Aimia Case Studies

Helping Homebase build stronger customer relationships

Thu, 15 Mar 2012 11:00:00 -0400

How Aimia ensured a seamless transition from a legacy loyalty programme to Nectar
By Jan-Pieter Lips, Managing Director, Nectar UK

Read the full study by downloading the PDF.

Summary

Homebase, the UK’s leading home improvement retailer, is recognised for its choice, style and customer service across the wider home improvement market. Before joining Nectar in 2009, Homebase operated the UK’s fourth largest loyalty programme, Spend & Save, for 18 years. Nectar offered a coalition loyalty value proposition with broader appeal, which Homebase believed would help the retailer deliver higher sales by leveraging Nectar’s ability to deliver cost effective, one-to-one targeted marketing. Homebase saw this option as an attractive alternative to Spend & Save, which had seen declining KPI s and had a more niche appeal.

Challenge

Spend & Save was an established loyalty programme, with a high penetration of sales. Homebase considered it critical that the programme’s 4.2 million active members were migrated seamlessly to Nectar.

The transition team immediately identified one potential roadblock to a smooth transition to Nectar: Spend & Save offered a 10% programme funding rate to its top tier customers—a very rich value proposition indeed. It was therefore crucial that the team managed the transition to the coalition in a way that maintained the strong loyalty of these top tier customers. Fortunately, Nectar’s strong UK brand, as well as its ability to deliver Nectar points on a large proportion of household spend across the Nectar partner network, offered a potent alternative to Homebase’s legacy loyalty programme.

The Opportunity

Nectar offered Homebase a loyalty proposition with broad consumer appeal, which would allow the retailer to build stronger relationships with a larger portion of their customer base. Armed with the richer data set and deep analytical insight that Nectar provides, Homebase would gain a more complete view of customer behaviour—a view difficult to achieve in a proprietary loyalty scheme operating in a low-frequency retail environment.

For Homebase, Nectar offered the following core opportunities:

Customer appeal: Nectar’s strong brand and broad earning potential increased the overall appeal of the loyalty proposition. At the same time, the coalition offered Homebase higher sales penetration and increased data capture.
Data-based insight: With the rich data and deep customer insight that Nectar provides, Homebase would gain a more complete customer view that included personal, attitudinal, behavioural and lifestyle data. Leveraged appropriately, this data set would give Homebase the ability to deliver more targeted and relevant offers to Homebase customers.
Category performance: Spend & Save’s simple cash-back programme design limited Homebase to promoting single products in their offers. Nectar’s currency-based structure would enable the retailer to reward cross-sell category activity with bonus point offers targeted to shift customer behaviour.
Multi-Channel communications: Spend & Save relied on a traditional paperbased direct mail model. Nectar, in contrast, allows Homebase to communicate with customers via highly targeted multi-channel communications that include web, email, social media and mobile platforms. The coalition partner model, meanwhile, ensures that programme communications are more cost efficient, with costs shared across the network.

The Solution

To leverage the opportunities identified by the transition team, Nectar and Homebase built a transition solution around three key activities.

The three key activities were:

Home Movers Kit: Nectar redesigned their monthly coalition mailing which is triggered by a Collector changing addresses. The mailing includes a map of the Collector’s new neighbourhood and shows the nearest places to earn and redeem Nectar points. This mailing allowed Homebase to communicate with Collectors at a time in which they are most likely to be considering DIY and home purchases.
Cross Sponsor Initiatives: Coalition loyalty programmes provide partners with the unique opportunity to leverage their mutual strengths and complementary customer bases. Homebase took advantage of this opportunity to create strong awareness of its Nectar launch: Nectar’s fuel retail partner BP supported the launch with POS and forecourt promotions, while card-issuing partner American Express supported it by including a message in one of its direct mail promotions during the launch period.
Customer behaviour analytics: Post-launch, Nectar and Homebase performed detailed data analysis on 12 months of robust transactional data. This analysis revealed eight distinct customer segments within the Homebase customer universe. The segmentation in turn provided the basis for effective in-house KPI reporting and a robust lifestyle marketing communication strategy.

The Result

The move to Nectar drove improved programme value perception that leveraged the coalition’s broad consumer appeal.

Key positive results included:

Spend & Save’s 4 million member customers have grown to over 7 million Nectar collectors who now shop at Homebase.
The Home Movers Kit direct mail campaign continues to achieve overall response rates of more than 20%.
The customer segmentation and lifestyle communication strategy continues to deliver incremental sales.

