Customer Loyalty Marketing – Simples
Customer loyalty marketing – Meercat style
Why are the Meercats buying cinema tickets? Those Meercat folk have stopped making ‘exclusive’ toys and started buying cinema tickets instead. But why are they doing this?
I have been involved helping businesses create customer loyalty marketing schemes for over 15 years. This has involved all kinds of different programmes across a variety of sectors.
I have a theory about those Meercats and comparethemarket.com. I think that with ‘Meercat Movies’ it looks like Comparethemarket.com have joined the loyalty programme party. After all 2 for 1 movie tickets are a pretty compelling reason to use one comparison site over another for something that most folk legally need to buy.
Our business, Websand provides marketing automation software to businesses that want to get the most from their data. It’s based on our experience helping businesses create customer loyalty marketing programmes.
As with any business that deals with data, we need to keep an eye on the changes to data protection on the horizon. I might be wrong, but it seems like data protection changes are a key driver for the creation of ‘Meercat Movies’.
The Meercat’s business model
Let’s compare the Meercat’s business model. Compare the market is a data business, it’s a market place for customers to find the best deal for insurance, financial and utilities services.
Every time a customer finds a deal that they want. Compare the market earn a ‘marketing fee’ from the provider chosen by the customer.
As part of this process, those Meercats collect a lot of information.
Who the customer is, where they live, who provides their utilities, what car they drive, when insurance products expire… you get the idea. A lot of customer information.
This information is valuable, very valuable and helps those Meercats tell you about the best deals coming up close to the time of renewal for those services we can’t (legally or necessarily) live without – primarily insurance and power.
Data Protection Changes
The data protection changes on the horizon are going to be a game changer, and include a requirement to prove that a contact / customer / prospect has agreed to receive marketing communications from a business.
It is also expected that this will also apply to marketing to existing customers. You are likely to require ‘regular’ confirmation from your customers that they wish to continue to receive marketing messages from your business.
I have heard mentioned that in some cases this could be as often as every six months. If that is the case, that would have serious consequences on a business such as ‘Comparethemarket.com’
A few years ago I was involved in the running of an annual survey for a major frequent flyer programme. The feedback from one particular question was always a talking point.
The question asked the member to rank the importance of the loyalty programme against other factors involved in the purchase decision.
In the six years I was involved in this process, the loyalty programme was always rated either 4th or 5th.
This meant when a customer had a decision about which Airline to select when flying to a destination, the loyalty programme became a factor after price, schedule and seat comfort/entertainment were taken into account.
Of course, lots of Airlines fly from and to similar places, for a similar price, in similar aircraft. As a result, for Airlines – a strong loyalty programme can make a competitive difference.
Loyalty for Comparison Websites
In a competitive market, loyalty can make a huge difference in customer decision making. The comparison sector is very competitive, so let’s apply the same loyalty questionnaire and see if a loyalty programme could unlock competitive advantage.
Applying this rationale to the Meercats who run compare the market.
Price – similar deals are offered by rivals such as confused.com and gocompare.com.
Selection (schedule) – the odd exclusive credit card offering for provided for a specific comparison website, but in most cases the selection is the same.
Brand (Entertainment) – in this case I’ll use the personas as fought out on highly expensive TV advertising campaigns. Our Meercat friends at comparethemarket.com, Brian the Robot for Confused.com, the Gocompare.com town in Wales (replacing the Opera man that started this trend) and of course, the fact that “you are so ‘moneysupermarket’”.
Loyalty – this is the new area of competition. Sales promotions using toys of the characters they have created were the starting point, but the Meercat Movies have moved this on to the next level.
I also need to mention the ‘providers of services’ that are NOT on comparison websites. They use the fact that they are NOT on comparison websites as a point of difference and a marketing tool in itself. This could also be considered as an attack on the comparison website sector as a whole as this suggests to the customer that the comparison websites really don’t give you the best deal at all.
It could be argued that the success of Orange as a mobile network was down to Orange Wednesday.
To follow the earlier market example. Within the telecommunications sector, price was comparable. Product was comparable, so to make a difference Orange needed to do something different. The answer was Orange Wednesday.
Orange Wednesday allowed every Orange customer to take advantage of two for one cinema tickets (at any cinema) on a Wednesday.
