Customer Loyalty Program - Tourist Destination and Bonus Card System

Table of Contents I

Table of Contents

Table of Contents .............................................................................................................I

Table of Figures.............................................................................................................. V

List of Abbreviations .................................................................................................. VII

1.  Introduction  1

1.1.  Subject and Objective  1

1.2.  Approach  3

2.  Fundamentals  5

2.1.  The Customer  5

2.1.1.  The Status of the Customer  5

2.1.2.  Customer Value  6

2.1.3.  The Customer as Prosumer  9

2.2.  Customer Retention  11

2.2.1.  The Importance of Loyal Customers  11

2.2.2.  Basics for the Loyalty  12

2.2.2.1.  Customer Satisfaction  12

2.2.2.2.  Added Value  13

2.2.2.3.  Proximity to the Customer  14

2.2.3.  Instruments  14

2.3.  Card-Systems as Marketing Instrument  16

2.3.1.  A General Overview  16

2.3.2.  The Customer Card  17

2.3.2.1.  The Position of the Customer Card  17

2.3.2.2.  Objectives of Card Emissions  18

2.3.2.3.  Functions of Cards  19

2.3.3.  Cards in Tourism  21

2.3.3.1.  The Difference of Tourist Cards  21

2.3.3.2.  The Function of Tourist Cards  21

2.3.3.3.  Tourist Cards versus Citizen Cards  22

2.3.4.  Provision of Cards  24

Table of Contents II

2.4.  The Tourist Destination and the Darss Peninsula  26

2.4.1.  The Tourist Destination  26

2.4.2.  Destination MV  28

2.4.2.1.  Facts about MV  28

2.4.2.2.  The Darss Peninsula  29

2.5.  The Visitor s Tax  32

2.5.1.  The Visitor s Tax in Germany  32

2.5.2.  Ahrenshoop s Ordinance as Example  33

2.5.3.  Comprehension Difficulties for the Tourists  34

2.6.  Benchmarking  37

2.6.1.  Definition  37

2.6.2.  Types of Benchmarking  38

2.6.2.1.  Internal Benchmarking  39

2.6.2.2.  External Benchmarking  40

2.6.3.  The Use of Benchmarking in this Essay  41

3.  Benchmark-Study and Market Analysis  42

3.1.  Tourist Cards  42

3.1.1.  German Tourist Cards  42

3.1.2.  The Rügen Card as Competitor  45

3.1.3.  The Engadin Card as Best Practice Example  47

3.1.4.  The Stralsund Card as Negative Example  49

3.2.  Card Systems in other Sectors  51

3.2.1.  An Overview  51

3.2.2.  The Miles-and-More Program of Lufthansa  52

3.2.3.  The Payback Card as Market Leader  53

3.2.4.  The Soltau Card as City Card Example  55

3.3.  Sample Companies for the Implementation  57

3.3.1.  Smart Loyalty AG  57

3.3.2.  Smart Approach GmbH  58

3.3.3.  The Basic Functions of the Systems  59

Table of Contents III

4.  Data Interpretation  60

4.1.  Data of the Destination Darss  60

4.1.1.  Number of Visitors  60

4.1.2.  Calculation of the Target Group  62

4.2.  The Questionnaire  63

4.2.1.  Fundamentals of the Survey  63

4.2.2.  The Survey as Snapshot  63

4.2.3.  Interview Rules  65

4.2.4.  About the Questions  65

4.2.5.  Scale  66

4.2.6.  ServQual  67

4.2.7.  Further Surveys about this Subject  67

4.2.8.  About the Analysis  68

4.3.  Analysis of the Survey Results  69

4.3.1.  Single Question Frequencies  69

4.3.1.1.  Satisfaction with the Visitor s Tax  69

4.3.1.2.  Interests in a Bonus-System  70

4.3.1.3.  Effects on the Off and Low Season  71

4.3.2.  Cross Tabulation  72

4.3.2.1.  Interests in Bonus System vs Federal State of Origin  72

4.3.2.2.  Interests in a Bonus System vs other Bonus Programs  74

4.4.  Interpretation Summary  76

5.  Implementing a Destination Bonus Card System  77

5.1.  Procedure  77

5.2.  Stage 1: Preparing Research  78

5.2.1.  Competitors and Comparable Products  78

5.2.2.  Card Systems on the Local Market  78

