Loyalty Dogs Blog

by David Rosen | SVP Strategy and Channel Development

I’ve been following two trends that make me very excited to be a Loyalty marketer. Developing high-value, enduring relationships with loyal customers/guests/shoppers/members isn’t new. But what were starting to see on forefront of smart marketing is simply awesome.

Trend One – Farm Cash for Fans.

I used to work at a company called MyPoints. It’s an amazing marketing engine that could change the behavior of hundreds of thousands of members by offering points in exchange for purchases, registrations, surveys, etc. Problem was, points are expensive. Basically it costs about ten dollars to reward a member with a ten dollar Starbucks card. And we mailed a lot of Starbucks (and Target, and Red Lobster and Macy’s and Amazon, etc. ) cards.

Last week players of Zynga’s amazingly popular game Farmville were offered Farm Cash for fanning Bing. Twenty Four hours later, 400,000 virtual farmers had taken the bait and signed on. In a flash, Bing surpassed Google in the hyper-followed ranking of “how many fans do you have on Facebook” stat.

And guess how much Farm Cash costs Zynga? A lot less than a $10 Starbucks card I’d guess.

Trend Two – Check In and Earn Points.

I’ve been watching for this one for some time. The very cool fro-yo shop Tasti D-Lite is now offering loyalty points when its members check in on Foursquare. Cool on so many levels: drives engagement, posts to Facebook – and more interestingly begins the process of geo-based permissioning for offers.

I strongly believe that location is the next frontier for right offer at the right time to the right person. However, geo-based targeting really does bump up against the marketing creepy factor. Loyalty programs bridge that gap by establishing a fundamental permission level for members and rewarding that additional permission with some type of gift or reward.

More to come on this one and we’ll make sure that we’re driving what happens next.

By Jason Hornik | Senior Director, Product Marketing

Tropicana is the latest CPG brand to launch a loyalty program with the objective of adding value and building direct relationships with their consumers. The program offers incentives through a points-based system for purchases and touts 20,000 reward options from partner brands such as adidas, Harrah’s, Coleman, and TaylorMade.

The loyalty program represents one of the largest marketing investments ever by PepsiCo in the Tropicana brand. Points are awarded by entering under-the-cap codes at the Juicy Rewards Web site:
http://juicyrewards.tropicana.com

Marketing for the launch involves TV spots, product packaging, print and digital executions, as well as social marketing through blogs. Andy Horrow, Tropicana Chief Marketing Officer had this to say about the program:

“I don’t like to think of it as a marketing campaign, but as a platform that supports everything we’re doing. It’s a great way for us to get our customers engaged and our retailers excited.”

This is a bold initiative for the Tropicana brand and they had 10,000 consumers registered in the 3 days prior to the actual launch of their marketing push. We will definitely keep an eye on this program and report back on any roll-out results.

by Joshua Tretakoff | EVP, Services

Been to the local GameCrazy lately? If you answered no, you probably are not a member of their PowerPlay program, but if you are, you received some surprisingly good news. Movie Gallery, the parent company of GameCrazy, Blockbuster Video, and more, has filed for Chapter 11. However, unlike other prominent retailers who have endured this, one of the first things Movie Gallery did was petition the Court to allow them to keep operating their loyalty programs, and even expand them (PDF link).

This should become standard practice for companies who’s fortunes need adjusting: the first order of business needs to be taking care of your best customers. In the past, retailers like Bombay Company, Circuit City, and more have done precisely the opposite by refusing to honor gift cards or stored value cards; they made an already uncertain customer immediately furious, ensuring that Chapter 11 would quickly become Chapter 7. Now, I don’t have a crystal ball on Movie Gallery’s future, but the very fact that they recognized that they have no hope of recovery without holding on to their best customers is a great sign.

Deep within the document is truly the most remarkable nugget:

We are also introducing new enhancements to our customer programs, including our “True $” discount program, which enables PowerPlay members to rent movies in our Core Collection for $1.

That’s right: they not only are continuing their loyalty program, but expanding it with new options that are designed to generate additional revenue at attractive savings for their best customers. When is the last time you heard about a bank in need of a bailout offering you, a longtime customer, an incentive to keep banking with them instead of raising your fees? Or a car manufacturer, desperate for a sales spurt, contacting customers who purchased in the last 4 years and offering them discounted service on their purchase for the next 4 years if they buy a new car? Kudos, Movie Gallery: your best customers thank you.

David Rosen | SVP Strategy and Partner Development

Today, MediaPost’s Research Brief highlighted the latest survey on loyalty from the CMO Council.

