What Do Affluent Consumers Want from their Loyalty Programs?

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1 What Do Affluent Consumers Want from their Loyalty Programs? June 23, 2011 Charles Christianson Group Vice President, Sales & Account Management, Affinion Loyalty Group Mark Robeson Vice President, Marketing & Strategic Accounts, VIPdesk

2 Poll Question What is your interest in learning about the affluent and their loyalty preferences? (Select the best answer). a. I want to optimize my existing loyalty program. b. I am considering developing a loyalty program. c. I don t have a loyalty program but I am conducting market research on the affluent and want to better understand their needs. d. Other

Seeking Affluent Consumers Affluent consumers are being sought after more than ever before The top 20 percent of income earners own about 40 percent of spending.

3 Seeking Affluent Consumers Affluent consumers are being sought after more than ever before The top 20 percent of income earners own about 40 percent of spending. Source: Michael Feroli, chief U.S. economist at JPMorgan Chase & Co., January 2011 By some estimates, high net worth cardholders can generate charge volume of over $20,000 per month. Source: Reuters Wealth Blog, May 2011

4 And Understanding Their Needs Affluent consumers post-recessionary needs have evolved While the number of affluent families planning to spend more has almost doubled in the last three years, they are emerging from the recession seeking real value, true quality and superior service for their money. This is a survivor s economy with people who have succeeded in surviving the recession demanding a new form of respect. Almost three-quarters [of affluent Americans] said they had become more resourceful because of the recession. Source: Jim Taylor, vice chairman of Harrison Group, based on sixth annual American Express Publishing and Harrison Group survey

5 Poll Question Of the drivers listed below, which one do you think most influences affluent consumers? a. Desire for recognition/personalization. b. Desire for exclusive access. c. Desire for status. d. Saving time. e. Saving money.

6 Motivate me. If you understand Who I am, What I value, How I behave, and empower me, I will Seek you out, Trust you, Be loyal to your brand and rave about you to others.

7 Understand who I am.

8 Understand what I value. A classic tale Don t judge a cowboy by his hat: Big Hat, No Cattle Portrait of an average millionaire Among other things, We live well below our means. We wear inexpensive suits and drive American-made cars. Only a minority of us drive the current-model-year automobile. Only a minority ever lease our motor vehicles. Looks can be deceiving Referring to those whose outward appearance might falsely indicate affluence, some wise and wealthy Texans use the saying, Big Hat, No Cattle. Source: The Millionaire Next Door by Thomas J. Stanley

9 Understand what I value. One look at segments on a global level Aspirational mass market: trendy metropolitans, tend to have average jobs and backgrounds but aspire to an above-average lifestyle (30%). Rising middle class: middle-class background with well-paying jobs (25%). New money: high net-worth consumers who earned the wealth themselves (33%). Old money: high net-worth consumers who have inherited their wealth (7%). Beyond money: similar to old money, but these consumers have a complete indifference to status, avoiding ostentatious displays of wealth (5%). Source: Boston Consulting Group s report The New World of Luxury, published in December 2010

10 Understand what I value. Common thread: The affluent value a good deal Coupons Affluent consumers are more likely than the average consumer to use cents-off coupons (74% vs. 69%). Source: Packaged Facts Luxury that is worth the price Overall luxury fashion spending is up 35% in the past year, while mainstream fashion spending gained just 8% last year. Source: American Express Business Insights qtd. in CNN Money, March 2011

11 Understand how I behave. Brand loyal Online and mobile savvy Travel focused

12 Understand how I behave. Brand loyal Far more likely to look for brand names. Service is key to brand loyalty. At the best hotels, the new luxury is the old luxury: service. It s a smile at reception, calling the guest by their name, serving breakfast on time, not making any mistakes with the bill. It s about getting to know and then remembering your customers. Guests want to be recognized. Source: Report from the Luxury Summit, May 2011 I will be loyal to your brand, but only if you provide the best service.

average rates to perform different activities.

13 Understand how I behave. Online and mobile savvy 200 million mobile phones are in the hands of US adults (84% market penetration). Higher-income consumers and other niche segments are using their mobile devices at above average rates to perform different activities. Source: Javelin Strategy & Research 64% of US residents earning at least $150K annually are currently on Facebook. Source: WealthSurvey from the Luxury Institute I am busy. I seek to simplify my life with technology while obtaining a high level of service regardless of the channel I use.

14 Understand how I behave. Travel Focused 82% of affluent Americans took a domestic vacation or personal trip in the past year. Average American affluent household spends >$4,100 annually for vacations and personal travel. Source: Media Post I travel extensively and I expect my loyalty program to help me be where I want to be.

