BOOTS delighting customers, building customer loyalty and profits

[ BOOTS delighting customers, building customer loyalty and profits Marcus Ruebsam, Vice President Global Solutions, LoB Marketing Chris Edson, IT Programme Manager, Boots UK

[ Learning Points Best practices in planning and executing customer loyalty programs Key components in an enterprise customer loyalty platform Lessons learned in implementing SAP CRM Loyalty solution Real Experience. Real Advantage. 2

Only 4 out 10 top brands retains 50% of highly loyal consumers year over year* Customer loyalty? Losing Loyalty: The Consumer Defection Dilemma, CMO Council 2009

21st century marketing leader Social channel coordination Harvest customer insights True customer loyalty Marketing and sales alignment

Become a Connected Marketer Integrated Marketing Processes Marketing Effectiveness & ROI Operations Support Segmentation Harvest Customer Insights MRM Campaign Management Performance Management Lead Management Customer Experience Management Online Marketing Loyalty Management Mobile and Social Enablement 2012 SAP AG. All rights reserved. Confidential 5

Advantages in Complete Customer Data Traditional Siloed Front-Office CRM True 360 Customer Engagement Beyond CRM Service Marketing Service Marketing Billing/ Accounts Receivable Sales Billing/ Accounts Receivable Sales Ship/ Ensure Fulfillment Select Product/ Quote Ship/ Ensure Fulfillment Social Media Procure/ Build Order/ Credit Check Inventory /Build Order/ Credit Check Multiple Customer Systems Data Latency Limited marketing & sales data Single source of customer data Real time updates Complete customer view 2011 SAP AG. All rights reserved. Confidential 7

Customers demand choice of channels Customer Expectations Choice of channels and convenient touch points Consistent experience across these touch points Switch channels seamlessly Proactive and timely information from their vendor CRM Requirements Blending of multiple channels (i.e. Facebook, Web Channel, Call Center) Increasing mobile access Anticipate customer needs and predict customer behavior Consistency Choice of Channels Timeliness Customers who use multiple channels tend to spend more than those who use only one 2011 SAP AG. All rights reserved. Confidential 8

Loyalty Management Solution Overview Benefits Offer flexible rewards with mixed payments and flexible redemption options Incentivize members using Benefits and Vouchers integrated in campaigns Deploy new offers and rules quickly using flexible rule builder Leverage partner channel to enhance the reach of your loyalty program and increase value Acquire new members using instant (temporary) cards Loyalty Management Multi-channel crm-centric solution with processes to drive customer acquisition and retention, a reward platform to incentivize and grow customers, and a robust rule design and processing engine Extended multi-channel capability beyond traditional channels into partner channel and point-of-sale (POS), to increase the reach of your loyalty program Advanced membership handling with organization membership, temporary/instant membership, and card handling to increase membership acquisition End-to-end partner management including CRM billing integration to leverage partner network and generate additional revenue Robust and flexible rule design environment to design program rules and offers using templates, decision tables, or graphical flows Benefit and voucher handling tools to offer the best incentives to the target members Mixed-payments capability to increase point value to program members, give them more options and flexibility, and generate additional revenue Extractors to analyze loyalty data and gain customer insight 2011 SAP AG. All rights reserved. This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 10

Loyalty Management Functional Overview 2011 SAP AG. All rights reserved. This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 11

Enable superior customer experience with multi-channel execution Call Center Social Mobile Online 2011 SAP AG. All rights reserved. This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 12

SAP Customers today are achieving Competitive Advantage by Transforming the business in their Industry Leveraging crowd sourcing to gain a competitive advantage through product co -innovation Taking the grocery shopping experience to the next level through multichannel commerce Gaining a competitive edge through superior customer experience in a commodity business Transforming the pharmacy & beauty business by nurturing loyalty for 20+ million club members 2012 SAP AG. All rights reserved. 13

Improving Customer Loyalty The Advantage Card Project Chris Edson Programme Manager

The Advantage Card Story About Boots the Chemists The Advantage Card Loyalty Scheme Programme Objectives Part 1 - Customer Offers Part 2 Loyalty Management The implementation challenge The result - Award winning Success factors In the Press

The Advantage Card Story Founded 1849 in Nottingham, England Merged with Alliance Unichem in 2006 to form Alliance Boots Turned private in 2007 Alliance Boots globally 115,500 staff 3,280 retail stores via over 370 depots

The Advantage Card Loyalty Scheme Most loved and generous loyalty scheme in the UK A Key differentiator with a unique treat proposition Over 16.5m active card holders Generating insight, enabling better decisions Enables personalised communications Personalised offers and promotions Key facts Used in over 2600 stores Over 16m members 24 x 7 trading 2 million transactions on the first weekend Available In 2600 stores UK & ROI Kiosks Boots.com Boots Opticians Call Centre

Programme Objectives Reinvigoration programme for the Advantage Card Scheme, moving from a chip based scheme to a centralised solution Improve response rates to personalised offers To improve the quality and timeliness of analytics Create the ability to operate multi-channel campaigns Investment in analytical tools and resources Improve business processes Real time loyalty management system Personalised Advantage Card offers Personalised Messages in store from colleagues and on receipts Enable Redeem on boots.com Platform for future developments (key fobs, mobile etc) To deliver a world class loyalty programme and fully exploiting the Advantage Card & underpinning value with emotionally engaging messages

Key Activities Replace Analytical Database Recruit Additional analysts Remodel Business Processes Enable 300 Seat Call Centre Re implement or replace bespoke Loyalty Management System Create the ability to deliver Personalised offers and messages Delivered in 2-4 seconds at tills Across all channels and all stores Don t disrupt business as usual Retain 16.5m scheme members

Phase One Customer Offers

Phase Two Loyalty Management

The Implementation 2008 to 2012 Activity Phase 1 - Analytics and Targeting Business Case & Planning Design Proof of Concept Build solution Testing Go live Initial campaigns Initial global mailing 2008 2009 2010 2011 2012 Phase 2 - Loyalty Management System Business Case and Planning System selection Proof of Concept 1 Team mobilisation High Level Design Proof Of Concept 2 Detailed Design Build Testing Roll out to stores Targetted offers and messages go live Performance proving Centralisation go live Boots online go live (redemption)

Results Award Winning New Analytical Database delivered Additional analysts appointed Business processes remodelled in ARIS Centralised real time Loyalty Management System 16.5 Million members migrated Personalised offers and messages 2600 Stores live 300 Seat Call Centre migrated to Customer Interaction Centre

Success factors Absolute clarity on the business case Balanced structure - difficult decisions taken promptly Carefully selected team members SAP Safeguarding (invaluable) A single integrated team - Business and IT inseparable 14 companies, one management team Hybrid PM Methodology (Prince II with Agile components) Morning Prayers Culture open and honest Team Charter - Strong Management of behaviours Executive comments The new solutions were delivered on time and without any of the dramas normally associated with large system replacement projects The management of the business and IT project was the best we have seen

The Press

Providing Certainty of Outcome in SAP initiatives Contact Details Email: chris.edson@boots.co.uk Email: chris.edson@edsonconsulting.com Office: 0845 0569422 Mobile: 07747 086785 www.edsonconsulting.com

[ ] Thank you for participating. Please remember to complete and return your evaluation form following this session. For ongoing education on this area of focus, visit the Year-Round Community page at www.asug.com/yrc [ SESSION CODE: 3510 Real Experience. Real Advantage. 27