Insight Impact Series

All Aboard SJrsquos Journey to Becoming a Loyalty Leader A Strategy to Become More Profitable Modern and Customer-Centric

August 2009

02

03

05

06

07

13

16

Executive Overview

Rail Industry Trends

The Turnaround Plan

Obstacles on the Road to Customer Centricity

SJrsquos Customer-Centric Solution

Benefits of a Customer Focus for SJ

Conclusion

Table of Contents

1

Executive Overview

Mission of SJ

A modern profitable and customer-oriented company

In 2002 SJ was Swedenrsquos largest public-sector passenger rail company facing deregulation of its once-protected market and a future contending against world-class competitors such as Norwayrsquos Baneservice Jan Forsbergrsquos top priority after taking over as CEO that year was to bring SJ back from the brink of bankruptcy caused in equal parts by the global recession that followed 911 and issues with execution

Among other challenges for Forsberg SJlsquos inventory of trains needed to be upgraded at a time when the businessrsquos cost structure was too high relative to revenues Perhaps most significantly SJ did not have a reputashytion for quality service Nor did SJ have a loyalty programmdasha best practice for passenger transportation companiesmdashto attract and retain customers

Forsberg put a turnaround strategy in place that focused on three factors revenue growth service quality and customer choice By early 2009 SJ had successfully navigated itself out of bankruptcy and its CRM initiative had achieved a substantial increase in average revenue per customer while also improving customer satisfaction

This case study describes the challenges facing the new SJ management team in 2002 and how it met those challenges by creating a world-class loyalty program supported by Oraclersquos Siebel Loyalty

2

ldquoOur customers are the platform for growth and profitability

Thatrsquos why we are focusing on customers more than everrdquo

Jan Forsberg CEO SJ

Rail Industry Trends

Sweden has a population of more than 9 million people scattered throughout a geographic area of just under 174000 square miles Thatrsquos the equivalent of the population of New York City residing in a territory the size of California With 85 percent of those people living in urban areas the country has one of the lowest population-density ratios in the world only 52 people per square mile For centuries this has posed unique transportation challenges for Sweden

For many decades the Swedish rail industry was open to competition Private investors first broke ground on a railway system in Sweden in the mid 1850s and until 1937 the system was still partially owned by private enterprises1 In the early days railway companies competed not only with other railway enterprises but in an open transportation market that included travel by boat and horseback At first railways had a strong competitive advantage over other forms of transportation due to lower prices shorter trip durations and scheduling flexibility but that began changing in the 1930s when cars buses trucks ships and aircraft became mainstream forms of transportation

By the 1990s travel by rail was rapidly declining as citizens increasingly chose other modes of transportation By 20022 rail traffic had dropped to only 7 percent of total passenger traffic (see Figure 1)

Figure 1 Market Share of Rail Transport for Passenger Traffic3

1043

864 733 692 685 683 704

1970 1980 1985 1991 1994 1998 2002

1 Anders Edstrom Making Sense of BusinessmdashReorganizing Processes in Swedish Rail 1997 2 Keith Barrow SJ Back from the Brink International Railway Journal October 2007 3 CEMT Evolution des Transports OECD Countries

3

SJ at a Glance

SJ makes 110000 journeys daily

to 220 destinations and serves 24

million customers each year

Employees

4000

Net Sales

euro09 billion

Profit (2008)

euro65 million

ldquoEvery time I take an SJ train I reflect on the 150-year tradition and historyrdquo

SJ passenger Stockholm to Goumlteborg April 2009

For example cars were used for 67 percent of all journeys greater than 100 kilometers while trains were used for only 15 percent (see Figure 2) To survive Swedenrsquos railway systemmdashnow called SJ and wholly owned and operated by the governmentmdashwould have to lure passengers away from cars and airplanes

Figure 2 Market Share of Journeys More Than 100km (2007)

Car 67

Air 13

Coach 5

Train 15

Complicating matters further was the upcoming deregulation of the passenger rail market in Sweden Since its inception SJ had had exclusive rights to operate trains on select long-distance routes such as Stockholm to GoumlteborgMalmoumlSundsvall and Goumlteborg to MalmoumlCopenhagen But the Swedish government planned to open these routes to other passenger train companiesmdashmost notably United Kingdomndashbased Arriva and First Group Francendashbased Keolis and Veolia Germanyndashbased DB Norwayrsquos NSB and Danish DSB

4

The Turnaround Plan

In an attempt to rescue the company from bankruptcy SJ appointed Jan Forsberg as CEO and Jan Olson as senior vice president of business development to create a turnaround program The program was built upon three key objectives increasing revenue growth improving service quality and providing customers with more choices These goals translated into a three-phase implementation plan that included reducing costs enhancing productsand implementing a customer-centric business strategy (see Figure 3)

This case study focuses on the third phase of the turnaround strategy customer centricity As part of this third and critical phase a high-powered cross-functional team was createdmdashled by Claes Lindholtzmdashwith the objective of establishing enterprisewide CRM initiatives that would win the hearts and minds of SJs most valuable customers

Figure 3 SJrsquos Phased Implementation Strategy

Business Goals of

SJs Customer-Centric

Business Strategy

bull Make SJ more profitable

modern and customer-centric

bull Increase revenue up-sell

and cross-sell

bull Increase the customers

lifecycle with SJ

bull Recruit and maintain

the ldquorightrdquo customers

bull Improve customer satisfaction

Customer Centricity

Product Enhancements

Cost Improvements

2000 2002 2004 2006 2008

5

ldquoTargeting the most valuable customers was like searching

for a needle in a haystack before the CRM initiativerdquo

Jan Olson Senior Vice President Business Development SJ

Obstacles on the Road to Customer Centricity

Setting a goal for true customer centricity is one thingmdashachieving it is another especially for a 150-year-old public sector company that has traditionally had a monopoly in its market An obvious first step creating a loyalty program SJ did not have one despite the fact thatcompanies in the travel industrymdashespecially airlines and hotelsmdashhave long used such programs to improve customer retention and increase average revenue per customer SJ faced a number of obstacles to implementing a successful loyalty program

bull Missing segmentation and analytics tools Management knew anecdotally that a small group of customers on select routes accounted for most of its profits However the company had only limited understanding of even the most basic facts about its customers due to fragmented processes for collecting information and limited analytical capabilities

For example SJ trains that began service at 555 am were running at significantly lower capacity than the 600 am trains which were 100 percent full But because SJ didnrsquot have an effective way to know who its customers were what was important to them and which variables impacted their transportation decisions executives didnrsquot know how to start changing the organizationrsquos behavior

bull Failure to differentiate service levels for the most valuable customers To increase customer retention SJ knew it had to differentiate and personalize the services it offered to different customer segments For example many transportation providers offer value-added services such as specialized meals lounge services and highly trained frontline staff to engage with their most valuable customers

For a public sector company such as SJ which had traditionally provided only basic single-tier transportation services this was a challenge Delivering differentiated services involves aligning sales customer support and onboard operationsmdashsomething that was beyond the existing capabilities of SJrsquos technology process and personnel systems

bull Lack of an adaptive and agile technology infrastructure SJrsquos technology infrastructure was not capable of supporting its vision of a customer-centric organization Customer information was spread across multiple systems making it impossible to extract required data from transactional systems to get a 360-degree view of customers and implement closed-loop sales and marketing processes

6

SJlsquos Customer-Centric Solution

SJ needed a technology solution that would support its customer-centric strategy and help it overcome each of these obstacles It found such a solution in Oraclersquos Siebel Loyalty which enabled SJ to

bull Target the most valuable customers

bull Establish tiers and other rewards that customers really want

bull Create relevant real-time personalized offers across multiple channels

bull Accurately assess the lifetime value of customers

bull Support easy processing of member and partner transactions and rewards

bull Promote richer engagement with customers

Target the Most Valuable Customers

When establishing a successful loyalty program the first step is for the business to clearly define the target audience it plans to serve and ensuremdashthrough data-based metricsmdashthat this target audience is in fact more profitable than other customer segments The challenges in accomplishing this are twofold First companies must collect a substantial volume of information about customers before they can identify which ones are most valuable to the business Secondly companies must apply the appropriate scoring mechanism to identify the most valuable customersmdasha process that has always required a balancing act between science and art Scoring methods include recency frequency and monetary value (RFM) activity-based costing (ABC) customer lifetime value (CLV) and net promoter score (NPS)

By implementing a Siebel customer relationship management (CRM) data modelmdashalso called Siebel Universal Customer MastermdashSJ was able to collect aggregate and analyze customer data across each customer touchpoint to gain a 360-degree view of each customer This data included revenue and purchase transactions from the rail reservation system customer preference data from the member Web site service data from the contact center and credit history from financial systems

How Siebel CRM Enables

SJlsquos Customer Strategy

SJ evaluated several vendors

before deciding on Siebel to enable

its loyalty program Benefits of the

Siebel solution include

bull High scalability both up and down

bull Integration with more than

50 SJ systems

bull Customer insight provided to

front-line staff in real time

bull Rich analytic capabilities

bull Zero downtime in two years

7

After much internal debate over commonly used metrics SJ chose CLV as the score that reflected the right mix between customer satisfaction and profitability By deploying this measure SJ was able to use Siebel Loyalty Manager and Oracle Business Intelligence Standard Edition to quickly and easily segment customers based on their current value their potential to increase in value and the probability that they might defect

Establish Tiers and Offer Rewards That Customers Really Want

One of the key objectives of well-defined loyalty programs is to reward customers when they act in a way that improves their profitability to the company A recent study in the Journal of Consumer Research4 found that loyalty programs can make consumers feel more special by creating multitiered programs that tap into customersrsquo aspirations for higher status

With the flexibility enabled by Siebel Loyalty SJ has established three tiers and created a reward structure that recognizes the value of each member With this new structure SJ drives desired customer behavior by offering tangible rewards that are both attractive and attainable such as the ability to upgrade to First Class and to buy meals using points It even provides some rewards in real time to immediately recognize the most valuable customers and transactions In addition SJ offers intangible benefits such as ticketless travel lounge access free onboard internet connections and the ability to change a departure without rebooking By putting all these measures in place SJ has achieved more than 90 percent penetration into its primary target groups

Create Relevant Real-Time Personalized Offers Across Multiple Channels

SJ has leveraged the flexibility scalability and real-time capabilities of Siebel Marketing and Siebel Loyalty to create hundreds of personalized promotions executed simultaneously across multiple channels Quarterly SJ now executes more than 1 million unique promoshytional mailings including both traditional direct mail and e-mail

4 Xavier Dregraveze Joseph C Nunes ldquoFeeling Superior The Impact of Loyalty Program Structure on Consumersrsquo

Perceptions of Statusrdquo Journal of Consumer Research 35(2009) Print

8

ldquoWe wanted a platform that gave us the fastest path to achieve our

loyalty vision with minimal risk We looked at other competitors but

settled on [Oraclelsquos] Siebel because of its track record on achieving

value for its customersrdquo

Claes Lindholtz Director Customer Programs and Customer Analysis SJ

Siebel Marketing and Siebel Loyalty have also allowed SJ to run everything from the simplest to the most complex promotions For example one of SJrsquos simpler promotions offered members double points if they traveled during the low season In a more complex promotion SJ specified rules that awarded triple points to elite members if they purchased food onboard the train

In the future SJ plans to make ldquoheuristicrdquo promotional offers These incorporate analyses of a customerrsquos recent behaviormdashsuch as transactions or responses to special offersmdashwith predefined business rules to make offers in real time SJ plans to accomplish this with Oracle Real-Time Decisions which will enable SJ to offer the promotion that is most relevant to the member at the point of interaction and which has the greatest likelihood of success For example for members close to attaining a next-level tier or a particular reward Oracle Real-Time Decisions will notify them of that fact and suggest actions they can takemdashbased on their recent account activitymdashthat will help them attain that tierreward

Accurately Assess the Lifetime Value of Customers

Marketers would like to continually measure the effectiveness of their promotions and based on midcampaign feedback be able to change campaigns on the fly to increase their efficacy Oracle Marketing Analytics and Siebel Marketing allow SJ to take a disciplined approach in measuring the profitability of its customers based on the CLV metric Because of this SJ is able to proactively monitor the return on investment (ROI) of its marketing campaigns Indeed many recent campaignsmdashincluding the one designed to increase off-peak capacity utilizationmdashhave achieved ROIs of more than 300 percent

9

In addition SJ has implemented a closed-loop marketing environment that allows it to continuously improve and optimize the success of its loyalty program It is also measuring partner profitability Oracle Marketing Analytics is key to achieving both these goals

Support Easy Processing of Member and Partner Transactions and Rewards

The logistics of running a loyalty program can be difficult Performing accrual and redempshytion transactions and calculating point balances are time-consuming and complex operations requiring companies to aggregate and process data from multiple sources By automating their loyalty programs and making them touch-free companies can significantly reduce the costs of their loyalty programs with minimal investment

Siebel Loyalty Customer Portal empowers SJ loyalty program members to review their program status update their profiles enroll in promotions submit service inquiries and redeem rewardsmdashall without requiring assistance from an SJ employee Siebel Loyalty Partner Portal automates management of loyalty currency joint promotion design and execution transaction validation and partner billing and enrollment

By helping SJ to continue automating its loyalty processes these Oracle solutions are allowing SJ to achieve significant cost savings as well as the following benefits

bull Real-time systematic processing of accrual and redemption transactions

bull Seamless processing of tier upgrades and downgrades

bull Application of complex daily point-expiration rules across three tiers

bull Self-service portals for members and partners

bull Near-touch-free capability in loyalty operations resulting in reduced loyalty program operating costs

10

Promote Richer Engagement with Customers

Delivering superior products and services to customers and rewarding them when they make decisions that increase your profitability are the hallmarks of a successful loyalty program Yet to achieve deeper and richer customer engagement that transcends a mere rewards program companies need to empower everyone in the organization to act on behalf of the customer at every level This requires giving all customer-facing workers the right information about customers at the right time promoting an internal culture that encourages them to make proactive customer-centric decisions using that information and backing it all up with senior executive support

To enable a richer engagement with its customers throughout its operations SJ applied organizational change management techniques that mirrored the research of Jeffrey and Laurie Ford5 These techniques centered on boosting awareness (what needs to be done) returning to purpose (why do this) changing the changes (what can go wrong) and building participation and engagement (get buy-in)

Boosting awareness To begin SJ boosted awareness of its loyalty program by sending out mailers to all employees It then scheduled ldquotown hallrdquo sessions in all key corporate locations These meetings not only improved awareness of the loyalty program but also helped SJ management assess the level of resistance in each location

The Importance of

Customer Insight

SJ can now utilize customer

insight on several levels

bull StrategicmdashUtilize customer

insight in product development

and performance measurement

bull TacticalmdashEnhance capabilities with

insight-based offers and campaigns

throughout the customer lifecycle

bull OperationalmdashImprove ability to

meetmanage customer expectashy

tions and use the information to

adapt service

bull SituationalmdashIn the future

be able to give each customer a

tailored price based on insight

5 Jeffrey and Laurie Ford ldquoDecoding Resistance to Changerdquo Harvard Business Review April 2009

11

Returning to purpose The returning-to-purpose phasemdashthe explanation of why SJ had embarked on this initiativemdashsaw the launch of a campaign inspired by Time Magazinersquos 2006 ldquoPerson of the Yearrdquo award where the cover image that year included a Mylar reflective mirror SJ managements intent was to emphasize to frontline staff that they were the most important factor in building true customer loyalty

Changing the changes SJ devoted a significant amount of time anticipating potential risks and invested heavily in processes to ensure that barriers to adoption were successfully addressed

Building participation and engagement Both SJrsquos CEO and the senior vice president of business development agreed to personally sponsor the initiative which subsequently ensured the buy-in and engagement of divisional heads (for example the senior vice presidents of Sales and Onboard Staff) and front-line staff

Because the cultural change initiative was successful SJ was able to redesign critical customer-facing processes across its sales support and services functions in a way that improved the overall customer experience For example it was able to begin distributing tickets across multiple channels and introduce new value-added services such as onboard meals internet access and car rentals upon journeyrsquos end in response to demands of different customer segments

SJ also depends on Siebel Loyalty to provide 360-degree member information (including CLV) to deliver the right levels of support to members and their households Future plans call for SJ to deploy an integrated loyalty view across all customer touchpoints so that all customer-facing employees are aware of the value of each member Using predefined business rules in the Siebel solution employees will be able to tailor the travel experience to reflect membersrsquo preferences as well as value to the organization

12

Benefits of a Customer Focus for SJ

The SJ loyalty program has been a resounding success As of May 2009 the program has approximately 470000 members and has achieved a 90 percent penetration into its target population Swedish business travelers Today loyalty members produce significantly more revenue than nonmembers and are also more-satisfied customers according to a survey sponsored by SJ In addition SJ can run loyalty campaigns that achieve a 100 percent follow-up rate and up to a 25 percent conversion rate Among other benefits SJ has been able to improve the utilization of trainloads and thus the profitability of many routes

The company has also achieved significant progress on the customer satisfaction front with substantial improvements in both NPS and NKI scores Customer surveys point to increased loyalty with 32 percent of the surveyed customers saying they will increase the proportion of travel they do by train

Industry associations have recognized the impact the SJ loyalty program has had on SJ with multiple awards Gartner recognized SJ as a runner-up for the CRM Excellence award SJ also won the Golden Relationship Prize 2008 and the Golden Key Award for best CRM initiative of 2008

SJ has achieved payback on this initiative within two years with an ROI of more than 100 percent (see Figure 4) The project timeline is pictured in Figure 5 and the overall benefits are captured in Table 1

The Metrics of Success

SJs Loyalty Program

bull Approximately 470000 members

bull 90 percent penetration into

target market

bull Loyalty campaigns achieve a

100 percent follow-up rate and up

to a 25 percent conversion rate

bull Loyalty program members

produce significantly more

revenue than nonmembers

bull Increased customer loyalty

32 percent say they will increase

the proportion of travel they do

by train

bull Improved trainload utilization

and route profitability

bull Project payback within two years

ROI of more than 100 percent

bull Recognition Gartner CRM

Excellence runner-up Golden

Relationship Prize 2008 Golden

Key Award

13

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

02

03

05

06

07

13

16

Executive Overview

Rail Industry Trends

The Turnaround Plan

Obstacles on the Road to Customer Centricity

SJrsquos Customer-Centric Solution

Benefits of a Customer Focus for SJ

Conclusion

Table of Contents

1

Executive Overview

Mission of SJ

A modern profitable and customer-oriented company

In 2002 SJ was Swedenrsquos largest public-sector passenger rail company facing deregulation of its once-protected market and a future contending against world-class competitors such as Norwayrsquos Baneservice Jan Forsbergrsquos top priority after taking over as CEO that year was to bring SJ back from the brink of bankruptcy caused in equal parts by the global recession that followed 911 and issues with execution

Among other challenges for Forsberg SJlsquos inventory of trains needed to be upgraded at a time when the businessrsquos cost structure was too high relative to revenues Perhaps most significantly SJ did not have a reputashytion for quality service Nor did SJ have a loyalty programmdasha best practice for passenger transportation companiesmdashto attract and retain customers

Forsberg put a turnaround strategy in place that focused on three factors revenue growth service quality and customer choice By early 2009 SJ had successfully navigated itself out of bankruptcy and its CRM initiative had achieved a substantial increase in average revenue per customer while also improving customer satisfaction

This case study describes the challenges facing the new SJ management team in 2002 and how it met those challenges by creating a world-class loyalty program supported by Oraclersquos Siebel Loyalty

2

ldquoOur customers are the platform for growth and profitability

Thatrsquos why we are focusing on customers more than everrdquo

Jan Forsberg CEO SJ

Rail Industry Trends

Sweden has a population of more than 9 million people scattered throughout a geographic area of just under 174000 square miles Thatrsquos the equivalent of the population of New York City residing in a territory the size of California With 85 percent of those people living in urban areas the country has one of the lowest population-density ratios in the world only 52 people per square mile For centuries this has posed unique transportation challenges for Sweden

