Loyalty Marketing Business Model - Team Effort

7/31/2019 Loyalty Marketing Business Model - Team Effort

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Loyalty Marketing Business Model

A Literary Review

Group 4: Aziz Aftiss, Yushen Wang,

Alexandru Bratu, Emer Daly, Bo Zhou



Overview

1) Introduction – Aziz,Yushen

2) Brugha Circle – Yushen, Alexandru

3) Brugha Matrix – Alexandru4) Case Study – Emer

5) Conclusion – Bo

6) References7) Q & A



Loyalty Marketing

Before :

DEMAND > SUPPLY

Now :

SUPPLY > DEMAND

Loyalty Marketing was first introduced in U.S.A by Betty Crocker.

She issued coupons to her customers, which could later be used to redeem forother goods & services.

Later the programme was modernised by the American Airlines



Customer Loyalty Business Model

• The loyalty business programmes took to a good start after the

introduction of the AAdvantage programme by American Airlines with

companies such as American Express, MasterCard, etc...

•

The business model works like this:



Brugha Circle



Brugha Matrix The implementation will be done using the DMADV 3 x 3 Brugha matrix,

because we need a new process to be developed.

DMADV Technical Contextual Situational

Somatic

Reward loyal

customers &

Improve brand

name

Customer

purchasing

patterns

Long line of

purchases & good

credit rating

Psychic

Statistical analysis

on purchases,

Introduction of

attractive offers

Beta testing on

past customers

Data mining

knowledge of

buyer

Pneumatic

Different levels of

loyalty for various

buyers

Quick and efficient

services

Maintain quality,

improve brand

name, verify

efficiency of

market analysis



Customer Loyalty Brand Loyalty

• With constantly developing markets leading company executives have to

develop new tactics to establish a proper Customer Relationship

Management(CRM)[3]

•

With heavy market researching it has been discovered that the frameworkfor understanding customer loyalty requires 3 steps:

• 1. Customer Brand Commitment

– Loyalty as a primary attitude leading to a relationship with the brand

• 2. Customer Brand Acceptance

– Pattern of past purchases, usually done through data mining

• 3. Customer Brand Buying

– Buying brands according to a customer’s characteristics, circumstances

and/or product situation



Case Study – American Airlines

o The reason we chose American Airlines as the case study is to show that

even the first loyalty programme still has a great booming success

o Name of programme: AAdvantage frequent flyer programme (FFP)

o Number of loyal customers(past/present): over 50 million

o Loyalty levels and benefits

o Gold(Waived Checked Baggage Charge)

o Platinum( Priority Baggage Delivery)

o Executive platinum(Unlimited Complementary Upgrades – exclusive to

executive platinum)



Case Study – American Airlines

• The loyalty system later expanded and decided to develop various partner

programmes such as the following:

– Hotel

– Rental cars

– Retail & gifts – Credit/debit cards

– Dining

– International Airline Alliance Programme: British Airways & Air Pacific

• Market Influence : Due to the tremendous success of the programme

research done by Charles X. Moloney, it has been proven that ½ of U.S.

citizens use a credit-card that is based on a reward points system[4]



Conclusion

• The majority of today’s market is a customers’ market, customers can

chose products by their preferences;

• Today’s business is rely on its customers come back and back again. From

this point of view, a high level of customer loyalty is a protection of business profit;

• Loyalty marketing has been widely used in today’s business process and

has very good performance.



Trends in 21st century:

• 1. Modern high techs have been applied into CRM, such as smart card,

RFID. Those development enable customer data sets to be built through

active dialogue and feedback.

•

2. Imagination is the key to differentiation, and successfully rewarding andrecognising the most highly-valued customers.

• 3. Financial analysis of the performance of any loyalty programme is

critical to long-term success.



Citation • The value of customers is not situational or temporary. Loyalty customers

are always valuable. Customers’ loyalty is never a problem but always thesolution. Customer loyalty levels the playing field and it is the ultimate

competitive advantages.

--M.R. Lawfer, 2004; (The author of the book: Why customers come back—

how to create a lasting customer loyalty )



References

• [1] http://www.jstor.org/stable/pdfplus/1251957.pdf?acceptTC=true

• [2] http://royalloyalties.com/Case_Study.pdf

• [3]http://www.emeraldinsight.com/journals.htm?issn=07363761&volume

=20&issue=4&articleid=856461&show=pdf – Journal of Consumer

Marketing – Customer Loyalty and customer loyalty programs• [4]Moloney, Chris X. (2006) "Winning Your Customer’s Loyalty: The

Best Tools, Techniques and Practices" AMA Workshop Event(s).Misc. mater

ials distributed related to event(s). San Diego, 2006.Chris X. Moloney

• [5] M.R. Lawfer, (2004), Why customers come back—how to crate a lasting

customer loyalty, Career Press, Franklin Lakes, NJ;• [6] M. Capizzi, R. Ferguson, R, cuthbertson, (2003), Loyalty Trends for the

21st Century, Journal of Targeting, Measurement, and Analysis of

Marketing, Vol.12, 2, 199-212;



Q & A

Documents

Loyalty Marketing Business Model - Team Effort