Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Volume 1 Number 3
Flawless
Program
Execution
Is the Art of
Client Service Dead?
EXPO 2009!
Highlights &
Reviews
A FREE MEAL?
The unfried chicken
calamity
Marketing
Automation
Marriage of Process
& Technology
J U LY 2 0 0 9 VOLUME 1 NUMBER 3 W W W. L O YA LT Y 3 6 0 . O R G
DEPARTMENTS FEATURES
6 What’s on Loyalty360.org
8 Letter from the Editor 22 Building Relationships—Are your customers
ready to bail on you, or are you already
10,12 Contributors bailing on them?
Jeff Anulewicz & Wayde Fleener – Carlson Marketing
LOYALTY FORUM
14 Your Voice
“What changes could an airline loyalty program make
to their program to get you to switch your allegiance?”
Page 59
28
LOYALTY
EXPO
2009
60 Expo Takeaways: “Keep it Real”
J U LY 2 0 0 9 VOLUME 1 NUMBER 3 W W W. L O YA LT Y 3 6 0 . O R G
48
42 Is There a Loyalty Marketing
Generation Gap?
Bill Hanifin – Hanifin Loyalty
What’s on Loyalty360.org
BLO G
WHITEPAPER
Read Affinion Group’s whitepaper “The New
4 P’s of Customer Engagement Marketing”
in its entirety (for summary see pg. 38)
Schedule of upcoming
webinars and events.
Our years of experience ensure we acknowledge, understand and anticipate marketplace and consumer trends, helping us
design programs to motivate your customers’ behavior. Some of the most recognizable brands have employed our services
to develop loyalty solutions to meet their profitability goals. We believe loyalty should be a business strategy with a positive
ROI. And our proven loyalty solutions repeatedly result in profitability for our clients.
LOYALTY
knowledgeable and passionate loyalty supporters I’ve met, John
Volume 1 Number
3
MANAGEMENT 360
Dawson. In the last issue and at the conference John and his team
taught us about the retention imperative. In this issue they continue
Powered by Loyalty
July 2009
Flawless
Program to wake us up to the need for analytics, go and meet the rooster on
Execution
Is the Art of page 32.
Client Service Dead?
Marketing
Automation
Marriage of Proce
& Technology
ss
Sincerely,
g landscape
m to the ever-changin
Adapting your loyalty progra
EvoLv E oR Exit:
Loyalty Management
will now be a bi- Erin Raese
monthly publication. Editor-in-Chief
Expect the next issue Loyalty Management
in late August! erinraese@loyaltymanagement.com
MANAGEMENT
“I convertedmy credit
card points to my debit card.”
MANAGEMENT
Kelly Passey
Paul Willerton
I
like a transaction and having a valuable relationship
with their customers. I fly to 48 states every year and ’d like to echo Mr. Williams comments above regarding
clients continue to ask me why I fly Southwest instead of an portability of equity & status migration. It seems to me
airline with 1st class seating. I always answer that I prefer that this would be a/the primary hurdle for any true frequent
the relationship I have with Southwest over that of an airline flier that has become vested with any one airline. If an airline
which offers a “no class” experience. You can’t buy my loyalty, can offer to port over status at minimum, that’s probably half
you have to earn it. the battle.
And of course, as anyone that has been on the program
Jeffrey Summers President at Restaurant Coaching development side for any length of time understands about
Solutions an airline’s “best customers”, although the miles (and “hard
rewards” from them) are certainly important, it’s really the
recognition of status and “soft benefits” that come with status
W
No doubt the airlines survey their top customers and hold
ith all that an airline must do to stay competitive focus groups time and again to determine the “appropriate”
and in business, it is with sincere appreciation and mix for their loyalty programs. As reflected in the postings
amazement that they are able to maintain this level of here, the question often leads the respondent down a
service. path that produces a predictable response--more miles,
1st. Honor the competitor’s miles from making the upgrades, expedited service, etc. This has resulted in a focus
switch. on the program and not loyalty in general, with customers
2nd. “Pricebreaks” at different tier levels. (Why should I “shopping the market” for the best deal--commoditization.
switch to a higher fee/price structure?) As soon as the competition comes out with a better deal, the
3rd. Baggage “Free” if you fly with me on a regular basis, consumer jumps ship.
not tied to a mileage program reward/tier program. True long-term loyalty isn’t about programs and
4th. Make it easier to purchase on board products ie; perquisites; it’s about the customer experience from pre-
Hawaiin Airlines no cash allowed to purchase. How transaction through post-transaction. How many airlines
about prepaid “Snack and drink cards?” bother with post-experience follow through? And I’m not
5th. If you have “premium” seating charges, waive those talking about a boiler-plate thank you from the flight crew/
for certain tier level members. captain when arriving at the gate or an e-mailed customer
We complain because we think we want more (and we do) feedback survey. Does the customer feel appreciated prior,
and yet I wonder if the airlines themselves are beginning to during, and afterward? Did the experience exceed the
feel “maxed out?” customer’s expectations?
Leonard Buchholz Seminar Leader Southwest is one of the very few airlines that comes close
to getting it right. Consistently get your customer where
he wants to go, on-time, without drama. Inform him of any
L isten, this isn’t about points, upgrades, or other changes in a timely manner. Treat him with respect. And,
tactical issues; it’s about creating a better experience. proactively make amends for shortcomings. A friendly smile,
If American or United could deliver a reasonable, good humor, and empathy go a long way while costing
CONSISTENT AND RELIABLE experience, they’d keep more nothing.
clients. Southwest has invested more money in its employees So, my suggestion to your airline executive, would be for
and it shows. him/her to take off his airline executive and budget manager
Wake up guys—would you really trade mediocre service cap and put on his customer cap. Personally experience
for points? several flights (incognito if he is easily recognizable by
airline employees), from several different cities in the US and
Paul Allamby Brand-activist abroad, flying in different classes, on his airline and others.
Listen to unsolicited comments made by passengers in the
terminal, at the ticket counter, and on the plane. I suspect
A: When making the shift from a private tender approach to multi-tender, there are
several factors to consider. First, I favor multi-tender especially if your core consumer
offering is not financial services. The goal is to garner a relationship to the brand not just
a product or service. At the same time, a specific product or service such as a card product
is important to segments of customers. Therefore, it should not be diminished in a multi-
tender approach. Depending on your situation, the card product can be very important
to your customers and organization. So, as you move forward, keep in mind:
The business impacts of the shift. The card product typically provides financial
benefit through lower interchange, fee income and marketing support. Understanding —John Bartold,
the financial implications will be very important. The decision will hinge on your Vice President
organization’s goals. For many organizations, visibility and consumer insight is a primary Loyalty Solutions,
goal. The increased consumer insight gained through multi-tender will drive financial Epsilon
results across the organization including the card product.
The consumer facing challenges at point of sale. Private tender and multi-tender will compete for position
at the point of sale off-line and on-line. Do you promote multi-tender loyalty, the card product or both at point
of sale? Again, once the customer can be identified and understood, it becomes easier to target the right mix of
products and services to their needs.
Design the value proposition to support the card product. Consumers using the card product should be
recognized and rewarded. The card is a badge for the brand and it delivers financial benefit to the organization.
Therefore, the value proposition should be designed to encourage consumers to adopt and use the private
tender within the multi-tender effort.
Focus on customer segments and their relationship to the brand. A successful loyalty effort will draw the
attention. Everyone will want to use ‘loyalty’ as a way to drive their specific area. Single tender versus multi-
tender will be one of many competing, internal interests. Defuse the competitive pressure by demonstrating
how segments can be served through targeted mixes of product and services.
