BRINGING INNOVATION TO CUSTOMER LOYALTY. Rethink your customer loyalty program

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1 BRINGING INNOVATION TO CUSTOMER LOYALTY Rethink your customer loyalty program

2 Your key loyalty questions.. The key strategic ques0ons to ask about your customer loyalty or affinity program Is our loyalty/affinity program being commodi6sed? How can we create a program that breaks away from the compe66on and generates genuine loyalty? How can we create the kind of value that not only makes customers loyal; but turns them into advocates? How do we design a program that simultaneously increases customer value and decreases our opera6onal costs? How do we increase ROI and decrease CPA? How can we increase loyalty program acquisi6on and ac6va6on? What would a 2% or 5% or 10% increase in loyalty program engagement mean to our bokom line?

3 What is your customer value trajectory? How can you ensure program growth and engagement today and tomorrow? What is your customer loyalty or affinity program s poten6al for growth. Are you offering the same benefits as you have in the past? Are these benefits unique to your industry or are they me too offerings? Will these benefits be relevant and valued by customers tomorrow? Or have your customers changed? Do you need to create new value that will increase acquisi6on, reten6on and engagement? Instead of looking to your past performance, ask ques6ons about the future performance of your loyalty program and its benefits. It will help you maintain a valuable loyalty offering well into the future.

4 Your competitive landscape Finding the opportuni0es for differen0a0on and growth What are your industry s compe66ve factors? Are you trapped in a game of me too offerings? Are you offering anything unique to your customers? This diagram of two airline loyalty programs shows there s likle differen6a6on between compe66ve offers. Where is the compelling reason for loyalty? Is your program truly crea6ng loyal advocacy or just sewng an expecta6on? Disclaimer: this strategy canvas provides indica6ve analysis only. It demonstrates how loyalty programs have been commodi6sed. It does not proclaim to provide an accurate representa6on of industry.

5 Your competitive landscape Finding the opportuni0es for differen0a0on and growth This strategy canvas shows the state of the airline lounge industry. The convergent value curves of airline A and airline B, indicates a highly compe66ve, commodi6sed industry. This is most likely because airlines are looking to each other rather than customers when making strategic decisions. A broader understanding of your compe66ve landscape and deeper insights into customer experience and u6lity will expose the opportuni6es for the crea6on of unprecedented value. Value that delights customers and creates authen6c loyalty and advocacy. Value that generates revenue and increases ROI whilst making the compe66on irrelevant. Disclaimer: this strategy canvas provides indica6ve analysis only. It demonstrates how loyalty programs have been commodi6sed. It does not proclaim to provide an accurate representa6on of industry.

6 Your competitive landscape Casella Wines disrupted the global wine market by looking beyond exis6ng market boundaries. Finding the opportuni0es for differen0a0on and growth Instead of crea6ng a me to offer they created a unique strategy. Premium Wines They eliminated compe66ve factors like enological terms, ATL marke6ng and ageing quality. They created new factors such as marke6ng easy drinking, ease of selec6on and fun & adventure. Budget Wines This (once) small Australian winemaker is s6ll producing the world s highest selling wine brand. It started by taking a innova6ve look at their compe66ve landscape and iden6fying opportuni6es to restructure market boundaries.

7 Understanding customer utility Too ocen our knowledge of customers extends only to their touch points with our loyalty program or business. Customer focus groups and research rarely deliver true insights because customers are trapped within the same assump6ve thinking that we are. Looking holis6cally at your customers experience; observing and looking for pain points in customer u6lity can reveal the opportuni6es to create excep6onal customer value and loyalty. Buyer U6lity Finding the opportuni0es for excep0onal value Customer Produc6vity Simplicity Convenience Risk Fun & Image Environmental Friendliness The Buyer Experience Cycle

8 Understanding customer utility Finding the opportuni0es for excep0onal value Marketers have tradi6onally viewed customers in terms of demographics and psychographics. We affix product akributes to specific customer segments. This approach looks at the customer the wrong way and asks the wrong strategic ques6ons. As a result the loyalty program rarely creates true value. If instead you seek to understand the customer experience cycle and look holis6cally at customer u6lity, you start asking the right ques6ons. From here you can find the opportuni6es to create excep6onal value. You create a truly differen6ated offer. And you make the compe66on irrelevant in the process. Customer Produc6vity Simplicity Convenience Risk Fun & Image Environmental Friendliness Casella looked at customer u0lity and iden0fied pain points that prevented wine purchases. They not only captured much of the exis0ng wine drinking market; they also aeracted markets deemed non- wine drinkers (who had been ignored by the wine industry). By overcoming barriers to customer u0lity Casella Wines created unprecedented customer value. And they became the highest selling wine in the world