5.2.3.  Interests of Potential Partners  79

5.2.4.  Interests of Potential Customers  79

Table of Contents IV

5.3.  Stage 2: Setting the Objectives  80

5.3.1.  Functions of the Card  80

5.3.2.  Partner Companies  81

5.3.3.  Target Groups  82

5.3.4.  The Award System  82

5.3.5.  System Providers  83

5.4.  Stage 3: The Implementation  84

5.4.1.  Project Group  84

5.4.2.  Project Structure  84

5.4.3.  Card Name and Design  85

5.4.4.  Emission Price of the Card  86

5.4.5.  Integration of Partner Companies  87

5.5.  Stage 4: Controlling  88

6.  Conclusion  89

Appendix ........................................................................................................................  91  91

  References  105

Table of Figures V

Table of Figures

Figures in the Main Part

  Fig 1: Structure of the Essay  3

  Fig 2: The Service Triangle  9

  Fig 3: The Loyalty Staircase of the Customer  11

  Fig 4: Percentage of Unused Cards  24

  Fig 5: The Darss Peninsula  29

  Fig 6: Types of Benchmarking  39

  Fig 7: Regional Tourist Cards in Germany  42

  Fig 8: City Tourist Cards in Germany  44

  Fig 9: Saving with the Rügen Card  45

  Fig 10: Number of Guests in the Destination Darss 1998-2003  60

  Fig 11: Increase of Guests in the Destination Darss 1998-2003  61

  Fig 12: Comparison of the Visitors Origin  64

  Fig 13: Importance of and Satisfaction with the Visitor s Tax  69

  Fig 14: Interests in a Darss Bonus Card  70

  Fig 15: Effects of a Darss Bonus Card on the Off and Low Season  72

  Fig 16: Interrelation between Interests in a Bonus Card and Federal State of Origin  73

  Fig 17: Interrelation between Interests in a Bonus Card and Number of Memberships  

  in other Bonus Programs  74

  Fig 18: Stages to Implement a Bonus System  77

Table of Figures VI

Figures in the Appendix

  Fig A1: Location of the Holiday Accommodation  93

  Fig A2: Duration of the Visit in the Destination Darss  94

  Fig A3: Type of Accommodation  95

  Fig A4: Type of Travel Group  96

  Fig A5: Importance of the Visitor s Tax Performances  97

  Fig A6: Satisfaction with the Visitor s Tax Performances  98

  Fig A7: Interests in a Darss Bonus Card  99

  Fig A8: Effects of a Darss Bonus Card on the Off and Low Season  100

  Fig A9: Number of Memberships in other Bonus Programs  101

  Fig A10: Gender  102

  Fig A11: Age  103

  Fig A12: Federal State of Origin  104

List of Abbreviations

List of Abbreviations

cp. compare

CRM Customer Relationship Management

e.g. for example

et al. et alii (Latin), and others

etc. et cetera

FDZ Fischland-Darss-Zingst

fig. figure

ibidem at the same place

MV Mecklenburg-Vorpommern, Mecklenburg-Western Pomerania

NN nomen nescio, author unknown

no. number

w/o without

vs. versus

Introduction

1. Introduction

1.1. Subject and Objective

Customer loyalty programs can be found all over the economical market today and there is a reason why companies do this. People like collecting miles, digits or points, so on the example of gas stations many drivers rather wait for the next Shell than to buy their petrol at the No-Name station around the corner, only to have the chance to earn enough points for a walkman or a sports bag, and many other customers are acting the same way without realizing it.

In the tourism market there is an additional participant to companies like the big tour operators or the small privately owned hotels, which is the tourist destination as a whole. It has to be competitive against other destinations, nationals and internationals. The question is now, if it is possible to apply a customer loyalty program, like they are widely used by companies, to a tourist destination and if it makes sense.

