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

$15 mn + $0.9 /transaction+ data

access cost

Near about $6.51 mn

netration Rate

16.56% (5.3 mn unique visitors)

21.87%(7 mn database)

21.25%(6.8 mn customers
served)

ta Ownership

Complete

None

None

vantages

1.Unlimited data access and control

2.Would know ones brand the best

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

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

OPTION 2

OPTION 3

OPTION 4

Membership fee

None incentive
enough for
customers to join

1 time membership
fee of just $2 very
low but still
questionable

Annual fee of $5
customers might be
deterred from
joining

None incentive
enough for
customers to join

Concession
discounts

None no incentive
for customers

10% customers
tempted to join

15% - too high

discount ;costly for
the company

10% customers
tempted to join

Sign up points

500 too many

points;1 free child
admission

100 too low

points; might not be
attractive enough

None customers
not tempted to join

250 adequate
points to tempt
customers to join;
no incentive yet but
motivation exists

Value sum of
benefits on reaching
highest point level

$51.77 too high a

value for benefits;
costly to support for
company

$68.37 moderate
value at 2500 points
but still prove to be
costly

No benefits no
incentive for
customer to join

$62.22 good
enough benefits for
customers and none
too costly for
company

Value per point /Will

it be too costly for
the company?

$28.97 lowest but

not justified at no
membership fee

$36.56 highest but

justification
questionable

0 no cost at all but

no customer gained
at all

$32.14 moderate
cost for the company

Will it appeal to
customers?

Yes

Yes/Might be

No

Yes

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

RADIO

ONLINE ADS

GRASS ROOT INITIATIVES

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.

Significant overage in key

markets. Low advertisement
and development costs. Free
advertisement space on
many radio stations
websites.

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.

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.

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)

Engage in mobile
advertisement and
couponing to target young
Smartphone users.

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