It may take a little time before you have the visibility and insight needed to achieve success. Be diligent
and stay focused. Serve the consumer and they will serve you.
For example, does a debit card customer have a different purchasing profile from a credit or
private label cardholder? Probably so—and that means different strategies. Customers segment
themselves by preferred payment type, so take advantage of the opportunity this presents you.
Never forget that the cost of accepting payment varies by type; your earnings models should
—Jake Sterling,
reflect this. The critical metric for the value of a merchant loyalty program is whether it’s creating
Vice President
value for the perceived “sunk” cost of payment acceptance. Work to determine what this value is for
your organization and how to measure it. Take a fresh look at your loyalty program objectives and
Payment Technology,
ensure you can measure its ROI. Finally, don’t leave the point of sale out of your program’s scope. Maritz Real-Time
It’s the last mile of loyalty; transform it into a point of engagement, so you can reconnect your Rewards
brand with your customers at the very moment they pay, however they pay.
A:
Customer Insights = Opportunity = Profitability. The
CCG has worked more robust understanding of all of your customers
with many clients to create and their spending habits results in better insights that
“multi-tender” programs. can be used to inform the entire organization (not just
Most recently we helped marketing). Many years ago we worked with a retailer
Talbots expand their Classic in Chapter 11. They had a very limited understanding of
Awards program, which had their customer which could be summed up as “female,
traditionally been a Talbot’s aged 25 to 55, pink collar, married with 2 kids.” After
Charge program, to all looking more closely at who was actually coming into their
forms of tender. There are —Sandra L. Gudat, stores it turned out that there were many important and
many compelling reasons President and CEO, diverse customer types shopping, including new college
for an organization to look graduates shopping for career-ware for the first time as
Customer
to expanding its programs well as upscale grandmothers who wanted to look hip. The
Communications
beyond their own credit composite that the retailer had been working from actually
Group
card, a few are: wasn’t representative of their most important segments
yet that was who they were targeting in their marketing,
360 View of the Customer. Programs that focus on only merchandising strategy, store locations and new product
one tender type, such as a proprietary or co-branded development. This disconnect between the real customers
cards miss out on collecting customer transaction and the management team nearly sunk the business.
behavior data when a customer pays with other forms of It’s easier than you think. Luckily, in this day and age there
payment such as cash. They also miss out on identifying are many options to help facilitate the capture and tracking
and understanding customers who will never carry the of all customer transactions. Data storage and access is
organization’s card. These customers often “fly under the practically a non-issue as there is a solution out there to fit
radar” and can account for a substantial amount of sales every pocketbook. Of course, organizations have used reverse
(and are often resentful that they are not included in append and other technologies in years past, which have
loyalty initiatives if they don’t carry your card). Programs become much more difficult and costly to utilize. However,
that focus on only one payment type result in data that everyday, there are new solutions going on the market to
is skewed to customers who can or want to become make it easier. For instance, one solution allows organizations
to swipe a customer’s driver’s license when opting into their
cardholders. This presents a very incomplete picture to
loyalty program thus eliminating the need for data entry.
those who depend on the customer insights generated by
The license can then be used in the future to track purchases,
the data collected by the loyalty program.
thus eliminating the need for a loyalty card. L
Andy Wright
President, Brand Loyalty – U.S.
Carlson Marketing Worldwide
Andy Wright joined Carlson Marketing Worldwide in
2005 and is responsible for Carlson Marketing’s global
Loyalty Marketing, Enterprise Engagement, Creative
and Interactive offerings. As a member of Carlson Marketing’s Executive Team,
Andy is known for his thought leadership and his ability to knit together the talent that
exists across Carlson’s global network that spans 21 countries. His team of experts is noted
for bringing cool, new ideas to clients that deliver results.
Which sports team is your favorite? How much Which talent would you most like to have?
time do you spend tracking your team? I would love to possess a true ”fine art” skill. I love just
When I was a kid growing up, I played rugby and about any form of visual art and have collected bits
enjoyed it more than soccer, unlike most Europeans. and pieces over the years. But I have always dreamed
So being from Wales, I follow two teams actually—the of having the skills to make my own work. My lack of
Ospreys, a club side and the Welsh national team. There skill hasn’t stopped me dabbling, even to the point of
is a quite an “underground” rugby-playing community creating some garden sculpture many years ago when I
in the U.S., certainly at college level, but not much to wanted a piece and couldn’t afford one. But the results
go and see. Even so, the U.S. national squad is getting would have been far better if I had true talent.
better and better; I saw them play against Munster, the
European champions, last year in Connecticut. Which person has made the most impact in
your life?
I track team news through RSS feeds (everybody
does these days from the club) and try to watch the big Without a doubt it would be my wife who has
games if possible. And then occasionally I will travel to influenced me the most over the years. She’s been my
see an international—wherever they may be. life partner for 18 years and we make all crucial life
decisions together.
“The way he taught was to let you make mistakes and then
help you figure out how to make the situation right. It really
opened my mind, helped me think “beyond the box.”
What do you consider your greatest
However, if you are looking at this from the business
achievement? context, it would be very hard to pick just one person.
I’m very happy with my career and some business I really believe I learn from everyone I meet.
milestones over the years do ring out, but ultimately But, if I absolutely had to pick one person, it would
my greatest achievement, jointly with my wonderful be a fellow named Roy Boss, who was the Managing
wife Liz, has to be my family. We have managed to raise Director of Brann Worldwide when I was there some
two great kids, Ellie (10) and Luc (7), and still manage to years ago in the UK. He really helped me transform from
retain our sense of fun in an environment where work is a senior manager into an executive with responsibility
all encompassing. for running a business. In addition to developing my
operational management skills, he also took the time
to come into my office regularly on an ad hoc basis and to—financial services, travel, retail -- and in newer
just debate business strategy, and kick around ideas. The sectors as well, packaged goods for one!
way he taught was to let you make mistakes and then
In addition, you will see us more involved end-
help you figure out how to make the situation right. It
to-end. While we were once considered more of a
really opened my mind, helped me think ”beyond the
loyalty operations agency, we are now experiencing
box.” I have never forgotten that. I still call him and he is
huge growth on the front end of our business: the
still a mentor to me even today.
strategic and conceptual parts of our business with
If you were not doing what you do today, how brand planning, analytics, and insight to drive more
communications and engagement. A strong loyalty
would you be spending your time?
program is as much about engaging the consumer with
If the question is really referring to what other activity great communications as it is about being able to bank
would I be doing, it would be very hard to imagine points. You will see a lot more digital, mobile (we’ve
something where I wasn’t able to use my brain or able to mobilized 25% of our client companies so far!) and
grow a business. That is very important to me. interactive activity from us this year and going forward
In terms of an activity outside of the business world, I as well.
would love to spend more time outdoors cycling, which
is my passion. In fact, this summer, I will be riding in the Word of advice for a novice loyalty marketer:
Etape du Tour in France—basically the Tour de France I would say “first of all, you have made the right
for amateurs. decision.”
What’s your customer loyalty philosophy? Assuming you’re a novice to marketing in general,
loyalty marketing is a great place to start your career
Before Carlson, I had been in the business of
because you’ll see every aspect of marketing in which
Relationship Marketing for many years. When I came to
you could ever possibly get involved. Everything! From
Carlson, I was really struck by the difference between
marketing strategy to database marketing and IT,
standard relationship marketing and loyalty. I had done
Relationship Marketing programs and been involved analytics, communications, rewards and measurement;
in everything from analytics to database marketing to you will gain an understanding of how everything fits
the creative side of the business over the years. But, it together.
was fascinating to see what loyalty marketing does for Even if you came from another branch of marketing
above and beyond standard Relationship Marketing— and haven’t been involved in loyalty before, as I did,
to the point where I think loyalty marketing will be a you’ll find this industry is a great place to be because it’s
fundamental principle of most marketers; some get it a great driver of growth in the future.
now, more will learn it in the future.