The origin of this topic are the city bonus cards 1 , that were implemented especially by mid-size cities to resist the trend of customers to leave their home-towns towards shopping centers, which are located outside the city borders, and towards the big cities. With this behavior a lot of the spending capacity of the inhabitants was carried away. These cities, which can according to their basic structure be compared to a tourist destination as opposition to companies, already successfully adapted bonus systems to keep the people in town.

1 City bonus cards stand for local citizen cards with bonus function as opposition to city tourist cards, which will be explained in chapter 2.3.

Introduction

Throughout this essay the example of the tourist destination Darss 2 will be used to explain the system. Most of the shops and hotels of this area are small or mid-sized and privately owned, so such a card program can also be seen and used as marketing association of separate companies. So far there is only existing a visitor's card with no additional function, which is a document for the tourist that he has paid the visitor's tax, but neither a tourist card nor a bonus card are distributed. Comparable to a feasibility study, the chances for the implementation of a customer loyalty program are observed and analyzed on this real case.

The questions this thesis is trying to answer are

• Can a bonus card system help to make the tourists loyal to a destination and turn one-time visitors into frequent repeaters?

• What is the difference to the already existing tourist cards offered by many destinations already?

• Can such a system be combined with the visitor's tax tourists have to pay in many resorts and help to improve its image and acceptance?

• How can such a system be implemented?

This thesis is one of the first essays about the combination bonus card and destination. Yet there is no specific literature existing about this subject and therefore also descriptions of other areas will be used and adapted. One of the basic objectives of this essay is, to give arguments for a tourist destination to convince possible partner companies to enter such a program and not to be afraid of the investment, and to deliver a guide for the implementation of a destination bonus card system.

2 The author prefers to use the term Darss for the whole peninsula of Fischland-Darss-Zingst. Though geographically not correct, because of marketing reasons it is combined to the tourist destination Darss, which will be explained more precisely in chapter 2.4.2.2.

Introduction

1.2. Approach

The essay is self-contained and structured consecutively to finally understand the chances, the possibilities and the advantages of a bonus card system for a tourist destination and even to be able to implement it.

Fig. 1: Structure of the Essay Source: Own Illustration

The fundamentals in chapter 2 are giving a background to understand the coherences. Initially the position of the customer is explained in general and focused on tourism, which is mainly a service industry. How important loyal customers are and which basic terms and conditions are leading to customer retention will be described, before the different card systems and their use as marketing instrument are specified. To built a connection of customer loyalty, bonus card and destination, this is defined afterwards with a more detailed look on the Darss Peninsula in the federal state MV 3 . The resorts of this destination are allowed to claim visitor's tax because of their status, which is explained before the description of benchmarking as basis for the following chapter. 3 The English appellation for Mecklenburg-Vorpommern is Mecklenburg-Western Pomerania. Nevertheless in the following chapters the commonly known German abbreviation MV will be used most of the times.

Introduction

In chapter 3 a basic benchmark-study and market analysis helps to learn from other systems, that are already existing. At first cards used in tourism are examined, to see what the competitors are doing. Afterwards a look on card systems independent of the tourism sector figures out the benchmarks of other systems and what could be adopted, before then two system providers and their products are described to get an idea of the technical equipment and the costs that occur.

To analyze the chances for the implementation of a bonus card system in the destination Darss, a snapshot survey was accomplished in that area and the results are interpreted in chapter 4, in addition to the secondary data of the last years, that was provided by the tourism association of the Fischland-Darss-Zingst area, the "Tourismusverband FDZ". The questionnaire and the researched subjects can be seen as example and used for other destinations as well.

The procedure described in chapter 5 was developed based on the collected information and consists out of four stages, that explain the necessary steps towards a successful implementation of a destination bonus program. It is a guide for destination managers to understand the requirements for it.

Fundamentals

2. Fundamentals

2.1. The Customer

2.1.1. The Status of the Customer

In the case of tourism it can be said, that the customer is equal to the tourist. But the word tourist does not describe enough, what he is supposed to do, which is spending money and so creating revenue for the travel industry, the small shops, hotels and restaurants and with this tax income for the destination. He is not only touring and traveling, he is also client and consumer.