For many decades the Swedish rail industry was open to competition Private investors first broke ground on a railway system in Sweden in the mid 1850s and until 1937 the system was still partially owned by private enterprises1 In the early days railway companies competed not only with other railway enterprises but in an open transportation market that included travel by boat and horseback At first railways had a strong competitive advantage over other forms of transportation due to lower prices shorter trip durations and scheduling flexibility but that began changing in the 1930s when cars buses trucks ships and aircraft became mainstream forms of transportation

By the 1990s travel by rail was rapidly declining as citizens increasingly chose other modes of transportation By 20022 rail traffic had dropped to only 7 percent of total passenger traffic (see Figure 1)

Figure 1 Market Share of Rail Transport for Passenger Traffic3

1043

864 733 692 685 683 704

1970 1980 1985 1991 1994 1998 2002

1 Anders Edstrom Making Sense of BusinessmdashReorganizing Processes in Swedish Rail 1997 2 Keith Barrow SJ Back from the Brink International Railway Journal October 2007 3 CEMT Evolution des Transports OECD Countries

3

SJ at a Glance

SJ makes 110000 journeys daily

to 220 destinations and serves 24

million customers each year

Employees

4000

Net Sales

euro09 billion

Profit (2008)

euro65 million

ldquoEvery time I take an SJ train I reflect on the 150-year tradition and historyrdquo

SJ passenger Stockholm to Goumlteborg April 2009

For example cars were used for 67 percent of all journeys greater than 100 kilometers while trains were used for only 15 percent (see Figure 2) To survive Swedenrsquos railway systemmdashnow called SJ and wholly owned and operated by the governmentmdashwould have to lure passengers away from cars and airplanes

Figure 2 Market Share of Journeys More Than 100km (2007)

Car 67

Air 13

Coach 5

Train 15

Complicating matters further was the upcoming deregulation of the passenger rail market in Sweden Since its inception SJ had had exclusive rights to operate trains on select long-distance routes such as Stockholm to GoumlteborgMalmoumlSundsvall and Goumlteborg to MalmoumlCopenhagen But the Swedish government planned to open these routes to other passenger train companiesmdashmost notably United Kingdomndashbased Arriva and First Group Francendashbased Keolis and Veolia Germanyndashbased DB Norwayrsquos NSB and Danish DSB

4

The Turnaround Plan

In an attempt to rescue the company from bankruptcy SJ appointed Jan Forsberg as CEO and Jan Olson as senior vice president of business development to create a turnaround program The program was built upon three key objectives increasing revenue growth improving service quality and providing customers with more choices These goals translated into a three-phase implementation plan that included reducing costs enhancing productsand implementing a customer-centric business strategy (see Figure 3)

This case study focuses on the third phase of the turnaround strategy customer centricity As part of this third and critical phase a high-powered cross-functional team was createdmdashled by Claes Lindholtzmdashwith the objective of establishing enterprisewide CRM initiatives that would win the hearts and minds of SJs most valuable customers

Figure 3 SJrsquos Phased Implementation Strategy

Business Goals of

SJs Customer-Centric

Business Strategy

bull Make SJ more profitable

modern and customer-centric

bull Increase revenue up-sell

and cross-sell

bull Increase the customers

lifecycle with SJ

bull Recruit and maintain

the ldquorightrdquo customers

bull Improve customer satisfaction

Customer Centricity

Product Enhancements

Cost Improvements

2000 2002 2004 2006 2008

5

ldquoTargeting the most valuable customers was like searching

for a needle in a haystack before the CRM initiativerdquo

Jan Olson Senior Vice President Business Development SJ

Obstacles on the Road to Customer Centricity

Setting a goal for true customer centricity is one thingmdashachieving it is another especially for a 150-year-old public sector company that has traditionally had a monopoly in its market An obvious first step creating a loyalty program SJ did not have one despite the fact thatcompanies in the travel industrymdashespecially airlines and hotelsmdashhave long used such programs to improve customer retention and increase average revenue per customer SJ faced a number of obstacles to implementing a successful loyalty program

bull Missing segmentation and analytics tools Management knew anecdotally that a small group of customers on select routes accounted for most of its profits However the company had only limited understanding of even the most basic facts about its customers due to fragmented processes for collecting information and limited analytical capabilities

For example SJ trains that began service at 555 am were running at significantly lower capacity than the 600 am trains which were 100 percent full But because SJ didnrsquot have an effective way to know who its customers were what was important to them and which variables impacted their transportation decisions executives didnrsquot know how to start changing the organizationrsquos behavior

bull Failure to differentiate service levels for the most valuable customers To increase customer retention SJ knew it had to differentiate and personalize the services it offered to different customer segments For example many transportation providers offer value-added services such as specialized meals lounge services and highly trained frontline staff to engage with their most valuable customers

For a public sector company such as SJ which had traditionally provided only basic single-tier transportation services this was a challenge Delivering differentiated services involves aligning sales customer support and onboard operationsmdashsomething that was beyond the existing capabilities of SJrsquos technology process and personnel systems

bull Lack of an adaptive and agile technology infrastructure SJrsquos technology infrastructure was not capable of supporting its vision of a customer-centric organization Customer information was spread across multiple systems making it impossible to extract required data from transactional systems to get a 360-degree view of customers and implement closed-loop sales and marketing processes

6

SJlsquos Customer-Centric Solution

SJ needed a technology solution that would support its customer-centric strategy and help it overcome each of these obstacles It found such a solution in Oraclersquos Siebel Loyalty which enabled SJ to

bull Target the most valuable customers

bull Establish tiers and other rewards that customers really want

bull Create relevant real-time personalized offers across multiple channels

bull Accurately assess the lifetime value of customers

bull Support easy processing of member and partner transactions and rewards

bull Promote richer engagement with customers

Target the Most Valuable Customers

When establishing a successful loyalty program the first step is for the business to clearly define the target audience it plans to serve and ensuremdashthrough data-based metricsmdashthat this target audience is in fact more profitable than other customer segments The challenges in accomplishing this are twofold First companies must collect a substantial volume of information about customers before they can identify which ones are most valuable to the business Secondly companies must apply the appropriate scoring mechanism to identify the most valuable customersmdasha process that has always required a balancing act between science and art Scoring methods include recency frequency and monetary value (RFM) activity-based costing (ABC) customer lifetime value (CLV) and net promoter score (NPS)

By implementing a Siebel customer relationship management (CRM) data modelmdashalso called Siebel Universal Customer MastermdashSJ was able to collect aggregate and analyze customer data across each customer touchpoint to gain a 360-degree view of each customer This data included revenue and purchase transactions from the rail reservation system customer preference data from the member Web site service data from the contact center and credit history from financial systems

How Siebel CRM Enables

SJlsquos Customer Strategy

SJ evaluated several vendors

before deciding on Siebel to enable

its loyalty program Benefits of the

Siebel solution include

bull High scalability both up and down

bull Integration with more than

50 SJ systems

bull Customer insight provided to

front-line staff in real time

bull Rich analytic capabilities

bull Zero downtime in two years

7

After much internal debate over commonly used metrics SJ chose CLV as the score that reflected the right mix between customer satisfaction and profitability By deploying this measure SJ was able to use Siebel Loyalty Manager and Oracle Business Intelligence Standard Edition to quickly and easily segment customers based on their current value their potential to increase in value and the probability that they might defect

Establish Tiers and Offer Rewards That Customers Really Want

One of the key objectives of well-defined loyalty programs is to reward customers when they act in a way that improves their profitability to the company A recent study in the Journal of Consumer Research4 found that loyalty programs can make consumers feel more special by creating multitiered programs that tap into customersrsquo aspirations for higher status

With the flexibility enabled by Siebel Loyalty SJ has established three tiers and created a reward structure that recognizes the value of each member With this new structure SJ drives desired customer behavior by offering tangible rewards that are both attractive and attainable such as the ability to upgrade to First Class and to buy meals using points It even provides some rewards in real time to immediately recognize the most valuable customers and transactions In addition SJ offers intangible benefits such as ticketless travel lounge access free onboard internet connections and the ability to change a departure without rebooking By putting all these measures in place SJ has achieved more than 90 percent penetration into its primary target groups

Create Relevant Real-Time Personalized Offers Across Multiple Channels

SJ has leveraged the flexibility scalability and real-time capabilities of Siebel Marketing and Siebel Loyalty to create hundreds of personalized promotions executed simultaneously across multiple channels Quarterly SJ now executes more than 1 million unique promoshytional mailings including both traditional direct mail and e-mail

4 Xavier Dregraveze Joseph C Nunes ldquoFeeling Superior The Impact of Loyalty Program Structure on Consumersrsquo

Perceptions of Statusrdquo Journal of Consumer Research 35(2009) Print

8

ldquoWe wanted a platform that gave us the fastest path to achieve our

loyalty vision with minimal risk We looked at other competitors but

settled on [Oraclelsquos] Siebel because of its track record on achieving

value for its customersrdquo

Claes Lindholtz Director Customer Programs and Customer Analysis SJ

Siebel Marketing and Siebel Loyalty have also allowed SJ to run everything from the simplest to the most complex promotions For example one of SJrsquos simpler promotions offered members double points if they traveled during the low season In a more complex promotion SJ specified rules that awarded triple points to elite members if they purchased food onboard the train

In the future SJ plans to make ldquoheuristicrdquo promotional offers These incorporate analyses of a customerrsquos recent behaviormdashsuch as transactions or responses to special offersmdashwith predefined business rules to make offers in real time SJ plans to accomplish this with Oracle Real-Time Decisions which will enable SJ to offer the promotion that is most relevant to the member at the point of interaction and which has the greatest likelihood of success For example for members close to attaining a next-level tier or a particular reward Oracle Real-Time Decisions will notify them of that fact and suggest actions they can takemdashbased on their recent account activitymdashthat will help them attain that tierreward

Accurately Assess the Lifetime Value of Customers

Marketers would like to continually measure the effectiveness of their promotions and based on midcampaign feedback be able to change campaigns on the fly to increase their efficacy Oracle Marketing Analytics and Siebel Marketing allow SJ to take a disciplined approach in measuring the profitability of its customers based on the CLV metric Because of this SJ is able to proactively monitor the return on investment (ROI) of its marketing campaigns Indeed many recent campaignsmdashincluding the one designed to increase off-peak capacity utilizationmdashhave achieved ROIs of more than 300 percent

9

In addition SJ has implemented a closed-loop marketing environment that allows it to continuously improve and optimize the success of its loyalty program It is also measuring partner profitability Oracle Marketing Analytics is key to achieving both these goals

Support Easy Processing of Member and Partner Transactions and Rewards

The logistics of running a loyalty program can be difficult Performing accrual and redempshytion transactions and calculating point balances are time-consuming and complex operations requiring companies to aggregate and process data from multiple sources By automating their loyalty programs and making them touch-free companies can significantly reduce the costs of their loyalty programs with minimal investment

Siebel Loyalty Customer Portal empowers SJ loyalty program members to review their program status update their profiles enroll in promotions submit service inquiries and redeem rewardsmdashall without requiring assistance from an SJ employee Siebel Loyalty Partner Portal automates management of loyalty currency joint promotion design and execution transaction validation and partner billing and enrollment

By helping SJ to continue automating its loyalty processes these Oracle solutions are allowing SJ to achieve significant cost savings as well as the following benefits

bull Real-time systematic processing of accrual and redemption transactions

bull Seamless processing of tier upgrades and downgrades

bull Application of complex daily point-expiration rules across three tiers

bull Self-service portals for members and partners

bull Near-touch-free capability in loyalty operations resulting in reduced loyalty program operating costs

10

Promote Richer Engagement with Customers

Delivering superior products and services to customers and rewarding them when they make decisions that increase your profitability are the hallmarks of a successful loyalty program Yet to achieve deeper and richer customer engagement that transcends a mere rewards program companies need to empower everyone in the organization to act on behalf of the customer at every level This requires giving all customer-facing workers the right information about customers at the right time promoting an internal culture that encourages them to make proactive customer-centric decisions using that information and backing it all up with senior executive support

To enable a richer engagement with its customers throughout its operations SJ applied organizational change management techniques that mirrored the research of Jeffrey and Laurie Ford5 These techniques centered on boosting awareness (what needs to be done) returning to purpose (why do this) changing the changes (what can go wrong) and building participation and engagement (get buy-in)

Boosting awareness To begin SJ boosted awareness of its loyalty program by sending out mailers to all employees It then scheduled ldquotown hallrdquo sessions in all key corporate locations These meetings not only improved awareness of the loyalty program but also helped SJ management assess the level of resistance in each location

The Importance of

Customer Insight

SJ can now utilize customer

insight on several levels

bull StrategicmdashUtilize customer

insight in product development

and performance measurement

bull TacticalmdashEnhance capabilities with

insight-based offers and campaigns

throughout the customer lifecycle

bull OperationalmdashImprove ability to

meetmanage customer expectashy

tions and use the information to

adapt service

bull SituationalmdashIn the future

be able to give each customer a

tailored price based on insight

5 Jeffrey and Laurie Ford ldquoDecoding Resistance to Changerdquo Harvard Business Review April 2009

11

Returning to purpose The returning-to-purpose phasemdashthe explanation of why SJ had embarked on this initiativemdashsaw the launch of a campaign inspired by Time Magazinersquos 2006 ldquoPerson of the Yearrdquo award where the cover image that year included a Mylar reflective mirror SJ managements intent was to emphasize to frontline staff that they were the most important factor in building true customer loyalty

Changing the changes SJ devoted a significant amount of time anticipating potential risks and invested heavily in processes to ensure that barriers to adoption were successfully addressed

Building participation and engagement Both SJrsquos CEO and the senior vice president of business development agreed to personally sponsor the initiative which subsequently ensured the buy-in and engagement of divisional heads (for example the senior vice presidents of Sales and Onboard Staff) and front-line staff

Because the cultural change initiative was successful SJ was able to redesign critical customer-facing processes across its sales support and services functions in a way that improved the overall customer experience For example it was able to begin distributing tickets across multiple channels and introduce new value-added services such as onboard meals internet access and car rentals upon journeyrsquos end in response to demands of different customer segments

SJ also depends on Siebel Loyalty to provide 360-degree member information (including CLV) to deliver the right levels of support to members and their households Future plans call for SJ to deploy an integrated loyalty view across all customer touchpoints so that all customer-facing employees are aware of the value of each member Using predefined business rules in the Siebel solution employees will be able to tailor the travel experience to reflect membersrsquo preferences as well as value to the organization

12

Benefits of a Customer Focus for SJ

The SJ loyalty program has been a resounding success As of May 2009 the program has approximately 470000 members and has achieved a 90 percent penetration into its target population Swedish business travelers Today loyalty members produce significantly more revenue than nonmembers and are also more-satisfied customers according to a survey sponsored by SJ In addition SJ can run loyalty campaigns that achieve a 100 percent follow-up rate and up to a 25 percent conversion rate Among other benefits SJ has been able to improve the utilization of trainloads and thus the profitability of many routes

The company has also achieved significant progress on the customer satisfaction front with substantial improvements in both NPS and NKI scores Customer surveys point to increased loyalty with 32 percent of the surveyed customers saying they will increase the proportion of travel they do by train

Industry associations have recognized the impact the SJ loyalty program has had on SJ with multiple awards Gartner recognized SJ as a runner-up for the CRM Excellence award SJ also won the Golden Relationship Prize 2008 and the Golden Key Award for best CRM initiative of 2008

SJ has achieved payback on this initiative within two years with an ROI of more than 100 percent (see Figure 4) The project timeline is pictured in Figure 5 and the overall benefits are captured in Table 1

The Metrics of Success

SJs Loyalty Program

bull Approximately 470000 members

bull 90 percent penetration into

target market

bull Loyalty campaigns achieve a

100 percent follow-up rate and up

to a 25 percent conversion rate

bull Loyalty program members

produce significantly more

revenue than nonmembers

bull Increased customer loyalty

32 percent say they will increase

the proportion of travel they do

by train

bull Improved trainload utilization

and route profitability

bull Project payback within two years

ROI of more than 100 percent

bull Recognition Gartner CRM

Excellence runner-up Golden

Relationship Prize 2008 Golden

Key Award

13

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

Executive Overview

Mission of SJ

A modern profitable and customer-oriented company

In 2002 SJ was Swedenrsquos largest public-sector passenger rail company facing deregulation of its once-protected market and a future contending against world-class competitors such as Norwayrsquos Baneservice Jan Forsbergrsquos top priority after taking over as CEO that year was to bring SJ back from the brink of bankruptcy caused in equal parts by the global recession that followed 911 and issues with execution

Among other challenges for Forsberg SJlsquos inventory of trains needed to be upgraded at a time when the businessrsquos cost structure was too high relative to revenues Perhaps most significantly SJ did not have a reputashytion for quality service Nor did SJ have a loyalty programmdasha best practice for passenger transportation companiesmdashto attract and retain customers

Forsberg put a turnaround strategy in place that focused on three factors revenue growth service quality and customer choice By early 2009 SJ had successfully navigated itself out of bankruptcy and its CRM initiative had achieved a substantial increase in average revenue per customer while also improving customer satisfaction

This case study describes the challenges facing the new SJ management team in 2002 and how it met those challenges by creating a world-class loyalty program supported by Oraclersquos Siebel Loyalty

2

ldquoOur customers are the platform for growth and profitability

Thatrsquos why we are focusing on customers more than everrdquo

Jan Forsberg CEO SJ

Rail Industry Trends

Sweden has a population of more than 9 million people scattered throughout a geographic area of just under 174000 square miles Thatrsquos the equivalent of the population of New York City residing in a territory the size of California With 85 percent of those people living in urban areas the country has one of the lowest population-density ratios in the world only 52 people per square mile For centuries this has posed unique transportation challenges for Sweden

For many decades the Swedish rail industry was open to competition Private investors first broke ground on a railway system in Sweden in the mid 1850s and until 1937 the system was still partially owned by private enterprises1 In the early days railway companies competed not only with other railway enterprises but in an open transportation market that included travel by boat and horseback At first railways had a strong competitive advantage over other forms of transportation due to lower prices shorter trip durations and scheduling flexibility but that began changing in the 1930s when cars buses trucks ships and aircraft became mainstream forms of transportation

By the 1990s travel by rail was rapidly declining as citizens increasingly chose other modes of transportation By 20022 rail traffic had dropped to only 7 percent of total passenger traffic (see Figure 1)

Figure 1 Market Share of Rail Transport for Passenger Traffic3

1043

864 733 692 685 683 704

1970 1980 1985 1991 1994 1998 2002

1 Anders Edstrom Making Sense of BusinessmdashReorganizing Processes in Swedish Rail 1997 2 Keith Barrow SJ Back from the Brink International Railway Journal October 2007 3 CEMT Evolution des Transports OECD Countries

3

SJ at a Glance

SJ makes 110000 journeys daily

to 220 destinations and serves 24

million customers each year

Employees

4000

Net Sales

euro09 billion

Profit (2008)

euro65 million

ldquoEvery time I take an SJ train I reflect on the 150-year tradition and historyrdquo

SJ passenger Stockholm to Goumlteborg April 2009

For example cars were used for 67 percent of all journeys greater than 100 kilometers while trains were used for only 15 percent (see Figure 2) To survive Swedenrsquos railway systemmdashnow called SJ and wholly owned and operated by the governmentmdashwould have to lure passengers away from cars and airplanes

Figure 2 Market Share of Journeys More Than 100km (2007)

Car 67

Air 13

Coach 5

Train 15

Complicating matters further was the upcoming deregulation of the passenger rail market in Sweden Since its inception SJ had had exclusive rights to operate trains on select long-distance routes such as Stockholm to GoumlteborgMalmoumlSundsvall and Goumlteborg to MalmoumlCopenhagen But the Swedish government planned to open these routes to other passenger train companiesmdashmost notably United Kingdomndashbased Arriva and First Group Francendashbased Keolis and Veolia Germanyndashbased DB Norwayrsquos NSB and Danish DSB

