Best Practices in · Best Practices in Retailer-funded Rewards and Bank-Retail Partnerships October...
Transcript of Best Practices in · Best Practices in Retailer-funded Rewards and Bank-Retail Partnerships October...
Best Practices inRetailer-funded Rewards and Bank-Retail Partnerships
October 5, 2007
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PresentersPanelists
Scott Johnson Senior Director – Marketing, Blockbuster
Cheryl Hintz Vice President – Payment Products, US Bank
Jonathan Silver President & CEO, Affinity Solutions
Moderator
Jonathan Gagliano Executive Vice President – Affinity Solutions
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Affinity Solutions OverviewRelationship marketing firm helping banks and retailers build loyalty through customized platforms focused on customer ‘affinities’
Pioneered merchant-funded debit rewards – coupon, automatic, experiential, SKU-level, enterprise
20 institutions, 4 of the top 10 debit card issuers
Developed customer segmentation models based on diverse credit, debit, and prepaid card programs totaling more than 40+ million cards
Established nearly 1,000 retailer relationships with over 40,000 locationsNational retailers with in-store offersRegional/local retailer network with in-store offersOnline retailers and offers
Value PropositionBank: reduces cost liability to support programRetailer: generates new shoppers and incremental purchase behaviorCustomer: up to 25% in rewards versus traditional programs at 25 bps to 100 bps
Developed and facilitated new partnership marketing opportunities for banks and retailers
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Program Currency
• Cash Back• Points• Rebates• Coupons• Other Products
• In-Branch– Print– Face to face
• Phone Center– Inbound– Outbound
• Direct mail• Internet/email• TV/radio/
publications• Affinity groups to
target
• Segment specific content
• Objective relevant content
• Interactive Tools• Data gathering
tools – surveys, polls, preference centers, automated information tools, indexes, search tools, etc.
• Brand consistent• Segment
consistent• Segment specific• Objective relevant• Currency specific• Revenue share• High perceived
value• High frequency• Status/aspiration
• High risk• High value• High tenure• Multiple product• Demographic• Life stage• Life event• By spend• By product• By usage• By activation
status• Affinities
• Customer satisfaction
• Increase share of wallet
• Increase activation• Increase usage• Reduce attrition• Increase cross sell• New revenue
streams• Increase profitability• Drive to lower costs• Increase acquisition
ObjectivesMerchant
Categories & Partners
Communication/Campaign
Touch Points
Dialogue Tools & Engagement
Devices
Segmentation/ Modeling/Targeting
AFFINITY’S VISION: Merchant-Funded Rewards Programs
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Our Goal Is To Ensure That Each Stakeholder Wins
Consumer
U.S. Bank Blockbuster
Gets• Opportunity to
profitably increase revenue/loyalty
• Access to a large consumer data base
Gets• Automatic rewards from
BLOCKBUSTER when cardholders use their check card
Gets• Relevant offers• Easy to earn and
understand
Gets• Incremental card usage• Enhanced customer loyalty
Gets• Partnerships with leading
retail brand• Differentiated offers for
U.S. Bank’s customers
Gets• Ability to target existing and
competitors' customers• Leverage of multiple mediums• Enhanced customer loyalty
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Positioning & Segmentation Model
CUSTOMER LEVEL DATA
Transaction History/Spend Data
Response History of Prior Promotions
Preference/Survey/Poll Data
Web Usage/Purchase Behavior
Demographic/Psychographic Append Data
Targeted Customer
CUSTOM MARKETINGSTRATEGY/BUSINESS RULES
Offers vary based on share of wallet in MCC/SIC
Customer lifecycle model
Threshold offers