Promotional deals and events offer the customer further savings on top of Homebase’s already great prices, and the use of storewide or categoryfocused promotions helps to drive footfall and incremental sales. Working together, Nectar and Homebase continue to build strong relationships with Homebase’s best customers.

“The first year working with Nectar exceeded our expectations. Nectar is a clear advantage versus our competition: We have seven million active customers, it has broader customer appeal, and delivers higher sales. Using Nectar to connect with our customers is a real opportunity for the future. It’s an opportunity to drive sales by a focused programme of direct marketing, to drive loyalty by rewarding our frequent, loyal shoppers, and also to use the insight to improve the shopping experience for the customer.” - Paul Loft, Managing Director, Homebase

Looking After Your World With British Gas and Nectar

Thu, 15 Mar 2012 11:00:00 -0400

How British Gas and Nectar exceeded first-year targets and expectations.
By Jan-Pieter Lips, Managing Director, Nectar UK

Read the full study by downloading the PDF.

Summary

British Gas (part of Centrica) is the UK’s largest energy and gas provider, operating in a competitive sector which typically suffers from low trust and high churn amongst consumers. In 2010, the company undertook a nationwide listening exercise, which revealed that their customers wanted to be rewarded for their loyalty. In January 2011, British Gas joined the Nectar loyalty coalition with the aim of engaging with and rewarding both current and prospective customers. Launched with a successful multi-million pound integrated campaign, the partnership between British Gas and Nectar exceeded first-year targets and expectations.

Challenge

The energy sector has been suffering a crisis of trust amongst the British public. As Britain’s leading energy supplier, British Gas already employed a proactive customercentric approach to its business that included energy saving tips, technology initiatives to help customers live greener lives in smarter homes, charity and community work, and even sponsorship of the British Gas GBR Swimming Team. Still, British Gas wanted to build on this approach to engage more effectively with its current and prospective customers and build long-lasting loyal relationships with them.

The Opportunity

Joining the Nectar loyalty coalition, the UK’s largest loyalty programme, presented British Gas with the opportunity to differentiate itself in a highly competitive and commoditised market, and to benefit both from the trust that the programme engenders in its collectors and its broad consumer appeal. A partnership with Nectar would enable British Gas to deliver immediate, recognisable and relevant rewards to its customers.

British Gas and Nectar identified the following potential benefits of the partnership:

Churn reduction

Nectar points are a “hook” that helps increase customer retention. Nectar would perform data analysis to identify key points of customer churn, which would allow British Gas to send targeted offers designed to drive retention and renewal.

Reduce cost to serve

From experience across different sectors, the Nectar team knew that Nectar points would be an effective incentive to encourage customers to perform more cost efficient behaviours, including submitting their own meter readings and signing up to pay their bills by direct debit.

First-year Objectives

Enrol 2.35 million British Gas customers into the Nectar loyalty programme within 12 months.
Deliver a positive benefit in churn reduction and Net Promoter Score among customers signed up with the programme.
Acquire 175,000 Nectar collectors as new British Gas customers.

The Solution

British Gas and Nectar worked together to design a customer loyalty solution designed to demonstrate the value of Nectar programme participation and drive retention, renewal and loyalty amongst British Gas current and prospective customers.

Specific elements of the partnership design included:

Programme value proposition: British Gas and Nectar designed a programme value proposition that rewards British Gas customers for performing key desirable behaviours with immediate, recognisable and relevant rewards. British Gas customers who enrol in the Nectar programme receive Nectar points every quarter, just for being a customer. Earning opportunities include points for gas and electricity accounts, points for home services products, and also points for performing specific behaviours that reduce their cost-toserve, including direct-debit bill pay or signing up for paperless billing. Customer collectors also receive bonus points at the end of each year they participate in the programme.
Colleague engagement: Early in the partnership development stage, British Gas and Nectar decided to embed the Nectar programme across as much of the British Gas business as possible with the goal of making the programme integral to all aspects of the customer experience. To facilitate a successful launch, British Gas undertook a 15-site road show to educate 28,000 employees about the launch and deliver training designed to ensure full commitment across the business.
Launch marketing: British Gas launched its partnership with Nectar on 31st January 2011. The company offered a 100-point “welcome bonus” to encourage enrolment, and promoted the launch via a multi-channel media campaign leveraging both mass and direct channels such as television, radio and direct mail through both Nectar and British Gas channels. The television campaign in particular was the highest-scoring advertising campaign undertaken by British Gas in three years.