4

The Turnaround Plan

In an attempt to rescue the company from bankruptcy SJ appointed Jan Forsberg as CEO and Jan Olson as senior vice president of business development to create a turnaround program The program was built upon three key objectives increasing revenue growth improving service quality and providing customers with more choices These goals translated into a three-phase implementation plan that included reducing costs enhancing productsand implementing a customer-centric business strategy (see Figure 3)

This case study focuses on the third phase of the turnaround strategy customer centricity As part of this third and critical phase a high-powered cross-functional team was createdmdashled by Claes Lindholtzmdashwith the objective of establishing enterprisewide CRM initiatives that would win the hearts and minds of SJs most valuable customers

Figure 3 SJrsquos Phased Implementation Strategy

Business Goals of

SJs Customer-Centric

Business Strategy

bull Make SJ more profitable

modern and customer-centric

bull Increase revenue up-sell

and cross-sell

bull Increase the customers

lifecycle with SJ

bull Recruit and maintain

the ldquorightrdquo customers

bull Improve customer satisfaction

Customer Centricity

Product Enhancements

Cost Improvements

2000 2002 2004 2006 2008

5

ldquoTargeting the most valuable customers was like searching

for a needle in a haystack before the CRM initiativerdquo

Jan Olson Senior Vice President Business Development SJ

Obstacles on the Road to Customer Centricity

Setting a goal for true customer centricity is one thingmdashachieving it is another especially for a 150-year-old public sector company that has traditionally had a monopoly in its market An obvious first step creating a loyalty program SJ did not have one despite the fact thatcompanies in the travel industrymdashespecially airlines and hotelsmdashhave long used such programs to improve customer retention and increase average revenue per customer SJ faced a number of obstacles to implementing a successful loyalty program

bull Missing segmentation and analytics tools Management knew anecdotally that a small group of customers on select routes accounted for most of its profits However the company had only limited understanding of even the most basic facts about its customers due to fragmented processes for collecting information and limited analytical capabilities

For example SJ trains that began service at 555 am were running at significantly lower capacity than the 600 am trains which were 100 percent full But because SJ didnrsquot have an effective way to know who its customers were what was important to them and which variables impacted their transportation decisions executives didnrsquot know how to start changing the organizationrsquos behavior

bull Failure to differentiate service levels for the most valuable customers To increase customer retention SJ knew it had to differentiate and personalize the services it offered to different customer segments For example many transportation providers offer value-added services such as specialized meals lounge services and highly trained frontline staff to engage with their most valuable customers

For a public sector company such as SJ which had traditionally provided only basic single-tier transportation services this was a challenge Delivering differentiated services involves aligning sales customer support and onboard operationsmdashsomething that was beyond the existing capabilities of SJrsquos technology process and personnel systems

bull Lack of an adaptive and agile technology infrastructure SJrsquos technology infrastructure was not capable of supporting its vision of a customer-centric organization Customer information was spread across multiple systems making it impossible to extract required data from transactional systems to get a 360-degree view of customers and implement closed-loop sales and marketing processes

6

SJlsquos Customer-Centric Solution

SJ needed a technology solution that would support its customer-centric strategy and help it overcome each of these obstacles It found such a solution in Oraclersquos Siebel Loyalty which enabled SJ to

bull Target the most valuable customers

bull Establish tiers and other rewards that customers really want

bull Create relevant real-time personalized offers across multiple channels

bull Accurately assess the lifetime value of customers

bull Support easy processing of member and partner transactions and rewards

bull Promote richer engagement with customers

Target the Most Valuable Customers

When establishing a successful loyalty program the first step is for the business to clearly define the target audience it plans to serve and ensuremdashthrough data-based metricsmdashthat this target audience is in fact more profitable than other customer segments The challenges in accomplishing this are twofold First companies must collect a substantial volume of information about customers before they can identify which ones are most valuable to the business Secondly companies must apply the appropriate scoring mechanism to identify the most valuable customersmdasha process that has always required a balancing act between science and art Scoring methods include recency frequency and monetary value (RFM) activity-based costing (ABC) customer lifetime value (CLV) and net promoter score (NPS)

By implementing a Siebel customer relationship management (CRM) data modelmdashalso called Siebel Universal Customer MastermdashSJ was able to collect aggregate and analyze customer data across each customer touchpoint to gain a 360-degree view of each customer This data included revenue and purchase transactions from the rail reservation system customer preference data from the member Web site service data from the contact center and credit history from financial systems

How Siebel CRM Enables

SJlsquos Customer Strategy

SJ evaluated several vendors

before deciding on Siebel to enable

its loyalty program Benefits of the

Siebel solution include

bull High scalability both up and down

bull Integration with more than

50 SJ systems

bull Customer insight provided to

front-line staff in real time

bull Rich analytic capabilities

bull Zero downtime in two years

7

After much internal debate over commonly used metrics SJ chose CLV as the score that reflected the right mix between customer satisfaction and profitability By deploying this measure SJ was able to use Siebel Loyalty Manager and Oracle Business Intelligence Standard Edition to quickly and easily segment customers based on their current value their potential to increase in value and the probability that they might defect

Establish Tiers and Offer Rewards That Customers Really Want

One of the key objectives of well-defined loyalty programs is to reward customers when they act in a way that improves their profitability to the company A recent study in the Journal of Consumer Research4 found that loyalty programs can make consumers feel more special by creating multitiered programs that tap into customersrsquo aspirations for higher status

With the flexibility enabled by Siebel Loyalty SJ has established three tiers and created a reward structure that recognizes the value of each member With this new structure SJ drives desired customer behavior by offering tangible rewards that are both attractive and attainable such as the ability to upgrade to First Class and to buy meals using points It even provides some rewards in real time to immediately recognize the most valuable customers and transactions In addition SJ offers intangible benefits such as ticketless travel lounge access free onboard internet connections and the ability to change a departure without rebooking By putting all these measures in place SJ has achieved more than 90 percent penetration into its primary target groups

Create Relevant Real-Time Personalized Offers Across Multiple Channels

SJ has leveraged the flexibility scalability and real-time capabilities of Siebel Marketing and Siebel Loyalty to create hundreds of personalized promotions executed simultaneously across multiple channels Quarterly SJ now executes more than 1 million unique promoshytional mailings including both traditional direct mail and e-mail

4 Xavier Dregraveze Joseph C Nunes ldquoFeeling Superior The Impact of Loyalty Program Structure on Consumersrsquo

Perceptions of Statusrdquo Journal of Consumer Research 35(2009) Print

8

ldquoWe wanted a platform that gave us the fastest path to achieve our

loyalty vision with minimal risk We looked at other competitors but

settled on [Oraclelsquos] Siebel because of its track record on achieving

value for its customersrdquo

Claes Lindholtz Director Customer Programs and Customer Analysis SJ

Siebel Marketing and Siebel Loyalty have also allowed SJ to run everything from the simplest to the most complex promotions For example one of SJrsquos simpler promotions offered members double points if they traveled during the low season In a more complex promotion SJ specified rules that awarded triple points to elite members if they purchased food onboard the train

In the future SJ plans to make ldquoheuristicrdquo promotional offers These incorporate analyses of a customerrsquos recent behaviormdashsuch as transactions or responses to special offersmdashwith predefined business rules to make offers in real time SJ plans to accomplish this with Oracle Real-Time Decisions which will enable SJ to offer the promotion that is most relevant to the member at the point of interaction and which has the greatest likelihood of success For example for members close to attaining a next-level tier or a particular reward Oracle Real-Time Decisions will notify them of that fact and suggest actions they can takemdashbased on their recent account activitymdashthat will help them attain that tierreward

Accurately Assess the Lifetime Value of Customers

Marketers would like to continually measure the effectiveness of their promotions and based on midcampaign feedback be able to change campaigns on the fly to increase their efficacy Oracle Marketing Analytics and Siebel Marketing allow SJ to take a disciplined approach in measuring the profitability of its customers based on the CLV metric Because of this SJ is able to proactively monitor the return on investment (ROI) of its marketing campaigns Indeed many recent campaignsmdashincluding the one designed to increase off-peak capacity utilizationmdashhave achieved ROIs of more than 300 percent

9

In addition SJ has implemented a closed-loop marketing environment that allows it to continuously improve and optimize the success of its loyalty program It is also measuring partner profitability Oracle Marketing Analytics is key to achieving both these goals

Support Easy Processing of Member and Partner Transactions and Rewards

The logistics of running a loyalty program can be difficult Performing accrual and redempshytion transactions and calculating point balances are time-consuming and complex operations requiring companies to aggregate and process data from multiple sources By automating their loyalty programs and making them touch-free companies can significantly reduce the costs of their loyalty programs with minimal investment

Siebel Loyalty Customer Portal empowers SJ loyalty program members to review their program status update their profiles enroll in promotions submit service inquiries and redeem rewardsmdashall without requiring assistance from an SJ employee Siebel Loyalty Partner Portal automates management of loyalty currency joint promotion design and execution transaction validation and partner billing and enrollment

By helping SJ to continue automating its loyalty processes these Oracle solutions are allowing SJ to achieve significant cost savings as well as the following benefits

bull Real-time systematic processing of accrual and redemption transactions

bull Seamless processing of tier upgrades and downgrades

bull Application of complex daily point-expiration rules across three tiers

bull Self-service portals for members and partners

bull Near-touch-free capability in loyalty operations resulting in reduced loyalty program operating costs

10

Promote Richer Engagement with Customers

Delivering superior products and services to customers and rewarding them when they make decisions that increase your profitability are the hallmarks of a successful loyalty program Yet to achieve deeper and richer customer engagement that transcends a mere rewards program companies need to empower everyone in the organization to act on behalf of the customer at every level This requires giving all customer-facing workers the right information about customers at the right time promoting an internal culture that encourages them to make proactive customer-centric decisions using that information and backing it all up with senior executive support

To enable a richer engagement with its customers throughout its operations SJ applied organizational change management techniques that mirrored the research of Jeffrey and Laurie Ford5 These techniques centered on boosting awareness (what needs to be done) returning to purpose (why do this) changing the changes (what can go wrong) and building participation and engagement (get buy-in)

Boosting awareness To begin SJ boosted awareness of its loyalty program by sending out mailers to all employees It then scheduled ldquotown hallrdquo sessions in all key corporate locations These meetings not only improved awareness of the loyalty program but also helped SJ management assess the level of resistance in each location

The Importance of

Customer Insight

SJ can now utilize customer

insight on several levels

bull StrategicmdashUtilize customer

insight in product development

and performance measurement

bull TacticalmdashEnhance capabilities with

insight-based offers and campaigns

throughout the customer lifecycle

bull OperationalmdashImprove ability to

meetmanage customer expectashy

tions and use the information to

adapt service

bull SituationalmdashIn the future

be able to give each customer a

tailored price based on insight

5 Jeffrey and Laurie Ford ldquoDecoding Resistance to Changerdquo Harvard Business Review April 2009

11

Returning to purpose The returning-to-purpose phasemdashthe explanation of why SJ had embarked on this initiativemdashsaw the launch of a campaign inspired by Time Magazinersquos 2006 ldquoPerson of the Yearrdquo award where the cover image that year included a Mylar reflective mirror SJ managements intent was to emphasize to frontline staff that they were the most important factor in building true customer loyalty

Changing the changes SJ devoted a significant amount of time anticipating potential risks and invested heavily in processes to ensure that barriers to adoption were successfully addressed

Building participation and engagement Both SJrsquos CEO and the senior vice president of business development agreed to personally sponsor the initiative which subsequently ensured the buy-in and engagement of divisional heads (for example the senior vice presidents of Sales and Onboard Staff) and front-line staff

Because the cultural change initiative was successful SJ was able to redesign critical customer-facing processes across its sales support and services functions in a way that improved the overall customer experience For example it was able to begin distributing tickets across multiple channels and introduce new value-added services such as onboard meals internet access and car rentals upon journeyrsquos end in response to demands of different customer segments

SJ also depends on Siebel Loyalty to provide 360-degree member information (including CLV) to deliver the right levels of support to members and their households Future plans call for SJ to deploy an integrated loyalty view across all customer touchpoints so that all customer-facing employees are aware of the value of each member Using predefined business rules in the Siebel solution employees will be able to tailor the travel experience to reflect membersrsquo preferences as well as value to the organization

12

Benefits of a Customer Focus for SJ

The SJ loyalty program has been a resounding success As of May 2009 the program has approximately 470000 members and has achieved a 90 percent penetration into its target population Swedish business travelers Today loyalty members produce significantly more revenue than nonmembers and are also more-satisfied customers according to a survey sponsored by SJ In addition SJ can run loyalty campaigns that achieve a 100 percent follow-up rate and up to a 25 percent conversion rate Among other benefits SJ has been able to improve the utilization of trainloads and thus the profitability of many routes

The company has also achieved significant progress on the customer satisfaction front with substantial improvements in both NPS and NKI scores Customer surveys point to increased loyalty with 32 percent of the surveyed customers saying they will increase the proportion of travel they do by train

Industry associations have recognized the impact the SJ loyalty program has had on SJ with multiple awards Gartner recognized SJ as a runner-up for the CRM Excellence award SJ also won the Golden Relationship Prize 2008 and the Golden Key Award for best CRM initiative of 2008

SJ has achieved payback on this initiative within two years with an ROI of more than 100 percent (see Figure 4) The project timeline is pictured in Figure 5 and the overall benefits are captured in Table 1

The Metrics of Success

SJs Loyalty Program

bull Approximately 470000 members

bull 90 percent penetration into

target market

bull Loyalty campaigns achieve a

100 percent follow-up rate and up

to a 25 percent conversion rate

bull Loyalty program members

produce significantly more

revenue than nonmembers

bull Increased customer loyalty

32 percent say they will increase

the proportion of travel they do

by train

bull Improved trainload utilization

and route profitability

bull Project payback within two years

ROI of more than 100 percent

bull Recognition Gartner CRM

Excellence runner-up Golden

Relationship Prize 2008 Golden

Key Award

13

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

ldquoOur customers are the platform for growth and profitability

Thatrsquos why we are focusing on customers more than everrdquo

Jan Forsberg CEO SJ

Rail Industry Trends

Sweden has a population of more than 9 million people scattered throughout a geographic area of just under 174000 square miles Thatrsquos the equivalent of the population of New York City residing in a territory the size of California With 85 percent of those people living in urban areas the country has one of the lowest population-density ratios in the world only 52 people per square mile For centuries this has posed unique transportation challenges for Sweden

For many decades the Swedish rail industry was open to competition Private investors first broke ground on a railway system in Sweden in the mid 1850s and until 1937 the system was still partially owned by private enterprises1 In the early days railway companies competed not only with other railway enterprises but in an open transportation market that included travel by boat and horseback At first railways had a strong competitive advantage over other forms of transportation due to lower prices shorter trip durations and scheduling flexibility but that began changing in the 1930s when cars buses trucks ships and aircraft became mainstream forms of transportation

By the 1990s travel by rail was rapidly declining as citizens increasingly chose other modes of transportation By 20022 rail traffic had dropped to only 7 percent of total passenger traffic (see Figure 1)

Figure 1 Market Share of Rail Transport for Passenger Traffic3

1043

864 733 692 685 683 704

1970 1980 1985 1991 1994 1998 2002

1 Anders Edstrom Making Sense of BusinessmdashReorganizing Processes in Swedish Rail 1997 2 Keith Barrow SJ Back from the Brink International Railway Journal October 2007 3 CEMT Evolution des Transports OECD Countries

3

SJ at a Glance

SJ makes 110000 journeys daily

to 220 destinations and serves 24

million customers each year

Employees

4000

Net Sales

euro09 billion

Profit (2008)

euro65 million

ldquoEvery time I take an SJ train I reflect on the 150-year tradition and historyrdquo

SJ passenger Stockholm to Goumlteborg April 2009

For example cars were used for 67 percent of all journeys greater than 100 kilometers while trains were used for only 15 percent (see Figure 2) To survive Swedenrsquos railway systemmdashnow called SJ and wholly owned and operated by the governmentmdashwould have to lure passengers away from cars and airplanes

Figure 2 Market Share of Journeys More Than 100km (2007)

Car 67

Air 13

Coach 5

Train 15

Complicating matters further was the upcoming deregulation of the passenger rail market in Sweden Since its inception SJ had had exclusive rights to operate trains on select long-distance routes such as Stockholm to GoumlteborgMalmoumlSundsvall and Goumlteborg to MalmoumlCopenhagen But the Swedish government planned to open these routes to other passenger train companiesmdashmost notably United Kingdomndashbased Arriva and First Group Francendashbased Keolis and Veolia Germanyndashbased DB Norwayrsquos NSB and Danish DSB

4

The Turnaround Plan

In an attempt to rescue the company from bankruptcy SJ appointed Jan Forsberg as CEO and Jan Olson as senior vice president of business development to create a turnaround program The program was built upon three key objectives increasing revenue growth improving service quality and providing customers with more choices These goals translated into a three-phase implementation plan that included reducing costs enhancing productsand implementing a customer-centric business strategy (see Figure 3)

This case study focuses on the third phase of the turnaround strategy customer centricity As part of this third and critical phase a high-powered cross-functional team was createdmdashled by Claes Lindholtzmdashwith the objective of establishing enterprisewide CRM initiatives that would win the hearts and minds of SJs most valuable customers

Figure 3 SJrsquos Phased Implementation Strategy

Business Goals of

SJs Customer-Centric

Business Strategy

bull Make SJ more profitable

modern and customer-centric

bull Increase revenue up-sell

and cross-sell

bull Increase the customers

lifecycle with SJ

bull Recruit and maintain

the ldquorightrdquo customers

bull Improve customer satisfaction

Customer Centricity

Product Enhancements

Cost Improvements

2000 2002 2004 2006 2008

5

ldquoTargeting the most valuable customers was like searching

for a needle in a haystack before the CRM initiativerdquo

Jan Olson Senior Vice President Business Development SJ

Obstacles on the Road to Customer Centricity

Setting a goal for true customer centricity is one thingmdashachieving it is another especially for a 150-year-old public sector company that has traditionally had a monopoly in its market An obvious first step creating a loyalty program SJ did not have one despite the fact thatcompanies in the travel industrymdashespecially airlines and hotelsmdashhave long used such programs to improve customer retention and increase average revenue per customer SJ faced a number of obstacles to implementing a successful loyalty program

bull Missing segmentation and analytics tools Management knew anecdotally that a small group of customers on select routes accounted for most of its profits However the company had only limited understanding of even the most basic facts about its customers due to fragmented processes for collecting information and limited analytical capabilities

For example SJ trains that began service at 555 am were running at significantly lower capacity than the 600 am trains which were 100 percent full But because SJ didnrsquot have an effective way to know who its customers were what was important to them and which variables impacted their transportation decisions executives didnrsquot know how to start changing the organizationrsquos behavior

bull Failure to differentiate service levels for the most valuable customers To increase customer retention SJ knew it had to differentiate and personalize the services it offered to different customer segments For example many transportation providers offer value-added services such as specialized meals lounge services and highly trained frontline staff to engage with their most valuable customers

For a public sector company such as SJ which had traditionally provided only basic single-tier transportation services this was a challenge Delivering differentiated services involves aligning sales customer support and onboard operationsmdashsomething that was beyond the existing capabilities of SJrsquos technology process and personnel systems

bull Lack of an adaptive and agile technology infrastructure SJrsquos technology infrastructure was not capable of supporting its vision of a customer-centric organization Customer information was spread across multiple systems making it impossible to extract required data from transactional systems to get a 360-degree view of customers and implement closed-loop sales and marketing processes

