Driving Consumer Engagement

Paul Smitton Group General Manager Loyalty Marketing

ADMA Forum June 2008

Presentation Topics
1. 2. 3. 4. 5. Background Our Approach Key Learnings Our Future Summary

1. Background

FFP Industry
Began in 1981 with American Airlines 120 million people enrolled* Over 14 trillion miles accumulated* Valued at more than US$700 billion* High perceived value of points vs cash

* Source: Economist magazine, Funny Money Dec 2005

Qantas Frequent Flyer

Launched over 20 years ago Objective: drive customer retention Largest active member base in Australia 5 million+ members 1,000 new members every business day High penetration of top income households More than 1 in 10 seats flown on Qantas are Award seats 350+ partners

Member DNA

Total Male 58% Female 42%

Qantas Frequent Flyers are Australias most valuable customers

Qantas Frequent Flyer members buy more, more often with partners than non-members

* Source: Economist magazine, Funny Money Dec 2005

350+ Earn Partners

350+ Earn Partners

35% of Consumer Spend

19% 17% 16% 12% 11% 4% footware 4% 5% 2% 9% Other Meat and Fish products Petrol 80% Power Other health services Household services Tobacco Medications

Car insurance 60% Rates Food and non-alcoholic beverages Car servicing and consumables 40% Mortgage Household furnshings Other recreation goods and services Clothing

20% Rent Restaurants and other meals Air fares, travel packages and car hire Telecommunica tions Hotels

Health insurance

Car purchasing

Alcohol

Household goods & services

Personal care

Housing

Clothing

Miscellaneous

Food

Transport

Leisure

Health

Miscellaneous

Personal care

2. Our Approach

Building Customer Advocacy

High behaviourally loyal base Emotional loyalty the holy grail Positive word of mouth: when experience exceeds expectation Personalised communication

Better Targeting

Statements - Printed
Up to monthly (depending on tiers)

Statements - online
2.7 million Frequent Flyers opted in for online statements

eDM
Monthly Frequent Flyer eNewsletter Sent monthly to 1.5 million Frequent Flyers Opened by 40 to 50% Click throughs 15 25% Unsubscribes <0.05%

qantas.com
One of Australias most popular websites Over 5 million visitors per month

Frequent Flyer Newsletter - Printed

Sent to Tier Frequent Flyers quarterly 160,000 members

Direct Mail
A popular channel with Partners Excellent cut-through for well targeted communications

Driving Positive Behaviours

Business Requirement Acquisition Device Retention Device Cash Flow Improvement Staff Incentives Staff Recognition Increase Overall Sales Feature Product Focus Customer Proposition Examples Become a customer and earn 5,000 points On every account anniversary receive 1,000 points in appreciation Pay account within 7 days and receive additional 1,000 points Sales over xxx receive additional 5,000 points Top sales performer per month receives 10,000 points Purchase/sell more than $x and receive 5,000 points Buy/sell 2 or more of x product and receive 5,000 points

KPI Driven Organisation

3. Key Learnings

QFFP plays a significant role in increasing Qantas margins

1 Key driver of Qantas yield premium1

% responses

My preferred airline

Most convenient time/ routing

Cheapest

1 Responses to What justifies Qantas price premium? Source: Upgrades Survey (n=483); Eureka Strategic Research

Share Shift with Qantas Frequent Flyer Points

Source: Qantas Research June 07

Share Shift in Practise

Partner A loses Ansett relationship 40% Partner A engages in heavy price discounting Partner A joins Qantas ends price discounting

Partner A

Market Share

Partner B

20%
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Source: Qantas in-house data-mining

Members benefit through a coalition of partnerships

13 times faster

120
QFF Loyalty redemption

Years to earn SYD - LAX (Average QFF Member)

113

100

Non-affiliated bank program

91

80 Years

60
5 times faster

40 15 3 0 Discount economy Business First 6 9

20

Source: Qantas in-house research

4. Our Future

The Model

Program Members (customers)

Qantas Frequent Flyer (market place)

Participating Companies (point issuing)

Reward Providers (Qantas, Jetstar and Qantas Store)

Great Rewards

Currency as Enabler

Coming Enhancements
3 million+ reward seats today
Classic remains cornerstone of proposition

More options tomorrow

new Qantas and Jetstar Any Seat Awards Greatly improved online store Points + pay introduced

Better rewards = more member engagement = more earn options

Relaunch Campaign

5. Summary

Preferred by Members and Partners

High perceived value of a Qantas Frequent Flyer point Large range of point earning Great rewards Simplicity of one loyalty account Targeted communications = relevancy The best incentive for partners Qantas Frequent Flyer is the only loyalty program a customer needs

Thank You