A simple definition of a customer could therefore be: “Ein Kunde ist...

...einer, der mein Produkt kauft, ...jemand, dem ich eine Dienstleistung erbringe, ...einer, der einen Bedarf hat.“ 4

But a customer is more than this, he has a much higher status. We are not anymore back in the times, when the customer was acting according to Maslow’s Pyramid, when in the first place he had to fulfill his basic needs to survive, which means he had to buy his bread no matter where and was not able to choose in which bakery he would do this. Today the customer is comparable to a sovereign emperor who has in most cases except for some monopolistic branches the power to decide which product he wants to purchase or which service he wants to use 5 .

4 Rothlauf, J. with Mietzner, D.: Total Quality Management in Theorie und Praxis, Munich / Vienna, 2001, p.101 5 cp. Meister, U. / Meister H.: Kundenzufriedenheit im Dienstleistungsbereich, Munich / Vienna, 1996, p.6

Fundamentals

This leads to the point where every business has to be thankful for any customer it can get and not vice versa, where customers are thankful to get the product. Even if a company is at that point, it should never forget this and how it got there. In the case of a gourmet restaurant for instance, where guests have to book their seats a long time ahead and are happy to get one, there still is no reason to become arrogant and condescend them. The guests can stay away easily, if they discover this.

The customer has to be brought to the point, where he forgets his power and becomes loyal. Only to see him as a buyer who increases the turnover, as it is in the definition above, is not enough, his value has to be seen in all connections.

2.1.2. Customer Value

“Der Wert eines Kunden resultiert nicht allein aus dessen Umsätzen und den zugehörigen Kosten” 6 . So it is not only the money earned with a customer in a certain moment, the customer has to be seen as a complex system. Though this seems logical, it is often forgotten.

All direct and indirect contributions have to be taken into account. How often are companies taking over other ones not because of their product but only because of their customer base? Two good and well known examples happened in the Mobile Phone- Market. To enter the German market, the British telecommunication company Vodafone absorbed Mannesmann D2 with their 10 Million clients in April 2000 7 . Though it was a hard battle especially in the public with expensive advertisements, it was the easiest way to become the largest mobile phone company in Germany at once.

6 Henseler, J. / Hoffmann, Th.: Kundenwert als Baustein zum Unternehmenswert, Hamburg, 2003, p.145 7 cp. NN.: Mannesmann/Vodafone - Chronik einer Übernahmeaffäre; available from:

http://www.manager-magazin.de/unternehmen/artikel/0,2828,242161-2,00.html [as of 15-May-2004]

Fundamentals

The same way it was done by the German subsidiary company of Deutsche Telekom, T- Mobile, to enter the American market. In 2001 they took over the US company VoiceStream 8 . These two examples of Mannesmann D2 and VoiceStream show, that the value of their customers was responsible for the value of their companies, and not their assets only.

It can also to be seen very often, that attorneys and doctors are able to sell their offices to a higher price, because they come with a secure number of clients or patients. Though it is more expensive in the first place, it is a lot easier for someone who wants to become a self-employed advocate than the acquisition of new clients.

One of many models, that helps to understand and to calculate the value of a customer, was developed by Cornelsen in 2000. He mentions 5 factors:

- Turnover

- Customer Profit

- Cross-Selling-Value

- Information-Value

- Reference-Value

• Turnover per customer is a plain number which is calculated in the first place anyway.

• Customer profit is also a regularly used number and shows the profit per customer, though most of the time too superficial because the additional costs for the cross-selling, information and reference activities are often not included.

• The cross-selling value increases the customer value depending on the potential of the customer to purchase other products of the same company. 8 cp. Winter, M.A.: T-Mobile USA kauft Mobilfunknetz von Cingular; available from: http://www.teltarif.de/arch/2004/kw22/s13810.html [as of 15-May-2004] 9 cp. Cornelson, J.: Kundenwert; in: Diller, H. (Editor): Vahlens Großes Marketinglexikon, 2 nd Edition, Munich, 2001, p.876

Fundamentals

• The information value consists out of all the useful and innovative information a company gets by his customer. If there is a good feedback by the customer, it is possible to improve and optimize productivity or marketing and distribution- processes. In comparison to the other items this value is not really possible to calculate 10 . Also the information collected by a good management of complaints must be mentioned here.

