Driving retail sales by innovative loyalty program Ewa

Driving retail sales by innovative loyalty program Ewa Wegorkiewicz 13 th of March, Sofia

Agenda • Loyalty why to go into it? • Loyalty in Retail – different approaches to different needs • Key points to make a loyalty program a success • Comarch CEMM as the tool for success Page 2

85% households participate in at least one reward program* 12 loyalty programs per household on average** 40% participation in active loyalty programs** Sources: * Loyalty & Rewards: A Market Overview, Aite Group, January 2007 ** Colloquy®talk™ Censustalk, April 2007, pp. 3 -6 Page 3

Customer acquisition is more expensive than retention Small improvements in retention generate great returns: Decreasing churn from 10% to 5% increases net present value by 75%. * Following loyalty best practices can help deliver more than 15% in annual improvement in return on gross revenues, customer retention rates and marketing investment. *The Loyalty Effect, by Reichheld & Teal 4 Page 4

So do we need to implement a loyalty program? Your competition Your Client Your PROBLEM Page 5

Wrong question! The right question is: How to make your Clients crazy about your brand? Page 6

This is how our retail Clients made it work Different possible loyalty program schemes : Emotional loyalty Loyalty for mass clients Multi-partner Sales force incentive Competition among sales force Page 7

All you need is love- Alma Market ü Premium department store chain in Poland targeted to the Clients with the above average income ü Immense choice of high quality products ü Client satisfaction taken to the next level- emotional loyalty - money can`t buy promotions • The results: ü Increase in average basket value 3 times higher for a member than for a nonmember Page 8

Money makes the world go round- Perekrostok (X 5 Retail Group) The largest food retail company in Russia by sales volume The company actively uses a multi-format strategy, developing three formats at the same time: discounters, supermarkets and hypermarkets The Average basket value of program members is 45% higher than for non-members More than 26% of turnover is generated through loyalty transactions More then 230 promotions active simultaneously Page 9

Malina – multipartner = multisucess The average transaction with the MALINA card is 2640 rubles, which is 20% higher than a "usual" average transaction IDEA: Take advantage of daily shopping and all cleints activities Russia’s richest consumer database 4, 581, 735 cards in the market with 8, 5 Malina transactions every second of the year! Page 10

Make your revenue grow by motivating your sales force! Single solution addressing the needs of different types of B 2 B Partners in traditional retail channel Communication via SMS, Email, Mail, WWW, Call Center Program data analysis & segmentation Enrollment invitation to selected Partners via Sales Representatives Motivating by rewarding (both tanglible goods, emotional rewards, experiences ) promotions depending on the target group and business need (SKU, invoice value, turnover, etc) Page 11

Tripple points- focus on different sales areas 1. Basic points For each 100 Pln on invoice You get points 100 zł = 10 pts We award full 100 zł on Invoice Eg. Total on invoice is 980 zł Client gets 90 pts 2. Points for no. of SKU on invoice You can double your basic points Scoring: Number of SKU on invoice: 10 -14 5 pts/100 zł 15 -24 7 pts/100 zł 25+ 10 pts/100 zł 3. Points for SPECIAL ACTIONS You can get EXTRA POINTS During each month a SPECIAL ACTION will be launched eg. - SKU promo, -Increase of turnover on invoice vs. Last month Page 12

Diversified reward catalogue • Gift catalogue with more than 130 items + special awards • Automatic settlements checking before the redemption • Easy to get rewards Page 13

Make your sales forces compete among each other! Main program purposes: • Motivation of both Sales Representatives and stores offering CC products (outlets) • Building competition among the Sales Reps and outlets and in this way increasing the sales volume • Control of the stock • Increasing the single invoice SKUs • Focus on the specific products and their promotion within cross and up selling promotions Page 14

Comarch Enterprise Marketing Management key functionalities to make your loyalty program a success Collect and use the data Measure the results and improve ! Reward customers for desired behaviors Get to know your clients=> make them better offers Use REAL Time for customer dialogue Page 15

Collect and use the data Application form is the single most important point of data capture a) Gather all data in form b) Gather data incrementally using electronic channels: a) Transactional b) Non-transactional Anna, young mother, loves organic food and often purchases at the weekends Page 16