15 Empower me. Help me feel less busy. Give me exclusive access. Focus on value. Provide holistic services. Ask the right questions. Remember my preferences. Make me feel truly special. Bottom line: Create an experience that delights me.

16 Every interaction is the moment of truth.

17 Empower me. Now that we understand the affluent consumer and the dynamics of interacting with them, how do we empower them in a unique way?

b. Travel benefits such as luggage forwarding or

Rewards focused on a unique or memorable experiences. d.

18 Poll Question What feature of a loyalty program is most important to affluent consumers? a. Exceptional customer service. b. Travel benefits such as luggage forwarding or expedited global entry. c. Rewards focused on a unique or memorable experiences. d. Exclusive rewards that are not available to all cardholders. e. Concierge service.

Reward me American Express Platinum card. The Next Generation of the Platinum Card. Transforming Travel. Worldwide. Priority Pass TM Select: Free international lounge access.

19 Reward me American Express Platinum card. The Next Generation of the Platinum Card. Transforming Travel. Worldwide. Priority Pass TM Select: Free international lounge access. No foreign transaction fees. Expedited global entry. $200 airline fee credit. Dedicated concierge. Room upgrades and special amenities. Pay with Points: 20% points credited back when you pay for travel with points. Key Learning: Affluent travelers value benefits that make international travel easier.

20 Reward me Chase Sapphire card. Phones answered by people, not prompts. Invitation-only events. Travel auctions. Key Learning: Affluent consumers value time spent on unique experiences.

Reward me Merrill Lynch Beyond Rewards card.

21 Reward me Merrill Lynch Beyond Rewards card. Premier service. Focus on luxury brands for merchandise. Travel perks: Luggage Forward, Priority Pass, Marquis Jet. Reward of Choice redeem points for virtually any purchase. Key Learning: Affluent consumers value a holistic loyalty program.

22 Delight me. CONCIERGE REQUEST Client required a late-model Rolls Royce Phantom for wedding-day transportation. Concierge succeeded in locating the car and also helped get the request featured on the TV show Platinum Weddings. Photo by Glenn Franco Simmons

23 Delight me. CONCIERGE REQUEST Client visiting Shanghai on business was detained in car accident. Client detained at local police station. No English-speaking officers. Client s credit card legal assistance benefit had been discontinued. Concierge had local US consular officers go to police station.

Delight me. CONCIERGE REQUEST Photograph of only painting in existence of old merchant ship, the Samos. Very important request: Client s ancestors built the ship.

24 Delight me. CONCIERGE REQUEST Photograph of only painting in existence of old merchant ship, the Samos. Very important request: Client s ancestors built the ship. Limited information: Ship name, year built, Captain s name. Painter s name unknown. Concierge obtained inside access to a private club in New York where a photo was taken.

25 Delight me. CONCIERGE REQUEST Develop full Italian honeymoon itinerary. Concierge used local resources to fulfill the request. Arrangements made in accordance with client preferences. Trip was one of the best memories of my life.

26 Delight me. CONCIERGE REQUEST Client wanted to do something special for his mom s 60 th birthday and called Concierge for suggestions. Concierge wrote special lyrics which described key moments in the mother s life to the tune of Hello Muddah, Hello Fadduh and performed them over the phone.

27 Delight me. CONCIERGE REQUEST Client wanted to propose to his girlfriend on the JumboTron in Times Square and called Concierge to arrange. Concierge located the company which manages the sign, obtained pricing, and scheduled the date and time. Photo by Michael McDonough

28 Loyalty Best Practices What Do Affluent Consumers Want from their Loyalty Programs? Help me feel less busy. Focus on online and mobile access to program features. Offload planning to concierge service. Give me exclusive access. Promote luxury brand and experiential rewards. Focus on value. Provide targeted benefits designed to provide tangible value such as top tier travel benefits. Provide holistic services. Offer flexible redemption options. Provide one voice single point of contact servicing. Ask the right questions. Remember my preferences. Offer concierge service. Make me feel truly special

29 Loyalty Best Practices Understand and empower affluent consumers to create an experience that delights them.

30 Q & A Charles Christianson Group Vice President, Sales & Account Management Affinion Loyalty Group cchristianso@affinion.com Mark Robeson Vice President, Marketing & Strategic Accounts VIPdesk mrobeson@vipdesk.com

Americas retail report

Americas retail report Redefining loyalty for retail June 2015 Redefining loyalty for retail Today, American consumers have more shopping choices than ever before. They have access to more diverse retailers