Pretend for a moment that you are thinking about a
The fact that loyalty programs involve a notable loyalty strategy for your clients. You’ve gone through
exchange of value really drives much more of an the steps of figuring out the financial implications;
emotional relationship between the brand and the determined the needs, wants and behaviors of your
customer. And from that you can build a much stronger audience; determined your communication strategy
connection and I think that’s fascinating. And that’s and figured out how to really deliver value back to
really why I got into this business. your client’s customers to build a relationship. If you’re
Relationships count. And we believe in the value of thinking in these terms, then you are truly engaging
building strong relationships. It’s loyalty marketing that customers in the brand and you’re right on. If your ideas
enables the development of enduring relationships are creating a value exchange that drives engagement
between a brand and its customers. So every day, with with the program that allows you to get your message
each interaction, our philosophy is to build valuable across, then that drives further value. Thinking about it
customer relationships for our clients. in those terms, you can see how loyalty marketing can
affect just about every industry you can imagine. And,
What can we expect from Carlson in 2010? thinking about that makes you realize that no industry
We’ll continue to grow! We’ll grow in the traditional is immune from building relationships with customers.
loyalty sectors that loyalty marketing has always played You have made the right decision. L
Loyalty Reads
COLLAPSE OF DISTINCTION:
Stand out and move up while your competition fails
By Scott McKain
April 2009 | Nelsonfree | http://collapseofdistinction.com
A cross country road trip or a flight across time zones today will teach
you a sobering lesson—the faster we move, the more everything begins
to be the same. From Starbucks in Singapore to McDonald’s in Memphis,
a sobering conformity has taken hold. Whether you’re buying a meal, an
insurance policy or even a new car, the customer experience has a scary
sameness that has buyers growing less impressed, and less loyal, than ever
before. A challenging economy makes it all the worse, as customers become
infinitely more discriminating about where and how they spend.
Scott McKain’s new book, COLLAPSE OF DISTINCTION: Stand out and move up while your competition
fails, takes a close look at this growing problem and offers cogent, practical advice for businesses searching
for ways to truly stand out from their competitors, especially in a challenging economy.
The book offers four key steps to truly differentiating your company from the pack: clarity, creativity,
communication and customer experience focus. Together, these four components provide a jumping off
point from just being different to being truly distinct.
McKain says an economic downturn is the perfect time to grab market share from your competitor and
COLLAPSE OF DISTINCTION provides a road map to do it.
The motivation for Answering the Ultimate Question was to identify the actions that organizations
have taken to deploy a successful Net Promoter program and create a practical guide on how to improve
customer loyalty and drive growth. Owen and Brooks spoke with more than eighty organizations that have
implemented Net Promoter programs to identify best practices.
Owen and Brooks combined their years of experience in the field with their research to develop the Net
Promoter Operating Model targeted at executives and practitioners who seek to implement a Net Promoter
program. The book introduces and explains the six elements of this model and shares a number of case
studies from companies including Experian, Intuit, LEGO, Symantec and Virgin Media.
Throughout, the authors present practical ways to examine your loyalties across multiple areas that
have been scientifically proven to correlate to happiness, and offer strategies for changing how you relate
to others in your professional and personal life. The book culminates in a four-step process, called P2R2,
that gives readers tools to strengthen their loyalty bonds at work and at home. Why Loyalty Matters is the
definitive guide to understanding what loyalty is, why we need it, and how to unlock its power to achieve
more happiness and fulfillment.
CATALYST CODE:
The Strategies Behind the World’s Most
Dynamic Companies
By David S. Evans; Richard Schmalensee
May 2007 | Harvard Business School Press
They all cracked the catalyst code—and they couldn’t have done
it using traditional business strategies and tactics. These two-sided
businesses generate value, engagement and customer loyalty by creating
simultaneous and mutually beneficial relationships among the different
groups of customers they serve.
Building
Relationships
Are your customers ready to bail on you,
or are you already bailing on them?
by Jeff Anulewicz & Wayde Fleener – Carlson Marketing
R
elationships are tricky; they’re fickle and take time to Powerful, insight-rich communications reach
build. And, ultimately they require a great amount of
customers at an emotional level, driving deeper
trust. But, if you’ve invested anything at all, in building
dialogue to change behavior.
relationships with your customers, here are a few points to stay
ahead and keep from falling behind: Done right, loyalty marketing programs provide a powerful
communications channel for relevant and timely dialogue and
messaging designed to add to that customer information set.
Customer data is at the core of building They also provide a mechanism to reinforce the brand experience
relationships. to create and enhance the emotional component of loyalty. The
power of enabling the customer’s voice and then listening to it,
A sophisticated loyalty/relationship program typically
creates a strong relationship. And, with decreased noise, comes
offers one of the richest customer data sets a firm will hold. increased relevance. While data may be considered dull, it’s what
Organizations who adopt a relationship-based loyalty strategy enables the fun “stuff” in which customers can engage.
are building it on an understanding of fundamental strategic
questions about their customers. Who are they, what they are To maintain that relevancy, a brand needs to ensure the
worth, and what are their desired and actual behaviors? From this data which drives these communications decisions is diligently
information they can determine who to target and what tactical captured and maintained in order to evolve along with the
executions are required to drive an increase in the economic value consumer relationship. Using technology enables you to do it
they add to the business. A loyalty program not driven by data is at the right level. The inherent strengths of the mobile medium
usually driven by discounts. These programs don’t discriminate for instance; the concepts of consumer impulse and proximity,
between truly valuable customers and the occasional discount uniquely position it as the ultimate loyalty mechanism. This
shopper. A relationship-based loyalty program, on the other hand, allows brands to get closer than ever before to true 1to1®
will reward and build customer value. marketing and fulfill on the promise of right-time, right-place,
H
ow can we start a conversation about So what is the moral of this story? Since the 19th century
consumers being motivated by “free” without economist have used the term, “There is no free lunch” to warn
acknowledging Oprah’s free chicken giveaway? prospective investors of expecting easy money or windfall results
For those who live under a rock, Oprah Winfrey, the talk show from their efforts or lack thereof. Perhaps the adage should now
queen offered a coupon available exclusively through her Web state “There is a free lunch if you can redeem it.”
site, oprah.com for 24 hours on May 6th. The coupon offered
“two pieces of grilled chicken, two individual sides and a
biscuit” for free at participating KFC restaurants. The coupon “In reality, there is Free
was sought out so frequently that “Oprah Winfrey KFC
coupons” was the fifth most-searched item on Google Trends by
in the truest sense of
Wednesday afternoon, only hours after it had been posted. the word and then there
Stores across the country reported they were inundated is the accumulation to
with customers looking to redeem coupons for a “free chicken free, which is the tender
meal.” Some restaurants quickly sold out and told customers,
who have until May 19—excluding Mother’s Day, May 10— loyalty marketers use in
to use their coupons, to come back. More that 10 million
coupons were downloaded from the offer website and over 3
their negotiation with the
million Americans have already “tried” to redeem the internet consumer.”
coupon for their new “unfried” chicken. The redemption
demand became too overwhelming for KFC and their franchise
operators. So much so, that the President of KFC had to go The flaw in the Oprah and KFC free unfried chicken offer
is that it was truth in advertising. In other words, there was
on the Oprah show and extend the program by staggering
really an offer of “free” with no strings attached. Downloading
redemption dates among geographic regions and offering an
the coupon, redeeming the coupon and eating the meal
additional “Free Pepsi.” Stories of long-lines, sit-ins and angry
involved absolutely zero commitment from the consumer.
customers fueled the news for the days following.
