Interview: DHL

26 January 2011

DHL commits its expertise in international express, air and ocean freight, road and rail transportation, contract logistics and international mail services to its customers. A global network composed of more than 220 countries and territories and 300,000 employees' worldwide therefore offering its customers superior service quality and local knowledge to satisfy their supply chain requirements. DHL was the first logistics provider to establish in the Middle East in 1976 and has since mirrored the growth of the UAE.

DHL Altitude was launched in the UAE in 2002 for selected corporate accounts. The aim of the programme was to identify "split shippers", mainly from the SME segment (companies that use multiple providers for their shipping requirement), to provide a unique point of difference from competitors in the region and to engender loyalty by providing incentives by way of points and redeemable rewards. Members earned points based on their shipment weight and zone and could redeem from a selection of reward partners.

In 2007, Altitude was re-launched with a fresh look and a new proposition which was easier to understand, with members now earning "one point per Dirham spent". Barriers to entry were also removed to allow us a greater basket of companies to incentivise.

Q1. Why did you decide to launch a rewards programme?

In the shipping and logistics industry, a big challenge that faces all major players is obtaining 100% share of wallet as many companies use multiple service providers for their shipping needs. Since it is difficult to know which customers do this we needed a mechanism and a channel through which to identify and test, and also to provide an incentive to switch all shipments to DHL. The idea of a points programme appealed because it allowed us to address both these needs by creating a "currency" and a direct channel (targeted promotions). This provided a cost effective way to incentivise customers to change their behaviour. Through insights generated from the promotional activity, we are able to refine our approach and continually generate results and ROI.

We weren't initially looking at a programme that enabled us to collect data, because we already had this by way of transaction records. However the data collected in the program database would prove invaluable for easily understanding behaviour, trends, and influences and allowed us to properly profile our customer base. What we aimed to achieve from the program was a mechanism to encourage constant engagement from our corporate accounts that goes beyond their standard purchase behaviour.

We have used this currency to good effect in our various promotions that have awarded points for incremental usage of our products. We have given away a million points during one promotion which has a very high perceived value, but in fact is very cost effective. We have also used the points to encourage early payment of invoices and participation in surveys. This has enabled us to expand the desired behaviour from standard shipping transactions to incorporate other profit-seeking departments and hence redefine a "profitable" customer.

Q2. What challenges did you face when launching the programme?

Launching any kind of large-scale initiative has its challenges. For us, one challenge was ensuring buy-in and support from the key stakeholders in the organisation. This included senior management and sales representatives. We also needed to create an alignment among all DHL departments including sales, marketing, and finance so that the programme fitted into the organisation culture and was supported at all levels.

The sales team was key to ensuring Altitude's success and we invested a lot in ensuring that they were fully trained to sell the benefits and features of the programme, as well as maintaining its visibility to members into the future. We also needed to ensure that they were always up-to-date with the latest promotions, offers and member point balance, and equipped to answer any member enquiry. We wanted to create a tool for sales team that gave them the edge over the competition, and so integrating Altitude into company training policies was essential.

Another challenge we faced was creating a programme that was relevant and attractive to our customer base. We needed to select a reward pool of partners that supported our B2B environment yet were appealing on an individual level. It was important to ensure that we had low-cost rewards with a high perceived value. Our final selection included a range of reward options that covered shopping malls, other retail outlets, travel, experiences and office supplies to provide this variety.

A final challenge was developing a programme design that was non-delusionary. We wanted to reward customers for changes in their behaviour. We achieved this through incentivizing on incremental spend during promotional periods. For this reason, our tactical activities really are a prime necessity.

Q3. What initiatives do you have planned for the programme in the future?

The key to driving desired behaviour for us is our communications strategy, as mentioned. This is refined each year as our database and insights grow. Segmenting the database from a strategic and tactical perspective allows us to see really measurable results from our campaigns. For 2011 we will be focusing even more on understanding the segments of members, be they regular, first-time, or lapsing shippers (which are derived at an overall and at product level), and providing recognition to or most valued customers through the currency. Without the continual and engaging communications campaigns to our members, the programme would not see the results that it does today. For this reason, even more focus will be placed this year on improving the segmentation and mechanics of campaigns.

In addition, due to the success of the programme in the Middle East, we are keen to expand our initiative into other geographical regions.

Q4. How do you measure the success of the programme?

Return on Investment is important to DHL on both a campaign and a total programme level, and this is something we continually review. We measure ROI on incremental spend to ensure we take the most conservative approach and to-date we return a positive ROI in each case. In addition, we conduct regular phone interviews with members and conduct Altitude-surveys to review campaign feedback and overall program health.

What we have seen from our analysis is that our tactical campaigns are the drivers of positive ROI. Without them, the programme would not be defined as a successful initiative for us.  


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