Cineplex Entertainment - The Loyalty Program Case Study

Cineplex Entertainment - The Loyalty Program - Case Study Example The essay aims to outline the recommendations of Sarah Lewthwaite, the market director for the Cineplex Entertainment, to the committee of senior executives. The presentation contains persuasive arguments regarding loyalty program development campaign, considering the movie industry, which is having inconsistent revenues each year. Cineplex entertainment was founded in 1979 as a small chain of movie theaters. In 2005 Cineplex acquired its largest supplier and become the Canada’s largest film exhibiter. The market share of Cineplex after that acquisition jumped up to 40 million visits of customer per day. Cineplex also started giving value added services to its customer like food at branded concession counters, arcade games, etc. In the same year they also expanded their strategies and entered into new markets which generated customer traffic and boosted their revenue per day. Although the revenue appreciated a lot in the year 2005 compared to the previous years but cost of operation got high as well which shrined the net income of the company. Cineplex Entertainment had issued Elite cards to the customer which offered them rewards like free movie viewing after they accumulate a certain number of points. Cineplex had no CRM capabilities which could help them in driving customer traffic. According to the survey in 2005, 95% respondents wanted to have movie reward offer back. Considering that option for further investment Sarah Lewthwaite gave option of starting a loyalty program to the committee. Cineplex needed a loyalty partner because creating their own data system it would have cost them about $5.5 million in the first year. So they looked went on to look for a partner. Flight Miles, having 72 percent of Canadian active members, had the top loyalty program in Canada. Flight Miles can give Cineplex an opportunity to get access to their data bank of seven million customers which would certainly help them in targeting their market. Flight Miles program would cost yearly about $5 million and $0.09 on every point issued to the customer. Flight Miles executives offered Cineplex $250,000 to make the deal more attractive. Scotiabank approached to Cineplex as a potential partner for the loyalty program. It is amongst the top five bank of Canada having 6.8 million customers and 950 branches in Canada. The Scotiabank proposed a 50-50 cost sharing and expected naming rights on three theatres. They offered a three card reward strategy as well. The estimated cost portion of Cineplex w as about $3 million in the first year and $1.7 million and $1.9 million in the later years. Sarah Lewthwaite has now three options to look for loyalty program and had to work on them to finally get the best option. She will have to see the benefits as well as the constraints of the three options. She also restructured the reward program. Sarah performed a sensitivity analysis in the concession revenue per guest which might increase by 5 to 15 per cent and also thought of having a nominal one time or annual membership fee of $2 to $5. Sarah Lewthwaite also knew the fact that only 40 per cent of the points earned by the customer in the loyalty program would be redeemed annually. Lewthwaite then drafted reward structure that contained a preliminary list of four options but she was not sure that which option will click in the customer mind. Loyalty program required a data base vendor who could manage the