The Result

The results of the new partnership between British Gas and Nectar speak for themselves.

Engagement: British Gas reached its year-end Nectar enrolment target of 2.35 million customers within 8 weeks of launch. By 31st December 2011, just 11 months after the launch, the company enrolled 3.96 million customers in the programme. Enrolled customers are also over-represented in multiple valuable product segments known to result in higher brand engagement and retention than single-product segments. Furthermore, within the first year over 700,000 existing British Gas customers joined the Nectar programme.
Reduced cost to serve: Over half of enrolled customers perform behaviours that reduce cost to serve, such as signing up for paperless billing.
Marketing ROI: The Nectar offer improved direct mail response rates by 160%.

“Loyalty is complex, and Nectar is an established programme and the market leader, so why would we try to build something in competition with that? Instead we joined forces, and it has been a brilliant decision.” - Chris Jansen, Managing Director, British Gas

Drawing Customers Into the Coke Zone

Thu, 29 Sep 2011 08:00:00 -0400

How Aimia helped the world’s leading beverage brand build relationships.
By Jonathan Harman, Chief Development Officer, EMEA

Read the full study by downloading the PDF.

Summary

Leading beverage manufacturer Coca-Cola engaged Carlson Marketing's (now operating as Aimia) UK business to build an innovative web-based reward program designed to reach the notoriously hard to impress teen market and prompt them to engage with Coca-Cola. The result: Coke Zone is the most successful online packaged goods program in the UK and delivers highly positive return on investment.

Challenge

Headquartered in Atlanta, Georgia in the United States, the Coca-Cola Company is the world's leading manufacturer, marketer and distributor of non-alcoholic beverages, with nearly 400 brands and operations in over 200 countries. Coca-Cola Great Britain markets 21 brands and over 100 products to consumers in the United Kingdom.

Coca-Cola approached Carlson Marketing’s (now operating as Aimia) business in the UK to help them solve a key customer loyalty problem: how to recruit the next generation of Coca-Cola consumers, whilst maintaining the loyal consumer base they had built over 125 years of existence.

The Opportunity

As designers and operators of loyalty programs for some of the world’s biggest and best-known brands, we know that customers are a brand’s most valuable assets. We also knew that Coca-Cola’s historic brand equity combined with a robust customer database could provide insight that keeps their customers engaged between promotions. We identified the following areas of opportunity to build a reward strategy for Coca-Cola in the UK that captured loyalty and built marketing ROI:

Capture customer insight: Customer data is the key to retaining high-value households and driving cross-portfolio trial and adoption at key life-stages. Packaged goods manufacturers typically struggle to capture proprietary data on individual customers; however through driving unique code entry from products provided a way to build a robust customer database.
Encourage customer engagement: Coca-Cola needed an interactive virtual environment with web content designed to reach the notoriously hard-to-impress teen market, as well as unique and entertaining rewards designed to capture interest and drive customers to the virtual environment.
Integrate with global CRM efforts: We knew that any marketing activity in the UK market needed to integrate with Coca-Cola’s global loyalty strategy to maximize cost efficiencies.

Our goal: Give UK consumers another reason to choose Coke lest they lose out on unique rewards and experiences that only Coke can deliver.

The Solution

Carlson Markeing (now operating as Aimia) helped Coca-Cola design and execute Coke Zone: An innovative rewards program that combined a compelling web experience with unique promotions designed to capture interest and drive customer insight back into the program. Our solution included:

A differentiating rewards program: We devised a “lean forward” CRM/Loyalty program that used on-pack code entry to engage loyal Coke consumers with prize draw entries, rewards and unique experiences.
A multi-channel communications plan: We created Web and mobile communications channels to feed Coca-Cola’s global insight database, deliver behaviour-triggered message prompts, segmented emails and SMS communications.
Brand extension into social media: We helped Coca-Cola execute a Christmas campaign that gave consumers the opportunity to tweet personal Christmas messages that appeared on the iconic Piccadilly Circus sign in London. The promotion was designed to increased the brand’s Twitter followers and acquire new Coke Zone members.
Program ROI: We worked with Aimia’s sister company LMG Insight & Communications (now operating as Aimia) to establish robust incremental revenue attributable to the Coke Zone platform.