• The reference value is comparable to mouth-to-mouth-advertising. It is an important marketing instrument and it must not be forgotten, that it can also be negative and not only positive. Any customer has a potential of telling his opinion about a certain company, service or product to 9 up to 20 other people. 11

The customer value is not mentioned here to be able to calculate numbers. This would be a separate subject. But it has to be understood, why there must not be seen only turnover when we look on a tourist. The potential of any tourist is much higher than it is estimated to be most of the time. The comprehension of this assists the implementation of a customer loyalty program, especially in the case of a bonus card system for a destination, where several different companies are involved. With this in their mind it makes it easier for them to understand the sense of an investment into such a system. 10 cp. Henseler, J. / Hoffmann, Th.: Kundenwert als Baustein zum Unternehmenswert, Hamburg, 2003, p.146 11 cp. Rothlauf, J. with Mietzner, D.: Total Quality Management in Theorie und Praxis, Munich / Vienna, 2001, p. 105

Fundamentals

2.1.3. The Customer as Prosumer

One big difference of a service industry, like for instance tourism, to other industries is a direct contact between employee and customer. This can be seen in the figure below, the service triangle, which shows the basic relationships. The Company itself stays in the same contact to employee and customer whether it is producing or service industry.

Fig. 2: The Service Triangle

Source: Arlt, W. 12

But this service triangle is not perfectly built. There is one arrow missing from customer to employee, because there is an interaction between these two.

What is not expressed in there is the second big difference of services to other businesses, the moment of the production. This is because production and the fulfillment of the service offer, respectively its purchase, happen at the same time. Other industries, like tools, cars, etc. are produced, then stored and then bought, one after the other. The customer has nothing to do with the production of the good he wants to buy, except for maybe ordering it.

12 Arlt, W.: The Service Triangle; available from: www.arlt-lectures.com/03wshr-0101.htm [as of 18-May-2004]

Fundamentals

A closer explanation can be found in "Verkaufsförderung" by Pepels and his co-authors. In his chapter about the specials of services Auerbach defines this as the involvement of the external factor 13 , which is not as easy to manipulate as the other factors. This means that the customer, whom he sees as external, is directly involved in the production process of services, opposite to the above mentioned other industries. This is turning the customer into the "Prosumer" 14 , because he is not only the consumer, but also the co- producer of the product. 15 13 cp. Auerbach, H.: Die Verkaufsförderung im Dienstleistungsmarkt; in: Pepels, W. (Editor): Verkaufsförderung; Munich, 1999, p.215 14 ibidem 15 The author has already presented a chapter with similar content alike 2.1.3. in his essay about "The Use of Kaizen in Customer Relationship" in 2003

Fundamentals

2.2. Customer Retention

2.2.1. The Importance of Customer Loyalty

Most of the offered literature and education in economics puts their main views on finding new target groups and on how to get new customers. Especially in marketing the major part consists out of attracting people to buy a certain product or service, either via several different pricing methods, advertisement, public relations or promotion activities. Though for sure this is a necessary thing to do, it is the most expensive way to increase revenue for a company, in opposition to binding customers to it. The following figure shows the steps towards customer loyalty:

