Loyalty Lab Blog

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.

by David Rosen | SVP Strategy & Channel Development

Thank you to Mark Silva of Real Branding for posting this graphic from SXSW today.  It’s a great visual of Zappo’s culture = brand = customer loyalty presentation by their CEO Tony Hsieh.   Here is a link to the original

by Joshua Tretakoff | EVP, Services

Consumer Goods companies are feeling the pinch of the tough economy; after all, their customers are less inclined than ever to spend money. But an excellent article in Promo this week calls out a prescription for how CPG’s can save money and defray the effects. Not surprisingly, Loyalty is the primary recommendation. Highlights:

•  Reward Your Loyal Customers not all customers are alike. Every brand needs new customers plus a loyal base of established customers. Identify and reward loyal users as an ongoing standard operating procedure.
• Encourage Repeat, Referral and Word-of-Mouth Marketing Listening and talking to your customers can be an invaluable asset in spreading goodwill and developing the “buzz” about your brand. Be proactive with customer service to engage and reward customers. You can turn them into brand ambassadors.
• Turn Your Web Site Into a “Go To” Destination With more consumers online and younger customers not consuming traditional newspapers and magazines, you need to make your Web site more fun and more valuable.
• 80/20 Rules Still Apply Eighty-percent of your business comes from the top 20% of heavy users. Focusing efforts and rewards against this heavy user group can reap huge rewards. Nurture these customers, listen to them and reward them—they are your VIP’S.

by Joshua Tretakoff | EVP, Services

Advertising Age Magazine has a good article today on the retailers who are thriving in the down economy. The common thread through most of their case studies is the presence and prevalence of a strong loyalty program. Salient clips from the article:

•  “[Kroger] offered gas discounts and free groceries in exchange for points earned through its loyalty-card program…data from its loyalty-card program are being used to send unique coupon offerings to specific households. “We understand and appreciate that no two customers are alike,” said David Dillon, Kroger’s chairman-CEO. “Some may live in the same city, some in the same neighborhood and even on the same street, but we know that they don’t have the same shopping habits. This level of personalization is a direct link to our customers [that] no other U.S. grocery retailer can replicate.”
• CVS: “Rob Price, the chain’s senior VP-marketing and advertising, pointed out that not all of the retailer’s programs are captured in measured-media data. Its massive ExtraCare loyalty program, for example, is not tracked. That program, which counts more than 50 million cardholders, has spawned more targeted marketing efforts, with promotional offers at the register, coupons, e-mail and direct mail.”

There’s also an anecdote about how certain companies who are definitely hurting the most, like Pottery Barn, are rolling out a loyalty program to try to turn the tide. Overall, yet more good reason for retailers to embrace loyalty.

by Joshua Tretakoff | EVP, Services

One of the more controversial aspects of a retail loyalty program is around the concept that a customer is made aware that you, as a retailer, are gathering their purchase information. For some privacy advocates, this seems intrusive, which is why loyalty programs are always opt-in. However, in recent months, some retailers are turning that aspect into a benefit to the customer; recent examples include food retailers being able to contact customers who purchased items that were subject to a recall.

Safeway has decided to add some significant value to their loyalty program, the Safeway Club, by unveiling a special site called FoodFlex.  You sign up, input your Club Card number, and within 6 hours they import your last 6 months of shopping data. Once the data is imported, you can then use a series of reporting tools to analyze your purchase history for cholesterol, protein, and more. Best of all, you can then see healthier alternatives to the items you have been purchasing, all without the customer having to enter in a single receipt or write down anything. In addition, the site supports goal setting, as well as advice.

This type of complimentary service allows customers to truly appreciate a retailer as not just a purveyor of goods, but as a partner, and recasts a loyalty program as a two way communication strategy.