Why having a loyalty program?
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This document discusses the impact of loyalty programs on customer retention and satisfaction. It provides data showing that customer satisfaction reduces churn rates and increases cross-selling. When loyalty programs are working properly, members report higher satisfaction than non-members. During a "churn crisis", loyalty program members had significantly lower churn rates than non-members, demonstrating the impact of the program. The document also includes an author biography providing experience with designing and implementing various loyalty programs.
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Why having a loyalty program?
- 1. Why having a loyalty program in the first place? Benjamin Filaferro – [email protected] – May 2013
- 2. Why Amazon has no Loyalty Program? 2Benjamin Filaferro – [email protected] – May 2013
- 3. Customer Satisfaction will always remain the top factor influencing Customer Loyalty 3 Disguised Example 6-Month Retail Churn Rate By Customer Satisfaction 12.9 % 9.4 % 5.3 % Poor Customer Satisfaction Mediocre Customer Satisfaction Good Customer Satisfaction Score from 1 to 4 Score from 5 to 7 Score from 8 to 10 27 % decrease 44 % decrease 6-Month Cross-Sell Rate By Customer Satisfaction 4.3 % 5.9 % Poor Customer Satisfaction Good Customer Satisfaction Score from 1 to 5 Score from 6 to 10 37 % increase Benjamin Filaferro – [email protected] – May 2013
- 4. What do surveys show when a Loyalty Program is properly working? 4 1 out of 2 respondents was very to extremely satisfied with the program Satisfaction and recommendation of the members is higher than average overall satisfaction with the overall operator brand The higher the customer value and the tenure of the customer, the higher the satisfaction about the program If the program would be stopped, 1 out of 5 customers would churn to another operator When comparing with the outcome of the survey organized in 2011, it can be noticed that the overall satisfaction level has increased with 5 - 15% Disguised Example Benjamin Filaferro – [email protected] – May 2013
- 5. During a “Churn Crisis” customers leave without contacting their operator 5 Only 5.5% of the customers called to receive a counter offer Disguised Example Benjamin Filaferro – [email protected] – May 2013
- 6. The impact of a Loyalty Program is easier to measure during a crisis 6 18.50% 17.20% 21.30% 56.30% 3.80% 5.10% 7.00% 11.50% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% M1 M2 M3 M4 Evolution of Churn During a Crisis Non Members Program Members Disguised Example During several years, this European Telecom Operator was discussing internally the reasons behind the lower churn rate (“A”) of Program Members: what is because the program was efficiently creating stickiness or because only the customers that were already attached to brand were actively enrolling. Then a major change in the regulation has allowed the customers to break more easily their contracts what resulted in an explosion of the Churn Rate. And even though the gap “A” could still be discussed the dramatic gap “B” had be explained by the performance of the loyalty program. A B Benjamin Filaferro – [email protected] – May 2013
- 7. Benjamin Filaferro – Independant Customer Strategy Advisor I have been a Strategy Consultant for the last 10 years at first for Banks and then for Telecom Operators, and I have specialized myself in Customer Strategy over the last 6 years. I have especially assisted Fixed and Mobile Operator CMOs on the design and the implementation of: • Segment Strategies (ATL, BTL, Touchpoint Experience, etc.) • New products • Retention Strategies (Loyalty Programs, Winback, etc.) In the specific field of Loyalty Programs, my experience covers: • The design, the implementation, and the launch of 2 Point Programs, 2 Affinity Programs, 1 Enterprise Affinity Program • The supervision of an outsourced team managing from end-to-end (Marketing, Communication, An alytics, Logistics, & Partnerships) 2 Point Programs and 1 Prepaid Stimulation Game 7Benjamin Filaferro – [email protected] – May 2013
- 8. Benjamin Filaferro – [email protected] – May 2013 Thank you