We’re faced with a “perfect storm” of conditions in today’s struggling market, financial institutions
must apply a spirit of innovation to set up both short-term and longer-term solutions to restore
profitability to all programs. The pressure is on for current loyalty programs encompassing debit
or credit card transactions and even an enterprise wide solution covering a full range of retail
products. Maintaining and growing revenue, while controlling margins by improving portfolio
quality and lowering operating cost for all programs, presents a daunting task for financial
institutions and loyalty program providers.
I
rather one way to reduce overall point cost and create a number
nnovation is not always something new, but many
of tangible benefits for cardholders and financial institutions alike.
times an updated version of a time tested solution. The trading
stamps system is long since gone, but in 1999 Consumer Benefit
When deciding to add a merchant network program, consider
Services, Inc. (Cbsi) leveraged this great old idea and developed the size and type of the card portfolio, the geographic footprint
one of the first new generation merchant network programs for of the financial institution and the merchant network provider
financial institutions tied to the usage of a financial institutions’ itself (there are several to choose from with strong differentiated
core loyalty debit and credit card programs. They developed capabilities). Extensive research should be completed
and tested a program by which card users were rewarded with when selecting one to partner with to assure the depth and
bonus points per dollar by using their credit or debit cards at sophistication of their program. This research is important when
specified merchants both national in scope, web-based and at considering the scale and pertinence of the merchant network
hundreds of locally-based merchants (in the geographic footprint itself, the ability to add and manage a local merchant component,
of the financial institution). These points were funded by special and the technology to process data and to support, report and
purchase rebates provided by the merchant network participants. analyze the program.
Evolve or Exit:
Adapting your loyalty program
to the ever-changing landscape
by Kelly Passey – Access Development
D
espite the rapidly changing landscape,
the goal of the loyalty marketer remains the same: to
increase the likelihood a consumer will (re)engage with
a brand/product upon an identified need. To achieve this goal in
such an evolving marketplace, loyalty programs need to adapt
just as quickly.
A 2006 Colloquy study evaluated the “Best of the Worst” These results reflect a failure to acknowledge change in the
loyalty programs over a 16-year period. During this time: three fundamentals of a loyalty program: its financial demands,
the voice of the customers it serves, and the data that represents
• 24% disappeared, with no replacement plan that voice.
• 14% disappeared, intending to replace
However, the results do not reflect a lack of consumer interest
• 7% relaunched
in loyalty programs. In fact, loyalty membership grew by 25%
• 21% underwent “major modifications” from 2006 to 2008 across all program types. The financial
• 34% “evolved” services area alone saw an astounding 77% growth, with an
estimated 80% of all consumer cards (both credit and debit)
In the end, 45% of programs had to retool or exit. These now equipped with rewards programs.
failing plans had three things in common:
Yes, loyalty saturation exists. Nonetheless, consumers remain
• Costs: 85% of programs reported flat funding across more attracted to companies that offer loyalty programs, and
all customer segments—meaning the best and the worst 80% of loyalty members indicate the program impacts their
customers were earning and being recognized at the same purchasing decisions. So, what is our mission if we decide to
level. accept it?
• Conversation: 75% of programs reported having little to
no consumer dialogue built in to the program. If there is no 1) Cut through the noise by keeping the program simple
capture or analysis of the customer voice—how does one 2) Instill trust by delivering what is expected, and
know what works and what doesn’t? 3) Reward or recognize for everyday behavior—redemption
• Data: 82% did not appear to be collecting or using member for the right customers should be easy, encouraged and
information, usage or transactional data. embraced.
C
ollectively, no one works
toward failure of a program. We
all work hard to build and launch
successful rewards and loyalty
programs, and we can’t afford to be passive
in monitoring their results. Ongoing re-
evaluation is essential, as the noise in the
marketplace continues to increase and more
programs miss the mark with complexity or
weakened value propositions, ultimately
eroding consumer trust.
It is not just where the cardholders spend (dining and • Would you sign up?
shopping) and how they spend (brick-and-mortar) that matters,
• Would you actively participate?
we needed to know when they spend. Again, we turned to usage
data to find that cardholder spending directly correlates with • Would you tell your friend about it?
when they have the most time and money—on payday and the • Would you tell family about it?
weekend. Clear spikes were seen around the 15th and 30th of • Would it reward you enough to change your existing
each month. We evolved our email marketing efforts accordingly behavior?
to coincide with these peaks in spending, customizing emails to
feature merchants within a 25-mile radius of the cardholder’s If the answer is no, it’s time to look to your program data, get
zip code. We then initiated weekly “thank you” emails on the your customer feedback and adapt your program. The customer
weekends to remind cardholders of the rewards they had earned. marketplace we serve is evolving—with or without us. L
Avoiding the
“Rooster Syndrome”
by Kathy Lambert & Tom J. Salutz – DataCo
email mobile website display ads direct mail call center point of sale
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Delivers Results
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Many marketers share this expectation of loyalty programs: that if you establish a program, then
customers will join, and wonderful things will happen. Sales will go up and profits will soar. Your
company’s CEO and the board will rejoice. Ultimately, you’ll get promoted and live happily ever
after. We call this the “Field of Dreams Fallacy,” which is to say that simply building and launching
a loyalty program is not enough to ensure its success—even one with a great value proposition.
The reality is that customer marketing success is not really Regardless of how this statement is phrased, it’s not the place
about being good at loyalty programs as much as it is about being you want to be after years of loyalty investment.
really good at relationship marketing. Here’s why.
Why Aren’t More Programs Working?
The Common Refrain or Those Who Do Not Study The recent study from Aberdeen Research, referenced in “1to1
History are Doomed to Repeat It Weekly” on May 11, 2009, quantifies this anecdotal evidence,
Over the years as we talk with new clients and prospects we concluding that a majority of retailers, over two-thirds, are
hear them express dissatisfaction with their existing programs dissatisfied with their loyalty program performance. In our
typically as follows: experience, this is usually caused by two things:
1) A poorly designed program
“We built this program XX years ago, basically copied our
competitors’ program and …” 2) A poorly managed program
1. “…are unsure whether it’s working or not” The truth is that there is no silver bullet that ensures on-going
2. “…are now spending $YY million per year” success. It takes a continuous stream of hard and smart work
that extends long after the program launch. Successful loyalty
3. “…no longer sure if it’s as good as what our competition is
initiatives (loyalty programs, relationship marketing, etc) evolve
now offering.”
over time, as does the ability of a company to make the most use
of them.
Information Exchange Feeds Customer The typical marketing metrics can be expanded to customer
Relationships metrics that measure how customers impact specific functional
areas and the business at large. The more a company can
The challenge of program design lies in using that information understand which customers are impacting its business, positively
to drive customer engagement—a requisite to building a customer or negatively, the better a company is able to manage these trends.
relationship. We need to answer this important question: “Can we (See “Comp Customers”, Loyalty Management, January 2009,
put forth a loyalty proposition that will motivate a customer to Volume 1, Number 1)*
opt-in to a relationship with our brand?”
Loyalty marketing shouldn’t be structured just as a
Customer engagement is the starting point in creating brand “department”, nor should it be a stand-alone program that
relevance, as engagement leads to data collection and, in turn, designed in a vacuum within a firm. From the beginning and
customer insights. These insights then can drive more relevant as long as you run your program, loyalty needs to be integrated
communication and ultimately put the brand in a position to into the entire organization. It’s vital to make sure everyone
drive incremental business from the customers. Therefore, the understands, has input and informs the loyalty program. True
most perfect loyalty proposition in the world, at its best, is a success comes when key organizational leaders are always
driver of relationship marketing. thinking, “How does/can/should (a new initiative) relate to our
customers and through our loyalty program?”
