empt the entry of a new brand or other goals. In any case, the importance of management board commitment has to be underlined. 04 Objectives. ppt 1

Market and Customer Management - Customer Loyalty Benchmarks setting Loyalty Programme Objectives Pricewaterhouse. Coopers has knowledge about several customer loyalty programmes. The following list gives a good overview of benchmarks for programme objectives: Programme objectives: Benchmarks: Higher average customer turnover due to cross-selling/ up-selling Airline in Europe: · 72% of the loyalty members spend club products and services instead of services of the competitors. The share of wallet is rising. Keebler (US; Food): · After launching a loyalty programme for a kids club, the turnover in this segment rose 100% and the market share rose from 21 to 29%. Burger Kids Club (US; Food): · The turnover tripled after launching a loyalty programme in the youth segment. Marks and Spencer (Retail Shops): · The turnover of loyalty club members is three times higher than for non-club members. Nieman Marcus direct: · After launching the In Circle Programme, the average turnover of a club member rose 25%. Amexco: · After launching a loyalty programme, the average turnover of a club member rose 55%. European Bank: · Loyalty programme members use the basic bank products and services between 100 -400% more than non-club members. European Telco: · The planned cross selling effect after launching a loyalty programme is between 5 -15% per year. Due to more loyal customers, win-back costs don’t arise Members in loyalty programmes defect less often than non- members Swiss Bank: · The set-up of a new bank account costs about 400 Swiss Francs. France Telecom (Source: Datamonitor): · The costs for customer win-back in mobile communications business is between 1’ 500 and 2’ 200 French Francs. US Telco (Quelle: Telecom Magazine): · The costs for customer win back in mobile communications business is between 300 and 600 US Dollars. The costs for customer retention is between 50 and 100 Dollar. · 60% of the customer defection is within the first three months. By focusing to the customers, the churn in the US mobile communications market could be reduced from 50 to 30%. Customer Retention Costs (Gartner): · To win back a new customer is 4 -10 times more expensive, than to hold an existing customer. MCI (US Telecommunication): · MCI gives 2‘ 000 points for new customers as a win back or acquisition present. · If a customer uses these points for miles in frequent flyer programmes, the value is about 400 US $. Swiss Bank: · The normal defection rate is 5% in the private market. The defection rate of members in the loyalty programme is 2%. The reduction therefore is 60%. European Telco: · The expected rate of not churning/ defecting due to a customer retention programme is 50% (mass market) Amexco: · The defection rate of non-members is 15%. The defection rate of Amexco Club members is 2%. The improvement due to the loyalty programme is 87%. MCI (US; Telco; Gannett News April 98): · MCI could rise its market share in international telephony with high spending customers from 19 to 40% by combining its loyalty programme with the ones of Airlines. 04 Objectives. ppt 22