The Customer Strategy Network (CSN) was formed in 2006 as a means to link customer marketing professionals in every point of the globe to share best practices, case studies, perspectives and more. The collective “on the ground” power of this network brings tremendous value to any brand seeking to stay on top of the customer loyalty game.
Multi-nationals are the most obvious beneficiaries from the CSN Network, but truly any company able to benefit from cross-border understanding of customer marketing practices stands to gain through association with CSN.
A practical example of the value generated by the network are the regional reports on loyalty marketing practices submitted by network partners on a periodic basis. Recently Jim Griffin, the founder of Lassu Loyalty and a Customer Strategy Network Partner published a report covering the Current State of Loyalty in the Philippines The report should be of interest for any marketers active in the ASEAN customer loyalty and CRM markets.We share highlights here based on a recent interview with Jim Griffin.
The loyalty insights generated by Lassu Loyalty came as a by product of Jim Griffin’s participation as a member of a research project team that conducted a cross-sectional survey of 570 households in the Philippines. The big goal of the project was to gain insight into financial resource allocation among consumers.
Jim collaborated with Professor Francisco De Los Reyes, of U.P. Diliman School of Statistics, the project research director to craft the final 256-page report. Among many findings were a strong subset of learnings on the subject of customer loyalty.
To set a baseline of loyalty program recognition, respondents were asked to name any loyalty programs of which they were aware. This method of unaided recall stimulated 654 total mentions.
In terms of the 570 Filipino households surveyed there was an approximate ratio of 1 to 1 loyalty program recognition per household on average. Compare this number to North American figures of approximately 15 or more per household and you can see that the Filipino market is in its infancy. Within the averages, it was interesting to see that only 14.7% recognized 3 more programs while 41.4% could not remember a single loyalty program brand.
As North American marketers are aware, awareness of loyalty programs can stand in stark contrast to program participation. For programs that were cited, share of mentions were distributed most strongly among the following business types:
- Grocery – 27.4%
- General Retail – 27.1%
- Drug stores (pharmacy) – 24.1%
- Banking – 12.4%
- Specialty Retail – 3.6%
- Government – 3.4%
- Retail Fuel – 1.2%
- Air Miles – .8%
The top two programs cited were SM Advantage and Mercury Suki Card. SM Advantage is the loyalty program of Shoemart (SM), which is by far the largest operator of malls, supermarkets, department stores, and niche brands in the Philippines. The Suki Card is sponsored by Mercury Drug Philippines, the market leader pharmacy category. Taken together, these two programs accounted for 47% of mentions.
On the other end of the spectrum, a total of 221 other loyalty programs cited by respondents were competing for share-of-mind within the remaining 53% of mentions.
Growth in loyalty program awareness and participation could be tied to consumer preferences but is also impacted by the available talent in the market to create compelling program structure and value propositions for the consumer. At this time, experienced loyalty program managers are hard to find. One company reportedly has been looking for an experienced loyalty-practice head for about nine months without success.
The challenge is acute as the best talent not only must understand loyalty needs today, but has to be familiar with and recognize trends in a rapidly-evolving technology and regulatory environment. Even experienced loyalty-program managers can quickly get out-of-date or risk becoming too specialized in just one toolset.
So how can loyalty programs break through the clutter? Jim Griffin offered that the relevance of a loyalty program is influenced by several factors:
- Relevance of the category to the household
- Market share of the brand
- Marketing mix of the brand
- Operational execution and customer experience
- Relevance, visibility and innovation of the loyalty program itself
Grocery, pharmacy and general retail have a natural advantage for share of mind with consumers in the Philippines due to their inherent advantage on Factor 1 – relevance of the category.
It’s somehow a chicken-and-egg question but, broadly speaking, the brands with the biggest share of market, are often the ones with a better marketing mix, better operational excellence and better customer experience. Since these are all key factors in adoption of loyalty programs, the result is that the programs of such brands naturally rose to the top on awareness and uptake.
For most brands, even the leaders, there is a lot to accomplish. Griffin reported that none of the loyalty marketing heads he spoke with believes they are doing a “great job” of delivering a personalized customer experience, or that they can capably deliver highly-relevant, targeted offers based on RFM and customer demographic profile.
Indeed, even fundamentals are sometimes lacking. For example:
- Some of the top loyalty programs in Philippine retail do not collect any demographic data from customers.
- One of the top programs does not send reminder messages when the card is about to expire, even to cardholders who have enough points to renew for free.
- Another top retailer lacks a marketing data mart, so all data mining must be done directly from the POS transaction tables and then exported to Excel for analysis.
Several retailers have taken note of these shortcoming and have successfully relaunched their loyalty programs with significant positive results. These programs have seen increased membership, percent of sales coverage by loyalty members, and sales uplift specifically linked to loyalty initiatives.
Despite the higher share of mind held by Grocers and Retailers, it may be the financial sector that is furthest evolved in successfully blending all of the critical success factors for customer loyalty. Several of the top banks have already developed good statistical models that support cross-selling products based on customer profile and activity.
The lucky brands in this group are already looking at ways to further optimize their efforts. They are introducing lights-out campaign push automation, website upgrades, events-based triggers, and campaign optimization to ensure customers receive only offers most relevant to them. The goal is to reduce campaign fatigue and improving response rates and the efforts are paying dividends. There are centers of excellence for this type of work in the Philippines and also offshore in India, and work being done in those places promises to bring significant financial returns in the future.
Another bright spot on the horizon is the likely infusion of course content related to loyalty within the Philippines Certified Digital Marketer Program. CDM is a very successful program, co-sponsored by e-Learning Edge and the International Institute of Digital Marketing, in partnership with Ateneo de Manila University, De La Salle University, and the Internet and Mobile Marketing Association of the Philippines (IMMAP). Preparation for the planned loyalty course material is underway and will incorporate globally-respected subject-matter experts to better define the way forward and help marketers level up their customer loyalty efforts.
To sum up the state of the Customer Loyalty market in the Philippines, Jim Griffin, shared that the country is positioned to surge forward in sophistication and operational excellence in customer loyalty. He noted that the Philippines is advanced in digital marketing and has a vibrant community of professionals already devoted to this area.
More than likely, Jim believes the brands in the vanguard of these changes will find the Filipino market a great opportunity for consumer marketing while those which lag may end up watching from the sidelines.
Editor’s Note: Bill Hanifin, the Publisher of Loyalty Truth dot com and President of Hanifin Loyalty is a founding partner of the Customer Strategy Network.