The result of our efforts: Coke Zone, an interactive web-based reward program environment designed to reach the notoriously hard to impress teen market and prompt them to engage with Coca-Cola—and keep them coming back for more.

The Result

The results of our work on the Coke Zone reward program are phenomenal:

The most successful packaged goods program online in the UK as measured by average dwell time, page views and unique visitor numbers.
Highly positive ROI, based on observed consumption uplift of members participating in the two leading grocers in the country.
Strong enrolment among the key hard-to-reach audience of teens and young adults.

Coke Zone is now consistently the UK's no.1 Food & Drink brand website.

Thanks to Aimia’s partnership with Coca-Cola in the UK, the world’s No. 1 beverage brand, Coca-Cola now has an always-on relationship portal for consumers, combining revenue-driving loyalty, brand immersion and relationship marketing into a winning formula for their best customers.

Playing with Customer Loyalty

Wed, 28 Sep 2011 08:00:00 -0400

How Aimia’s Loyalty Analytics team uses customer segmentation to drive loyalty.
By Peter Gleason, President, Intelligent Shopper Solutions

Read the full study by downloading the PDF.

Summary

UK-based online retailer Play.com engaged Aimia to build a customer segmentation strategy that would improve the effectiveness of its email communications. We designed the customer segments, devised a dynamic communications plan and tested the results over a six-week test period. The trial resulted in demonstrable incremental revenue that demonstrated the power of transaction data in action.

Challenge

Play.com, is a UK-based online retailer of DVDs, CDs, books, gadgets, video games, music downloads, and other electronic products, as well as clothes and accessories. Founded in 1998, Play.com is now one of the biggest online retailers in the United Kingdom.

Play.com asked LMG Insight & Communication’s (now operating as Aimia) team to leverage its customer insight capabilities to help them enhance the ecommerce site’s performance. The site’s existing communication stream consisted of a “one size fits all” bi-weekly email newsletter sent to every one of the site’s seven million contactable customers. The challenge for LMG Insight & Communication (now operating as Aimia) - build a customer segmentation strategy that would build loyalty, drive engagement and increase profits.

The Opportunity

Play.com hoped to unlock the profitability of its customer file by engaging LMG Insight & Communication (now operating as Aimia) to answer the following key questions:

How do we improve the impact of our bi-weekly communications?
How do we increase response rates, average spend per customer and customer retention rates?
How do we make the best use of our existing newsletter without disproportionately increasing costs?

A core principle of loyalty management holds that loyalty increases as marketing relevance increases - if you market to customers in smaller clusters based on their value, potential, life stage, stated preferences or their purchase history, the increased value of the resulting offers to individual consumers will result in profitable behaviour change.

We knew in theory that a robust customer segmentation strategy would enhance the effectiveness of Play.com’s communications — and we were eager to put that knowledge to the test.

The Solution

By analyzing Play.com’s customer transaction data to understand the behaviour of different clusters of customers, we were able to group together discrete customer segments with similar shopping habits and interests. First, we created “Pen portraits” - descriptions of key customer segments that include age and other 'hard' variables as well as softer dimensions such as attitudes, appearance and lifestyle. Then we used these new customer segments to develop more customized methods of contacting them.

This analytics work helped us to design a communication plan that allowed Play.com to target these customer segments with relevant product offers - for example, customers who usually purchased computer games would be sent offers for newly released games or gaming consoles. Our segmentation allowed us to drill down into specific customer variables such as “music preference” to send offers that would appeal to customers at the level of the individual.

Next, we conducted a test email campaign over six weeks. We replaced the existing generic newsletter with dynamic communications designed to appeal to the four main customer segments we had created.

The Result

Thanks to our segmentation strategy, Play.com could now see the power of transaction data as a marketing tool in action. We also demonstrated how you can track and analyse individual marketing campaigns to gauge their ability to influence customer behaviour and build loyalty. Here’s a look at our high-level results:

Incremental Revenue: The test campaign was a great success, producing incremental revenue of £530,000 over the six-week test period.
Incremental Net Profit: We also projected that, if rolled out over a full year, the new communications plan would provide additional revenue of £4.6 million and deliver £500,000 in incremental net profit.

Our work provided a platform for Play.com to use their new segmentation strategy to increase repeat business, win back lapsed customers and reduce communication opt-out rates. The project demonstrated a classic exchange of customer information for increased value that leads to stronger customer loyalty. Who says that work and play can’t mix?