Loyalty marketing is really about giving customers a reason
to opt-in and identify themselves at every point of contact, Long term loyalty success comes when a company has customer
then using these data to drive communications through CRM insights that enable it to be more relevant to its customers,
functionality. Each point of contact creates data and customer and in turn, makes its customers more relevant and integral to
insights around what customers look like, who they are, how they the company’s business planning, operations, marketing and
behave and when, how often / how much they buy, whether they financials. Ultimately it’s what you do with the program (how you
refer, etc. use, adapt, and innovate it) that really makes a difference to your
top and bottom lines. L
Data Collection Also Raises Customer Expectations
*Available online at: http://www.loyalty360.org/loyaltymanagement.shtml
The flip side to collecting and using customer data through a
loyalty program is that it simultaneously raises the bar in terms
of what a company should do with that information. Customers
are increasingly smart about data and privacy. They know that
Customer engagement
has become an important
concept to businesses in
various industries recently;
so important that we
regard it as a prerequisite to
business success amid one
of the most challenging
economic environments in
recent history.
Is There a
Loyalty Marketing
Generation Gap?
by Bill Hanifin – Hanifin Loyalty
3. Acting on the Data—Using data gathered from feedback to Near universal adoption shows that most respondents have
respond and take new actions to increase loyalty, including: heard of these programs and are participating in them, most
usually through internal resources. High adoption shows that
a. Product creation
most respondents have heard of these programs, and many are
b. Communication / positioning participating through a mix of internal and external sources. Low
c. Complaint management adoption reveals that many participants have not heard of these
d. Incentive / rewards programs and are not using them.
I
t would be nice if the link between customer loyalty and profit The second segment looked very different. This group consisted
were simple, clear and easy to prove. The theory is certainly of younger, low-income customers who typically held a single
attractive: Customers with high satisfaction and commitment free-checking account with a low average balance. However, they
levels form a bond with a company, and this bond leads to a bounced a lot of checks, which brought in significant revenue
variety of desirable behaviors. Loyal customers stay longer, spend from overdraft fees. Unlike the first segment, these customers had
more, complain less and make recommendations to their friends exceptionally low loyalty scores. In fact, they hated the bank. The
and family. If companies invest in loyalty, the theory goes, the
only reason they stayed was that the situation would be the same
rewards will come pouring in.
wherever they went.
In practice, however, this scenario doesn’t always play out as
predicted. The loyalty-profit connection can be complex and
muddled, as the following case demonstrates:
“Not all of the predicted
At a large retail bank (which we will call Bank Z) analysts from
the Finance Department teamed up with the Service Quality financial benefits of loyalty
Group to examine the relationship between customer loyalty
and profitability. The Finance analysts calculated profit at the
are included in the standard
individual household level. Service Quality managed a large profit formula, at least at
survey program and calculated household loyalty scores, which
were based on a combination of satisfaction, commitment, the level of the individual
advocacy and brand identification ratings.
customer or household.”
The teams linked the profit measures and loyalty scores, with
the expectation that they would discover a nice, upward-sloping
line showing that the least loyal customers made less money
for the bank than the most loyal customers. What they found, Taken together, the loyalty scores of these high-profit groups
instead, was a flat line. There was no difference in the average cancelled each other out. But, what about the low-profit
loyalty scores between low-profit and high-profit customers. customers? As it turns out, there were competing segments in that
group, as well. One segment consisted of customers who were
This finding caused considerable consternation. Bank Z spent highly dissatisfied with the bank. They had experienced errors
a great deal of money on programs to measure and improve or service problems, and consequently had begun shifting their
customer loyalty, and the loyalty metric was a key part of the business to competitors, resulting in lower profit levels. As one
executive incentive structure. If there was no return on these would expect, their loyalty scores were abysmal.
investments, what was the point of making them?
The second segment consisted of renters with modest but
Further analysis revealed there were at least three factors steady income. They did not have mortgages or equity loans,
confusing the results: kept fairly low account balances, used free checking, and never
had overdraft fees. In other words, they were stable, financially
1. Competing Segments. When examined more closely, it responsible people – and they made no money for the bank. They
was found that there were two large, distinct groups among the were also among the bank’s most “loyal” customers. And why not?
most profitable households. The first consisted of high-income, They were getting a valuable service for free.
older customers who had long tenure with the bank. These
customers generally used multiple products and services, and kept The existence of competing segments at the opposite ends of
large balances in their deposit accounts. Their loyalty scores, as the profit spectrum may in itself have been enough to flatten out
expected, were extremely high. the loyalty curve. But there were other factors at play, as well.
2. Imprecise Profit Calculations. Profit, as we all learned in 3. Financial Benefits Outside The Formula. Not all of
school, is calculated by subtracting cost from revenue. Companies the predicted financial benefits of loyalty are included in the
are usually pretty accurate when it comes to assigning revenue to standard profit formula, at least at the level of the individual
individual accounts. Banks, for example, know to the penny how customer or household. One example is retention – or its flip-
much someone has paid in fees and interest. side, attrition. At Bank Z, those who severed their relationship
with the company because of dissatisfaction or lack of loyalty
But costs, particularly in service businesses, can be more
were removed from the household profit figures altogether. The
difficult to assign to individual customers. This is important,
revenue lost from their defection would impact profitability at an
because according to some experts, loyal customers are cheaper
aggregate level, but as individual households they had effectively
to serve. By staying with the company longer they learn more
about its products and services, and they develop more realistic ceased to exist, and would not have been included in the loyalty-
expectations about what the company can do. As a consequence, profit analysis.
they become less reliant on support services and less likely to
complain. In addition, with time and knowledge they may Another supposed loyalty benefit is new account generation
migrate from high-cost to low-cost channel usage. In the case of from referrals. Analysis of customer survey data at Bank Z
banks, that means using ATMs and on-line banking instead of indicated a strong correlation between a customer’s satisfaction
relying on tellers and call agents. and the number of referrals given. Furthermore, about 40% of
new customers said they had joined the bank primarily because of
But, if loyal customers at Bank Z were cheaper to serve, that a referral from an existing customer. But, household-level profit
fact was not reflected in the profit calculations for individual calculations have no way of accounting for the value of bringing
households. The Finance Department ignored such details; in new business, and this benefit would, like retention, have been
they simply took an average cost-to-serve for all accounts and excluded from the loyalty-profit analysis.
applied it evenly, irrespective of the individual households’ actual
behaviors. Bank Z learned more than one lesson from this exercise. First,
it stopped treating loyalty as a one-size-fits-all proposition, and
Some of the cost details were, in fact, available at the
began looking at how best to leverage loyalty-driven behaviors
household level. But, the information was scattered about
within specific customer segments. Second, it started searching
in various databases and was controlled by Marketing,
Operations and other groups. It would simply have been too out and consolidating cost-to-serve data from across the
difficult for Finance to find and extract all the information organization (an effort that is still far from complete). And third,
needed to get a true picture of household service costs, so it designed a loyalty benefits calculator that incorporated a wider
they took a shortcut - and consequently masked any insight range of variables than the profit formula used by the analysts
about cost-related loyalty behaviors that might have been in Finance. Even with these changes the loyalty-profit picture
contained in the household profit data. remains fuzzy, but it’s getting clearer all the time. L
Is the Art of
Client Service Dead?
by Chip Hall – Kobie Marketing
I
n the ever-advancing age of technology
we are more connected, more in touch, and more
accessible to our clients than at any time in the history
of modern communications. We can scour through our
plethora of e-mails, voice mails, tweets, Facebook updates,
and presentations from practically any location on the globe.