Launched in 2003, it worked. Really worked. And, because it was across every cinema it couldn’t be copied. They had a monopoly on cinema tickets as a benefit.
When Orange was taken over by EE, Orange Wednesday continued. When it ended in February 2015, the Meercats pounced on the opportunity!
Cinema Business Model
So how much would it cost to put Meercat Movies into place? With the exception of ‘award season’ the success of movies are based on box office. Every year, a box office record is broken. But how do cinemas actually make money?
Cinemas rent the movies that they show from the film distributors. To keep a complex thing simple, on average a cinema will take 50% of the ticket cost. They make the majority of their money from food and drink.
I’ve been involved in setting up a ‘movie night’ offering before. It didn’t go ahead. It couldn’t. The cost of each ticket needed to be covered by the ‘client’ and that was going to cost a lot of money. It is safe to say that buying cinema tickets twice a week for up to 5 million people is likely to cost a fair chunk of your marketing budget.
Customer Lifetime Value
Understanding the your Customer Lifetime Value (CLV) gives a deep strategic understanding of successful you are at meeting the needs and wants of your customers.
CLV also helps you to make key strategic decisions, such as Meercat Movies. The cost of running this programme needs to be better than the projected uplift in customer lifetime value.
Without a customer lifetime measurement metric in place, a progamme such as Meercat Movies would probably look really expensive.
As a fictitious example, if we spend £20 per customer, the impact on customer lifetime value will increase from £20 to £80. That would be a net increase of £40 per customer.
Cost per acquisition
The cost of finding a new customer is know as your ‘cost per acquisition’. In isolation it’s a measure of how well your marketing budget has worked. I’ve spent 10,000 and we’ve created 100 new customers.
However, once you understand the Customer Lifetime Value of each new customer, you can be more pro-active in setting your cost per acquisition as you can define how much you are willing to spend to acquire a new customer.
Getting that metric in place can have a huge strategic impact on a business. In the early days at Amazon, Jeff Bezos allowed staff to spend up to $39 to acquire a new customer.
The comparison website sector is completely metrics driven. They know how much it costs to acquire a new customer and they spend that accordingly through huge marketing budgets across nearly every marketing channel – from PPC and affiliate links to more traditional billboards, radio and TV.
Ironically a large % of the budget is taken up with huge TV campaigns, something that is difficult to really quantify.
The brand spend in reference the ‘loyalty’ metrics explained earlier, make strategic sense to build brand trust but also points to the fact that loyalty initiatives such as Meercat Movies are the next step.
To prove a point, I could have generated revenue through affiliate links to each of the brands that have featured in this post. If I had I’d have probably generated a few quid.
Why does Meercat Movies Exist
As I said earlier, 2 for 1 movie tickets give customers a compelling reason to buy through comparethemarket.com.
Let’s look at the challenges that face comparethemarket.com
- Obviously the circumstances of people that use comparison sites are constantly changing,
- The comparison market is becoming increasingly competitive.
- Increasingly key providers now refuse to participate. In fact that’s now a selling point for those brands, “we aren’t on comparison websites”.
How does Meercat Movies address these challenges?
Increased competition will be have been the main driver for the introduction of Meercat Movies. However, it will be sector maturity and changes in data protection that will give Meercat Movies, a real competitive advantage.
When selection, price and brand are on equal standing, loyalty strategy makes a huge impact. Meercat Movies gives people a compelling reason to buy (and continue to buy) from ‘comparethemarket.com’.
Given that Meercat Movies is active for a period of 12 months, Meercat Movies also give comparethemarket.com a similar subscription model as the providers they deal with. Building loyalty with their own customer base, and safeguarding the relationship with their ‘suppliers’.
Longer term, this could potentially give the Meercats leverage with providers to generate exclusive details. Creating even more competitive advantage .
And finally the loyalty mechanism gives their customers a reason to explicitly opt-in to receive future marketing communications. So ensuring that comparethemarket.com avoid one of the potential pitfalls of GDPR. No explicit opt-in. No your 2 for 1 code. Simples.
Speaking of making things easier.
Generating customer loyalty marketing is a complex subject, but we’ve got the tools to make it easier for you. Websand is built to help businesses to get the most from the customer data they collect. To give them an email marketing platform that help generates customer loyalty and increase customer lifetime value.
Sign up today and let’s get you started. If the Meercats can do it, you can too
Also published on Medium.