Loyalty Lab Blog

By Mark H. Goldstein | CEO

The Wall Street Journal today offered advice regarding storing customer data. Their point of view – which I concur with – is if you don’t use your customer and credit card data, don’t bother taking the risks in storing it. My view is – if you store this data, mine it. Ensure custom messaging, offers and insights flow from each megabyte of data you store. Data is like sand in a sandbox. If you have kids and they use the sandbox, it’s great. If you don’t have kids, and there are cats in the neighborhood, don’t keep sand in the sandbox. It ends up being quite a negative experience.

by Joshua Tretakoff | VP, Account Management

Many of our clients focus on what their customers want to improve loyalty. Interestingly, the one common thread we’ve seen is that customers want honest information, quickly. In many cases, when mistakes are made, the speed of a response and the admission of the error engender customer loyalty in equal weight with the “hard benefits”. In fact, putting a human face on the situation is often the best way to make customers even more passionate.

With this week’s recent error (as Mark pointed out, Best Buy accidentally emailed 6.8 million members instead of 1,000 members with erroneous “Premier Black” membership notification), Best Buy made the best of the situation. First, the CMO, Barry Judge, currently participates in the microblogging service, Twitter. As soon as the error happened, he immediately posted this:

“This is a live issue. ‘Black’ is a test. 1000 people. Email pushed by mistake to 1 million. We r wrestling w/what to do. Thoughts?”

Notice the approach: Recognition, rapid response, acknowledgement, and engagement. He recognized the impact this would have on loyalty. Last night, he blogged about the incident, as well as their expected approaches. This level of transparency is practically a blueprint for how to handle the impact of an error in loyalty marketing. While I disagree with sending the apology email with the email that was sent by mistake again (uh…what was that about?), loyalty marketers can learn from this mistake and its response to better maintain their customers’ loyalty.

by David Rosen | Senior Vice-President

Like many Americans, my family and I look forward to the summer as a chance to get away from home and enjoy a well-deserved vacation. 

Given my fascination (obsession?) with loyalty programs in general, and travel programs in particular, I blindly embrace all hotel, car, air — and even train frequency programs that I come across — often without regard for my privacy and the sanctity of my hotmail inbox.

Why?  For the most part joining travel company’s guest programs yields a better experience — well at least that is the true test of value.  As I’ve opined in the past, I’ve pretty much given up on redeeming the points/miles/stays that I’ve earned, but have come to expect a higher degree of service and general consideration when I travel.

So, planning our trips this summer, I joined two more programs (I think this brings me past the 50 mark just in the travel space — I still keep my Western Airlines TravelPassII card handy just in case).  The first was Loews-First.  From a customer experience standpoint, this program rocks.  Easy to join, relevant fields — including questions tied exclusively to member benefits and preferences (which treat do I want when I check in?  What newspaper do I want in the morning) — what a great way to introduce me to the benefits before I’m even a member.  Submit and I have a number.

I get on the phone to book the room (I want them to match the rate that I found on Hotels.com) and the number is already in the system and the agent has all of my contact and preference information.  And to my “surprise and delight,” I’m already a “Gold” member which includes a free upgrade upon reservation.

Clearly, a well designed and executed program.

Next, I joined Amtrak’s Guest Rewards Program.  OK, I’m not a big rail traveler, I live in California but am headed to New England this summer.  Unfortunately, the program lacks connection to the larger Amtrak experience.  I had to replicate my registration on both sites, I’m receiving emails from both entities and I’m uncertain how I will benefit from the program — but again, truth in advertising, I’m in infrequent rail passenger, so I’m not the definitive source for measuring perceived value.

Bottom line, good lessons for any loyalty program design:

• Keep registration simple and relevant
• Ask profiling questions that communicate the program value while gaining real marketing insights
• Use registration as the first chance to reward – Give something for the Get
• Be fast, be connected, be multi-channel
• Use the program as the primary touchpoint between associates and best customers/guests/members

by Michael Greenberg | President

While perusing a short but interesting bit of research on multi-channel customer behavior by Opinion Research Corporation on Marketing Charts, I noted some interesting data that points out the difference between Loyalty and Value.

The chart shows the dollars spent with the subject company and with its most important competitor. Note how spending with the company increases as the number of buying channels increases:
1 channel – $44
2 channels – $51
3 channels – $62
4+ channels – $82
This is consistent with what most companies see.