Collect and use the data Primary Retail Segmentation Approaches Recency, Frequency, Value (RFV): e. g. High Value Frequent Shoppers, Low Value Frequent Lapsed Lifestage: e. g. Young Adult, Young Family, Older Family, Empty Nesters Lifestyle: e. g. Organic, Fast Food, Home Cooking, TV Diners, Ethnic Dining based on basket Data Collection Internet Shopping: e. g. Trial, Cautious Developing, Everything Recency , Frequency, Value Segmentation Frequency Visit Recency Frequency Visit Value $ Today Time Page 17

Make the clients feel understood by well targetted offers Basket analysis to get shopper type and appropriate offers Price sensitive Health Conscious Low far milk Natural Yogurt Eco-Washing Powder Basket <10 items Lowest price cola Organic Carrots Brown Rice Brown Bread New organic chocolate Current Basket Lowest price noodles Uses 2 -1 offers New large value biscuits No fresh items Cheapest washing powder large format Recommended 46 other shopping types – tv dinners, deli divers, traditional, ethnic explorers, meat feast, vegetarians etc Page 18

Make the clients feel understood by well targetted offers Points & Discount Promotions as the best way for motivation ü Points are used as motivation currency. The more you collect – the more attractive Value Added Services you can get ü Additional discounts, lotteries, member gets member promotions ü High-value and aspiring customers receive additional promotions ü Time- and location-based promotions (e. g. new store openings) Points are calculated for: Transaction value Single shopping basket value, single order via phone or internet Increase in transaction value in time Cumulative value of all Customer transaction in a time period Purchase of specific products Extra points for purchasing highmargin products Customer status and segmentation Relationship building rules Special point rules for customers with „Golden” or „Silver” stauts in the program Irregular motivation and recognition (e. g. . points for registration, birthday, 3 -year participation in th program) Page 19

Use REAL Time for Client dialogue From segmentation to effective Client communication Enterprise-Initiated, Marketing-Driven Customer-Triggered, Product as Service Customer-Initiated, Relationship-Driven Campaign Event-Driven Real-Time „Intrusive” 1%-5% Response „Convenient” 5 x Success „Appropriate” 10 X Success Source: Gartner 20 Page 20

Use REAL Time for customer dialogue Customer Self Service • Attractive tools for Loyalty Program Members • Full account management through: • Mobile Application • Loyalty Program Website • Contact Center Application • Attractive set of functionalities: • Personal data management • Ordering and tracking rewards • Special personalized offers and coupons • Access to full history of transactions and communication Page 21

Reward customers for desired behaviors Multiple Rewarding Schemes Real time • Cash-back paying with loyalty points for on-site products • Discounts, free products ticket level, item level discounts, pay 50 EUR for alcohol get 10 percent discount for soft drinks Gift Catalogue • Available for customers with certain points amount Lotteries / Instant Win • Coupons for lotteries can be printed as rewards i. e. at the store Free services vouchers at partners stores : • Free home delivery • Free SPA vouchers Page 22

Measure the results and improve! Balancing Loyalty Investment Against Return Loyalty Program is a cost of learning about clients Additional Customer Profits > Loyalty Program Investment + Loyalty Promotions Costs Page 23

Measure the results and improve ! Constant Reporting & Analysis Report templates with scheduled generation Different output formats (PDF, HTML, CSV, XML) „Push” and „pull” reports: automatic reports sending or manual downloading Additional analysis on a Dashboard: KPI’s presentation Data manipulation Creation of the customized reports by the user with external tool Notifications after generation Page 24

What Comarch proposes as an IT tool for a loyalty success Marketing Department Administrator & Marketing Campaign Management Analytics Smart Analytics B 2 B module Partners Business Administratio n (BA) Web Portal Clients Contact Center (CC) Customer Care Page 25

Flexible projects implementation to optimize the costs Our loyalty experience: Over 80 million members in 40 worldwide projects over 2 mln transactions processed every day Flexibility in choosing the model: • SAS/Installation on client premises • Out of the box/ customized Page 26

Q&A Page 27

Thank you www. comarch. com