“American business has
developed an insane
imbalance between obsessive
customer acquisition and
negligent customer retention”
Basic objectives for Loyalty programs
• Retain best, most profitable customers
• Make good customers better
• Acquire customers with potential to become
best customers
• Reconnect lapsed users with the brand
• Revitalize the brand’s relationship with its
core franchise
Appropriate question is not will a
loyalty program attract new
customers or will it increase our
retention rates. But will it grow
the profitability of our customers
Principles of Loyalty Marketing
• Relevance is the key to Loyalty Marketing
– The magnitude of the reward is less important
that the perceived value of the reward
• Benefits - Intermittent scheduling of rewards
(“surprises”) can be more effective than regular
scheduling
• Special treatment
• Recognition
• Loyalty Marketing reduces the consumer’s
decision-making complexity
• Loyalty Marketing reinforces the rightness
or wrongness of the consumer’s choice
• Loyalists represent an incremental sales
force
• Loyalty Marketing is informationdependent
What is Loyalty?
The consumer is loyal to you is s/he frequently buys your
product
Desired Behaviour
Low
High
Loyal
Behaviour
The consumer is not necessarily
desirable...
Desired Behaviour
Low
Loyal
Behaviour
High
• If you have had to subsidize their purchases
• If s/he buys your product because of inertia or
absence of an alternative
Potentially
Loyal
Behaviour
Actively
Loyal
Behaviour
Passively
Loyal
Behaviour
Low
High
Commitment is an emotional
bonding
Low
High
Desired Behaviour
The actively
loyal customer
is the only (long
term) profitable
customer
High
Extend the relationship from
Product to Brand
Depth of Involvement
reflects moving from a
narrow relationship with
an individual product to
broad usage of the
full range of
products
marketed
under the brand
Low
High
Desired Behaviour
High
Commitment
Actively Loyal
to the Product
Low
High
Desired Behaviour
Actively Loyal
to the Brand
High
Commitment
An index of behaviours
that reflect a CM’s
attachment to AMEX
- Tenure of membership
-Total number of trans.
per month
- Months active
- Total number of services
currently active
- Share of plastic spending
- Survey responding and
responses
AMEX
Total $ revenue from all AMEX
products and services
- Total $ spending across all AMEX cards
- Total $ annual card fees
- Total revolving balances on Optima
Low
High
Desired Behaviour
An index of the number of points
of connection with AMEX
- Total number of types of cards held
- Total number of basic cards
- Total number of services currently enrolled in