Levering on partnershipsand cost optimisation in loyalty programmes …& not only

Direct Marketing Days 2011

Introduction

Defining business challenges

Successful campaigns – models

Levering on partnerships and cost optimization

Results

Cooperation possibilities in Ukraine

Agenda

Largest private postal group in Poland

30% of unaddressed mail

10.5% of addressed mail

entering e-commerce

Part of Integer.pl Capital Group

Stock-listed on Warsaw Stock Exchange

WMA winner for Growth (2010), Innovation & e-comerce Category (2011)

141 mln addressed items compared to 74.84 mln in 2009

InPost – challengers from Poland

2011

Social mail

Transactional mail

Direct Mail

Parcels

Less mail is being

sent

To deliver the revenue we all need to optimise loyalty programs’ concepts

+ 100 000

- 75 000

Acquisition

Churn

Fill holes – remove reasons

for leaving

CLM - life time value

Build loyalty – provide Incentives for staying

Rationalise costs

of retention

Optimise payback

on existing tools

Source: Mobile Operator from EU, 2010

Involve partnersto finance your

efforts

6

Well known wonder of loyalty programs

1. PVD = Precived Value of Discount

Points based program has that

benefit obvious but all other „gifts”

should create higher value too.

Create benefits that can not be

purchased at all – those are the most

appreciated.

Points scheme: cost-efficient reward

Leverage of Points Example:

Customer perceives 5% discount through the program, while actual cost of the discount is not even 25% of that!

1000 Euro

PVD = 5%

Real cost of award is 1.2%

Points programs are cost-effective

customer incentives

through the leverage that they offer. In many cases,

cost of the incentive is only

25% of the Perceived

Value of Discount (PVD).

7

WIN ON SOMEONES ELSE FIGHT

Let others pay for building loyalty to your brand

Tesco financies the program through its partners

Do it rightrelevence, response,

revenue

How much you need to spend to invite the customer to dance with you?

Customer ProfileStatus: Registered with Top Up DirectSegment: High value Gold & Platinum customersTested: Varying amounts to increase TUD usage the use of emotional bonding messages

Thank You Message Included

response

10% back 31%

20% back 35%

50% back 39%

41%

52%

65%

NO Thank You Message

response

10% back 30%

20% back 49%

50% back 33%

60%

63%

60%

Top up by 20 €

Top up by 20 €

Top up by 10 €and get:

Top up by 20 €and get:

10 20

Source: test campaign resutls executed in Western European mobile operator in 2009

How to rationalise costs of retention further?

13

Perfect service for building extended loyalty

EasyPack

Cost saving pick-up point of program awards

Additional opportunity for interaction with customer

Collect customer data

Ask questions, get feedback

Execute member get member promotions

420 machines in Poland

Self-service pick-up points for collecting and sending parcels

SMS / email notification about the parcel in the machine

800 machines in total in Poland

User and producer of the machines

Shortly new machines for Estonian Post

5 new countries in 2011

SizeNumbe

r of boxes

Max dimensions

(in cm)

Size A 32 8 x 38 x 64 cm

Size B 3219 x 38 x 64

cm

Size C 1241 x 38 x 64

cm

easyPack will be available in Ukraine from August 2011

Starting from Kiev

591 billion euros – world e-Retail spend in 2010 > 2 billion internet users 585 million Facebook users 50% of them logged in on any given day 28% check their Facebook on smartphone before

getting out of bed Brands are now thinking how to monetize

Facebook 58% of Japanese used mobile phone to browse

internet at least monthly

Increasing role of e-, m- and f-commerce

Source: IMR World, Socialbakers.com, Asia-Pacific Technographics Survey

30% of revenues to come from non-mail

Hybrid Mail

E-invoicing and Mobile Payments

MVNO – free access to internet via phoneeasyPack

24/7

E-shops on Facebook

81% conversion rateThe best member get member concept in social media

InPost LOVE

Sending „Love letter” using

hybrid mail linked with

Facebook

Pick up a friend to give a

present

Friends to choose easyPack

24/7 for collecting their

present

15.000 new users

Paczkobranie – „Parcel-

rooming” Paczkobranie – „Parcel-rooming”

Pick up the box and win the physical

award from our e-commerce partners

Award collection from Paczkomaty

24/7

Interesting awards from our partners

~ 200.000 fans on Facebook

Paczkobranie – “Parcel-sweeping” Pick the right box and win a prize

from one of our e-commerce partners

Best social media campaign in 2010

in PolandStart 299 fans

End of 11th edition 184 515 fans

„Parcel-rooming” – engaging

partners

700% growth of easyPack 24/7 delivery – over 600 participants

Results – Morele.net customers soft roll out

Communication channels of sms competition:On-line activities: banners + subpageE-mailingsPosts and graphics on facebook.pl

E-mailing statistics:Database 75 245Unique opens 9685 – 13%Unique click 1808 – 2,5 %

Results:Over 600 participants received a special gift-device

Fanbook – discount offers from partners

57 offers from different e-stores segments

Total value of discount 400 Euro

Reference LIVE – use business partners to promote your service

25

EasyPack for customer in PL – case study– 3 months after roll out statistics

We are the only operator in the world that offers that service!

