Loyalty Lab Blog

[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.

by Joshua Tretakoff | EVP, Services

It always intrigues me what some folks consider will motivate customers to remain loyalty to their brands. In many cases, it depends on a combination of the brand’s value proposition, the kind of customer they attract, and the uniqueness of their offering. Yet some of the programs brands launch make me scratch my head as to why they consider them “loyalty” programs, vs. traditional acquisition marketing techniques.

Take, for example, the Tallahassee Airport. Like many regional airports, its in tough competition with other local and large airports for those tough to find traveler dollars. Recognizing this, they launched Runway Rewards, a fairly unique concept that rewards flyers for choosing Tallahassee for their travel. Now, remember, this is a program that is ostensibly designed to retain travelers. Yet the mechanism they choose to do this? A monthly sweepstakes entry. Not a “the more you visit the airport, the more you earn,” nor a “spend a certain amount at Tallahassee Airport and get a day of free parking.” No, instead a sweepstakes that awards 6 people a month. So, for those lucky 72 people a year, they will truly be loyal. The other thousands of travelers? Not so much.

Sometimes, people get caught up in the technology vs. the goal, and confuse one for the other. As a former New Englander, I love living in CA, but often miss summer East Coast seafood. Luckily, there are a few restaurants competing for my nostalgic dollars who specialize in such. One, called Yankee Pier in Larkspur, CA, recently used their Twitter account to unveil a “Guest Rewards” program, which you sent a text message to a special number to sign up. What were you signing up for? Special coupons and advanced notice of nightly specials. While I appreciate the information, how is this a “Guest Rewards” program? Are you rewarding me for dining often with you (I try to at least once a month)? Are you giving me, as a loyal customer, special access to dishes the regular public cannot have?

Look, I love using Twitter and SMS to communciate with customers wherever they may be, and mobile is a great platform for local content, but this is not rewarding me; it’s just discounting. That’s acquisition, not retention. For 1/3 the cost, you could set up a great program that tracks how often I dine or how much I spend, and offer me benefits like Chef’s Dinner nights, or member-only bottles of wine from the wine list. Make me a VIP, and I’ll spend more with you, more often.

Rewards Programs are the #1 tool to combat tough times in a recession; don’t disappoint your customers by repackaging sweepstakes and coupons and calling them a loyalty program. Think of your customer, and what they want from you. If you don’t know, ask them! Trust us, they will be more than happy to tell you what they like and don’t like…and you win as a result.

by Michael Greenberg | COO

If you go back and read The Loyalty Effect there’s a lot of reference to the referral value of customers as one of the 4 incremental sources of value from customer loyalty. Referral value has been very tough to measure in the 13 years since the book was published…until now. Social media provides an excellent view of the influence of a customer, plus new value from content contribution.

Connecting relevant social media to your customer data is increasingly possible and provides many benefits. We’ll be covering this topic from many directions over the coming months. Learn much more from our white paper, available for download here.

by Joshua Tretakoff | EVP, Services

A controversial post out of Harvard Business today, as the authors ask the question if customer loyalty can be a bad thing. While the statement, on it’s surface, is outlandish, the authors make a well reasoned case that it’s equally as important that you set up the economics of a loyalty program to reward the best customers who’s behavior you want to encourage, while not making the program reward those that are perhaps less profitable customers or worse, encouraging profitable customers to become less so.

Thought provoking, and worth a read.

by Joshua Tretakoff | EVP, Services

When we founded Loyalty Lab years ago, we made a few basic assumptions about the customers that would use our software:

• A significant portion of our clients’ customers would have broadband Internet access.
• Customers would want to be able to manage their loyalty program accounts on a web-based portal
• Customers would each have a unique e-mail address, which would help us recognize them and communicate personalized content to them.

This last one occasionally gets challenged. In many of our clients, less than 1% of the customers share an e-mail address , usually with a spouse or other family member. When anyone raises a concern about one “member” of the e-mail address being able to see loyalty information on another “member,” we usually point out that they already see sensitive e-mail communications, and that there are a plethora of free e-mail address options that they can get their own.

This week, AMC, the large movie theater chain, has decided to echo this same behavior in their MovieWatcher rewards program. They informed the members of the program via an e-mail, which is the most efficient way to communicate e-mail address policy changes. It is interesting that this change was important enough to communicate to their customers clearly; I wonder if this was a policy change or a software one?

In any case, it’s a change for the best for all involved.

by Matt Howland | President

Our Free Trial Offer to qualified companies kicked off yesterday. Since most (if not all) SaaS companies offer a “try before you buy” option we decided it was time for us to do the same. The trial includes bringing real data so companies can see how it would look using real information, run real reports, and segment and message to real customers.

Part of what makes this so interesting is our ad hoc reporting capabilities. We’ve figured out how to turn client data into a scalable, incredibly powerful reporting environment, and we think a lot of people will find it a huge upgrade over existing options.

When you get down to it, the companies we talk to want to collect customer information, understand cross-channel behavior, actively engage, segment intelligently, and automate outbound messaging. That’s what we do, with a loyalty management option for those who want it. Enjoy.

by Mickey Neuberger | VP Loyalty Strategy

Local Mini dealer develops interesting loyalty/retention program based on key insight that car owners defect from dealer servicing when their cars reach a certain age, especially when price is cheaper by 30-50% somewhere else. The solution: a 100k mile club that provides incentives to stay via discounts and badge recognition.