But now if you calculate the share of wallet using both companies, the picture changes:
1 channel – 36% share
2 channels – 60% share
3 channels – 52% share
4+ channels – 48% share

Granted this is a fairly small sample size for this type of analysis, but some interesting questions arise. Which segment of customers should marketers target? Those with the most available wallet share (1 channel)? Those with the largest available to spend (4+ channel)? Or should you focus on migrating to multiple channels?

The answer depends on a variety of other factors, which I’ll address in other posts.

But by examining this basic example, you can begin to see how indicators of loyalty (share of wallet, net promoter score, year over year retention) aren’t always the same as customer value, and that the best options for high return on investment are found by looking at several factors, not just customer value.

By Mickey Neuberger | Senior Director, Loyalty Strategy

Re-engagement and inactivity campaigns are a huge part of any customer loyalty or retention management solution. Companies usually target customers who have been inactive for 90-180 days with a “we miss” you message and aggressive limited-time offer. I thought the email below from eBags (after 6-months of inactivity) was particularly good. It uses the touch-point to not only drive me back with a 20% offer but also as an opportunity to identify any problems with product/service.

By Mickey Neuberger | Senior Director, Loyalty Strategy

Good article on Email Is Not Dead, But Preferences Need to Evolve.

Relevancy is more than just targeted content. It’s also communication and frequency preferences. Brands that ask and listen will win the attention of their customers.

by Joshua Tretakoff | VP, Account Management

Always nice to get public validation on basic functions: nice article in Internet Retailer about the success of targeted email from Bath & Body Works.. Targeted Email is often undervalued, since email is so cheap to blast out. However, targeted emails produce dramatically higher results, and usually can be the difference between someone reading your email, or hitting the old delete button.

Loyalty’s not always about points; its about relevance and connection. How you speak to your loyal customer can be as important as how you reward them.

by Mark H. Goldstein | CEO

Great start Budweiser!

Now the secret is going to be to move beyond a PLCC-only program to get to critical mass. I have many a friend who would be proud members of the Bud Army.

by David Rosen | Senior Vice President

As I was preparing for an upcoming panel at Shop.org’s marketing workshop, I was asked “How can a brand turn all customers into ‘best customers?’”My reaction was a profound “You can’t” – nor should you even try. 

Customer analysis of company after company has solidified my understanding that only about five percent (in extreme cases ten percent) of any company’s customers should be considered best customers.Marketers who attempt to turn all customers into best customers run the risk of losing the special, differential treatment that the real best customers expect and legitimately deserve.However, in almost every circumstance there is an opportunity to significantly increase the number of best customers.  Two segments represent the highest potential for migration:

1. Customers that fall into the “next best category”  (i.e. the segment of approximately fifteen percent of customers that comprise the next thirty percent of sales and profits
2. New customers who self identify through what they purchase or other traits (e.g. their zips, their acquisition channel, through friend referrals) that they are more likely to become best customers

And now a self-serving pitch.  To learn more about identifying and differentially serving best customers, join me and Ed Foy, Jr., CEO of eFashion Solutions at Shop.org’s Online Marketing Workshop April 7-9 in

Scottsdale http://www.shop.org/marketing08/ or for a sneak preview, our upcoming webinar on Thursday, April 3 at 10:00 PDT.  http://www.loyaltylab.com/public/webinar_details.aspx

by Joshua Tretakoff | VP, Account Management

Many of our clients focus on new and innovative ways to connect with their loyal customers, as part of the strategies we help craft for them. One surprisingly underused way is the mere peeling back of the inner workings to expose the thought process through running blogs. Movie makers, such as Peter Jackson and Bryan Singer have been doing this for years, making the fans feel like they are part of the process, and building up hype, to boot.

This week, the big retail daddy of them all, jumped in: Wal-Mart now has a Blog for their buyers to express their thoughts on upcoming items, reviews of current items, and more. The Blog, like most effective blogs, is surprisingly frank. RetailWire, for instance, highlighted one of the Blog entries about a buyer regarding Microsoft Vista: “Is it really all that and a bag of chips? My life has not changed dramatically – well, for that matter, it hasn’t changed at all.”

This combination of honesty, insight, and sheer information can have a dramatic effect on the customer’s loyalty. Wal-Mart already faces intense competition, and has been known for more aggressive tactics to combat it; this more comprehensive view is one that, frankly, I wish more clients would embrace: you can never go wrong by being honest with your customers, and the more your customers understand about how hard you work to deliver the great values, the more loyal they will be.