There is a common sense of pride and of accomplishment in
our ability to be responsive to our clients. We are executing
on all of our tasks, and taking advantage of all of the
latest tools at our disposal to provide what we perceive as
exceptional responsiveness and service to our clients. We are
dispensing with our workloads at increasing levels of speed
and proficiency. However, are we engaging our clients as
they wish to be engaged, and effectively positioning their
businesses for growth and profit?
has gotten lost with the emergence of malls, where merchants uncovered the true motivation on why you were hired in the first
began relying on traffic volume to make sales and thus ignored place! Keeping the client’s goals in lock step with your own and
the personal touch. Today, retailers who have taken the steps to being proactive with your recommendations (not just relying on
know their customers, track their behaviors, and engage them meeting SLAs) will establish the foundation for a true partnership.
in relevant ways are the ones who are surviving and thriving in
today’s highly competitive economic environment. The Elite 8 is focusing
“According their entire organization
This personal engagement example is highly applicable to the on customer collaboration.
Client Services world today. According to Bain and Company,
80% of companies believe that they deliver a superior level of
to Bain and They are developing their
capabilities to satisfy
service, however only 8% of their customers agree! Client surveys
tell us with increasing frequency that companies have lost the
Company, 80% customers over and over.
They are establishing
client in the equation. Resources are increasingly constrained
across the entire business spectrum. What sets the 8% that of companies direct accountability for
the customer experience.
are delivering a superior level of service apart? If we are more
connected than ever, why are the vast majority of companies not believe that They are utilizing the
latest innovations to
receiving the service they expect? communicate the most
they deliver a recent trends, data,
The answer is elementary: The 8% that are and relevant news to
delivering on their client’s expectations have superior level of their clients at an ever-
engaged in the way the client expects! expanding level.
A common mistake in client services is to execute on of partnership that are not currently on the radar? Are you being
packaged recommendations, generic programs, promotions, invited to speaking engagements with your clients to discuss
etc., which are not tailored specifically to the client’s primary the success of your relationship model? Are you engaging your
objectives. In the loyalty business, this would encompass a one- customers in the way in which they wish to be engaged? If the
size fits all approach (Loyalty in a box with an on/off switch). answer to these questions is a resounding yes, then you are truly
The concept is there, but in the client’s perspective, you have not practicing the Art of Client Service! L
Marketing Automation:
Marriage of Process and Technology
Key to Unlocking Customer Loyalty
by Connie Hill – TFC, Inc.
W
hile marketers today seem to “To build meaningful strategies
recognize the importance of developing customer
loyalty through customer centric marketing for customer retention and
efforts, many marketers are at odds as to how to implement
and integrate strategies, processes and technologies that fuel loyalty, marketers need a
customer relationships. In fact, in the recent Routes to Revenue
research paper, the CMO Council cites that a surprising 76 centralized data repository.”
percent of senior marketers believe that they are not realizing
full revenue potential from their current customers. Moreover,
only 46.5 percent say they have insights into retention rates, Action 1:
customer profitability and lifetime value. In today’s economic Integrate Disparate Data Scattered
reality, marketers are motivated to retain existing relationships Throughout the Organization
and sustain customer loyalty. With so much opportunity on
the table, why aren’t more customer relationship and loyalty Relationship marketers need a comprehensive view of the
marketers embracing analytics and process automation? customer to develop meaningful strategies based on customer
interactions. A comprehensive view means capturing behavior
According to Forrester Research, organizational as well as data across multiple communication channels, including
data and technology- related issues prevent marketers from financial data, service data, campaign data and any relevant
stitching together a comprehensive view of the customer external data. As Forrester Research indicates, data collection
(Creating a Multi-Channel View of the Customer 2008). So challenges occur when companies are organized in functional
what action can loyalty and relationship marketers take? marketing silos, data is not shared. The problem relationship
marketers face is that customers today interact with companies
via multiple communication channels as they consider their
purchase or request service. To build meaningful strategies for
customer retention and loyalty, marketers need a centralized
data repository.
To differentiate itself and gain competitive advantage in a crowded market for credit
card offers, Orvis created a co-branded credit card that is delivering on its promise.
The results have not only provided more value to the customer and improved the
customer experience, but have also deepened customer loyalty and significantly
improved Orvis’ financial performance.
PROGRAM HOOKS collectively have a breadth and depth of credit card experience
second to none. They are in this to ensure a succesful program,
n Free standard shipping on all Orvis orders, which has proven
and achieve results as an extension of our team.”
to be a motivator for today’s catalog and Internet shopper
n Enhanced user experience and value, which means more In an economic time when every dollar matters, Orvis is now
customers shop using the card able to offer its customers an innovative credit card with great
n Instant credit approval on orvis.com, allowing customer to rewards benefits that will keep them coming back. Specifically,
use and earn benefits with immediate purchase Partner Advisors helped Orvis through skillful structuring,
management, and execution of the program by:
n Increased customer points earned from three to five points
for every dollar spent at Orvis, and one point per dollar spent n Helping to redefine and redesign the Orvis card program and
elsewhere value proposition
n Points convert to rewards dollars stored in an easy-to-access n Developing and optimizing new channels
virtual rewards bank. Cardholders easily redeem their rewards n Structuring a profitable long-term model for Orvis
for Orvis products and services online, in stores and by
n Managing the overall program from start to finish
phone.
WHAT’S NEXT?
ORVIS HIRED A GUIDE
Orvis is planning for continued program growth in all its
One of the hallmarks of the Orvis brand experience is to
channels—including catalogs, Website, and retail stores. Future
enjoy the sage advice and services of one of its more than 200
card initiatives include:
endorsed fishing guides, who are renowned experts in teaching
people how to tie flies, read the water, and catch more fish. In n Launching an email campaign to tell card holders how much
Partner Advisors, Orvis found an expert guide of its own to help they have in their rewards bank that can be redeemed for
navigate the unfamiliar waters of co-branded credit cards. Bill products and services
Eyre, director of Advertising and manager of the Orvis Rewards n Testing double points promotions in key spending categories
Visa program at Orvis, hired Partner Advisors to provide Orvis like gas and groceries, designed to get the Orvis card “top of
access to core-competency in the credit card industry, drawing wallet”
on Partner Advisors’ extensive expertise on both the issuer and
partner side. “Coming from an advertising background, I didn’t n Creating a more tailored approach to the customer whereby
have experience with the nuances of how a credit card program the customer is identified as an Orvis Rewards Visa Card
should work,” said Eyre. “I’ve been very pleased with how Partner holder when they call, allowing Orvis to accelerate specific
Advisors aligned us with Chase to create such a strong co-branded benefits and/or special offers to the customer
card program. From the beginning, they partnered with me to n Optimizing cardholder spend behavior to make the customer
drive marketing planning and implementation, to ensure its relationship as profitable as possible for all constituents of the
success day in and day out. They continue, to this day, to have an partnership L
active hand in managing the program.”
