DHL UAE wins loyalty award - and here's why
In the United Arab Emirates, DHL's loyalty programme 'Altitude' has taken the "Best customer loyalty programme" award at the Gulf Marketing Review (GMR) Marketing Effectiveness Awards, which recognise marketing excellence each year. The Wise Marketer dug deeper to find out what went into such a successful loyalty programme...
The Altitude programme come above 25 other entrants in the Customer Loyalty category, which was judged on the basis of each programme's innovation, effectiveness and methodology.
The Middle East is a market characterised by huge variations in culture, education and religion from both the local and the large expatriate populations. This provides interesting challenges for the marketing community and the nature of how best to target customers and potential customers in the best way - a goal which is often far removed from how things work in the UK and Europe.
According to DHL, the main drivers for the loyalty programme were to develop a strong line of communication with its customers, and to reach the right people with the right message and promote those areas of the business that the company wanted to develop. The final decision to create the programme was based on the intention to develop a level of differentiation between DHL and its key competitors in an industry notorious for brand-promiscuous customers, low switching costs, and price sensitivity. Altitude was created with the idea of increasing existing customer loyalty, reducing split business within the customer base (consolidating each customer's market sector spend with DHL), and winning new business by providing a tangible reason to choose DHL above the competition.
Loyalty puzzle However, according to Sanjay Dsouza, marcomms manager for DHL UAE, customer loyalty was only one piece of the puzzle. Communicating through marketing media can be a challenge for express logistics companies, which traditionally have product and service portfolios focused on rational business necessity rather than emotional purchase decisions. A core purpose for the Altitude scheme was to establish a new communication medium to reach the company's customers and measurably affect their purchase decisions.
"While conducting the initial feasibility study it became obvious that, although not typical in our industry, a points based loyalty scheme is perfect for express logistics organisations," explained Dsouza. "We figured that successful loyalty schemes are dynamic, they offer regular point accruals, and they offer quality redemptions that don't take years to achieve. The average express logistics customer trades on a regular basis, they spend considerable amounts of money, they are cost conscious and they want fast and efficient service."
"We were aware that loyalty schemes had been tried by key competitors, and had failed," added Dsouza. "Our justification for going ahead was based on the belief that they did not have the concept quite right, they had not invested adequately, and had not supported their scheme with the right people."
After vetting possible agencies to run the scheme, ICLP Dubai was chosen to co-develop Altitude, and eventually run the day-to-day operations of the scheme.
Key objectives The key objectives for the programme - which grew dramatically as time went on - included:
- Develop long term relationships with customers and increase their lifetime value;
- Measurably improve customer retention;
- Provide better understanding of customer requirements;
- Deliver the right benefits to the right people;
- Improve the efficiency of communication budgets;
- Increase brand awareness;
- Acquisition of new customers;
- Measurably increase revenue and yield;
- Reduce split shipment accounts;
- Reactivate lapsed customers.
Redeeming points A qualifying customer (with 3 months trading) automatically receives an 'Altitude' welcome pack and a membership card which gets them earning points immediately. As the customer builds up points, they have the option to redeem for a number of items.
Redemption partners include charities for those who wish to donate, DHL vouchers for those who wish to reduce their monthly DHL bill, and a range of other rewards such as Damas Jewellery and Wild Wadi for those who want something for themselves.
Depending on the nature of the business, the charity and DHL voucher options offer a happy medium where personal benefit among staff is disallowed. Indeed, a number of DHL's clients use the scheme as a form of discount, and others save their points all year and then take their staff on a free desert safari.
According to Dsouza, with the programme's second anniversary approaching, the scheme has been a definite success. But to place a specific value on the returns and benefits Altitude provides not an easy task: with all positive factors considered, it has brought DHL closer to its customer base and created measurable, incremental revenue. For example:
- Redemptions currently average 38%, peaking at over 70% during sales incentives.
- Year on year revenue growth is 5% higher for 'Altitude' customers than 'non Altitude' customers. Taking the same sample before the scheme, the 'Altitude' group had a 2.1% higher year on year revenue growth.
- Account closures and losses has reduced overall since Altitude was launched. The defining figure however has been the 40% reduction in customer turnover among the 'Altitude' customers as opposed to 18% reduction in 'non Altitude' customers.
- Monthly 'Altitude' website hits have grown from hundreds to over 100,000 hits per month.
- US, Middle East, and European campaigns have all yielded measurable increases in trade over promotional periods. The increases were between 5% and 13% higher than year-to-date average year-on-year increases, and also when compared to the 'non Altitude' customer figures.
"Altitude has generated valuable insight into the motivations and value our customers consider when making purchasing decisions," concluded Dsouza. "Our determination and enthusiasm was, in part, driven by the will to provide a measurable return on investment through the marketing function, traditionally seen only as a cost centre within DHL. But the big lesson is never to waver from the key objectives."