6

SJlsquos Customer-Centric Solution

SJ needed a technology solution that would support its customer-centric strategy and help it overcome each of these obstacles It found such a solution in Oraclersquos Siebel Loyalty which enabled SJ to

bull Target the most valuable customers

bull Establish tiers and other rewards that customers really want

bull Create relevant real-time personalized offers across multiple channels

bull Accurately assess the lifetime value of customers

bull Support easy processing of member and partner transactions and rewards

bull Promote richer engagement with customers

Target the Most Valuable Customers

When establishing a successful loyalty program the first step is for the business to clearly define the target audience it plans to serve and ensuremdashthrough data-based metricsmdashthat this target audience is in fact more profitable than other customer segments The challenges in accomplishing this are twofold First companies must collect a substantial volume of information about customers before they can identify which ones are most valuable to the business Secondly companies must apply the appropriate scoring mechanism to identify the most valuable customersmdasha process that has always required a balancing act between science and art Scoring methods include recency frequency and monetary value (RFM) activity-based costing (ABC) customer lifetime value (CLV) and net promoter score (NPS)

By implementing a Siebel customer relationship management (CRM) data modelmdashalso called Siebel Universal Customer MastermdashSJ was able to collect aggregate and analyze customer data across each customer touchpoint to gain a 360-degree view of each customer This data included revenue and purchase transactions from the rail reservation system customer preference data from the member Web site service data from the contact center and credit history from financial systems

How Siebel CRM Enables

SJlsquos Customer Strategy

SJ evaluated several vendors

before deciding on Siebel to enable

its loyalty program Benefits of the

Siebel solution include

bull High scalability both up and down

bull Integration with more than

50 SJ systems

bull Customer insight provided to

front-line staff in real time

bull Rich analytic capabilities

bull Zero downtime in two years

7

After much internal debate over commonly used metrics SJ chose CLV as the score that reflected the right mix between customer satisfaction and profitability By deploying this measure SJ was able to use Siebel Loyalty Manager and Oracle Business Intelligence Standard Edition to quickly and easily segment customers based on their current value their potential to increase in value and the probability that they might defect

Establish Tiers and Offer Rewards That Customers Really Want

One of the key objectives of well-defined loyalty programs is to reward customers when they act in a way that improves their profitability to the company A recent study in the Journal of Consumer Research4 found that loyalty programs can make consumers feel more special by creating multitiered programs that tap into customersrsquo aspirations for higher status

With the flexibility enabled by Siebel Loyalty SJ has established three tiers and created a reward structure that recognizes the value of each member With this new structure SJ drives desired customer behavior by offering tangible rewards that are both attractive and attainable such as the ability to upgrade to First Class and to buy meals using points It even provides some rewards in real time to immediately recognize the most valuable customers and transactions In addition SJ offers intangible benefits such as ticketless travel lounge access free onboard internet connections and the ability to change a departure without rebooking By putting all these measures in place SJ has achieved more than 90 percent penetration into its primary target groups

Create Relevant Real-Time Personalized Offers Across Multiple Channels

SJ has leveraged the flexibility scalability and real-time capabilities of Siebel Marketing and Siebel Loyalty to create hundreds of personalized promotions executed simultaneously across multiple channels Quarterly SJ now executes more than 1 million unique promoshytional mailings including both traditional direct mail and e-mail

4 Xavier Dregraveze Joseph C Nunes ldquoFeeling Superior The Impact of Loyalty Program Structure on Consumersrsquo

Perceptions of Statusrdquo Journal of Consumer Research 35(2009) Print

8

ldquoWe wanted a platform that gave us the fastest path to achieve our

loyalty vision with minimal risk We looked at other competitors but

settled on [Oraclelsquos] Siebel because of its track record on achieving

value for its customersrdquo

Claes Lindholtz Director Customer Programs and Customer Analysis SJ

Siebel Marketing and Siebel Loyalty have also allowed SJ to run everything from the simplest to the most complex promotions For example one of SJrsquos simpler promotions offered members double points if they traveled during the low season In a more complex promotion SJ specified rules that awarded triple points to elite members if they purchased food onboard the train

In the future SJ plans to make ldquoheuristicrdquo promotional offers These incorporate analyses of a customerrsquos recent behaviormdashsuch as transactions or responses to special offersmdashwith predefined business rules to make offers in real time SJ plans to accomplish this with Oracle Real-Time Decisions which will enable SJ to offer the promotion that is most relevant to the member at the point of interaction and which has the greatest likelihood of success For example for members close to attaining a next-level tier or a particular reward Oracle Real-Time Decisions will notify them of that fact and suggest actions they can takemdashbased on their recent account activitymdashthat will help them attain that tierreward

Accurately Assess the Lifetime Value of Customers

Marketers would like to continually measure the effectiveness of their promotions and based on midcampaign feedback be able to change campaigns on the fly to increase their efficacy Oracle Marketing Analytics and Siebel Marketing allow SJ to take a disciplined approach in measuring the profitability of its customers based on the CLV metric Because of this SJ is able to proactively monitor the return on investment (ROI) of its marketing campaigns Indeed many recent campaignsmdashincluding the one designed to increase off-peak capacity utilizationmdashhave achieved ROIs of more than 300 percent

9

In addition SJ has implemented a closed-loop marketing environment that allows it to continuously improve and optimize the success of its loyalty program It is also measuring partner profitability Oracle Marketing Analytics is key to achieving both these goals

Support Easy Processing of Member and Partner Transactions and Rewards

The logistics of running a loyalty program can be difficult Performing accrual and redempshytion transactions and calculating point balances are time-consuming and complex operations requiring companies to aggregate and process data from multiple sources By automating their loyalty programs and making them touch-free companies can significantly reduce the costs of their loyalty programs with minimal investment

Siebel Loyalty Customer Portal empowers SJ loyalty program members to review their program status update their profiles enroll in promotions submit service inquiries and redeem rewardsmdashall without requiring assistance from an SJ employee Siebel Loyalty Partner Portal automates management of loyalty currency joint promotion design and execution transaction validation and partner billing and enrollment

By helping SJ to continue automating its loyalty processes these Oracle solutions are allowing SJ to achieve significant cost savings as well as the following benefits

bull Real-time systematic processing of accrual and redemption transactions

bull Seamless processing of tier upgrades and downgrades

bull Application of complex daily point-expiration rules across three tiers

bull Self-service portals for members and partners

bull Near-touch-free capability in loyalty operations resulting in reduced loyalty program operating costs

10

Promote Richer Engagement with Customers

Delivering superior products and services to customers and rewarding them when they make decisions that increase your profitability are the hallmarks of a successful loyalty program Yet to achieve deeper and richer customer engagement that transcends a mere rewards program companies need to empower everyone in the organization to act on behalf of the customer at every level This requires giving all customer-facing workers the right information about customers at the right time promoting an internal culture that encourages them to make proactive customer-centric decisions using that information and backing it all up with senior executive support

To enable a richer engagement with its customers throughout its operations SJ applied organizational change management techniques that mirrored the research of Jeffrey and Laurie Ford5 These techniques centered on boosting awareness (what needs to be done) returning to purpose (why do this) changing the changes (what can go wrong) and building participation and engagement (get buy-in)

Boosting awareness To begin SJ boosted awareness of its loyalty program by sending out mailers to all employees It then scheduled ldquotown hallrdquo sessions in all key corporate locations These meetings not only improved awareness of the loyalty program but also helped SJ management assess the level of resistance in each location

The Importance of

Customer Insight

SJ can now utilize customer

insight on several levels

bull StrategicmdashUtilize customer

insight in product development

and performance measurement

bull TacticalmdashEnhance capabilities with

insight-based offers and campaigns

throughout the customer lifecycle

bull OperationalmdashImprove ability to

meetmanage customer expectashy

tions and use the information to

adapt service

bull SituationalmdashIn the future

be able to give each customer a

tailored price based on insight

5 Jeffrey and Laurie Ford ldquoDecoding Resistance to Changerdquo Harvard Business Review April 2009

11

Returning to purpose The returning-to-purpose phasemdashthe explanation of why SJ had embarked on this initiativemdashsaw the launch of a campaign inspired by Time Magazinersquos 2006 ldquoPerson of the Yearrdquo award where the cover image that year included a Mylar reflective mirror SJ managements intent was to emphasize to frontline staff that they were the most important factor in building true customer loyalty

Changing the changes SJ devoted a significant amount of time anticipating potential risks and invested heavily in processes to ensure that barriers to adoption were successfully addressed

Building participation and engagement Both SJrsquos CEO and the senior vice president of business development agreed to personally sponsor the initiative which subsequently ensured the buy-in and engagement of divisional heads (for example the senior vice presidents of Sales and Onboard Staff) and front-line staff

Because the cultural change initiative was successful SJ was able to redesign critical customer-facing processes across its sales support and services functions in a way that improved the overall customer experience For example it was able to begin distributing tickets across multiple channels and introduce new value-added services such as onboard meals internet access and car rentals upon journeyrsquos end in response to demands of different customer segments

SJ also depends on Siebel Loyalty to provide 360-degree member information (including CLV) to deliver the right levels of support to members and their households Future plans call for SJ to deploy an integrated loyalty view across all customer touchpoints so that all customer-facing employees are aware of the value of each member Using predefined business rules in the Siebel solution employees will be able to tailor the travel experience to reflect membersrsquo preferences as well as value to the organization

12

Benefits of a Customer Focus for SJ

The SJ loyalty program has been a resounding success As of May 2009 the program has approximately 470000 members and has achieved a 90 percent penetration into its target population Swedish business travelers Today loyalty members produce significantly more revenue than nonmembers and are also more-satisfied customers according to a survey sponsored by SJ In addition SJ can run loyalty campaigns that achieve a 100 percent follow-up rate and up to a 25 percent conversion rate Among other benefits SJ has been able to improve the utilization of trainloads and thus the profitability of many routes

The company has also achieved significant progress on the customer satisfaction front with substantial improvements in both NPS and NKI scores Customer surveys point to increased loyalty with 32 percent of the surveyed customers saying they will increase the proportion of travel they do by train

Industry associations have recognized the impact the SJ loyalty program has had on SJ with multiple awards Gartner recognized SJ as a runner-up for the CRM Excellence award SJ also won the Golden Relationship Prize 2008 and the Golden Key Award for best CRM initiative of 2008

SJ has achieved payback on this initiative within two years with an ROI of more than 100 percent (see Figure 4) The project timeline is pictured in Figure 5 and the overall benefits are captured in Table 1

The Metrics of Success

SJs Loyalty Program

bull Approximately 470000 members

bull 90 percent penetration into

target market

bull Loyalty campaigns achieve a

100 percent follow-up rate and up

to a 25 percent conversion rate

bull Loyalty program members

produce significantly more

revenue than nonmembers

bull Increased customer loyalty

32 percent say they will increase

the proportion of travel they do

by train

bull Improved trainload utilization

and route profitability

bull Project payback within two years

ROI of more than 100 percent

bull Recognition Gartner CRM

Excellence runner-up Golden

Relationship Prize 2008 Golden

Key Award

13

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

SJ at a Glance

SJ makes 110000 journeys daily

to 220 destinations and serves 24

million customers each year

Employees

4000

Net Sales

euro09 billion

Profit (2008)

euro65 million

ldquoEvery time I take an SJ train I reflect on the 150-year tradition and historyrdquo

SJ passenger Stockholm to Goumlteborg April 2009

For example cars were used for 67 percent of all journeys greater than 100 kilometers while trains were used for only 15 percent (see Figure 2) To survive Swedenrsquos railway systemmdashnow called SJ and wholly owned and operated by the governmentmdashwould have to lure passengers away from cars and airplanes

Figure 2 Market Share of Journeys More Than 100km (2007)

Car 67

Air 13

Coach 5

Train 15

Complicating matters further was the upcoming deregulation of the passenger rail market in Sweden Since its inception SJ had had exclusive rights to operate trains on select long-distance routes such as Stockholm to GoumlteborgMalmoumlSundsvall and Goumlteborg to MalmoumlCopenhagen But the Swedish government planned to open these routes to other passenger train companiesmdashmost notably United Kingdomndashbased Arriva and First Group Francendashbased Keolis and Veolia Germanyndashbased DB Norwayrsquos NSB and Danish DSB

4

The Turnaround Plan

In an attempt to rescue the company from bankruptcy SJ appointed Jan Forsberg as CEO and Jan Olson as senior vice president of business development to create a turnaround program The program was built upon three key objectives increasing revenue growth improving service quality and providing customers with more choices These goals translated into a three-phase implementation plan that included reducing costs enhancing productsand implementing a customer-centric business strategy (see Figure 3)

This case study focuses on the third phase of the turnaround strategy customer centricity As part of this third and critical phase a high-powered cross-functional team was createdmdashled by Claes Lindholtzmdashwith the objective of establishing enterprisewide CRM initiatives that would win the hearts and minds of SJs most valuable customers

Figure 3 SJrsquos Phased Implementation Strategy

Business Goals of

SJs Customer-Centric

Business Strategy

bull Make SJ more profitable

modern and customer-centric

bull Increase revenue up-sell

and cross-sell

bull Increase the customers

lifecycle with SJ

bull Recruit and maintain

the ldquorightrdquo customers

bull Improve customer satisfaction

Customer Centricity

Product Enhancements

Cost Improvements

2000 2002 2004 2006 2008

5

ldquoTargeting the most valuable customers was like searching

for a needle in a haystack before the CRM initiativerdquo

Jan Olson Senior Vice President Business Development SJ

Obstacles on the Road to Customer Centricity

Setting a goal for true customer centricity is one thingmdashachieving it is another especially for a 150-year-old public sector company that has traditionally had a monopoly in its market An obvious first step creating a loyalty program SJ did not have one despite the fact thatcompanies in the travel industrymdashespecially airlines and hotelsmdashhave long used such programs to improve customer retention and increase average revenue per customer SJ faced a number of obstacles to implementing a successful loyalty program

bull Missing segmentation and analytics tools Management knew anecdotally that a small group of customers on select routes accounted for most of its profits However the company had only limited understanding of even the most basic facts about its customers due to fragmented processes for collecting information and limited analytical capabilities

For example SJ trains that began service at 555 am were running at significantly lower capacity than the 600 am trains which were 100 percent full But because SJ didnrsquot have an effective way to know who its customers were what was important to them and which variables impacted their transportation decisions executives didnrsquot know how to start changing the organizationrsquos behavior

bull Failure to differentiate service levels for the most valuable customers To increase customer retention SJ knew it had to differentiate and personalize the services it offered to different customer segments For example many transportation providers offer value-added services such as specialized meals lounge services and highly trained frontline staff to engage with their most valuable customers

For a public sector company such as SJ which had traditionally provided only basic single-tier transportation services this was a challenge Delivering differentiated services involves aligning sales customer support and onboard operationsmdashsomething that was beyond the existing capabilities of SJrsquos technology process and personnel systems

bull Lack of an adaptive and agile technology infrastructure SJrsquos technology infrastructure was not capable of supporting its vision of a customer-centric organization Customer information was spread across multiple systems making it impossible to extract required data from transactional systems to get a 360-degree view of customers and implement closed-loop sales and marketing processes

6

SJlsquos Customer-Centric Solution

SJ needed a technology solution that would support its customer-centric strategy and help it overcome each of these obstacles It found such a solution in Oraclersquos Siebel Loyalty which enabled SJ to

bull Target the most valuable customers

bull Establish tiers and other rewards that customers really want

bull Create relevant real-time personalized offers across multiple channels

bull Accurately assess the lifetime value of customers

bull Support easy processing of member and partner transactions and rewards

bull Promote richer engagement with customers

Target the Most Valuable Customers

When establishing a successful loyalty program the first step is for the business to clearly define the target audience it plans to serve and ensuremdashthrough data-based metricsmdashthat this target audience is in fact more profitable than other customer segments The challenges in accomplishing this are twofold First companies must collect a substantial volume of information about customers before they can identify which ones are most valuable to the business Secondly companies must apply the appropriate scoring mechanism to identify the most valuable customersmdasha process that has always required a balancing act between science and art Scoring methods include recency frequency and monetary value (RFM) activity-based costing (ABC) customer lifetime value (CLV) and net promoter score (NPS)

By implementing a Siebel customer relationship management (CRM) data modelmdashalso called Siebel Universal Customer MastermdashSJ was able to collect aggregate and analyze customer data across each customer touchpoint to gain a 360-degree view of each customer This data included revenue and purchase transactions from the rail reservation system customer preference data from the member Web site service data from the contact center and credit history from financial systems

How Siebel CRM Enables

SJlsquos Customer Strategy

SJ evaluated several vendors

before deciding on Siebel to enable

its loyalty program Benefits of the

Siebel solution include

bull High scalability both up and down

bull Integration with more than

50 SJ systems

bull Customer insight provided to

front-line staff in real time

bull Rich analytic capabilities

bull Zero downtime in two years

7

After much internal debate over commonly used metrics SJ chose CLV as the score that reflected the right mix between customer satisfaction and profitability By deploying this measure SJ was able to use Siebel Loyalty Manager and Oracle Business Intelligence Standard Edition to quickly and easily segment customers based on their current value their potential to increase in value and the probability that they might defect

Establish Tiers and Offer Rewards That Customers Really Want

One of the key objectives of well-defined loyalty programs is to reward customers when they act in a way that improves their profitability to the company A recent study in the Journal of Consumer Research4 found that loyalty programs can make consumers feel more special by creating multitiered programs that tap into customersrsquo aspirations for higher status

With the flexibility enabled by Siebel Loyalty SJ has established three tiers and created a reward structure that recognizes the value of each member With this new structure SJ drives desired customer behavior by offering tangible rewards that are both attractive and attainable such as the ability to upgrade to First Class and to buy meals using points It even provides some rewards in real time to immediately recognize the most valuable customers and transactions In addition SJ offers intangible benefits such as ticketless travel lounge access free onboard internet connections and the ability to change a departure without rebooking By putting all these measures in place SJ has achieved more than 90 percent penetration into its primary target groups

Create Relevant Real-Time Personalized Offers Across Multiple Channels

SJ has leveraged the flexibility scalability and real-time capabilities of Siebel Marketing and Siebel Loyalty to create hundreds of personalized promotions executed simultaneously across multiple channels Quarterly SJ now executes more than 1 million unique promoshytional mailings including both traditional direct mail and e-mail

4 Xavier Dregraveze Joseph C Nunes ldquoFeeling Superior The Impact of Loyalty Program Structure on Consumersrsquo

Perceptions of Statusrdquo Journal of Consumer Research 35(2009) Print

8

ldquoWe wanted a platform that gave us the fastest path to achieve our

loyalty vision with minimal risk We looked at other competitors but

settled on [Oraclelsquos] Siebel because of its track record on achieving

value for its customersrdquo

Claes Lindholtz Director Customer Programs and Customer Analysis SJ

Siebel Marketing and Siebel Loyalty have also allowed SJ to run everything from the simplest to the most complex promotions For example one of SJrsquos simpler promotions offered members double points if they traveled during the low season In a more complex promotion SJ specified rules that awarded triple points to elite members if they purchased food onboard the train

In the future SJ plans to make ldquoheuristicrdquo promotional offers These incorporate analyses of a customerrsquos recent behaviormdashsuch as transactions or responses to special offersmdashwith predefined business rules to make offers in real time SJ plans to accomplish this with Oracle Real-Time Decisions which will enable SJ to offer the promotion that is most relevant to the member at the point of interaction and which has the greatest likelihood of success For example for members close to attaining a next-level tier or a particular reward Oracle Real-Time Decisions will notify them of that fact and suggest actions they can takemdashbased on their recent account activitymdashthat will help them attain that tierreward

Accurately Assess the Lifetime Value of Customers

Marketers would like to continually measure the effectiveness of their promotions and based on midcampaign feedback be able to change campaigns on the fly to increase their efficacy Oracle Marketing Analytics and Siebel Marketing allow SJ to take a disciplined approach in measuring the profitability of its customers based on the CLV metric Because of this SJ is able to proactively monitor the return on investment (ROI) of its marketing campaigns Indeed many recent campaignsmdashincluding the one designed to increase off-peak capacity utilizationmdashhave achieved ROIs of more than 300 percent

9

In addition SJ has implemented a closed-loop marketing environment that allows it to continuously improve and optimize the success of its loyalty program It is also measuring partner profitability Oracle Marketing Analytics is key to achieving both these goals