For more information about the Orvis Rewards Visa Program visit:
“Partner Advisors played a key role in bringing Orvis and http://www.orvis.com/visa
Chase together to enhance the customer experience with a
best-of-breed program,” said Eyre. “The Partner Advisors team
P R O G R A M S U CC E S S S TO RY
RocketBux
Brings More Traffic,
Revenue Increases
by Paul Willerton – RocketBux
PROGRAM BASICS
Starbucks Card Rewards Starbucks Gold Membership
n Free drink extras like syrup, soymilk or whipped cream. n 1 0% off most in store purchases
n Free refills on drip coffee. These are unlimited and apply n A free drink when you join at Starbucks
to any size drink.
n Friends and Family discount days/coupons
n Free Tall beverage with 1 lb. whole bean coffee purchase
n S pecial “surprise offers,” i.e. free drink on your birthday
n Free AT&T Wi-Fi Access (2 hour daily session)
n Free AT&T Wi-Fi Access (2 hour daily session)
To receive your benefits, at least part of your purchase must be
Although you can load $ value and register your Starbucks Gold
made with your registered Starbucks card.
card, the benefits are separate and DO NOT OVERLAP (except Free
Wi-Fi) those of the Starbucks Card Rewards. You must choose one
or the other. Decide what works best for you!
Each issue we’ll be sending our secret shopper out to experience a particular brand first hand. Our shopper will sign up for the
loyalty program, if one is available, and interact with the company at least 3 times, then share their experience with all of us.
Your suggestions for the next brand review are welcomed: email your suggestions to mailbag@loyaltymanagement.com.
*Visit www.starbucks.com/card for full program rules, participating locations and AT&T WiFi information. L
Job Openings
Sales Executive / Loyalty Industry Independent Sales Contractors
Consumer Benefit Services, Inc. Connexions Loyalty Travel Solutions
Expo Takeaways:
“Keep it Real”
by Al McClain – RetailWire.com
S “The Loyalty
o here’s the thing about loyalty—it’s whatever
the individual shopper/consumer wants it to be,
not a marketer’s program. One person is loyal
due to personalized service, another likes the one free
after ten purchases deal, while someone else wants to
accumulate points, etc. The problem seems to be that
Expo was a well
at least some marketers are more in love with putting
together programs and setting rules than they are in run conference
with many great
really connecting with their customers.
presentations
example, where one can earn 20,000 Aadvantage® miles
for doing the following: Open a checking account with at
least $1,000 by 6-30-09. Make one direct deposit or pay
two electronic bills or make five qualifying non PIN-based
purchase transactions with their debit card per month for
twelve consecutive months. Oh, and you have to remember
and significant
to register for the program using a special code and once it’s
all over it takes up to 120 days from completing all the activity
to receive the miles.
networking
Meanwhile, speaker after speaker at this week’s Loyalty
Expo advised marketers to “simplify”, “connect with consumers
opportunities
” and “keep it real”. With the above example, we can see why
that advice is necessary. BrandMIND noted that households
have an average of 14 loyalty cards yet a Colloquy presenter
with clients,
said that only 6.2 of those 14 memberships are active. In
other words, consumers have a lot of loyalty cards and partners and
prospects.”
can’t keep up with them all. Yet, here’s the program that
started it all in 1981 making consumers jump through nearly
impossible hoops to claim their award.
Eye on
the Future
by Julie Sturgeon
In short, our goal is to find the answer to today’s says, we think that correlations are the cause, which means
vital questions on how to retain loyalty, how to engage we buy into myths such as customers become more
consumers and how to measure effectively. profitable the longer they stay with the company. (Wrong.
Buyers fall into either profitable, break-even or unprofitable
But we can’t drag the baggage of our past along on this buckets. You simply want to encourage the profitables to
journey if we intend to get to our destination, as Timothy stay, not everyone in a blanket statement.) Or we believe
Keiningham, global chief strategy officer and executive loyal customers pay higher prices. (Just the opposite: they are
vice president of IPSOS Loyalty , made clear in his keynote quite price sensitive because they’ve learned how we tick.)
address. “We see with our brains, not our eyes, so we accept
the myths in this industry,” he told the audience of 300-plus. “There is no magic bullet, no simple solution to loyalty,”
“That’s a problem.” Keiningham said. “We have to satisfy customer needs and
wants at a sustainable profit. It’s the last part marketers
Unfortunately, our brains are wired to see things consistent forget.”
with our normal world—we do not see things we think are
impossible. And as marketers, there’s a second twist: Our Here’s a glimpse of how other loyalty marketing players are
brains see patterns in everything. As a result, Keiningham using what we know today to reshape our future. L
“There
were many
L O Y A LT Y E X P O S U M M A R Y
“Games tap into competition, status, flow, play, reward, Exchanges make the games social. When you let
achievement and mastery—primal psychological needs,” people interact—think sending gifts on Facebook or
Kirk told his audience. And that’s exactly why they could retweeting on Twitter—they’ll play longer
be the big ticket to solving pervasive challenges in the
loyalty marketing arena, such as commoditized programs, Customization, such as avatars, cement folks to your
the public’s growing attention scarcity and social media’s program. The more time they invest in creating their
message that everything needs to be interactive and stamp, the higher the exit barrier. PetSociety gamers
immersive. did exactly this when they discovered players had
made a point to collect the different color dog poos in
Kirk offers three steps to take immediately: the competition. Now, there’s an added goal: to earn
golden and rainbow poo. “We have as much data on
1. See yourself as a game designer: Call it a loyalty program how people use loyalty as gaming companies do,” Kirk
if you insist, but the goal is still to tap into the same pointed out. “Why not use it to fit the program to the
power engagement triggers. The real transformation players?”
happens when you throw in the fun.
Feedback shows where you stand relative to a
2. Focus on your player. As a game designer, your role is to personal goal in addition to the big picture.
be an advocate for the player. Yes, it’s a radical shift for
folks who traditionally think in terms of price per point. Randomness plays on the popularity of slots.
Psychologists will tell you that variable reinforcement
3. Master these game mechanics: is the most powerful carrot. Take, for instance, Charter
cable company’s loyalty program. Participants know
Points, or even more precisely, scores. Coca-Cola has how to collect points (yawn) but they have no idea
turned its bottle caps into tokens; YouTube encourages when the window to redeem them will open and
participants to strive for hits and ratings. Anything you close. The suspense means they open every email just
can do to create experience points to go with the spend in case. It also helps with a program’s liability if you
points is golden. control when people can redeem, Kirk said.
Tiers to let people know where they are relative to Spectators are a given. Face it, without an audience
the game. Think of American Express’s card color Facebook wouldn’t exist.
progression, or Yahoo Answers passing out gifts built on
interaction levels. Bosses, as the last great Herculean task before
completing a level or game, intrigues the best of us. If
Collecting, because if you put it in a set, the human you fail, it’s human nature to work to get that second
brain feels compelled to gather the entire thing. Think (third, fourth and fifth) crack at it. And when you do
Boy Scout badges, Burger King Star Trek glasses, and conquer the obstacle, the emotions are very positive.
McDonald’s Monopoly cards. According to Kirk, if you
bundle behaviors you currently aren’t getting with “It’s all about looking at your existing programs to see
actions the public is comfortable with, they’ll strive for it. where game tactics fit,” Kirk encouraged. L
L O Y A LT Y E X P O S U M M A R Y
“Had a great
iPhonifying Loyalty—Micro Offers
and Mobile Interaction:
time at Loyalty
Leveraging Today’s Mobile Technologies to
Move Product, Reduce Inventory and Increase
Communication
for Dukky.”
Even more damning for ordinary phones: 72 percent of
iPhone users told surveyors in December 2008 that they are
very satisfied with their smart choice, while 52 percent at
Blackberry (RIM) rate echo that sentiment. Other cell phones
have fallen into the 30 percent ratings category, and Nokia,
which clocked in at only 32 percent on the very satisfied —Mike Paine, Dukky
scale, lost 10 percent of market share in the last quarter.