It’s a solid overview of general member satisfaction and general marketer satisfaction with their programs.  In fact, generally very good news for the loyalty industry:  Members really do appreciate the additional value that loyalty programs deliver and marketers’ returns justify increased investment in 2010 and beyond.

I was, however, struck the by title:  “Loyalty Programs Need to Engage.”

Based on the research, there still is a significant gap in marketers’ ability to build a dialog with their members that is based on points of interaction that extend beyond the transaction.  While a clear majority of the respondents are increasing their digital spend, few seem to be ready to take the highly personal inputs of the engagement to drive big lifts if frequency, retention and measurable advocacy.

As reported in the Council’s research:

When it comes to in-depth profiling of customers, the vast majority of marketers still only aggregate and analyze limited customer data sets.

• 73% collect basic demographics and
• 68% track the location of members

But critical insights are not being leveraged:

• Advocacy rates (14%)
• Brand loyalty and attachment (27%)
• Personal preferences (31%)
• Satisfaction levels (33%)
• Product preferences (38%)

Clearly the gap needs to close.  This year, we’re doing our own research in collaboration with Razorfish on member engagement and loyalty.  Stay tuned – and if you would like an advanced peek, email me at david@loyaltylab.com

by Mickey Neuberger | VP Loyalty Strategy

CMO Council published latest report http://cms.sys-con.com/node/1258487

Study establishes that consumers see value in programs and marketers are achieving high ROIs. I thought the following excerpt on consumer complaints was particularly interesting:

“Too much spam and junk email topped the list of negatives associated with loyalty and rewards program membership (44 percent), followed by too many conditions and restrictions (38 percent), and rewards that lacked real value (37 percent). Other prevalent beefs included members having a hard time redeeming points or rewards, program membership lacking value, as well as communications and service not being personalized or targeted specifically for members.”

By Michael Greenberg | COO

We all know what’s coming. A blizzard of emails. Tweets of new specials every day, if not multiple times a day. A sale every weekend. Web only specials. Private savings events. Early access. The noise will be absolutely deafening.

Cutting through this will take some old-fashioned sales and marketing. I’m still convinced that sales today are won during the 10 minute search and research phase, whether the purchase happens instore or online.

Here’s a few ideas for winning that 10 minute battle with your best customers. These don’t make sense for all customers, but make great sense for proven high-value customers.

1. Individually connect with your best 10,000 customers. How much revenue do they generate? Doesn’t it make sense to assign someone to build a bridge with them? Get two or three of your better salespeople, put them in a room, and have them spend the next month emailing, tweeting, and connecting with your elite customers. You know what they buy, their preferences, where they live, and with a little research, who they know. Use that to suggest specific items and services that will be relevant and follow up. Give your company a voice and really connect.

2. “No questions” guarantee with your best 10,000 customers. There are generally three ways that people buy – impulse, researched, and prompted. Researched purchases have swamped the other two methods, primarily because even impulse and prompted purchases go through a quick research cycle nowadays. For customers that you know will not take advantage of you, consider a “no risk to them” approach. That is, worry-free returns, price match and best price guarantees, improved warranty or service levels, that is, anything that will remove the element of risk in their mind. That way if a competitor prompts or impulses a sale, you stand a good chance of these customers taking the sale to you instead. And reduce the risk of the customer taking a sale you generate (through marketing or merchandising) elsewhere. Its a great way to reward customer loyalty.

3. Orient yourself around gift recipient personas. If someone walks into a store you owned and says they need a gift, what’s the first question you’d ask? “What are they like”, most likely. And then progress through a couple of questions to pin down what kind of person they are before making recommendations. So take that same approach in your preparation for the holidays, and arm your associates, your marketers, your call center, and anyone else touching the customer with a highly targeted guide to gift giving. Think of it as transferring the brain of your best salesperson to as many people as possible.

These are just a couple of ideas to improve customer retention this holiday, but the underlying assumption should be clear. Your top 1% customers account for (probably) 10-15% of sales. So use some of your budget to cater to their needs and ensure you keep them throughout the holiday.

[Editor's note: This post by Phil Rubin originally appeared on the Relevant Dialogue blog on October 12, 2009. We wanted to share it with our readers.]

The world we live and work in is all abuzz about social media and the increased prominence of brand initiatives. Even this morning, none other than The Wall Street Journal pronounced “The End of the Email Era“.

