CRM CASE ANALYSIS: CINEPLEX ENTERTAINMENT: THE LOYALTY PROGRAM

VIDISHA MOHAPATRA PGP/15/123 Customer relationship management

DECISIONS TO BE TAKEN
Recommendations for Loyalty Program Development
Reward structure Tie-in partner
Flight Miles Scotia bank

Type of promotional campaign

In-theater advertising Newspaper/Radio advertising Online advertising Grass root initiatives

Whether to roll-out the program regionally or nationally

TRIGGERS
Inconsistent revenue yield per year
Variable attendance dependant on movie genre

Weak box office attendance(2005)

Sharp drop in Net operating Income

How to link individual customers to targeted movies and concession purchases?

No reliable database yet of customer preferences

Aggressive contention for customer box office retention even after 65% market share
Ongoing film piracy Rental movies Concerts and sorting events

CINEPLEX CORPORATE STRATEGY AND RESULTS

Chain of movie theaters
Mergers and acquisitions
Galaxy Entertainment Inc,Famous players(2005)

Conglomeration of various brands

Cineplex Odeon Galaxy Famous Players Cinema City

USP
Offer movie-goers an exceptional entertainment experience Focused on developing new markets
Showcasing live and sporting events

Explore new ways of enhancing share of wallet with lucrative 16-24 segment

STRATEGY FOR THE REWARD PROGRAM

Regarding the loyalty program
Data control and ownership Resource requirements
Cost and labor

Length if time to establish the database

Min 500000 members

Robust execution Firms image Value to customer

1.EVALUATION OF POTENTIAL PARTNER

RAMETERS

NO PARTNER INTERNAL DEVELOPMENT

FLIGHT MILES

SCOTIABANK

st incurred

$5.5mn and diminishing thereafter

16.56% (5.3 mn unique visitors) Complete 1.Unlimited data access and control 2.Would know ones brand the best

$15 mn + $0.9 /transaction+ data access cost

21.87%(7 mn database) None 1.Immediate entrance to data of 7 mn people and other Flight Miles partners 2.Offer of $250000 by Flight Miles towards marketing campaign 3.Easy reach to large number of Canadians already widespread awareness built(exhibit 3) 4.No need to carry multiple cards

Near about $6.51 mn

21.25%(6.8 mn customers served) None

netration Rate

ta Ownership

vantages

1.Leverage on earlier corpor sponsorships 2.One of the Big 5 banks in Canada 3.Ready to share Cineplexs financial risk- proposed to share 50-50 cost 4.Prior experience with data management companies 5.No requirement to open bank accounts but each debit/credit card holder issu Cineplex loyalty card.

sadvantages

1.Face financial risk of unredeemed points 2.Difficult to divest the program 3.New department and database required 4.Lenghthy time of development

1.Lenghthy commitment of 3 yrs 2.No easy exit option 3.Would lose all access to accumulated data on exiting 4.Extra cost incurred in accessing database and to issue points

1.Naming rights on 3 major theaters 2.Exlusitivity agreements on bank machines in all theater 3.Customers wouldnt like carrying multiple cards 4.Constrained decision mak power 5.No access to individual lev

RECOMMENDATION:
Opt for partnership with Scotia bank Advantages:
Cheapest and easiest way for Cineplex to grow its customer base benefit from dual strategy Financial and data management risks would be shared No barriers for contractual exits

Modifications:
Execute a single card/cardless strategy Equal decision making powers In long term, aim to gather customer preferences via advanced technology at PoS

2.EVALUATION OF POINTS SCHEME

OPTION 1
Membership fee None incentive enough for customers to join None no incentive for customers 500 too many points;1 free child admission

OPTION 2
1 time membership fee of just $2 very low but still questionable 10% customers tempted to join 100 too low points; might not be attractive enough

OPTION 3
Annual fee of $5 customers might be deterred from joining 15% - too high discount ;costly for the company None customers not tempted to join

OPTION 4
None incentive enough for customers to join 10% customers tempted to join 250 adequate points to tempt customers to join; no incentive yet but motivation exists $62.22 good enough benefits for customers and none too costly for company $32.14 moderate cost for the company Yes

Concession discounts Sign up points

Value sum of benefits on reaching highest point level

$51.77 too high a value for benefits; costly to support for company $28.97 lowest but not justified at no membership fee Yes

$68.37 moderate value at 2500 points but still prove to be costly $36.56 highest but justification questionable Yes/Might be

No benefits no incentive for customer to join

Value per point /Will it be too costly for the company? Will it appeal to customers?

0 no cost at all but no customer gained at all No

RECOMMENDATION:
Choose option 4 as the suitable reward structure

Moderate cost for the company Attractive enough for customers

No upfront membership fee Adequate sign up points(250) no incentive yet but motivates customers to earn more points Permanent discount for concessions
Enhance share-of-wallet for Cineplex (reference link)

But at higher level of points (2500-3000),introduce still attractive incentive schemes

Free concert/live event tickets Anniversary celebrations free concessions combo Sweepstakes program

3.SELECTING THE MARKETING COMMUNICATION CAMPAIGN

OBJECTIVE: Reach 500000 customers per year for 1st 3 years with a budget constraint of $300000 By partnering with Scotiabank,increase the customer reach while decreasing cost with dual strategy.
NEWSPAPERS National newspapers dont have reach to every targeted segment. Regional newspapers do have reach but they are very costly to insert In and develop ads. RADIO Significant overage in key markets. Low advertisement and development costs. Free advertisement space on many radio stations websites. ONLINE ADS To target the young audience (16-24) online advertisements especially on music websites like mtv.ca and muchmusic.ca as well as Google could be done. GRASS ROOT INITIATIVES Engage in WOM publicity in a big way for young audience. Develop more promotional campaigns for universities and more in campus offers for special events. Target young working adults too by corporate sponsorships. Engage in mobile advertisement and couponing to target young Smartphone users.

Rather than relying on newspaper ads, look out for other media .

Helpful in targeting the young segment(16-24)

Low advertisement costs per thousand impressions(25 Canadian dollars)

Rather than relying on just traditional advertisement media ,look out for more cost effective and non traditional ,mobile and online media that can enhance reach.

4.WEBSITE VENDOR SELECTION

Opt for Gamma company.
Lowest initial investment costs - $200000 Vast experience in IT strategy and in developing CRM programs for leading organizations Program proposals
Manage marketing platform and all aspects of ecommunications Track members on -going basis through different promotional media Appealing fixed price, fixed time model

5.NATIONAL OR REGIONAL ROLLOUT

Opt for a national rollout
Having partnership with one of Canadas important national bank would help in
Sharing financial risk Boost cost efficiency Increase program coverage via branches

Accrue revenues faster 2006s new PoS installation had the technical capability of supporting the national roll out.

DECISION SNAPSHOT
Opt for partnership with Scotia bank Opt for option 4 in reward program Opt for online, radio and non traditional media to target the youth segment Opt for a national roll out in partnership with Scotia bank.

THANK YOU