Frequency offers based on spend over time
Offers tied to purchase cycle
Buying tools
Life event offers, e.g., new parents, new movers
Recognition/status rewards
Communication strategy
Encourage specific behavior, e.g., bonus for shopping on weekdays, when activity is lower
INFORMATION FROM RETAIL PARTNERS
Target life stages, lifestyles, and life events
Seasonal factors
Competitive set
Average transaction sizes/purchase cycle
How purchase decision is made
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Sample ‘Affinity Segments’Affinity Segment Savings from
retailers like …Plus exclusive services, such as …
And shopping content from leading magazines …
Home Entertain-ment Active
BLOCKBUSTER, Pizza Hut, Borders
Personalized DVD finder
Entertainment Weekly
Young Families Toys R Us, BLOCKBUSTER, Chuck E. Cheese
Family activity reminders
Family Fun, Parents, Parenting, Cookie
Technophiles CompUSA, Circuit City, BLOCKBUSTER
New gadget guide Wired, Cargo
Avid Homeowners
Home Depot, Bed Bath & Beyond, BLOCKBUSTER
Home warranty folder House & Garden, Domino,
Heavy Travelers United Airlines, Hertz, Starwood Hotels, Busch Entertainment
Travel service Condé Nast Traveler, Golf Digest
Health Oriented Seniors
Rite Aid, GNC, Bally Fitness
Personalized health guide
Self, Prevention
Fashion-Conscious Women
Payless, Ann Taylor, Macy’s, GAP
Special sale announcements, reminder services
Lucky, Allure, Glamour, Vogue, Teen Vogue, Jane
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BLOCKBUSTER: Identifying the Segments With a High Propensity to Shop Incrementally
Target Segments
Home entertainment active
Dining/outsideentertainment active
Young families
Competitive shoppers
New movers
5 Million+ Consumers
500 Million Card Transactions
$20BB Spend
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Entertainment active segment might receive:
1. Higher-value offers from Blockbuster
2. ‘Value add’ content from Entertainment Weekly (reviews, ‘if you like film X, you’ll like film Y’)
3. Spend $15+ on USB card at BB and get free EW magazine subscription
4. Win trip to Oscars – entereach time you shop at BB with USB check card
5. Developing mobile cap-ability to deliver content real-time before/during shopping experience
Next Step – Enhancing ‘Affinity’ Consumer Experience
Financial Services Co-Marketing Overview
BLOCKBUSTER name, design and related marks are trademarks of Blockbuster Inc ©2007 Bockbuster Inc all rights reserved.BLOCKBUSTER name, design and related marks are trademarks of Blockbuster Inc ©2007 Bockbuster Inc all rights reserved.
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Digital Entertainment: The State Of The Industry• HDTV: 12% of U.S. households are current receiving HDTV service• Cable/DBS: 57% of all U.S. households subscribe to cable while 24% subscribe to
satellite.• DVD Player Ownership: The number of households having a console DVD player
increased from 63% in 2005 to 66% in 2006.11% of households have a recordable DVD player, up from 6% last year.
• Movie attendance: 34% of households reported that at least one family member saw a movie at a theater. This was down from 37% in 2005.
• Video Game Consoles: 40% of all U.S. households have a video game console which is equal to last year’s incidence
• PPV: 9% of all U.S. households ordered a movie on PPV during the past 30 days, a similar incidence compared to a year ago.
• VOD: 6% of all households have ordered a movie on VOD in the past 30 days compared to 4% last year.
8% of all households have ordered Free VOD (TV shows, music, concerts, etc) in the past 30 days compared to 5% last year.
• DVRs: 14% of all U.S. households have a DVR, up from 10% last year.• Downloading: 4% of all U.S. households have downloaded a video, up from 3% last
yearBroadband, DSL and cable modem penetration have all increased since last year while dial-up has declined.