Support Easy Processing of Member and Partner Transactions and Rewards

The logistics of running a loyalty program can be difficult Performing accrual and redempshytion transactions and calculating point balances are time-consuming and complex operations requiring companies to aggregate and process data from multiple sources By automating their loyalty programs and making them touch-free companies can significantly reduce the costs of their loyalty programs with minimal investment

Siebel Loyalty Customer Portal empowers SJ loyalty program members to review their program status update their profiles enroll in promotions submit service inquiries and redeem rewardsmdashall without requiring assistance from an SJ employee Siebel Loyalty Partner Portal automates management of loyalty currency joint promotion design and execution transaction validation and partner billing and enrollment

By helping SJ to continue automating its loyalty processes these Oracle solutions are allowing SJ to achieve significant cost savings as well as the following benefits

bull Real-time systematic processing of accrual and redemption transactions

bull Seamless processing of tier upgrades and downgrades

bull Application of complex daily point-expiration rules across three tiers

bull Self-service portals for members and partners

bull Near-touch-free capability in loyalty operations resulting in reduced loyalty program operating costs

10

Promote Richer Engagement with Customers

Delivering superior products and services to customers and rewarding them when they make decisions that increase your profitability are the hallmarks of a successful loyalty program Yet to achieve deeper and richer customer engagement that transcends a mere rewards program companies need to empower everyone in the organization to act on behalf of the customer at every level This requires giving all customer-facing workers the right information about customers at the right time promoting an internal culture that encourages them to make proactive customer-centric decisions using that information and backing it all up with senior executive support

To enable a richer engagement with its customers throughout its operations SJ applied organizational change management techniques that mirrored the research of Jeffrey and Laurie Ford5 These techniques centered on boosting awareness (what needs to be done) returning to purpose (why do this) changing the changes (what can go wrong) and building participation and engagement (get buy-in)

Boosting awareness To begin SJ boosted awareness of its loyalty program by sending out mailers to all employees It then scheduled ldquotown hallrdquo sessions in all key corporate locations These meetings not only improved awareness of the loyalty program but also helped SJ management assess the level of resistance in each location

The Importance of

Customer Insight

SJ can now utilize customer

insight on several levels

bull StrategicmdashUtilize customer

insight in product development

and performance measurement

bull TacticalmdashEnhance capabilities with

insight-based offers and campaigns

throughout the customer lifecycle

bull OperationalmdashImprove ability to

meetmanage customer expectashy

tions and use the information to

adapt service

bull SituationalmdashIn the future

be able to give each customer a

tailored price based on insight

5 Jeffrey and Laurie Ford ldquoDecoding Resistance to Changerdquo Harvard Business Review April 2009

11

Returning to purpose The returning-to-purpose phasemdashthe explanation of why SJ had embarked on this initiativemdashsaw the launch of a campaign inspired by Time Magazinersquos 2006 ldquoPerson of the Yearrdquo award where the cover image that year included a Mylar reflective mirror SJ managements intent was to emphasize to frontline staff that they were the most important factor in building true customer loyalty

Changing the changes SJ devoted a significant amount of time anticipating potential risks and invested heavily in processes to ensure that barriers to adoption were successfully addressed

Building participation and engagement Both SJrsquos CEO and the senior vice president of business development agreed to personally sponsor the initiative which subsequently ensured the buy-in and engagement of divisional heads (for example the senior vice presidents of Sales and Onboard Staff) and front-line staff

Because the cultural change initiative was successful SJ was able to redesign critical customer-facing processes across its sales support and services functions in a way that improved the overall customer experience For example it was able to begin distributing tickets across multiple channels and introduce new value-added services such as onboard meals internet access and car rentals upon journeyrsquos end in response to demands of different customer segments

SJ also depends on Siebel Loyalty to provide 360-degree member information (including CLV) to deliver the right levels of support to members and their households Future plans call for SJ to deploy an integrated loyalty view across all customer touchpoints so that all customer-facing employees are aware of the value of each member Using predefined business rules in the Siebel solution employees will be able to tailor the travel experience to reflect membersrsquo preferences as well as value to the organization

12

Benefits of a Customer Focus for SJ

The SJ loyalty program has been a resounding success As of May 2009 the program has approximately 470000 members and has achieved a 90 percent penetration into its target population Swedish business travelers Today loyalty members produce significantly more revenue than nonmembers and are also more-satisfied customers according to a survey sponsored by SJ In addition SJ can run loyalty campaigns that achieve a 100 percent follow-up rate and up to a 25 percent conversion rate Among other benefits SJ has been able to improve the utilization of trainloads and thus the profitability of many routes

The company has also achieved significant progress on the customer satisfaction front with substantial improvements in both NPS and NKI scores Customer surveys point to increased loyalty with 32 percent of the surveyed customers saying they will increase the proportion of travel they do by train

Industry associations have recognized the impact the SJ loyalty program has had on SJ with multiple awards Gartner recognized SJ as a runner-up for the CRM Excellence award SJ also won the Golden Relationship Prize 2008 and the Golden Key Award for best CRM initiative of 2008

SJ has achieved payback on this initiative within two years with an ROI of more than 100 percent (see Figure 4) The project timeline is pictured in Figure 5 and the overall benefits are captured in Table 1

The Metrics of Success

SJs Loyalty Program

bull Approximately 470000 members

bull 90 percent penetration into

target market

bull Loyalty campaigns achieve a

100 percent follow-up rate and up

to a 25 percent conversion rate

bull Loyalty program members

produce significantly more

revenue than nonmembers

bull Increased customer loyalty

32 percent say they will increase

the proportion of travel they do

by train

bull Improved trainload utilization

and route profitability

bull Project payback within two years

ROI of more than 100 percent

bull Recognition Gartner CRM

Excellence runner-up Golden

Relationship Prize 2008 Golden

Key Award

13

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

The Turnaround Plan

In an attempt to rescue the company from bankruptcy SJ appointed Jan Forsberg as CEO and Jan Olson as senior vice president of business development to create a turnaround program The program was built upon three key objectives increasing revenue growth improving service quality and providing customers with more choices These goals translated into a three-phase implementation plan that included reducing costs enhancing productsand implementing a customer-centric business strategy (see Figure 3)

This case study focuses on the third phase of the turnaround strategy customer centricity As part of this third and critical phase a high-powered cross-functional team was createdmdashled by Claes Lindholtzmdashwith the objective of establishing enterprisewide CRM initiatives that would win the hearts and minds of SJs most valuable customers

Figure 3 SJrsquos Phased Implementation Strategy

Business Goals of

SJs Customer-Centric

Business Strategy

bull Make SJ more profitable

modern and customer-centric

bull Increase revenue up-sell

and cross-sell

bull Increase the customers

lifecycle with SJ

bull Recruit and maintain

the ldquorightrdquo customers

bull Improve customer satisfaction

Customer Centricity

Product Enhancements

Cost Improvements

2000 2002 2004 2006 2008

5

ldquoTargeting the most valuable customers was like searching

for a needle in a haystack before the CRM initiativerdquo

Jan Olson Senior Vice President Business Development SJ

Obstacles on the Road to Customer Centricity

Setting a goal for true customer centricity is one thingmdashachieving it is another especially for a 150-year-old public sector company that has traditionally had a monopoly in its market An obvious first step creating a loyalty program SJ did not have one despite the fact thatcompanies in the travel industrymdashespecially airlines and hotelsmdashhave long used such programs to improve customer retention and increase average revenue per customer SJ faced a number of obstacles to implementing a successful loyalty program

bull Missing segmentation and analytics tools Management knew anecdotally that a small group of customers on select routes accounted for most of its profits However the company had only limited understanding of even the most basic facts about its customers due to fragmented processes for collecting information and limited analytical capabilities

For example SJ trains that began service at 555 am were running at significantly lower capacity than the 600 am trains which were 100 percent full But because SJ didnrsquot have an effective way to know who its customers were what was important to them and which variables impacted their transportation decisions executives didnrsquot know how to start changing the organizationrsquos behavior

bull Failure to differentiate service levels for the most valuable customers To increase customer retention SJ knew it had to differentiate and personalize the services it offered to different customer segments For example many transportation providers offer value-added services such as specialized meals lounge services and highly trained frontline staff to engage with their most valuable customers

For a public sector company such as SJ which had traditionally provided only basic single-tier transportation services this was a challenge Delivering differentiated services involves aligning sales customer support and onboard operationsmdashsomething that was beyond the existing capabilities of SJrsquos technology process and personnel systems

bull Lack of an adaptive and agile technology infrastructure SJrsquos technology infrastructure was not capable of supporting its vision of a customer-centric organization Customer information was spread across multiple systems making it impossible to extract required data from transactional systems to get a 360-degree view of customers and implement closed-loop sales and marketing processes

6

SJlsquos Customer-Centric Solution

SJ needed a technology solution that would support its customer-centric strategy and help it overcome each of these obstacles It found such a solution in Oraclersquos Siebel Loyalty which enabled SJ to

bull Target the most valuable customers

bull Establish tiers and other rewards that customers really want

bull Create relevant real-time personalized offers across multiple channels

bull Accurately assess the lifetime value of customers

bull Support easy processing of member and partner transactions and rewards

bull Promote richer engagement with customers

Target the Most Valuable Customers

When establishing a successful loyalty program the first step is for the business to clearly define the target audience it plans to serve and ensuremdashthrough data-based metricsmdashthat this target audience is in fact more profitable than other customer segments The challenges in accomplishing this are twofold First companies must collect a substantial volume of information about customers before they can identify which ones are most valuable to the business Secondly companies must apply the appropriate scoring mechanism to identify the most valuable customersmdasha process that has always required a balancing act between science and art Scoring methods include recency frequency and monetary value (RFM) activity-based costing (ABC) customer lifetime value (CLV) and net promoter score (NPS)

By implementing a Siebel customer relationship management (CRM) data modelmdashalso called Siebel Universal Customer MastermdashSJ was able to collect aggregate and analyze customer data across each customer touchpoint to gain a 360-degree view of each customer This data included revenue and purchase transactions from the rail reservation system customer preference data from the member Web site service data from the contact center and credit history from financial systems

How Siebel CRM Enables

SJlsquos Customer Strategy

SJ evaluated several vendors

before deciding on Siebel to enable

its loyalty program Benefits of the

Siebel solution include

bull High scalability both up and down

bull Integration with more than

50 SJ systems

bull Customer insight provided to

front-line staff in real time

bull Rich analytic capabilities

bull Zero downtime in two years

7

After much internal debate over commonly used metrics SJ chose CLV as the score that reflected the right mix between customer satisfaction and profitability By deploying this measure SJ was able to use Siebel Loyalty Manager and Oracle Business Intelligence Standard Edition to quickly and easily segment customers based on their current value their potential to increase in value and the probability that they might defect

Establish Tiers and Offer Rewards That Customers Really Want

One of the key objectives of well-defined loyalty programs is to reward customers when they act in a way that improves their profitability to the company A recent study in the Journal of Consumer Research4 found that loyalty programs can make consumers feel more special by creating multitiered programs that tap into customersrsquo aspirations for higher status

With the flexibility enabled by Siebel Loyalty SJ has established three tiers and created a reward structure that recognizes the value of each member With this new structure SJ drives desired customer behavior by offering tangible rewards that are both attractive and attainable such as the ability to upgrade to First Class and to buy meals using points It even provides some rewards in real time to immediately recognize the most valuable customers and transactions In addition SJ offers intangible benefits such as ticketless travel lounge access free onboard internet connections and the ability to change a departure without rebooking By putting all these measures in place SJ has achieved more than 90 percent penetration into its primary target groups

Create Relevant Real-Time Personalized Offers Across Multiple Channels

SJ has leveraged the flexibility scalability and real-time capabilities of Siebel Marketing and Siebel Loyalty to create hundreds of personalized promotions executed simultaneously across multiple channels Quarterly SJ now executes more than 1 million unique promoshytional mailings including both traditional direct mail and e-mail

4 Xavier Dregraveze Joseph C Nunes ldquoFeeling Superior The Impact of Loyalty Program Structure on Consumersrsquo

Perceptions of Statusrdquo Journal of Consumer Research 35(2009) Print

8

ldquoWe wanted a platform that gave us the fastest path to achieve our

loyalty vision with minimal risk We looked at other competitors but

settled on [Oraclelsquos] Siebel because of its track record on achieving

value for its customersrdquo

Claes Lindholtz Director Customer Programs and Customer Analysis SJ

Siebel Marketing and Siebel Loyalty have also allowed SJ to run everything from the simplest to the most complex promotions For example one of SJrsquos simpler promotions offered members double points if they traveled during the low season In a more complex promotion SJ specified rules that awarded triple points to elite members if they purchased food onboard the train

In the future SJ plans to make ldquoheuristicrdquo promotional offers These incorporate analyses of a customerrsquos recent behaviormdashsuch as transactions or responses to special offersmdashwith predefined business rules to make offers in real time SJ plans to accomplish this with Oracle Real-Time Decisions which will enable SJ to offer the promotion that is most relevant to the member at the point of interaction and which has the greatest likelihood of success For example for members close to attaining a next-level tier or a particular reward Oracle Real-Time Decisions will notify them of that fact and suggest actions they can takemdashbased on their recent account activitymdashthat will help them attain that tierreward

Accurately Assess the Lifetime Value of Customers

Marketers would like to continually measure the effectiveness of their promotions and based on midcampaign feedback be able to change campaigns on the fly to increase their efficacy Oracle Marketing Analytics and Siebel Marketing allow SJ to take a disciplined approach in measuring the profitability of its customers based on the CLV metric Because of this SJ is able to proactively monitor the return on investment (ROI) of its marketing campaigns Indeed many recent campaignsmdashincluding the one designed to increase off-peak capacity utilizationmdashhave achieved ROIs of more than 300 percent

9

In addition SJ has implemented a closed-loop marketing environment that allows it to continuously improve and optimize the success of its loyalty program It is also measuring partner profitability Oracle Marketing Analytics is key to achieving both these goals

Support Easy Processing of Member and Partner Transactions and Rewards

The logistics of running a loyalty program can be difficult Performing accrual and redempshytion transactions and calculating point balances are time-consuming and complex operations requiring companies to aggregate and process data from multiple sources By automating their loyalty programs and making them touch-free companies can significantly reduce the costs of their loyalty programs with minimal investment

Siebel Loyalty Customer Portal empowers SJ loyalty program members to review their program status update their profiles enroll in promotions submit service inquiries and redeem rewardsmdashall without requiring assistance from an SJ employee Siebel Loyalty Partner Portal automates management of loyalty currency joint promotion design and execution transaction validation and partner billing and enrollment

By helping SJ to continue automating its loyalty processes these Oracle solutions are allowing SJ to achieve significant cost savings as well as the following benefits

bull Real-time systematic processing of accrual and redemption transactions

bull Seamless processing of tier upgrades and downgrades

bull Application of complex daily point-expiration rules across three tiers

bull Self-service portals for members and partners

bull Near-touch-free capability in loyalty operations resulting in reduced loyalty program operating costs

10

Promote Richer Engagement with Customers

Delivering superior products and services to customers and rewarding them when they make decisions that increase your profitability are the hallmarks of a successful loyalty program Yet to achieve deeper and richer customer engagement that transcends a mere rewards program companies need to empower everyone in the organization to act on behalf of the customer at every level This requires giving all customer-facing workers the right information about customers at the right time promoting an internal culture that encourages them to make proactive customer-centric decisions using that information and backing it all up with senior executive support

To enable a richer engagement with its customers throughout its operations SJ applied organizational change management techniques that mirrored the research of Jeffrey and Laurie Ford5 These techniques centered on boosting awareness (what needs to be done) returning to purpose (why do this) changing the changes (what can go wrong) and building participation and engagement (get buy-in)

Boosting awareness To begin SJ boosted awareness of its loyalty program by sending out mailers to all employees It then scheduled ldquotown hallrdquo sessions in all key corporate locations These meetings not only improved awareness of the loyalty program but also helped SJ management assess the level of resistance in each location

The Importance of

Customer Insight

SJ can now utilize customer

insight on several levels

bull StrategicmdashUtilize customer

insight in product development

and performance measurement

bull TacticalmdashEnhance capabilities with

insight-based offers and campaigns

throughout the customer lifecycle

bull OperationalmdashImprove ability to

meetmanage customer expectashy

tions and use the information to

adapt service

bull SituationalmdashIn the future

be able to give each customer a

tailored price based on insight

5 Jeffrey and Laurie Ford ldquoDecoding Resistance to Changerdquo Harvard Business Review April 2009

11

Returning to purpose The returning-to-purpose phasemdashthe explanation of why SJ had embarked on this initiativemdashsaw the launch of a campaign inspired by Time Magazinersquos 2006 ldquoPerson of the Yearrdquo award where the cover image that year included a Mylar reflective mirror SJ managements intent was to emphasize to frontline staff that they were the most important factor in building true customer loyalty

Changing the changes SJ devoted a significant amount of time anticipating potential risks and invested heavily in processes to ensure that barriers to adoption were successfully addressed

Building participation and engagement Both SJrsquos CEO and the senior vice president of business development agreed to personally sponsor the initiative which subsequently ensured the buy-in and engagement of divisional heads (for example the senior vice presidents of Sales and Onboard Staff) and front-line staff

Because the cultural change initiative was successful SJ was able to redesign critical customer-facing processes across its sales support and services functions in a way that improved the overall customer experience For example it was able to begin distributing tickets across multiple channels and introduce new value-added services such as onboard meals internet access and car rentals upon journeyrsquos end in response to demands of different customer segments

SJ also depends on Siebel Loyalty to provide 360-degree member information (including CLV) to deliver the right levels of support to members and their households Future plans call for SJ to deploy an integrated loyalty view across all customer touchpoints so that all customer-facing employees are aware of the value of each member Using predefined business rules in the Siebel solution employees will be able to tailor the travel experience to reflect membersrsquo preferences as well as value to the organization

12

Benefits of a Customer Focus for SJ

The SJ loyalty program has been a resounding success As of May 2009 the program has approximately 470000 members and has achieved a 90 percent penetration into its target population Swedish business travelers Today loyalty members produce significantly more revenue than nonmembers and are also more-satisfied customers according to a survey sponsored by SJ In addition SJ can run loyalty campaigns that achieve a 100 percent follow-up rate and up to a 25 percent conversion rate Among other benefits SJ has been able to improve the utilization of trainloads and thus the profitability of many routes

The company has also achieved significant progress on the customer satisfaction front with substantial improvements in both NPS and NKI scores Customer surveys point to increased loyalty with 32 percent of the surveyed customers saying they will increase the proportion of travel they do by train

Industry associations have recognized the impact the SJ loyalty program has had on SJ with multiple awards Gartner recognized SJ as a runner-up for the CRM Excellence award SJ also won the Golden Relationship Prize 2008 and the Golden Key Award for best CRM initiative of 2008

SJ has achieved payback on this initiative within two years with an ROI of more than 100 percent (see Figure 4) The project timeline is pictured in Figure 5 and the overall benefits are captured in Table 1

The Metrics of Success

SJs Loyalty Program

bull Approximately 470000 members

bull 90 percent penetration into

target market

bull Loyalty campaigns achieve a

100 percent follow-up rate and up

to a 25 percent conversion rate

bull Loyalty program members

produce significantly more

revenue than nonmembers

bull Increased customer loyalty

32 percent say they will increase

the proportion of travel they do

by train

bull Improved trainload utilization

and route profitability

bull Project payback within two years

ROI of more than 100 percent

bull Recognition Gartner CRM

Excellence runner-up Golden

Relationship Prize 2008 Golden

Key Award

13

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

ldquoTargeting the most valuable customers was like searching

for a needle in a haystack before the CRM initiativerdquo

Jan Olson Senior Vice President Business Development SJ

Obstacles on the Road to Customer Centricity

Setting a goal for true customer centricity is one thingmdashachieving it is another especially for a 150-year-old public sector company that has traditionally had a monopoly in its market An obvious first step creating a loyalty program SJ did not have one despite the fact thatcompanies in the travel industrymdashespecially airlines and hotelsmdashhave long used such programs to improve customer retention and increase average revenue per customer SJ faced a number of obstacles to implementing a successful loyalty program

bull Missing segmentation and analytics tools Management knew anecdotally that a small group of customers on select routes accounted for most of its profits However the company had only limited understanding of even the most basic facts about its customers due to fragmented processes for collecting information and limited analytical capabilities