9 Creating commercially viable innovation Reconstruc0ng market boundaries to innovate In order to create excep6onal value for both customers and profit you need to find ways to create innova6ve ideas and offers. The six paths of innova6on is a powerful tool that helps you to find innova6ve ideas by looking beyond the market boundaries of the loyalty industry that keep you stuck with a commodi6sed me too offering. The insights you find by looking across market boundaries, coupled with your insights from the buyer u6lity model will help you find the innova6ve ideas that will transform your loyalty program offer. Armed with knowledge of the industry s compe66ve landscape, deep insights into customers (and non- customers) and a process for unlocking ideas that break compe66ve boundaries you will be on the way to crea6ng excep6onal value that is truly unique and hard to replicate. Across Industries Strategic Groups Chain of Buyers Complementary Product/ Service Offering Functional-Emotional Orientation Time

10 Creating unprecedented value Once you understand your customers and have gathered the insights to create unparalleled customer u6lity you can start to restructure your offer to create a divergent value curve (ref: the strategy canvas p. 11). You do this using the four ac6ons framework; a process of elimina6ng and reducing compe66ve factors that either don t meet or over- serve customer needs (this reduces the cost structure of your loyalty program). You then look to raise factors where the industry has been underserving customers. Finally, you create new value based on your insights into customer u6lity. With a compelling new offering you create excep6onal value for customers, and a model for sustainable growth and profit for your customer loyalty or affinity program. Reconstruc0ng market boundaries to innovate Eliminate Enological terminology & dis6nc6ons Aging quality Above- the- line marke6ng Reduce Vineyard pres6ge Wine complexity Wine range Raise Retail store involvement Create Easy drinking Ease of selec6on Fun and adventure

11 Creating unprecedented value Casella s (yellowtail) divergent value curve Create Raise Reduce Eliminate

12 How we work. One process two approaches In- house innovator approach We assign a consultant as your in- house innovator to work with your team to formulate your loyalty program strategy. You benefit from our innova6on and loyalty program exper6se and ideas. Your Resource Commitment: Project commikee (6-12 pax) AKendance: 3 workshops, 3 project update mee6ngs Advantages: Faster delivery Less internal resources allocated (reduced overall cost) Less internal conflict Facilita6on approach We assign a facilitator to deliver a series of workshops and mentor you through the planning process. Your team takes full ownership for the development of ideas and formula6on of strategy. Your Resource Commitment: Project commikee (4-12 pax) Working Group (6-36 pax) AKendance: 6-12 workshops, 5-7 days fieldwork, 4-8 days calibra6on & refinement Prepara6on of strategy document Advantages: Builds internal competence Reten6on of internal IP & knowledge Creates ownership, buy- in and execu6on

13 For more information Berg Consul6ng Group helps businesses in financial services, retail and tourism find the strategies for business growth and customer loyalty. We train managers in innova6on strategy and idea crea6on. We help clients devise and implement innova6ve customer loyalty, marke6ng and business strategies. Berg Consul6ng Group clients include global financial services, avia6on services, tourism bodies, media and hotel groups. Founder and Director Robynne Berg MBus(Marke6ng) AFAMI CPM is business consultant with over twenty years industry experience. She is one of a select number of accredited Blue Ocean Strategy consultants working in Australia and is part of a global network of academics, consultants and government officers. Robynne previously held senior management roles in professional services, major projects and tourism. She directed Australia s most successful professional affinity program (CPA Solu6ons) developing partnership programs with corpora6ons including American Express, Aviva, AMP Bank and Fairfax Media. Contact us for more informa6on and to receive a complimentary diagnos6c of your exis6ng loyalty or affinity program. Robynne Berg Director Berg Consul6ng Group Pty Ltd Level 10, 50 Market Street Melbourne VIC robynne@bergconsul6ng.com.au Robynne holds a Master of Business (marke6ng) and is a sought acer execu6ve trainer and keynote speaker.