L O Y A LT Y E X P O S U M M A R Y L O Y A LT Y E X P O S U M M A R Y
L O Y A LT Y E X P O S U M M A R Y
Economic Downturns:
Is Loyalty Dead?
“The market will turn around when real wages increase, Finally, 66 percent of Americans say they intend to spend
which is happening now. Retailers will start to see an upsurge
more or the same as always in this recession—do you know
in personal spending, so get ready. We will fight for every
who they are in your loyalty program? Once you find them,
customer,” he warned.
drive them to redeem their rewards. After all, there is no
Indeed, in 2000 the marketing model heavily emphasized value until there is consumption. One of Epsilon’s clients
economy and emotion. Today dialogue and continuity is saw flat sales until its consumers began redeeming their $10
king, Nelson added. Simply putting a name on an email certificates at the company’s urging. Most spent far more
doesn’t equal “personal” any longer—today returning guests since the $10 didn’t cover the whole shopping trip, and
at a hotel chain want the check-in staff to recognize their boosted sales for the entire period.
status and treat them like they know the score. That takes
more precise internal data gathering for starters, and a “A recession is a stress test to clean out garbage and force
revamped way to measure results. us to grow,” Nelson summed up. L
A
ttending recent conferences around different
vertical markets, I had been struck by the
stark contrast in conference style and
“Kudos to
structure. At one banking event, there was almost
palpable embarrassment in the air when attendees
were asked to raise hands acknowledging their use
of Twitter. At another more digital-friendly event,
interest in the keynote speaker was validated by
the sea of attendees tweeting and texting on their
Mark Johnson,
mobile devices during the presentation.
Erin Raese & the
Loyalty 360 crew
Given these contrasts, the suggestion to engage an
experiment with Twitter at Loyalty Expo 2009 seemed to
make sense. After all, if we are to lead innovation in loyalty
for putting on
marketing for the next generation, how can we do so without
being familiar with the tools of the trade?
a great event
The use of Twitter was designed to enable real-time
communications with fellow attendees opting-in as
“Followers” while listening to chosen colleagues and
competitors participants were “Following”. The effort was
complemented by the texting program sponsored by
Vayulogic and allowed conference participants two new ways
in Florida.
to keep abreast of schedule changes, provide evaluations on
presentations, and facilitate networking. Met great folks;
In all, about 40 people were seen posting updates using
the “hashtag” LE360 to designate the event. Hashtags are
a Twitter convention used to make comments (Tweets)
learned a lot!”
searchable when used in the message. Over 100 messages
were bantered about and there were probably 10 power-users —Mark Frisk,
of the micro-blogging tool posting during the 3 day event.
Thinking Like a Customer
Given the size of the event, adoption of Twitter could
have been much higher. Reluctance to participate is partly
due to misunderstanding of the tool and its implications for
corporate users. A pre-conference Twitter webinar (Twebinar) research are top on the list, then Twitter and a Facebook Fan
was held to answer many of these questions and I have done page might serve the purpose. For more established brands,
my best to put social media tools in perspective in a recent building a community (we used to call this a forum) might
post on my blog Loyalty Truth. be the right venue to encourage candid comments from
preferred customers. If brand building and awareness are the
During the Social Media Roundtable on Day 2 of the event, goals, then a corporate blog might be the foundation of an
value was at the center of our discussions. A common concern evolving social media strategy that would include Twitter and
was how smaller brands would use social media as opposed other tools.
to corporate brands to differentiate in crowded markets. The
answers seem to lie in understanding corporate objectives for Concerns were express in our Roundtable about the time
social media campaigns. investment needed to “do social media right”. The choice of
who sits at the keyboard to execute blog posts and Tweets
There are many examples of large corporate brands was a related issue and most in the group acknowledged that
(Comcast, JetBlue, Zappos) using social media, Twitter the value of executive time should be weighed against the
specifically, to meet customer service needs, offer promotions, risk of unapproved voices speaking out about the brand.
and to listen to what consumers are saying about their
brand. For smaller organizations, the same tool could be a The fact that consumers continue to be empowered, first
channel for promotion, public relations, brand awareness, and with the information generally available on the internet and
networking. now with tools to share this information at increasing velocity
should be the focus of our energies. Whether Twitter survives
Another recurring question asked “If you had to choose just and becomes the Google of its category remains to be seen.
one or two tools, what would they be?” Again, the answer is Less in doubt is that micro-blogging and other forms of social
found in defining objectives. If customer service and primary media are here to stay. L
Beverly Hollifield
AT&T
Panelist at the 2009 Loyalty Expo! Beverly is responsible for the
strategic development and management of the AT&T Select Business Rewards
program, the AT&T Universal Business Rewards credit card and third party offers for the AT&T
small business customer base. She spearheaded the introduction of numerous exciting enhancements to the
small business loyalty program to include partner points, a mobile application and an online community.
What do you consider your greatest Where do you go to keep up to date on the
achievement? latest trends in your business?
While I am extremely proud of my company and my An avid reader of books, I also read numerous
accomplishments in the areas of bringing new products publications related to loyalty and attend conferences
to market and bringing loyalty initiatives to our customer, and seminars related to loyalty and the customer
my greatest pride would be my children and seeing the experience.
amazing young adults they are today.
What words or phrases do you most over use?
Which talent would you most like to have?
“Wonderful”—A word I feel expresses appreciation
The talent I would like most to have would be to be able and has the power to make people feel good about
to sing. My fellow church members would probably really themselves and what they are doing. Wishing someone
appreciate it if I had this talent as well. a wonderful day will hopefully make the day just that.
Which person has made the most impact in What can we expect from AT&T Select Business
your life? Rewards in 2010?
My great grandmother is the person who had the most The AT&T Select Business Rewards program is currently
impact on my life. She was a woman before her time, in the southeast. As we continue to see the critical
the epitome of a “steel magnolia”. She taught me that a impact of loyalty initiatives, especially in this economic
woman could be and achieve anything as long as she downturn, our strategy will be to expand its current
stayed true to herself, her faith, stayed committed to boundaries. At the same time, new enhancements will
whatever endeavor she undertakes and maintains the be made to the current program to keep it exciting and
highest integrity. relevant to our current member base.
Which book(s) are you currently recommending? What have been your biggest challenges in
I am an avid reader. Team of Rival about Abraham Lincoln’s 2009?
rise to the presidency would be my first recommendation.
As with everyone, the economic downturn and its
It is amazing how little politics have changed over the last
impact on our small business customers is our biggest
100 years. My second recommendation would be Outliers
by Malcom Gladwell. Interesting and entertaining at the challenge. Our focus has been to find ways to provide
same time about how successful people arrive at the top services and benefits that would ease the pain of the
of their field. current environment for them.
If you were not doing what you do today, how Word of advice for a novice loyalty marketer:
would you be spending your time? Loyalty Programs should work to strengthen your
I would work with children who have been abused, relationship with your customers, recognizing them
emotionally and physically, pursuing with the greatest for what they are already doing with your company.
passion improvements in their rights and the systems These programs, in no way, replace your commitment
that protect them. to deliver best in class products and customer service.
Never loose focus on “what brought you to the dance.”
L
We are looking forward to seeing you all again next year at the
Omni ChampionsGate in Orlando, Florida, June 6th–8th.
engagementEXP ™
The Engagement Expo will take a deeper look at the best practices of engagement and
experience management, focusing on brand, client and product perspectives.
We will address the various areas of engagement such as word-of-mouth,
experiential marketing, social media, interactive media and
technologies, forums and communities, as well as traditional media —
and how to leverage these as part of your marketing communication mix.
engagementexpo.com