Fig. 3: The Loyalty Staircase of the Customer

Source: Based on Schüller/Fuchs, Total Loyalty Marketing 16

Studies proof, that the costs for the acquisition of new consumers are 5 to 7 times higher than to keep a customer and converting him into a repeater or even making him loyal. 17 Calculated the other way round this means, that the more loyal a customer is, the higher is the profit he creates for the company. While the loss of profitable customers influences turnover and revenue disproportional negative, the concentration on existing customers helps disproportional positive to increase revenue. 18 16 cp. Schüller, A.M. / Fuchs G.: Total Loyalty Marketing: mit loyalen Mitarbeitern und treuen Kunden zum Unternehmenserfolg, Wiesbaden, 2002, p.178 17 cp. Kunz, H.: Beziehungsmanagement - Kunden binden, nicht nur finden, Zurich, 1996, p.18; cp. also Rothlauf, J. with Mietzner, D.: Total Quality Management in Theorie und Praxis, Munich / Vienna, 2001, p.107 18 cp. Sturmlechner, A.: Erfolgsfaktor Sympathie - Erfolgreiche Kundenbindung und hohe Wiederkaufrate durch Beziehungsmarketing, Remagen, 2003, p.33

Fundamentals

Simply said:

2000 € investment in a customer loyalty program = 10,000 € spent on advertisement

Though this is not a scientifically correct calculation, it helps to understand why so many companies started loyalty programs, like e.g. the most famous in Germany, Lufthansa’s “Miles & More” 19 . It shall not be expressed here, that marketing activities should be completely reduced. Instead customer retention should go parallel with it. If there is nobody interested in a product, he will not buy it for the first time and so could never become a repeating buyer. The final goal has to be then, not only to make him loyal to a product or in this case to a tourist destination. His above mentioned reference value has to be used, so that it becomes the cheapest and best promotion of all. He has to be so loyal, that he recommends for example the place of his last vacation to his friends and relatives and therefore is a promoter for this destination.

2.2.2. Basics for the Loyalty

It has to be understood, that a customer loyalty program is only one instrument for customer retention. A customer can not be connected to a company by such a program alone, because basically it is still a matter of supply and demand and of the offered products.

2.2.2.1. Customer Satisfaction

Customer satisfaction is here one of the major aspects and is a requirement for loyal customers 20 .

“Kundenzufriedenheit entsteht durch den Abgleich der Leistungswahrnehmung des Kunden und seinen Erwartungen an eine Leistung.” 21 19 cp. chapter 3.2.2.

20 cp. Rothlauf, J. with Mietzner, D.: Total Quality Management in Theorie und Praxis, Munich / Vienna, 2001, p.100 21 Meffert, H. / Bruhn, M.: Dienstleistungsmarketing: Grundlagen - Konzepte - Methoden, 4 th Edition, Wiesbaden, 2003, p.121

Fundamentals

So the minimum that has to be done is to satisfy the customer, because an unsatisfied customer will never be loyal. This is the so called cognitive dissonance, when he gets less than he expected to get 22 .

It does not necessarily mean, that if there happens one mistake, the customer is lost immediately. Here the seller has to act and to show the customer, that he cares for the problem and that it was his fault, even added with an additional bonus or discount. If he does not do so, he does not only lose him, also the reference value of the customer becomes negative.

2.2.2.2. Added Value

Sometimes an offered product is bought coincidentally, just because nothing else was around or the customer did not compare it to other products. But the two most important points for selling a product are either to have a USP or to offer an added value.

The word unique can be found in USP, which stands for unique selling proposition 23 . This uniqueness on the market, if the customer sees it the same way, leads him to the decision to purchase this certain product and even to become loyal to it, because it is the only one, at least for him. However, such products and also services are not found very often, but if there is a real USP, it also leads to customer retention.

The other possibility to make the customer loyal is the added value. “Kundenbindung entsteht, wenn es dem Unternehmen gelingt, dem Kunden einen über das Produkt hinausgehenden Wert zu bieten.“ 24 This added value, which is also important for the potential customer, helps to stand out of the competitors' products.

22 cp. Meffert, H. / Bruhn, M.: Dienstleistungsmarketing: Grundlagen - Konzepte - Methoden, 4 th Edition, Wiesbaden, 2003, p.121 23 cp. Dettmer, H. et al.: Tourismus-Marketing-Management, Munich / Vienna, 1999, p.69 24 Malorny, C.: TQM umsetzen : der Weg zur Business excellence, Stuttgart, 1996, p.506; cp. also Höhler, G.: Wettspiele der Macht, Düsseldorf / Munich, 1998, p.53

Fundamentals

It can be tangible, but it can also be emotional like a special brand. To drive a Mercedes even though Lexus offers the same kind of car, or to be able to go on vacation to Sylt and eat Lobster, though on Amrum you find the same beaches and service quality, is for many this added value. It makes people loyal and even lets them pay more. Also to be recognized by name anytime someone comes back into a hotel or into a shop is an added value for many and makes them come back again.