View2surf technology

We can push away cost of building loyalty

from your company!

Free minutes for shopping

Effective differentiator: a customer receives free minutes for shopping exchengable for SMS

Free minutes for the full shopping basket,

Free minutes for buying selected items,

Free minutes for buying products of the selected suppliers.

An innovative loyalty tool

Ads co-financed by the suppliers

Full-screen ads

Sms message „visit the nearest store, and you’ll get a ….% discount”

Link to website http://www.promocje.pl

MMS message

photo/image with the link and reference to details

Constant customer contact

ResultsThe results are based on „free

minutes for shopping” model and v2s advertising

15% bigger market basket when using „free minutes for shopping” comparing to the average base (during the survey customers declare more than 50%),

10% - increase for selected products in targeted marketing promotions

over 100% higher rate of viewing mobile ads using view2surf technology,

a satisfaction rate for full-screen mobile ads is high

Additional effects

Increased customer loyalty – a cost effective and self-funding loyalty program supports Club Card

A simple communication tool that can be used in FMCG products sales.

An efficient customer communication tool when using geo-location technology.

Target Market Segmentation

Mass Market Mass Customize

Micro-Marketing Channel Optimized

Benefits of Better Customer Management

51%

76%

49%

36%

60%

45%

39%

45%

37%

Return on Marketing Investment

Customer Retention Rate

Customer Acqusition Rate

Multi Channel Optimized

Rules-basedCampaign Execution

Spread-sheet Data-marts

CRM/SFA Front/Back Integration

Business Intelligence

Real-time Integration

Percent Co’s Reporting > 15%

Performance by Benchmark

Grouping

Technology Enablers

Lagging

Norm

Best in Class

Source: Aberdeen Group, US Market 2009

Thank you for your attention

Results Churn Reduction : -20% is

realistic Proximus (B): -25% T-Mobile (NL): -20% Plus GSM (PL): -25% Orange (PL): -20% (postpaid), -60%

(prepaid)

Cross- and Up-selling : +5% is feasible Proximus (B): +7% T-Mobile (NL): +4% Plus GSM (PL): +4% Orange (PL): 25%-35% higher ARPU

Cost efficient client behaviour : T-Mobile : members use online-billing more frequently Plus GSM : members opt for direct debit twice as often Orenge Profit : members use direct debit 3x as often as non-

members

Benchmarks and experiences with results of points programs throughout Europe.

35

RFM analysisrecency, frequency, monetary value

RATIONAL SURFACE(customer)

EMOTIONAL SURFACE(customer)

TACTIC GOALS

STRATEGIC GOALS

Rewards and benefits in Loyalty ProgramBulid based on the best practices

RATIONALSURFACE(customer)

EMOTIONAL SURFACE(customer)

TACTIC GOALS

STRATEGIC GOALS

Rewards and benefits sheme

First parcel sent bonus Early pick up bonus (>6h)

Birthday sms greetings

Member-gets-member bonus

Birthday email bonus

Suprise&delight competitions

5th order bonus

Welcome bonus for joining

2

39

OBJECTIVEPromote new Neostrada package

TIMINGJan-MarOFFER

Free Installation500 Bonus pointsTARGET

Families with children having highdial-up volume.

X-sell

OBJECTIVERetain churn-sensitive Customers

TIMINGOngoingOFFER

Renew your contract and get500 Bonus points

TARGETHigh value customer that are2 months before end of contract.

Retention

OBJECTIVEWin customers for new store

TIMINGMayOFFER

Double points during Mayopening month

TARGETAll members living within 5 kmfrom new store location.

Acquisition

OBJECTIVEWin back lapsers

TIMINGOngoingOFFERFree oil change on your first(re-)visit to BP + survey WHY?TARGETAll members who had high freq. &value for BP, but have not visitedBP for more than 3 monthsWin-back

recencyfrequency

monetary value

OBJECTIVEIncrease life insurance premiums

TIMINGJulOFFER

Triple points on increase in life insurance premiums

TARGETHigh income, middle aged existingpolicy holders with low/avg current premiumsUpsell

income

Age

policy value

OBJECTIVEPromote internet banking

TIMINGSeptOFFER250 points for switching to internet bankingTARGETExisting Lukas customers whodo not use internet banking yet buthave NeostradaSteer behavior

Lukas customersNeostrada users

recencyfrequency

monetary value

Own partnermarketing toolsusing program

as ‘support’

Targeted

Communication preferencesValue

ProfileHistory

…Nowak family

Newsletter

PROGRAM COMMUNICATION CALENDAR

PROGRAM TOOLS

Email

WWW

SMS

DM

Newsletter

DecNovOctSepAugJulJunMayAprMarFebJan

Email

WWW

SMS

DM

Newsletter

DecNovOctSepAugJulJunMayAprMarFebJan

Points Promo Coupons Events

ALL

•Free oil change @ BP

Trackingresponse

ROI Reporting

income

Age

policy value

income

Age

policy value

Pekao customersNeostrada users Pekao customersNeostrada users

•Double points @ Carrefour

•Coupon 3 months trial internet

•Contract renewal bonus from mobile op.

PartnerBusiness objectives

Win backRetention

AcquisitionCross-sell

Up-sellCreate needs

Educate