For example SJ trains that began service at 555 am were running at significantly lower capacity than the 600 am trains which were 100 percent full But because SJ didnrsquot have an effective way to know who its customers were what was important to them and which variables impacted their transportation decisions executives didnrsquot know how to start changing the organizationrsquos behavior

bull Failure to differentiate service levels for the most valuable customers To increase customer retention SJ knew it had to differentiate and personalize the services it offered to different customer segments For example many transportation providers offer value-added services such as specialized meals lounge services and highly trained frontline staff to engage with their most valuable customers

For a public sector company such as SJ which had traditionally provided only basic single-tier transportation services this was a challenge Delivering differentiated services involves aligning sales customer support and onboard operationsmdashsomething that was beyond the existing capabilities of SJrsquos technology process and personnel systems

bull Lack of an adaptive and agile technology infrastructure SJrsquos technology infrastructure was not capable of supporting its vision of a customer-centric organization Customer information was spread across multiple systems making it impossible to extract required data from transactional systems to get a 360-degree view of customers and implement closed-loop sales and marketing processes

6

SJlsquos Customer-Centric Solution

SJ needed a technology solution that would support its customer-centric strategy and help it overcome each of these obstacles It found such a solution in Oraclersquos Siebel Loyalty which enabled SJ to

bull Target the most valuable customers

bull Establish tiers and other rewards that customers really want

bull Create relevant real-time personalized offers across multiple channels

bull Accurately assess the lifetime value of customers

bull Support easy processing of member and partner transactions and rewards

bull Promote richer engagement with customers

Target the Most Valuable Customers

When establishing a successful loyalty program the first step is for the business to clearly define the target audience it plans to serve and ensuremdashthrough data-based metricsmdashthat this target audience is in fact more profitable than other customer segments The challenges in accomplishing this are twofold First companies must collect a substantial volume of information about customers before they can identify which ones are most valuable to the business Secondly companies must apply the appropriate scoring mechanism to identify the most valuable customersmdasha process that has always required a balancing act between science and art Scoring methods include recency frequency and monetary value (RFM) activity-based costing (ABC) customer lifetime value (CLV) and net promoter score (NPS)

By implementing a Siebel customer relationship management (CRM) data modelmdashalso called Siebel Universal Customer MastermdashSJ was able to collect aggregate and analyze customer data across each customer touchpoint to gain a 360-degree view of each customer This data included revenue and purchase transactions from the rail reservation system customer preference data from the member Web site service data from the contact center and credit history from financial systems

How Siebel CRM Enables

SJlsquos Customer Strategy

SJ evaluated several vendors

before deciding on Siebel to enable

its loyalty program Benefits of the

Siebel solution include

bull High scalability both up and down

bull Integration with more than

50 SJ systems

bull Customer insight provided to

front-line staff in real time

bull Rich analytic capabilities

bull Zero downtime in two years

7

After much internal debate over commonly used metrics SJ chose CLV as the score that reflected the right mix between customer satisfaction and profitability By deploying this measure SJ was able to use Siebel Loyalty Manager and Oracle Business Intelligence Standard Edition to quickly and easily segment customers based on their current value their potential to increase in value and the probability that they might defect

Establish Tiers and Offer Rewards That Customers Really Want

One of the key objectives of well-defined loyalty programs is to reward customers when they act in a way that improves their profitability to the company A recent study in the Journal of Consumer Research4 found that loyalty programs can make consumers feel more special by creating multitiered programs that tap into customersrsquo aspirations for higher status

With the flexibility enabled by Siebel Loyalty SJ has established three tiers and created a reward structure that recognizes the value of each member With this new structure SJ drives desired customer behavior by offering tangible rewards that are both attractive and attainable such as the ability to upgrade to First Class and to buy meals using points It even provides some rewards in real time to immediately recognize the most valuable customers and transactions In addition SJ offers intangible benefits such as ticketless travel lounge access free onboard internet connections and the ability to change a departure without rebooking By putting all these measures in place SJ has achieved more than 90 percent penetration into its primary target groups

Create Relevant Real-Time Personalized Offers Across Multiple Channels

SJ has leveraged the flexibility scalability and real-time capabilities of Siebel Marketing and Siebel Loyalty to create hundreds of personalized promotions executed simultaneously across multiple channels Quarterly SJ now executes more than 1 million unique promoshytional mailings including both traditional direct mail and e-mail

4 Xavier Dregraveze Joseph C Nunes ldquoFeeling Superior The Impact of Loyalty Program Structure on Consumersrsquo

Perceptions of Statusrdquo Journal of Consumer Research 35(2009) Print

8

ldquoWe wanted a platform that gave us the fastest path to achieve our

loyalty vision with minimal risk We looked at other competitors but

settled on [Oraclelsquos] Siebel because of its track record on achieving

value for its customersrdquo

Claes Lindholtz Director Customer Programs and Customer Analysis SJ

Siebel Marketing and Siebel Loyalty have also allowed SJ to run everything from the simplest to the most complex promotions For example one of SJrsquos simpler promotions offered members double points if they traveled during the low season In a more complex promotion SJ specified rules that awarded triple points to elite members if they purchased food onboard the train

In the future SJ plans to make ldquoheuristicrdquo promotional offers These incorporate analyses of a customerrsquos recent behaviormdashsuch as transactions or responses to special offersmdashwith predefined business rules to make offers in real time SJ plans to accomplish this with Oracle Real-Time Decisions which will enable SJ to offer the promotion that is most relevant to the member at the point of interaction and which has the greatest likelihood of success For example for members close to attaining a next-level tier or a particular reward Oracle Real-Time Decisions will notify them of that fact and suggest actions they can takemdashbased on their recent account activitymdashthat will help them attain that tierreward

Accurately Assess the Lifetime Value of Customers

Marketers would like to continually measure the effectiveness of their promotions and based on midcampaign feedback be able to change campaigns on the fly to increase their efficacy Oracle Marketing Analytics and Siebel Marketing allow SJ to take a disciplined approach in measuring the profitability of its customers based on the CLV metric Because of this SJ is able to proactively monitor the return on investment (ROI) of its marketing campaigns Indeed many recent campaignsmdashincluding the one designed to increase off-peak capacity utilizationmdashhave achieved ROIs of more than 300 percent

9

In addition SJ has implemented a closed-loop marketing environment that allows it to continuously improve and optimize the success of its loyalty program It is also measuring partner profitability Oracle Marketing Analytics is key to achieving both these goals

Support Easy Processing of Member and Partner Transactions and Rewards

The logistics of running a loyalty program can be difficult Performing accrual and redempshytion transactions and calculating point balances are time-consuming and complex operations requiring companies to aggregate and process data from multiple sources By automating their loyalty programs and making them touch-free companies can significantly reduce the costs of their loyalty programs with minimal investment

Siebel Loyalty Customer Portal empowers SJ loyalty program members to review their program status update their profiles enroll in promotions submit service inquiries and redeem rewardsmdashall without requiring assistance from an SJ employee Siebel Loyalty Partner Portal automates management of loyalty currency joint promotion design and execution transaction validation and partner billing and enrollment

By helping SJ to continue automating its loyalty processes these Oracle solutions are allowing SJ to achieve significant cost savings as well as the following benefits

bull Real-time systematic processing of accrual and redemption transactions

bull Seamless processing of tier upgrades and downgrades

bull Application of complex daily point-expiration rules across three tiers

bull Self-service portals for members and partners

bull Near-touch-free capability in loyalty operations resulting in reduced loyalty program operating costs

10

Promote Richer Engagement with Customers

Delivering superior products and services to customers and rewarding them when they make decisions that increase your profitability are the hallmarks of a successful loyalty program Yet to achieve deeper and richer customer engagement that transcends a mere rewards program companies need to empower everyone in the organization to act on behalf of the customer at every level This requires giving all customer-facing workers the right information about customers at the right time promoting an internal culture that encourages them to make proactive customer-centric decisions using that information and backing it all up with senior executive support

To enable a richer engagement with its customers throughout its operations SJ applied organizational change management techniques that mirrored the research of Jeffrey and Laurie Ford5 These techniques centered on boosting awareness (what needs to be done) returning to purpose (why do this) changing the changes (what can go wrong) and building participation and engagement (get buy-in)

Boosting awareness To begin SJ boosted awareness of its loyalty program by sending out mailers to all employees It then scheduled ldquotown hallrdquo sessions in all key corporate locations These meetings not only improved awareness of the loyalty program but also helped SJ management assess the level of resistance in each location

The Importance of

Customer Insight

SJ can now utilize customer

insight on several levels

bull StrategicmdashUtilize customer

insight in product development

and performance measurement

bull TacticalmdashEnhance capabilities with

insight-based offers and campaigns

throughout the customer lifecycle

bull OperationalmdashImprove ability to

meetmanage customer expectashy

tions and use the information to

adapt service

bull SituationalmdashIn the future

be able to give each customer a

tailored price based on insight

5 Jeffrey and Laurie Ford ldquoDecoding Resistance to Changerdquo Harvard Business Review April 2009

11

Returning to purpose The returning-to-purpose phasemdashthe explanation of why SJ had embarked on this initiativemdashsaw the launch of a campaign inspired by Time Magazinersquos 2006 ldquoPerson of the Yearrdquo award where the cover image that year included a Mylar reflective mirror SJ managements intent was to emphasize to frontline staff that they were the most important factor in building true customer loyalty

Changing the changes SJ devoted a significant amount of time anticipating potential risks and invested heavily in processes to ensure that barriers to adoption were successfully addressed

Building participation and engagement Both SJrsquos CEO and the senior vice president of business development agreed to personally sponsor the initiative which subsequently ensured the buy-in and engagement of divisional heads (for example the senior vice presidents of Sales and Onboard Staff) and front-line staff

Because the cultural change initiative was successful SJ was able to redesign critical customer-facing processes across its sales support and services functions in a way that improved the overall customer experience For example it was able to begin distributing tickets across multiple channels and introduce new value-added services such as onboard meals internet access and car rentals upon journeyrsquos end in response to demands of different customer segments

SJ also depends on Siebel Loyalty to provide 360-degree member information (including CLV) to deliver the right levels of support to members and their households Future plans call for SJ to deploy an integrated loyalty view across all customer touchpoints so that all customer-facing employees are aware of the value of each member Using predefined business rules in the Siebel solution employees will be able to tailor the travel experience to reflect membersrsquo preferences as well as value to the organization

12

Benefits of a Customer Focus for SJ

The SJ loyalty program has been a resounding success As of May 2009 the program has approximately 470000 members and has achieved a 90 percent penetration into its target population Swedish business travelers Today loyalty members produce significantly more revenue than nonmembers and are also more-satisfied customers according to a survey sponsored by SJ In addition SJ can run loyalty campaigns that achieve a 100 percent follow-up rate and up to a 25 percent conversion rate Among other benefits SJ has been able to improve the utilization of trainloads and thus the profitability of many routes

The company has also achieved significant progress on the customer satisfaction front with substantial improvements in both NPS and NKI scores Customer surveys point to increased loyalty with 32 percent of the surveyed customers saying they will increase the proportion of travel they do by train

Industry associations have recognized the impact the SJ loyalty program has had on SJ with multiple awards Gartner recognized SJ as a runner-up for the CRM Excellence award SJ also won the Golden Relationship Prize 2008 and the Golden Key Award for best CRM initiative of 2008

SJ has achieved payback on this initiative within two years with an ROI of more than 100 percent (see Figure 4) The project timeline is pictured in Figure 5 and the overall benefits are captured in Table 1

The Metrics of Success

SJs Loyalty Program

bull Approximately 470000 members

bull 90 percent penetration into

target market

bull Loyalty campaigns achieve a

100 percent follow-up rate and up

to a 25 percent conversion rate

bull Loyalty program members

produce significantly more

revenue than nonmembers

bull Increased customer loyalty

32 percent say they will increase

the proportion of travel they do

by train

bull Improved trainload utilization

and route profitability

bull Project payback within two years

ROI of more than 100 percent

bull Recognition Gartner CRM

Excellence runner-up Golden

Relationship Prize 2008 Golden

Key Award

13

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

SJlsquos Customer-Centric Solution

SJ needed a technology solution that would support its customer-centric strategy and help it overcome each of these obstacles It found such a solution in Oraclersquos Siebel Loyalty which enabled SJ to

bull Target the most valuable customers

bull Establish tiers and other rewards that customers really want

bull Create relevant real-time personalized offers across multiple channels

bull Accurately assess the lifetime value of customers

bull Support easy processing of member and partner transactions and rewards

bull Promote richer engagement with customers

Target the Most Valuable Customers

When establishing a successful loyalty program the first step is for the business to clearly define the target audience it plans to serve and ensuremdashthrough data-based metricsmdashthat this target audience is in fact more profitable than other customer segments The challenges in accomplishing this are twofold First companies must collect a substantial volume of information about customers before they can identify which ones are most valuable to the business Secondly companies must apply the appropriate scoring mechanism to identify the most valuable customersmdasha process that has always required a balancing act between science and art Scoring methods include recency frequency and monetary value (RFM) activity-based costing (ABC) customer lifetime value (CLV) and net promoter score (NPS)

By implementing a Siebel customer relationship management (CRM) data modelmdashalso called Siebel Universal Customer MastermdashSJ was able to collect aggregate and analyze customer data across each customer touchpoint to gain a 360-degree view of each customer This data included revenue and purchase transactions from the rail reservation system customer preference data from the member Web site service data from the contact center and credit history from financial systems

How Siebel CRM Enables

SJlsquos Customer Strategy

SJ evaluated several vendors

before deciding on Siebel to enable

its loyalty program Benefits of the

Siebel solution include

bull High scalability both up and down

bull Integration with more than

50 SJ systems

bull Customer insight provided to

front-line staff in real time

bull Rich analytic capabilities

bull Zero downtime in two years

7

After much internal debate over commonly used metrics SJ chose CLV as the score that reflected the right mix between customer satisfaction and profitability By deploying this measure SJ was able to use Siebel Loyalty Manager and Oracle Business Intelligence Standard Edition to quickly and easily segment customers based on their current value their potential to increase in value and the probability that they might defect

Establish Tiers and Offer Rewards That Customers Really Want

One of the key objectives of well-defined loyalty programs is to reward customers when they act in a way that improves their profitability to the company A recent study in the Journal of Consumer Research4 found that loyalty programs can make consumers feel more special by creating multitiered programs that tap into customersrsquo aspirations for higher status

With the flexibility enabled by Siebel Loyalty SJ has established three tiers and created a reward structure that recognizes the value of each member With this new structure SJ drives desired customer behavior by offering tangible rewards that are both attractive and attainable such as the ability to upgrade to First Class and to buy meals using points It even provides some rewards in real time to immediately recognize the most valuable customers and transactions In addition SJ offers intangible benefits such as ticketless travel lounge access free onboard internet connections and the ability to change a departure without rebooking By putting all these measures in place SJ has achieved more than 90 percent penetration into its primary target groups

Create Relevant Real-Time Personalized Offers Across Multiple Channels

SJ has leveraged the flexibility scalability and real-time capabilities of Siebel Marketing and Siebel Loyalty to create hundreds of personalized promotions executed simultaneously across multiple channels Quarterly SJ now executes more than 1 million unique promoshytional mailings including both traditional direct mail and e-mail

4 Xavier Dregraveze Joseph C Nunes ldquoFeeling Superior The Impact of Loyalty Program Structure on Consumersrsquo

Perceptions of Statusrdquo Journal of Consumer Research 35(2009) Print

8

ldquoWe wanted a platform that gave us the fastest path to achieve our

loyalty vision with minimal risk We looked at other competitors but

settled on [Oraclelsquos] Siebel because of its track record on achieving

value for its customersrdquo

Claes Lindholtz Director Customer Programs and Customer Analysis SJ

Siebel Marketing and Siebel Loyalty have also allowed SJ to run everything from the simplest to the most complex promotions For example one of SJrsquos simpler promotions offered members double points if they traveled during the low season In a more complex promotion SJ specified rules that awarded triple points to elite members if they purchased food onboard the train

In the future SJ plans to make ldquoheuristicrdquo promotional offers These incorporate analyses of a customerrsquos recent behaviormdashsuch as transactions or responses to special offersmdashwith predefined business rules to make offers in real time SJ plans to accomplish this with Oracle Real-Time Decisions which will enable SJ to offer the promotion that is most relevant to the member at the point of interaction and which has the greatest likelihood of success For example for members close to attaining a next-level tier or a particular reward Oracle Real-Time Decisions will notify them of that fact and suggest actions they can takemdashbased on their recent account activitymdashthat will help them attain that tierreward

Accurately Assess the Lifetime Value of Customers

Marketers would like to continually measure the effectiveness of their promotions and based on midcampaign feedback be able to change campaigns on the fly to increase their efficacy Oracle Marketing Analytics and Siebel Marketing allow SJ to take a disciplined approach in measuring the profitability of its customers based on the CLV metric Because of this SJ is able to proactively monitor the return on investment (ROI) of its marketing campaigns Indeed many recent campaignsmdashincluding the one designed to increase off-peak capacity utilizationmdashhave achieved ROIs of more than 300 percent

9

In addition SJ has implemented a closed-loop marketing environment that allows it to continuously improve and optimize the success of its loyalty program It is also measuring partner profitability Oracle Marketing Analytics is key to achieving both these goals

Support Easy Processing of Member and Partner Transactions and Rewards

The logistics of running a loyalty program can be difficult Performing accrual and redempshytion transactions and calculating point balances are time-consuming and complex operations requiring companies to aggregate and process data from multiple sources By automating their loyalty programs and making them touch-free companies can significantly reduce the costs of their loyalty programs with minimal investment

Siebel Loyalty Customer Portal empowers SJ loyalty program members to review their program status update their profiles enroll in promotions submit service inquiries and redeem rewardsmdashall without requiring assistance from an SJ employee Siebel Loyalty Partner Portal automates management of loyalty currency joint promotion design and execution transaction validation and partner billing and enrollment

By helping SJ to continue automating its loyalty processes these Oracle solutions are allowing SJ to achieve significant cost savings as well as the following benefits

bull Real-time systematic processing of accrual and redemption transactions

bull Seamless processing of tier upgrades and downgrades

bull Application of complex daily point-expiration rules across three tiers

bull Self-service portals for members and partners

bull Near-touch-free capability in loyalty operations resulting in reduced loyalty program operating costs

10

Promote Richer Engagement with Customers

Delivering superior products and services to customers and rewarding them when they make decisions that increase your profitability are the hallmarks of a successful loyalty program Yet to achieve deeper and richer customer engagement that transcends a mere rewards program companies need to empower everyone in the organization to act on behalf of the customer at every level This requires giving all customer-facing workers the right information about customers at the right time promoting an internal culture that encourages them to make proactive customer-centric decisions using that information and backing it all up with senior executive support

To enable a richer engagement with its customers throughout its operations SJ applied organizational change management techniques that mirrored the research of Jeffrey and Laurie Ford5 These techniques centered on boosting awareness (what needs to be done) returning to purpose (why do this) changing the changes (what can go wrong) and building participation and engagement (get buy-in)

Boosting awareness To begin SJ boosted awareness of its loyalty program by sending out mailers to all employees It then scheduled ldquotown hallrdquo sessions in all key corporate locations These meetings not only improved awareness of the loyalty program but also helped SJ management assess the level of resistance in each location