2.2.2.3. Proximity to the Customer

The customer has to get the feeling, that a company cares for him. The proximity plays an important role together with the satisfaction 25 . A congratulation card for birthdays or the famous Christmas cards, maybe even with a gift, help to keep the customer loyal. Here it is also important, that the customer has a certain contact person, especially if a company is large.

2.2.3. Instruments for Customer Retention

When the basics for customer retention are fulfilled, this still does not mean, that the customer is loyal to the company. Several instruments can therefore be used to influence his buying decisions. One among others is the customer bonus card, which will be described in chapter 2.3. more detailed, since it is part of the main subject of this thesis. Nevertheless there are also other methods, which are mentioned here for the sake of completeness.

25 cp. Rothlauf, J. with Mietzner, D.: Total Quality Management in Theorie und Praxis, Munich / Vienna, 2001, p.106

Fundamentals

One problem is the time gap between the purchase and the next buying decision of the customer. In tourism business for example, there can pass up to one year and more until the next vacation for the customer. To skip this, there have to be undertaken some activities to stay in the tourist's mind 26 , like little giveaways 27 . One of the classical small gifts that proofs the success of such items is the ballpoint pen. It has a reminder potential of 73% to 82%. 28

Also important here are the after-sales activities, which could be cards or phone calls for several anniversaries of the customer, information about subjects he is interested in, business news or notes about special offers. 29 Invitations on sailing boats or theatre tickets could take place here as well.

Another method could be exceptional pricing for loyal customers. If they recognize that their loyalty is rewarded by special discounts, this is not only a possibility for extra sales. It satisfies both, the seller and the buyer.

26 cp. Sturmlechner, A.: Erfolgsfaktor Sympathie - Erfolgreiche Kundenbindung und hohe Wiederkaufrate durch Beziehungsmarketing, Remagen, 2003, p.47 27 cp. Schüller, A.M. / Fuchs G.: Total Loyalty Marketing: mit loyalen Mitarbeitern und treuen Kunden zum Unternehmenserfolg, Wiesbaden, 2002, p.115 28 cp. Rothlauf, J. with Mietzner, D.: Total Quality Management in Theorie und Praxis, Munich / Vienna, 2001, p.109 29 cp. Sturmlechner, A.: Erfolgsfaktor Sympathie - Erfolgreiche Kundenbindung und hohe Wiederkaufrate durch Beziehungsmarketing, Remagen, 2003, p.47

Fundamentals

2.3. Card-Systems as Marketing Instrument

2.3.1. An Overview on Cards

Only a decade ago cards were not really important in Germany. Many people still had old ID-booklets and the driving license was either big and grey or pink. The only card in the wallet was the EC-card because of its use at ATMs. Some people already had an additional credit card like American Express, Visa or Master Card, but not the average citizen, since the acceptance was not wide spread except for hotels or exclusive shops.

Nowadays it is vice versa. The question is rather, if there is still space for another card. One of the changes was in 1995, when the health insurance card replaced the paper form 30 . The possibility of saving data on a chip or a magnetic strip was an important step for today's cards. A look in the wallet shows the several cards that are in there: Calling card, ATM card, credit cards, health insurance card, Bahn Card, library card, driving license card, company ID card, student ID, etc. Cards became, like for instance the mobile phone, important in daily life.

With the existence of so many different cards, an additional system only has a chance if there is a benefit for the user. The higher the benefit, the better the position in the user's wallet and in turn the better are the chances for the card to be used.

30 cp. NN.: Chronik zur Gesundheitsreform; available from:

http://www.kvsh.de/presse/nordlicht/sonderausgaben/sonderheft_2003.pdf [as of 27-May-2004]