Loyalty 2.0

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Loyalty 2.0 Five Key Elements of NextGeneration
Loyalty Sean McDonald, Dell Scott Ekman,
Rockler David Rosen, Loyalty Lab
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About Dell

• Founded in 1984 by Michael Dell
• Direct Model is the foundation for Dells
  business
• Dell maintains a consistent focus on offering the
  best value and customer experience
• Dell is a trusted technology innovator with a
  diversified, comprehensive IT portfolio
• Dell is a global company committed to its
  customers and employees
• Ranked 34 of Fortune 500 (2007)
• Revenue
• Q2 Preliminary Revenue of 14.8 Billion

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Dell Community
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5 Customer Needs of Community
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Community Loyalty

• The loyalty program at Dell is focused of the
  relationship between
• Dell and the Community.
• The 3 programs listed below allow Dell to
  recognize our Community contributions.

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DellCommunityLoyalty
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About Rockler

• Founded in 1954 by Nordy Rockler
• Started as a mail order woodworking supply
  company first retail store opened in 1978
• Internet Retailers Best of the Web Top 50 Web
  Sites (2005)
• 100M 2006 revenue
• Publishes key trade journals, ezines

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Rockler Rewards
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About Loyalty Lab

• A market leader
• We are the fastest-growing provider of loyalty
  program management for consumer brands
• A game changer
• As a Software-as-a-Service company we deliver
  best-of-breed loyalty technology over the
  Internet
• A thought leader
• We are seasoned loyalty experts who build our
  expertise into our product and provide ongoing
  hands-on service and support

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The New Customer Loyalty Imperative

• The basic tenants of loyalty are still relevant
• Learning from your customers so you can respond
  intelligently
• Aligning incentives to best protect and grow LTV
• Enhancing brand and strong personal feelings of
  your best customers
• Next Generation of loyalty essentially uses new
  tools to allow marketers to do all these things
  better, in ways more aligned to the changing ways
  customers are interacting with you

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High Return on Investment

• Efforts invested in best customer management far
  outstrip other marketing efforts
• 10 increases in marketing effectiveness result
  in x increases in customer value

Gupta, Lehmann Stuart, Valuing Customer,
Marketing Science Institute, No. 01-119, 2001
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The new loyalty paradigm

• Broadens the definition of customer lifetime
  value its not just transaction dollars
• Extends the description of the customer
  relationship -- customers actions influence each
  others lifecycle development
• Better recognizes and responds to the obvious and
  subtle differences in customers
• Successfully rewards both purchasers and
  advocates
• Follows the customer where she goes and better
  influences who she knows

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5 Key Elements

• 1. Identifies, Segments and Differentiates
  Customers
• 2. Makes Boundaries Flexible and Extendable
• 3. Enhances Your Brand Among Best Customers
• 4. Aligns Directly with Company Success
• 5. Promotes and Facilitates Two-Way Engagement

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Identify, Segment, Differentiate

• Recognizes and adapts to deeper levels of
  consumer affinity
• Clubs join tiers as special places
• Magnitude changes in
• Offer targeting and eligibility
• Communication strategies
• Earning means
• Rewards

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MyCoke Rewards
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Flexibility and Extendibility

• Earning and Burning features grow by extending
  program to strategic partners
• On-brand partners tap into the insights,
  community and buying power of great programs
• The more valuable the program to members, the
  more likely they will be to engage

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Extending Loyalty to On-Brand Partners
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Marketers are Searching for Ways to Tap into
Social Loyalty
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Enhances Brand

• Shifts focus from self promotion of retail
  brand
• To member promotion of retail brand
• Recognizes and rewards members contribution to
  positive share of voice
• Commenting
• Reviewing
• Referring

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Viral Advocacy
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Viral Advocacy
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Viral Advocacy Thru Facebook
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Aligned to Company Success

• Ties point-earning/benefits to deeper
  understanding of LTV
• Increased gross margins
• Lower cost to serve
• Lower acquisition costs
• Higher conversion rates
• Ratings and reviews

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The Power of Customer Reviews
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Promotes Two-Way Engagement

• Loyalty 2.0 heavily focused on dynamic, two-way
  interaction
• Drives significant consumer insights through deep
  set of tools
• Collaborative message boards
• Forums
• Frequent, targeted market research

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Forums
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Idea Sharing