Nurturing Relationships With Pampers®

Mon, 12 Sep 2011 09:00:00 -0400

A CPG loyalty strategy to grow on
By Peter DeNunzio, President, U.S. Customer Loyalty

Summary

Procter & Gamble Co. (P&G), a Fortune 500 multinational manufacturer of consumer goods based in Cincinnati, Ohio, chose Carlson Marketing’s (now operating as Aimia) to help them revamp and relaunch the “Gifts to Grow” consumer loyalty program for their Pampers® brand of infant care products. We revamped the program value proposition, deployed data analytics to identify key consumer behaviors, designed a trigger-based communication plan, and optimized the reward portfolio to improve program ROI and create sustainable loyalty from Pampers’ best consumers.

Challenge

Pampers® and other baby care brands face a marketing challenge unique even among other packaged goods brands that struggle to form direct relationships with their best consumers. Infant care brands have a finite amount of time to engage expectant and new mothers to form profitable relationships with them. To tackle this problem, P&G had piloted consumer loyalty programs with mixed results in both loyalty and marketing return on investment (ROI). Their current program, “Pampers Gifts to Grow Rewards,” was collecting plenty of data and rewarding moms for sharing it—but P&G felt the program still possessed untapped potential.

The Opportunity

P&G hired Carlson Marketing (now operating as Aimia) in 2009 and challenged us to refine the strategy and tactics of “Gifts to Grow” while keeping the successful core of the program intact. When strategy, tactics and execution work together efficiently and effectively, brands can operate profitable loyalty programs without wasting time and money.

A well-designed program can help a CPG brand build profits along multiple fronts: It increases incremental purchase behavior and brand affinity among the brand’s best consumers, it increases the influx of partner dollars to help mitigate program cost, and it increases the engagement level of the brand’s retailer partners. Working closely with the Pampers® brand team, we identified the pain points in the “Gifts to Grow” program:

Customer attrition: First, we identified key points of consumer defection, and developed trigger programs that could be implemented at those points to help keep moms in the program.
Marketing ROI:Program profitability suffered from a point-per-dollar approach to earning rewards that offered the same number of points on purchases of products with vastly differing sales margins. We were determined to help P&G manage the earn metrics more effectively.
Data usage: We also knew that the program would become stronger and more effective if we better leveraged the transaction data. Smarter program management, coupled with a strong use of data not only keeps moms loyal, but it also reduces costs.
Consumer experience: Generally, we wanted to improve the overall consumer experience, making sure that every interaction with the program (whether through a seamless sign-on, better e-catalog or text-to-enter functionality, for example) was as efficient and effective as possible.

Armed with these points of attack, we defined our opportunity: To help Pampers improve program results across the spectrum from consumer engagement to program ROI. These improvements were, we knew, key to building sustainable loyalty.

The Solution

Carlson Marketing (now operating as Aimia) delivered a completely revamped “Gifts to Grow” program strategy designed to improve performance across the board. Our revamped program design focused on three key areas of improvement:

Program value proposition: We designed a value proposition that better aligned earning velocity with product margins and brand focus. We moved from a 1 to 10x point strategy, eliminated fractional points and increased point flexibility. Then we realigned the earning structure to reflect product margins so that moms received more points for purchasing higher-tier diapers.
Customer behavior analytics:Data analysis revealed eight key member behaviors that helped predict a mother’s lifetime consumer value. Then we designed a communication plan focused on moms at risk of leaving the program, with trigger offers to drive desired behaviors.
Reward optimization:By reinventing the program reward matrix, we improved the reward selection while decreasing program costs. We also leveraged the data to better align rewards with behavior. Pampers’ strong brand equity, backed by a database of new mothers attractive to program partners, allowed us to procure rewards at optimized costs and deliver a significant discount on reward retail value.

The Result

Millions of moms, millions of product code entries and millions of reward redemptions later,P&G can point to proven metrics of program success.

Acquisition: Monthly new customer acquisitions 50% above program benchmarks.
Activation: Active Members at 135 IYA; expected double growth by end of 2012.
Engagement: Visits to GTG at 150 IYA; engaged member email response above industry average.
Growth: Significant consumer share shift after joining program.

The revamped Pampers “Gifts to Grow” program has proven so successful that P&G expanded the program to Japan. Consumer relationships need to be nurtured—and together, P&G and Aimia will continue to provide value for new mothers who have some nurturing of their own to do.