Source: Centris Q4 2006 and 2005
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74MM customer visits monthly1
100% brand awareness among active movie renters
65% of US lives within 10 minute drive
Transactional and Monthly Subscription rental terms available
BLOCKBUSTER Distribution Points
1 Based on BLOCKBUSTER transaction data. 2Source: Omniture Web Analytics June 2007
In Store Online
3MM+ subscribers to movies by mail service
Movielink digital download service recently acquired
10MM unique monthly visitors2
Monthly Subscriptions from $5.99 to $24.99
31MM Active Member Database
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BLOCKBUSTER Consumer Snapshot
Key Demographics
Escape From RealityFun Occasion
Visitor Profile• 51% of visitors are Female; 49% are Male2
• US average age is 373 ; Our Average age is 342
• Average household size is 2.82 (higher incidence of children in HH)
• Skews slightly affluent
• Average number of persons shopping in groups is 2.1
2 Nielsen Media Research, March/August 2005 BLOCKBUSTER TV Intercept Study, off a base of Persons 12+.3 Total U.S. based off the U.S. Census Bureau’s - July 2005 Middle Series Projections off a base of Persons 12+.4 Based on BLOCKBUSTER transaction data. International rates available upon request.MRI 2006
Entertainment Emotion Connection Participation
EngagedInteractive
Family Or FriendsIn the Know
StimulationRelaxation
Psychographics: (Medium-Heavy Index)• Media Usage – Internet, Pop Culture/Travel Magazines, Sports
Events, Academy Awards, MTV
• Lifestyle – Electronics, Video Games, Travel, Entertain Friends & Family, Social Occasions, Music, Exercise
Active Member Households4 31MMAvg # BB store visits past 4 wks 2.7Avg # DVD rented among renters (1+) 1.9Avg # games rented among renters (1+) 1.1
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Numerous New Entrants to Digital Movie Delivery Space
Source: Centris Q4 2006 and 2005
BLOCKBUSTER Customer Relationship is Key to Differentiation
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Financial Services Co-Marketing StrategyObjectives:
Increase debit, prepaid and credit payment vs. cash; in-store and onlineLeverage partner bank customer relationships and data to drive behavior change
among current and non-customersStrategy:
Partner with select high quality financial services brands to leverage customer data, communication and offers to drive increased spend and loyalty to Blockbuster via debit or credit card paymentUtilize bank customer transaction data to quantify incremental revenue and return on marketing investment
US Bank/Affinity Solutions Program:Unique attributes of program include:
Online offer featuring special monthly rebate to drive loyalty in addition to customer acquisitionIn-store rebates based on threshold spendTargeted offers based on pre customer behavior by segmentPost campaign results tracking based on US Bank and Blockbuster customer data
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Financial Services Co-Marketing Ideas
Potential Future Blockbuster/Bank Card Programs:Integrated in-store offer linking bank product to Blockbuster incentive and customer experience – spike promotionVariable offers from BLOCKBUSTER to track consumer through brand lifecycleSpecial online and in-store entertainment-based incentives for card usage and increased spendWebsite integration between bank loyalty program via RSS feeds/widgets
Add mobile components
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Blockbuster Entertainment Television End Cap
Take-One’s DVD inserts
E-newsletter DVD envelopesOnline Banner Ads
Blockbuster Customer Marketing Touchpoints to Drive Card Usage
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Cash Bonus Rewards was Rolled-out to U.S. Bank customers in October, 2006
Since January 2007:Customer engagement grew by over 90%Qualified spending increased for those in the program an average of 43%Monthly cash rewards to customers increased 62%The number of qualified transactions increased over 105%
Promotion of retail partners is an integral part of overall marketing strategy
Customer segments were targeted specifically to engage specific customers with relevant Cash Bonus Partners
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Positioning & Segmentation ModelThe U.S. Bank Cash Bonus Rewards Program is positioned as an integral benefit of the debit card program.
In and of itself, the cash rewards are positioned as “HUGE” and relevant with the most popular (valuable to the customer) everyday retailers.
Affinity Solutions applied their predictive algorithm to identify individual U.S. Bank card users and align them with relevant retailers and offers.
Segmented cardholder experiences that lead to increased card spend and usage includes:
Promoting Double Cash Back for online purchases to promote online shopping to those who shop online but not through the program website
Creating special offers to acquire those customers who own products with the financial institution’s other lines of business such as Mortgages, and Home Equity for example... Get Cash Back when you use a U.S. Bank Check Card at a home improvement retailer
Creating a reciprocal marketing strategy with Blockbuster that allows both institutions to encourage spend of targeted card users
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Partnership Opportunities
Targeted Customers Targeted Offers Precision Partnership Marketing+ =
Targeting customers to effectively increase card
spend, usage and customer retention
Targeting offers effectively identifies those who shop:
• Exclusively at Competitors
• Exclusive at Retailer
• Dual Shoppers where there is growth opportunity
Apply predictive models that identifies those
customers who have a high likelihood of responding
positively to a precise communication strategy for
the optimal offer
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Panel Discussion
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Questions