While we’ll save commentary for WSJ’s opinion that email is over (we don’t think it is, at least for many customers), the underlying issue is that marketing is much more complex than simply email, just as it is also about much more than social media. Whichever of these media channels or strategies is more or less important is a function of a customer, a context, a time, a place and a brand relationship. As was said long ago: not all customers are the same. Some may want brand friendships on Facebook some (many) don’t or won’t. Ditto for ads. (That’s why mullets were invented: business in front, party in back. Kind of like brands in email, real friends on Facebook? Hmmm…)

Two other pieces today caught our eye and they both underscore the complexity and associated challenges facing marketers today. One is fairly obvious though detailed in depth by none other than Peter Francese, founder of American Demographics and now head of demographic trends at Ogilvy. The conclusion in the promotorial piece in AdAge is that there is no average customer anymore. Perhaps this story will be on the network television news tonight.

The second and much more interesting story, also by coincidence in AdAge, is about a new report from our favorite Forrester analyst, Lisa Bradner. In this report, coming out next week, one of the things Lisa addresses is the important reality that companies and brand managers aren’t organized to effectively handle new media nor moving rapidly to adapt to, much less embrace, other new digital opportunities. Like technology and social media and customers that don’t fit neatly into demographic “target” audiences with labels like “A25-54″. Further, marketers need to be more able to do math and be able to develop and presumably use customer intelligence so as to be more accountable for results and be able to adapt and change course based on actual performance.

Now this is relevant and something we support.

From our perspective, there is too much discussion about what is and what isn’t dead or alive, and not enough discussion about customers. For marketers, customers are the essence of social media’s value. Perhaps it should be called Customer Media – because that’s who controls it, at least as far as brands go.

By Michael Greenberg | COO

Ever since the WSJ article on the end of email, its been a cage match between email service providers and social media/emerging technology. Hyperbole aside, this is just part of the natural evolution of technology. Ideas that were cutting edge become mainstream and eventually become background noise.

What makes this time so different from years past is the sheer number of channels for interaction. Its tempting to try and take on all of them, but unless you have a large team or superhuman skills, you won’t be able to put enough time and energy into each channel to get a good return.

So the key here is to pick your battles, find the channels that make sense, and put in the resources to make them work. We love what Express is doing on Twitter – focus, cadence, good content, personality, and fits naturally with the rest of their marketing and brand voice. We also love what Pink does on Facebook – it also has focus, cadence, good content, personality, relevance, and stays exactly on brand.

Brands can learn a lot from these examples. Success in the new (mostly) social channels comes from resourcing and focus more than anything else. Just check out Chris Brogan, who has become the foremost social marketing guru through sheer force of will…51,000+ tweets, over 100K followers. And he seems to have conversations with every single one.

by Michael Greenberg | COO

Many companies equate customer loyalty with customer value. It isn’t difficult to see why, since value is easy to measure and loyalty is much more difficult. But often we see companies take this concept too far and focus all of their retention efforts on pure frequency or retention increases. A longer term approach is to balance investment in value creation and loyalty development.

Some people say loyalty can’t be bought. This isn’t quite true – its just an incomplete picture. Some portion of your customers allow their loyalty to be driven by financial considerations. Others respond to your brand promise and attributes with a more emotional attachment. Others are loyal since they don’t have alternatives. And others are loyal because they haven’t looked for alternatives.

While the objectives of customer loyalty development are the same as value creation (retention, frequency, and advocacy), the strategies and tactics are often different. Customer experience takes a larger role, frontline staff training becomes very important, social technologies become far more useful, and message tone has an impact. Consistency of message compounds as customers become more familiar with the brand promise and see it in action with every interaction.

We’ll be looking at all of these elements over the coming months and how developing customer loyalty impacts customer value.

by Michael Greenberg | COO

A recent article in The New York Times discussed the big dropoff in the restaurant business in Las Vegas. Vegas restaurants are almost entirely acquisition driven – that is, they compete to grab attention and bring a customer in the door without worrying too much about bringing them back in the future. When the pie shrank there was little repeat business to fall back on.

Their plight illustrates why investing in customer relationships over the long term is so important. When customers flat out reduce spending, revenue goes down without any change in market share. If you don’t change how you operate, your best case is to maintain market share, which means your revenue is guaranteed to decline. To maintain revenue, you must take it from someone else.

Ratcheting up acquisition spending is easy, but its likely all of your competitors are doing the same. With a retention marketing program in place, you have many more options that are difficult for your competitors to match.
Because you’ll know a) who your customers are and b) what they buy, you have an unfair advantage over your competitors, and can use many tactics to take market share from them.

Use that advantage as much as possible, and you’ll be able to defend your position and hopefully take share from competitors with less developed programs.