The Importance of

Customer Insight

SJ can now utilize customer

insight on several levels

bull StrategicmdashUtilize customer

insight in product development

and performance measurement

bull TacticalmdashEnhance capabilities with

insight-based offers and campaigns

throughout the customer lifecycle

bull OperationalmdashImprove ability to

meetmanage customer expectashy

tions and use the information to

adapt service

bull SituationalmdashIn the future

be able to give each customer a

tailored price based on insight

5 Jeffrey and Laurie Ford ldquoDecoding Resistance to Changerdquo Harvard Business Review April 2009

11

Returning to purpose The returning-to-purpose phasemdashthe explanation of why SJ had embarked on this initiativemdashsaw the launch of a campaign inspired by Time Magazinersquos 2006 ldquoPerson of the Yearrdquo award where the cover image that year included a Mylar reflective mirror SJ managements intent was to emphasize to frontline staff that they were the most important factor in building true customer loyalty

Changing the changes SJ devoted a significant amount of time anticipating potential risks and invested heavily in processes to ensure that barriers to adoption were successfully addressed

Building participation and engagement Both SJrsquos CEO and the senior vice president of business development agreed to personally sponsor the initiative which subsequently ensured the buy-in and engagement of divisional heads (for example the senior vice presidents of Sales and Onboard Staff) and front-line staff

Because the cultural change initiative was successful SJ was able to redesign critical customer-facing processes across its sales support and services functions in a way that improved the overall customer experience For example it was able to begin distributing tickets across multiple channels and introduce new value-added services such as onboard meals internet access and car rentals upon journeyrsquos end in response to demands of different customer segments

SJ also depends on Siebel Loyalty to provide 360-degree member information (including CLV) to deliver the right levels of support to members and their households Future plans call for SJ to deploy an integrated loyalty view across all customer touchpoints so that all customer-facing employees are aware of the value of each member Using predefined business rules in the Siebel solution employees will be able to tailor the travel experience to reflect membersrsquo preferences as well as value to the organization

12

Benefits of a Customer Focus for SJ

The SJ loyalty program has been a resounding success As of May 2009 the program has approximately 470000 members and has achieved a 90 percent penetration into its target population Swedish business travelers Today loyalty members produce significantly more revenue than nonmembers and are also more-satisfied customers according to a survey sponsored by SJ In addition SJ can run loyalty campaigns that achieve a 100 percent follow-up rate and up to a 25 percent conversion rate Among other benefits SJ has been able to improve the utilization of trainloads and thus the profitability of many routes

The company has also achieved significant progress on the customer satisfaction front with substantial improvements in both NPS and NKI scores Customer surveys point to increased loyalty with 32 percent of the surveyed customers saying they will increase the proportion of travel they do by train

Industry associations have recognized the impact the SJ loyalty program has had on SJ with multiple awards Gartner recognized SJ as a runner-up for the CRM Excellence award SJ also won the Golden Relationship Prize 2008 and the Golden Key Award for best CRM initiative of 2008

SJ has achieved payback on this initiative within two years with an ROI of more than 100 percent (see Figure 4) The project timeline is pictured in Figure 5 and the overall benefits are captured in Table 1

The Metrics of Success

SJs Loyalty Program

bull Approximately 470000 members

bull 90 percent penetration into

target market

bull Loyalty campaigns achieve a

100 percent follow-up rate and up

to a 25 percent conversion rate

bull Loyalty program members

produce significantly more

revenue than nonmembers

bull Increased customer loyalty

32 percent say they will increase

the proportion of travel they do

by train

bull Improved trainload utilization

and route profitability

bull Project payback within two years

ROI of more than 100 percent

bull Recognition Gartner CRM

Excellence runner-up Golden

Relationship Prize 2008 Golden

Key Award

13

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

After much internal debate over commonly used metrics SJ chose CLV as the score that reflected the right mix between customer satisfaction and profitability By deploying this measure SJ was able to use Siebel Loyalty Manager and Oracle Business Intelligence Standard Edition to quickly and easily segment customers based on their current value their potential to increase in value and the probability that they might defect

Establish Tiers and Offer Rewards That Customers Really Want

One of the key objectives of well-defined loyalty programs is to reward customers when they act in a way that improves their profitability to the company A recent study in the Journal of Consumer Research4 found that loyalty programs can make consumers feel more special by creating multitiered programs that tap into customersrsquo aspirations for higher status

With the flexibility enabled by Siebel Loyalty SJ has established three tiers and created a reward structure that recognizes the value of each member With this new structure SJ drives desired customer behavior by offering tangible rewards that are both attractive and attainable such as the ability to upgrade to First Class and to buy meals using points It even provides some rewards in real time to immediately recognize the most valuable customers and transactions In addition SJ offers intangible benefits such as ticketless travel lounge access free onboard internet connections and the ability to change a departure without rebooking By putting all these measures in place SJ has achieved more than 90 percent penetration into its primary target groups

Create Relevant Real-Time Personalized Offers Across Multiple Channels

SJ has leveraged the flexibility scalability and real-time capabilities of Siebel Marketing and Siebel Loyalty to create hundreds of personalized promotions executed simultaneously across multiple channels Quarterly SJ now executes more than 1 million unique promoshytional mailings including both traditional direct mail and e-mail

4 Xavier Dregraveze Joseph C Nunes ldquoFeeling Superior The Impact of Loyalty Program Structure on Consumersrsquo

Perceptions of Statusrdquo Journal of Consumer Research 35(2009) Print

8

ldquoWe wanted a platform that gave us the fastest path to achieve our

loyalty vision with minimal risk We looked at other competitors but

settled on [Oraclelsquos] Siebel because of its track record on achieving

value for its customersrdquo

Claes Lindholtz Director Customer Programs and Customer Analysis SJ

Siebel Marketing and Siebel Loyalty have also allowed SJ to run everything from the simplest to the most complex promotions For example one of SJrsquos simpler promotions offered members double points if they traveled during the low season In a more complex promotion SJ specified rules that awarded triple points to elite members if they purchased food onboard the train

In the future SJ plans to make ldquoheuristicrdquo promotional offers These incorporate analyses of a customerrsquos recent behaviormdashsuch as transactions or responses to special offersmdashwith predefined business rules to make offers in real time SJ plans to accomplish this with Oracle Real-Time Decisions which will enable SJ to offer the promotion that is most relevant to the member at the point of interaction and which has the greatest likelihood of success For example for members close to attaining a next-level tier or a particular reward Oracle Real-Time Decisions will notify them of that fact and suggest actions they can takemdashbased on their recent account activitymdashthat will help them attain that tierreward

Accurately Assess the Lifetime Value of Customers

Marketers would like to continually measure the effectiveness of their promotions and based on midcampaign feedback be able to change campaigns on the fly to increase their efficacy Oracle Marketing Analytics and Siebel Marketing allow SJ to take a disciplined approach in measuring the profitability of its customers based on the CLV metric Because of this SJ is able to proactively monitor the return on investment (ROI) of its marketing campaigns Indeed many recent campaignsmdashincluding the one designed to increase off-peak capacity utilizationmdashhave achieved ROIs of more than 300 percent

9

In addition SJ has implemented a closed-loop marketing environment that allows it to continuously improve and optimize the success of its loyalty program It is also measuring partner profitability Oracle Marketing Analytics is key to achieving both these goals

Support Easy Processing of Member and Partner Transactions and Rewards

The logistics of running a loyalty program can be difficult Performing accrual and redempshytion transactions and calculating point balances are time-consuming and complex operations requiring companies to aggregate and process data from multiple sources By automating their loyalty programs and making them touch-free companies can significantly reduce the costs of their loyalty programs with minimal investment

Siebel Loyalty Customer Portal empowers SJ loyalty program members to review their program status update their profiles enroll in promotions submit service inquiries and redeem rewardsmdashall without requiring assistance from an SJ employee Siebel Loyalty Partner Portal automates management of loyalty currency joint promotion design and execution transaction validation and partner billing and enrollment

By helping SJ to continue automating its loyalty processes these Oracle solutions are allowing SJ to achieve significant cost savings as well as the following benefits

bull Real-time systematic processing of accrual and redemption transactions

bull Seamless processing of tier upgrades and downgrades

bull Application of complex daily point-expiration rules across three tiers

bull Self-service portals for members and partners

bull Near-touch-free capability in loyalty operations resulting in reduced loyalty program operating costs

10

Promote Richer Engagement with Customers

Delivering superior products and services to customers and rewarding them when they make decisions that increase your profitability are the hallmarks of a successful loyalty program Yet to achieve deeper and richer customer engagement that transcends a mere rewards program companies need to empower everyone in the organization to act on behalf of the customer at every level This requires giving all customer-facing workers the right information about customers at the right time promoting an internal culture that encourages them to make proactive customer-centric decisions using that information and backing it all up with senior executive support

To enable a richer engagement with its customers throughout its operations SJ applied organizational change management techniques that mirrored the research of Jeffrey and Laurie Ford5 These techniques centered on boosting awareness (what needs to be done) returning to purpose (why do this) changing the changes (what can go wrong) and building participation and engagement (get buy-in)

Boosting awareness To begin SJ boosted awareness of its loyalty program by sending out mailers to all employees It then scheduled ldquotown hallrdquo sessions in all key corporate locations These meetings not only improved awareness of the loyalty program but also helped SJ management assess the level of resistance in each location

The Importance of

Customer Insight

SJ can now utilize customer

insight on several levels

bull StrategicmdashUtilize customer

insight in product development

and performance measurement

bull TacticalmdashEnhance capabilities with

insight-based offers and campaigns

throughout the customer lifecycle

bull OperationalmdashImprove ability to

meetmanage customer expectashy

tions and use the information to

adapt service

bull SituationalmdashIn the future

be able to give each customer a

tailored price based on insight

5 Jeffrey and Laurie Ford ldquoDecoding Resistance to Changerdquo Harvard Business Review April 2009

11

Returning to purpose The returning-to-purpose phasemdashthe explanation of why SJ had embarked on this initiativemdashsaw the launch of a campaign inspired by Time Magazinersquos 2006 ldquoPerson of the Yearrdquo award where the cover image that year included a Mylar reflective mirror SJ managements intent was to emphasize to frontline staff that they were the most important factor in building true customer loyalty

Changing the changes SJ devoted a significant amount of time anticipating potential risks and invested heavily in processes to ensure that barriers to adoption were successfully addressed

Building participation and engagement Both SJrsquos CEO and the senior vice president of business development agreed to personally sponsor the initiative which subsequently ensured the buy-in and engagement of divisional heads (for example the senior vice presidents of Sales and Onboard Staff) and front-line staff

Because the cultural change initiative was successful SJ was able to redesign critical customer-facing processes across its sales support and services functions in a way that improved the overall customer experience For example it was able to begin distributing tickets across multiple channels and introduce new value-added services such as onboard meals internet access and car rentals upon journeyrsquos end in response to demands of different customer segments

SJ also depends on Siebel Loyalty to provide 360-degree member information (including CLV) to deliver the right levels of support to members and their households Future plans call for SJ to deploy an integrated loyalty view across all customer touchpoints so that all customer-facing employees are aware of the value of each member Using predefined business rules in the Siebel solution employees will be able to tailor the travel experience to reflect membersrsquo preferences as well as value to the organization

12

Benefits of a Customer Focus for SJ

The SJ loyalty program has been a resounding success As of May 2009 the program has approximately 470000 members and has achieved a 90 percent penetration into its target population Swedish business travelers Today loyalty members produce significantly more revenue than nonmembers and are also more-satisfied customers according to a survey sponsored by SJ In addition SJ can run loyalty campaigns that achieve a 100 percent follow-up rate and up to a 25 percent conversion rate Among other benefits SJ has been able to improve the utilization of trainloads and thus the profitability of many routes

The company has also achieved significant progress on the customer satisfaction front with substantial improvements in both NPS and NKI scores Customer surveys point to increased loyalty with 32 percent of the surveyed customers saying they will increase the proportion of travel they do by train

Industry associations have recognized the impact the SJ loyalty program has had on SJ with multiple awards Gartner recognized SJ as a runner-up for the CRM Excellence award SJ also won the Golden Relationship Prize 2008 and the Golden Key Award for best CRM initiative of 2008

SJ has achieved payback on this initiative within two years with an ROI of more than 100 percent (see Figure 4) The project timeline is pictured in Figure 5 and the overall benefits are captured in Table 1

The Metrics of Success

SJs Loyalty Program

bull Approximately 470000 members

bull 90 percent penetration into

target market

bull Loyalty campaigns achieve a

100 percent follow-up rate and up

to a 25 percent conversion rate

bull Loyalty program members

produce significantly more

revenue than nonmembers

bull Increased customer loyalty

32 percent say they will increase

the proportion of travel they do

by train

bull Improved trainload utilization

and route profitability

bull Project payback within two years

ROI of more than 100 percent

bull Recognition Gartner CRM

Excellence runner-up Golden

Relationship Prize 2008 Golden

Key Award

13

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

ldquoWe wanted a platform that gave us the fastest path to achieve our

loyalty vision with minimal risk We looked at other competitors but

settled on [Oraclelsquos] Siebel because of its track record on achieving

value for its customersrdquo

Claes Lindholtz Director Customer Programs and Customer Analysis SJ

Siebel Marketing and Siebel Loyalty have also allowed SJ to run everything from the simplest to the most complex promotions For example one of SJrsquos simpler promotions offered members double points if they traveled during the low season In a more complex promotion SJ specified rules that awarded triple points to elite members if they purchased food onboard the train

In the future SJ plans to make ldquoheuristicrdquo promotional offers These incorporate analyses of a customerrsquos recent behaviormdashsuch as transactions or responses to special offersmdashwith predefined business rules to make offers in real time SJ plans to accomplish this with Oracle Real-Time Decisions which will enable SJ to offer the promotion that is most relevant to the member at the point of interaction and which has the greatest likelihood of success For example for members close to attaining a next-level tier or a particular reward Oracle Real-Time Decisions will notify them of that fact and suggest actions they can takemdashbased on their recent account activitymdashthat will help them attain that tierreward

Accurately Assess the Lifetime Value of Customers

Marketers would like to continually measure the effectiveness of their promotions and based on midcampaign feedback be able to change campaigns on the fly to increase their efficacy Oracle Marketing Analytics and Siebel Marketing allow SJ to take a disciplined approach in measuring the profitability of its customers based on the CLV metric Because of this SJ is able to proactively monitor the return on investment (ROI) of its marketing campaigns Indeed many recent campaignsmdashincluding the one designed to increase off-peak capacity utilizationmdashhave achieved ROIs of more than 300 percent

9

In addition SJ has implemented a closed-loop marketing environment that allows it to continuously improve and optimize the success of its loyalty program It is also measuring partner profitability Oracle Marketing Analytics is key to achieving both these goals

Support Easy Processing of Member and Partner Transactions and Rewards

The logistics of running a loyalty program can be difficult Performing accrual and redempshytion transactions and calculating point balances are time-consuming and complex operations requiring companies to aggregate and process data from multiple sources By automating their loyalty programs and making them touch-free companies can significantly reduce the costs of their loyalty programs with minimal investment

Siebel Loyalty Customer Portal empowers SJ loyalty program members to review their program status update their profiles enroll in promotions submit service inquiries and redeem rewardsmdashall without requiring assistance from an SJ employee Siebel Loyalty Partner Portal automates management of loyalty currency joint promotion design and execution transaction validation and partner billing and enrollment

By helping SJ to continue automating its loyalty processes these Oracle solutions are allowing SJ to achieve significant cost savings as well as the following benefits

bull Real-time systematic processing of accrual and redemption transactions

bull Seamless processing of tier upgrades and downgrades

bull Application of complex daily point-expiration rules across three tiers

bull Self-service portals for members and partners

bull Near-touch-free capability in loyalty operations resulting in reduced loyalty program operating costs

10

Promote Richer Engagement with Customers

Delivering superior products and services to customers and rewarding them when they make decisions that increase your profitability are the hallmarks of a successful loyalty program Yet to achieve deeper and richer customer engagement that transcends a mere rewards program companies need to empower everyone in the organization to act on behalf of the customer at every level This requires giving all customer-facing workers the right information about customers at the right time promoting an internal culture that encourages them to make proactive customer-centric decisions using that information and backing it all up with senior executive support

To enable a richer engagement with its customers throughout its operations SJ applied organizational change management techniques that mirrored the research of Jeffrey and Laurie Ford5 These techniques centered on boosting awareness (what needs to be done) returning to purpose (why do this) changing the changes (what can go wrong) and building participation and engagement (get buy-in)

Boosting awareness To begin SJ boosted awareness of its loyalty program by sending out mailers to all employees It then scheduled ldquotown hallrdquo sessions in all key corporate locations These meetings not only improved awareness of the loyalty program but also helped SJ management assess the level of resistance in each location

The Importance of

Customer Insight

SJ can now utilize customer

insight on several levels

bull StrategicmdashUtilize customer

insight in product development

and performance measurement

bull TacticalmdashEnhance capabilities with

insight-based offers and campaigns

throughout the customer lifecycle

bull OperationalmdashImprove ability to

meetmanage customer expectashy

tions and use the information to

adapt service

bull SituationalmdashIn the future

be able to give each customer a

tailored price based on insight

5 Jeffrey and Laurie Ford ldquoDecoding Resistance to Changerdquo Harvard Business Review April 2009

11

Returning to purpose The returning-to-purpose phasemdashthe explanation of why SJ had embarked on this initiativemdashsaw the launch of a campaign inspired by Time Magazinersquos 2006 ldquoPerson of the Yearrdquo award where the cover image that year included a Mylar reflective mirror SJ managements intent was to emphasize to frontline staff that they were the most important factor in building true customer loyalty

Changing the changes SJ devoted a significant amount of time anticipating potential risks and invested heavily in processes to ensure that barriers to adoption were successfully addressed

Building participation and engagement Both SJrsquos CEO and the senior vice president of business development agreed to personally sponsor the initiative which subsequently ensured the buy-in and engagement of divisional heads (for example the senior vice presidents of Sales and Onboard Staff) and front-line staff

Because the cultural change initiative was successful SJ was able to redesign critical customer-facing processes across its sales support and services functions in a way that improved the overall customer experience For example it was able to begin distributing tickets across multiple channels and introduce new value-added services such as onboard meals internet access and car rentals upon journeyrsquos end in response to demands of different customer segments

SJ also depends on Siebel Loyalty to provide 360-degree member information (including CLV) to deliver the right levels of support to members and their households Future plans call for SJ to deploy an integrated loyalty view across all customer touchpoints so that all customer-facing employees are aware of the value of each member Using predefined business rules in the Siebel solution employees will be able to tailor the travel experience to reflect membersrsquo preferences as well as value to the organization

12

Benefits of a Customer Focus for SJ

The SJ loyalty program has been a resounding success As of May 2009 the program has approximately 470000 members and has achieved a 90 percent penetration into its target population Swedish business travelers Today loyalty members produce significantly more revenue than nonmembers and are also more-satisfied customers according to a survey sponsored by SJ In addition SJ can run loyalty campaigns that achieve a 100 percent follow-up rate and up to a 25 percent conversion rate Among other benefits SJ has been able to improve the utilization of trainloads and thus the profitability of many routes

The company has also achieved significant progress on the customer satisfaction front with substantial improvements in both NPS and NKI scores Customer surveys point to increased loyalty with 32 percent of the surveyed customers saying they will increase the proportion of travel they do by train

Industry associations have recognized the impact the SJ loyalty program has had on SJ with multiple awards Gartner recognized SJ as a runner-up for the CRM Excellence award SJ also won the Golden Relationship Prize 2008 and the Golden Key Award for best CRM initiative of 2008

SJ has achieved payback on this initiative within two years with an ROI of more than 100 percent (see Figure 4) The project timeline is pictured in Figure 5 and the overall benefits are captured in Table 1

The Metrics of Success

SJs Loyalty Program

bull Approximately 470000 members

bull 90 percent penetration into

target market

bull Loyalty campaigns achieve a

100 percent follow-up rate and up

to a 25 percent conversion rate

bull Loyalty program members

produce significantly more

revenue than nonmembers

bull Increased customer loyalty

32 percent say they will increase

the proportion of travel they do

by train

bull Improved trainload utilization

and route profitability

bull Project payback within two years

ROI of more than 100 percent

bull Recognition Gartner CRM

Excellence runner-up Golden

Relationship Prize 2008 Golden

Key Award

13

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

In addition SJ has implemented a closed-loop marketing environment that allows it to continuously improve and optimize the success of its loyalty program It is also measuring partner profitability Oracle Marketing Analytics is key to achieving both these goals

Support Easy Processing of Member and Partner Transactions and Rewards

The logistics of running a loyalty program can be difficult Performing accrual and redempshytion transactions and calculating point balances are time-consuming and complex operations requiring companies to aggregate and process data from multiple sources By automating their loyalty programs and making them touch-free companies can significantly reduce the costs of their loyalty programs with minimal investment

Siebel Loyalty Customer Portal empowers SJ loyalty program members to review their program status update their profiles enroll in promotions submit service inquiries and redeem rewardsmdashall without requiring assistance from an SJ employee Siebel Loyalty Partner Portal automates management of loyalty currency joint promotion design and execution transaction validation and partner billing and enrollment

By helping SJ to continue automating its loyalty processes these Oracle solutions are allowing SJ to achieve significant cost savings as well as the following benefits

bull Real-time systematic processing of accrual and redemption transactions

bull Seamless processing of tier upgrades and downgrades

bull Application of complex daily point-expiration rules across three tiers

bull Self-service portals for members and partners

bull Near-touch-free capability in loyalty operations resulting in reduced loyalty program operating costs

10

Promote Richer Engagement with Customers

Delivering superior products and services to customers and rewarding them when they make decisions that increase your profitability are the hallmarks of a successful loyalty program Yet to achieve deeper and richer customer engagement that transcends a mere rewards program companies need to empower everyone in the organization to act on behalf of the customer at every level This requires giving all customer-facing workers the right information about customers at the right time promoting an internal culture that encourages them to make proactive customer-centric decisions using that information and backing it all up with senior executive support

To enable a richer engagement with its customers throughout its operations SJ applied organizational change management techniques that mirrored the research of Jeffrey and Laurie Ford5 These techniques centered on boosting awareness (what needs to be done) returning to purpose (why do this) changing the changes (what can go wrong) and building participation and engagement (get buy-in)

Boosting awareness To begin SJ boosted awareness of its loyalty program by sending out mailers to all employees It then scheduled ldquotown hallrdquo sessions in all key corporate locations These meetings not only improved awareness of the loyalty program but also helped SJ management assess the level of resistance in each location

The Importance of

Customer Insight

SJ can now utilize customer

insight on several levels

bull StrategicmdashUtilize customer

insight in product development

and performance measurement

bull TacticalmdashEnhance capabilities with

insight-based offers and campaigns

throughout the customer lifecycle

bull OperationalmdashImprove ability to

meetmanage customer expectashy

tions and use the information to

adapt service

bull SituationalmdashIn the future

be able to give each customer a

tailored price based on insight

5 Jeffrey and Laurie Ford ldquoDecoding Resistance to Changerdquo Harvard Business Review April 2009

11

Returning to purpose The returning-to-purpose phasemdashthe explanation of why SJ had embarked on this initiativemdashsaw the launch of a campaign inspired by Time Magazinersquos 2006 ldquoPerson of the Yearrdquo award where the cover image that year included a Mylar reflective mirror SJ managements intent was to emphasize to frontline staff that they were the most important factor in building true customer loyalty

Changing the changes SJ devoted a significant amount of time anticipating potential risks and invested heavily in processes to ensure that barriers to adoption were successfully addressed

Building participation and engagement Both SJrsquos CEO and the senior vice president of business development agreed to personally sponsor the initiative which subsequently ensured the buy-in and engagement of divisional heads (for example the senior vice presidents of Sales and Onboard Staff) and front-line staff

Because the cultural change initiative was successful SJ was able to redesign critical customer-facing processes across its sales support and services functions in a way that improved the overall customer experience For example it was able to begin distributing tickets across multiple channels and introduce new value-added services such as onboard meals internet access and car rentals upon journeyrsquos end in response to demands of different customer segments

SJ also depends on Siebel Loyalty to provide 360-degree member information (including CLV) to deliver the right levels of support to members and their households Future plans call for SJ to deploy an integrated loyalty view across all customer touchpoints so that all customer-facing employees are aware of the value of each member Using predefined business rules in the Siebel solution employees will be able to tailor the travel experience to reflect membersrsquo preferences as well as value to the organization

12

Benefits of a Customer Focus for SJ

The SJ loyalty program has been a resounding success As of May 2009 the program has approximately 470000 members and has achieved a 90 percent penetration into its target population Swedish business travelers Today loyalty members produce significantly more revenue than nonmembers and are also more-satisfied customers according to a survey sponsored by SJ In addition SJ can run loyalty campaigns that achieve a 100 percent follow-up rate and up to a 25 percent conversion rate Among other benefits SJ has been able to improve the utilization of trainloads and thus the profitability of many routes

The company has also achieved significant progress on the customer satisfaction front with substantial improvements in both NPS and NKI scores Customer surveys point to increased loyalty with 32 percent of the surveyed customers saying they will increase the proportion of travel they do by train

Industry associations have recognized the impact the SJ loyalty program has had on SJ with multiple awards Gartner recognized SJ as a runner-up for the CRM Excellence award SJ also won the Golden Relationship Prize 2008 and the Golden Key Award for best CRM initiative of 2008

SJ has achieved payback on this initiative within two years with an ROI of more than 100 percent (see Figure 4) The project timeline is pictured in Figure 5 and the overall benefits are captured in Table 1

The Metrics of Success

SJs Loyalty Program

bull Approximately 470000 members

bull 90 percent penetration into

target market

bull Loyalty campaigns achieve a

100 percent follow-up rate and up

to a 25 percent conversion rate

bull Loyalty program members

produce significantly more

revenue than nonmembers

bull Increased customer loyalty

32 percent say they will increase

the proportion of travel they do

by train

bull Improved trainload utilization

and route profitability

bull Project payback within two years

ROI of more than 100 percent

bull Recognition Gartner CRM

Excellence runner-up Golden

Relationship Prize 2008 Golden

Key Award

13

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

Promote Richer Engagement with Customers

Delivering superior products and services to customers and rewarding them when they make decisions that increase your profitability are the hallmarks of a successful loyalty program Yet to achieve deeper and richer customer engagement that transcends a mere rewards program companies need to empower everyone in the organization to act on behalf of the customer at every level This requires giving all customer-facing workers the right information about customers at the right time promoting an internal culture that encourages them to make proactive customer-centric decisions using that information and backing it all up with senior executive support

To enable a richer engagement with its customers throughout its operations SJ applied organizational change management techniques that mirrored the research of Jeffrey and Laurie Ford5 These techniques centered on boosting awareness (what needs to be done) returning to purpose (why do this) changing the changes (what can go wrong) and building participation and engagement (get buy-in)

Boosting awareness To begin SJ boosted awareness of its loyalty program by sending out mailers to all employees It then scheduled ldquotown hallrdquo sessions in all key corporate locations These meetings not only improved awareness of the loyalty program but also helped SJ management assess the level of resistance in each location

The Importance of

Customer Insight

SJ can now utilize customer

insight on several levels

bull StrategicmdashUtilize customer

insight in product development

and performance measurement

bull TacticalmdashEnhance capabilities with

insight-based offers and campaigns

throughout the customer lifecycle

bull OperationalmdashImprove ability to

meetmanage customer expectashy

tions and use the information to

adapt service

bull SituationalmdashIn the future

be able to give each customer a

tailored price based on insight

5 Jeffrey and Laurie Ford ldquoDecoding Resistance to Changerdquo Harvard Business Review April 2009

11

Returning to purpose The returning-to-purpose phasemdashthe explanation of why SJ had embarked on this initiativemdashsaw the launch of a campaign inspired by Time Magazinersquos 2006 ldquoPerson of the Yearrdquo award where the cover image that year included a Mylar reflective mirror SJ managements intent was to emphasize to frontline staff that they were the most important factor in building true customer loyalty

Changing the changes SJ devoted a significant amount of time anticipating potential risks and invested heavily in processes to ensure that barriers to adoption were successfully addressed

Building participation and engagement Both SJrsquos CEO and the senior vice president of business development agreed to personally sponsor the initiative which subsequently ensured the buy-in and engagement of divisional heads (for example the senior vice presidents of Sales and Onboard Staff) and front-line staff

Because the cultural change initiative was successful SJ was able to redesign critical customer-facing processes across its sales support and services functions in a way that improved the overall customer experience For example it was able to begin distributing tickets across multiple channels and introduce new value-added services such as onboard meals internet access and car rentals upon journeyrsquos end in response to demands of different customer segments

SJ also depends on Siebel Loyalty to provide 360-degree member information (including CLV) to deliver the right levels of support to members and their households Future plans call for SJ to deploy an integrated loyalty view across all customer touchpoints so that all customer-facing employees are aware of the value of each member Using predefined business rules in the Siebel solution employees will be able to tailor the travel experience to reflect membersrsquo preferences as well as value to the organization

12

Benefits of a Customer Focus for SJ

The SJ loyalty program has been a resounding success As of May 2009 the program has approximately 470000 members and has achieved a 90 percent penetration into its target population Swedish business travelers Today loyalty members produce significantly more revenue than nonmembers and are also more-satisfied customers according to a survey sponsored by SJ In addition SJ can run loyalty campaigns that achieve a 100 percent follow-up rate and up to a 25 percent conversion rate Among other benefits SJ has been able to improve the utilization of trainloads and thus the profitability of many routes

The company has also achieved significant progress on the customer satisfaction front with substantial improvements in both NPS and NKI scores Customer surveys point to increased loyalty with 32 percent of the surveyed customers saying they will increase the proportion of travel they do by train

Industry associations have recognized the impact the SJ loyalty program has had on SJ with multiple awards Gartner recognized SJ as a runner-up for the CRM Excellence award SJ also won the Golden Relationship Prize 2008 and the Golden Key Award for best CRM initiative of 2008

SJ has achieved payback on this initiative within two years with an ROI of more than 100 percent (see Figure 4) The project timeline is pictured in Figure 5 and the overall benefits are captured in Table 1

The Metrics of Success

SJs Loyalty Program

bull Approximately 470000 members

bull 90 percent penetration into

target market

bull Loyalty campaigns achieve a

100 percent follow-up rate and up

to a 25 percent conversion rate

bull Loyalty program members

produce significantly more

revenue than nonmembers

bull Increased customer loyalty

32 percent say they will increase

the proportion of travel they do

by train

bull Improved trainload utilization

and route profitability

bull Project payback within two years

ROI of more than 100 percent

bull Recognition Gartner CRM

Excellence runner-up Golden

Relationship Prize 2008 Golden

Key Award

13

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

Returning to purpose The returning-to-purpose phasemdashthe explanation of why SJ had embarked on this initiativemdashsaw the launch of a campaign inspired by Time Magazinersquos 2006 ldquoPerson of the Yearrdquo award where the cover image that year included a Mylar reflective mirror SJ managements intent was to emphasize to frontline staff that they were the most important factor in building true customer loyalty

Changing the changes SJ devoted a significant amount of time anticipating potential risks and invested heavily in processes to ensure that barriers to adoption were successfully addressed

Building participation and engagement Both SJrsquos CEO and the senior vice president of business development agreed to personally sponsor the initiative which subsequently ensured the buy-in and engagement of divisional heads (for example the senior vice presidents of Sales and Onboard Staff) and front-line staff

Because the cultural change initiative was successful SJ was able to redesign critical customer-facing processes across its sales support and services functions in a way that improved the overall customer experience For example it was able to begin distributing tickets across multiple channels and introduce new value-added services such as onboard meals internet access and car rentals upon journeyrsquos end in response to demands of different customer segments

SJ also depends on Siebel Loyalty to provide 360-degree member information (including CLV) to deliver the right levels of support to members and their households Future plans call for SJ to deploy an integrated loyalty view across all customer touchpoints so that all customer-facing employees are aware of the value of each member Using predefined business rules in the Siebel solution employees will be able to tailor the travel experience to reflect membersrsquo preferences as well as value to the organization

12

Benefits of a Customer Focus for SJ

The SJ loyalty program has been a resounding success As of May 2009 the program has approximately 470000 members and has achieved a 90 percent penetration into its target population Swedish business travelers Today loyalty members produce significantly more revenue than nonmembers and are also more-satisfied customers according to a survey sponsored by SJ In addition SJ can run loyalty campaigns that achieve a 100 percent follow-up rate and up to a 25 percent conversion rate Among other benefits SJ has been able to improve the utilization of trainloads and thus the profitability of many routes

The company has also achieved significant progress on the customer satisfaction front with substantial improvements in both NPS and NKI scores Customer surveys point to increased loyalty with 32 percent of the surveyed customers saying they will increase the proportion of travel they do by train

Industry associations have recognized the impact the SJ loyalty program has had on SJ with multiple awards Gartner recognized SJ as a runner-up for the CRM Excellence award SJ also won the Golden Relationship Prize 2008 and the Golden Key Award for best CRM initiative of 2008

SJ has achieved payback on this initiative within two years with an ROI of more than 100 percent (see Figure 4) The project timeline is pictured in Figure 5 and the overall benefits are captured in Table 1

The Metrics of Success

SJs Loyalty Program

bull Approximately 470000 members

bull 90 percent penetration into

target market

bull Loyalty campaigns achieve a

100 percent follow-up rate and up

to a 25 percent conversion rate

bull Loyalty program members

produce significantly more

revenue than nonmembers

bull Increased customer loyalty

32 percent say they will increase

the proportion of travel they do

by train

bull Improved trainload utilization

and route profitability

bull Project payback within two years

ROI of more than 100 percent

bull Recognition Gartner CRM

Excellence runner-up Golden

Relationship Prize 2008 Golden

Key Award

13

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

Benefits of a Customer Focus for SJ

The SJ loyalty program has been a resounding success As of May 2009 the program has approximately 470000 members and has achieved a 90 percent penetration into its target population Swedish business travelers Today loyalty members produce significantly more revenue than nonmembers and are also more-satisfied customers according to a survey sponsored by SJ In addition SJ can run loyalty campaigns that achieve a 100 percent follow-up rate and up to a 25 percent conversion rate Among other benefits SJ has been able to improve the utilization of trainloads and thus the profitability of many routes

The company has also achieved significant progress on the customer satisfaction front with substantial improvements in both NPS and NKI scores Customer surveys point to increased loyalty with 32 percent of the surveyed customers saying they will increase the proportion of travel they do by train

Industry associations have recognized the impact the SJ loyalty program has had on SJ with multiple awards Gartner recognized SJ as a runner-up for the CRM Excellence award SJ also won the Golden Relationship Prize 2008 and the Golden Key Award for best CRM initiative of 2008

SJ has achieved payback on this initiative within two years with an ROI of more than 100 percent (see Figure 4) The project timeline is pictured in Figure 5 and the overall benefits are captured in Table 1

The Metrics of Success

SJs Loyalty Program

bull Approximately 470000 members

bull 90 percent penetration into

target market

bull Loyalty campaigns achieve a

100 percent follow-up rate and up

to a 25 percent conversion rate

bull Loyalty program members

produce significantly more

revenue than nonmembers

bull Increased customer loyalty

32 percent say they will increase

the proportion of travel they do

by train

bull Improved trainload utilization

and route profitability

bull Project payback within two years

ROI of more than 100 percent

bull Recognition Gartner CRM

Excellence runner-up Golden

Relationship Prize 2008 Golden

Key Award

13

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

ldquoNew customer offers combined with improved quality

have strengthened our market positionrdquo

Jan Forsberg CEO SJ

Figure 4 Payback Details

Investment Costs and Benefits MSEK Net Present Value MSEK

0 Year 0 Year

Benefits Costs

Million Swedish Kroner

Figure 5 Project Timeline

2005 2006 2007 2008 2009

SJ Loyalty Program Phase I Plan and Analysis Design Build Test Technical Go Live Post Go Live support Pilot and Commercial Go Live

SJ Loyalty Program Phase II Design Build Test Go Live

Application Maintenance

14

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

ldquoSJrsquos vision of transforming a public sector company into a modern profitable

customer-centric organization is an unqualified success and Oracle is pleased

to be an enabler for SJrsquos success and strategic positioning for the futurerdquo

Harry Stehrenberger Vice President EMEA Oracle Corporation

Table 1 Benefit Drivers and Impacts

Benefit Category Metric Result Comment

Targeting and Average number of leads 12000 Number of leads per cam-offer generation generated per campaign paign is trending upward

Campaign follow-up rate 100 Exceeded SJrsquos

corporate goals

Conversion rates 10 to 25 Achieved above-average

industry conversion rates

Average ROI per

campaign

1500 Significantly exceeded

SJrsquos expectations

Loyalty revenues Average revenue per SEK$35000 SEK$9000 Significantly higher than and satisfaction member per tier and

trend

and SEK$1000 for a nonloyalty-program

traveler

Penetration in target

population (SJ cardholdshy

ers commuters and

business travelers)

91 60 and 45 Penetration more than

exceeded goals

Customer satisfaction

(service level on-board

and member services)

73 positive Early survey results

indicate loyalty members

are more satisfied than the

overall customer base

Program and analytics

TCO Analytics and

reporting costs

Loyalty program costs

Less than 001

of revenues

Less than 001

of revenues

IT costs minimal due to

prebuilt KPIs and reports

Even as revenues inshy

crease program costs

will not increase in the

same proportion

15

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

ldquoWe wouldnrsquot have realized our All Aboard strategy without

Siebel Loyalty and Oraclersquos commitment in getting value for

us in the fastest time with minimal riskrdquo

Jan Olson Senior Vice President Business Development SJ

Conclusion

SJrsquos approach to enabling greater customer centricity was transformational paving the way for a new phase of profitable growth for the company Oraclersquos Siebel Loyalty has enabled SJ to significantly drive down IT and marketing costs by leveraging prebuilt Web services to integrate with partners using prebuilt analytics and key performance indicators (KPIs) to support campaigns and deploying member and program analytics to enable cost-optimized communication channels with customers SJ also used Siebel Loyalty to create a centralized customer information repository to build a single point of truth about customers This repository was also the foundation for identifying key customer trends

By taking a multifaceted approach to customer centricity through a disciplined implementation of Siebel Loyalty SJ was able to significantly and substantially increase revenue growth and profitability

SJs story is a best practice model for companies that are looking to radically shift their orientation and address the need for greater customer centricity SJ has proven that a multifaceted approach to customer centricity disciplined implementation and an integrated technology platform can significantly and substantially increase revenue growth and profitability

CONTACT US

For more information please visit oraclecominsight or send an e-mail

to insight_wworaclecom

Outside North America visit oraclecomcorporatecontactglobalhtml to find the phone number for your local Oracle office

16

Oracle Corporation

Worldwide Headquarters 500 Oracle Parkway

Redwood Shores CA

94065

USA

Worldwide Inquiries Phone

+16505067000

+1800ORACLE1

Fax

+16505067200

oraclecom

C16885

Authors Venki Rajah Senior Director Industry Strategy and Insight Oracle Claes Lindholtz Director Customer Programs and Customer Analysis SJ

Copyright copy 2009 Oracle andor its affiliates All rights reserved Published in the USA This document is provided for information purposes only and the contents hereof are subject to change without notice This document is not warranted to be error-free nor is it subject to any other warranties or conditions whether expressed orally or implied in law including implied warranties and conditions of merchantability or fitness for a particular purpose We specifically disclaim any liability with respect to this document and no contractual obligations are formed either directly or indirectly by this document This document may not be reproduced or transmitted in any form or by any means electronic or mechanical for any purpose without our prior written permission

Oracle is a registered trademark of Oracle Corporation andor its affiliates Other names may be trademarks of their respective owners 09028746