Loyalty Lab Blog

By Mark H. Goldstein | CEO

WSJ reports brands loyalty is down as private label and price trumpeting it.  While its sort of obvious, it really means brands need to work harder and smarter to give their more profitable customers continued reasons to engage and support the brand.  It means reinforcing the brand message, rewarding most profitable customers with thanks and recognition and continued work to improve brand perception and value amidst the economy’s fury…

By Mark H. Goldstein | CEO

OK.  Now can you think of a set of brands more likely to get crushed in today’s economy that Williams-Sonoma?  There sell aspirational merchandising via traditional direct marketing methods and sit on lots of expensive stores.  Their product is increasingly copied elsewhere and their marketing is so traditional and so mail heavy—-we’ve been waiting for this shoe to drop for a year now.  In San Francisco, first it was Gap being woken out of bed—now its Williams-Sonoma’s turn.….expect fewer brands and a company at best 50% the size within a year.  The resumes have been flowing out for months now….

By Mark H. Goldstein | CEO

Well, Loyalty Lab lost this one—we were in there and thought we had a espresso shot of being their partner but they went to the agency of record and built on top of First Data, their POS gift card vendor.  Its a solid program and well designed——will it work?  You betcha.

by Joshua Tretakoff | VP, Account Management

Wonderful tidbit out of this week’s SourceMedia’s ATM, Debit & Prepaid Forum in Chandler, Ariz., from Citigroup, inc. According to CardLine, Nancy Gordon, Executive Vice President of Citi’s ThankYou Rewards reports that Citi has cut churn by 50%, thanks to the ThankYou Network rewards program. Even better, she reports that cardholders that belong to the rewards program spend more and help the bank earn higher revenues than customers who have not signed up.

It may have taken a little while to get there, but this is a clear win for the loyalty program space.

by David Rosen | Senior Vice President

OK, I am a frequent flyer junkie.  Since college when I traversed the country to get to school and every subsequent job, I have been that guy.  I am no longer ashamed about my obsession — rather feel cleansed of my guilt since I’ve admitted this to myself, family, friends and co-workers.

[note to self, one day do a blog entry on some of my bizarre FFP obsessive, compulsive behaviors.]

Yesterday Virgin America (by partnering with Loyalty Lab) launched to the public the major missing piece of their frequent flyer program, Elevate – the ability to redeem the points that guests have earned by flying the airline.  Why the wait – it has been over a year since the airline launched.  The answer is Virgin America (VX in airline geek code) has what is assuredly the most innovative and consumer-friendly loyalty program in the airline space.

If you read the business travel columnists in the NY Times and WSJ, you know that the legacy carriers’ programs are regularly skewered for their:

• Increasing difficulty of finding reward-eligible seats
• Brutal black-out periods
• Non-alignment of customer revenue with miles/points earned
• Declining value per mile

Virgin America rejected the basic assumptions of their competition with a program that:

• Ties earning to revenue.  Not miles, but points.  The more you pay, the more you earn
• Makes every seat available for redemption on every flight
• Guests can easily and seamlessly toggle between points and dollars within the same session

Essentially, points become a currency that guests can use as they choose.  If flights are more expensive in dollars, they’ll likely be more expensive in points.  This keeps the economics of the program — both earning and burning — squarely aligned with VX profitability and fairer and more logical for Virgin’s guests. 

There’s a lot more behind the scenes.  The technology employed to deliver both what is presented to Virgin’s guests and the tools provided to VX’s loyalty marketers pushed Loyalty Lab’s technology team to new heights of creativity, design, implementation and quality.

We congratulate the Virgin America and Loyalty Lab teams for a powerful partnership and great times to come.

by Joshua Tretakoff | VP, Account Management

Interesting discussion in RetailWire today: seems that a couple of French professors concluded a study of loyalty programs, and determined that traditional “one size fits all” programs don’t really have a long term effect, but personalized programs that address customer’s individual needs have a dramatic one.

Their advice?

Not unsurprisingly, the professors argued that retailers should focus on providing customers with more “individualized rewards, based on what they value.” As such, the scholars identified five different purchase motivations in surveying shoppers in France from 2005 to 2007:

1. An economic motivation: the main goal is to save money;
2. A hedonistic motivation: the aim is to feel pleasure;
3. A routine-loyal/risk-avoiding motivation: the goal is to reduce the risk of being disappointed by a purchase by remaining loyal to a favorite brand or store;
4. A relational motivation: buyers seek to establish a relationship with a store or its staff and be recognized as a privileged client;
5. A functional motivation: the aim is to decrease the time and effort devoted to making purchases.

One of the reasons we founded Loyalty Lab was for just this: the ability to create highly individualized, targeted segments within your program, on the fly, and be able to set up different programs that “speak” to the customer. Nice to see this strategy now has scientific backing.

by Joshua Tretakoff | VP, Account Management

Wired Magazine has a little section they call Wired/Tired/Expired. In essence, they map the migration of concepts within certain industries with one word blurbs to show what hot, and what’s not. The above headline is what I expect to see shortly in their issue on customer marketing efforts, based on this article on a recent study from predictive analytics software firm SPSS.

How far has the needle swung from acquisition to retention? According to the study, a full 32% decline in polled companies listing acquisition as their top initiative. Replacing it is retention, with 40% of respondents listing it as #1. With the waves of economic voodoo washing out every day, this looks to be a pretty hot space in the next year.

by Mark H. Goldstein | CEO

We’ve always been loyalty snobs but yesterday’s news on Amazon entering the market Amazon To Focus On Customer Loyalty Points is truly great news. Amazon is opening up their backend and allowing third parties to create ‘reward centers’ based on 3rd party products. This makes it that much easier to offer aspiration rewards. Less need now to secure dedicated third party fulfillment relationships with traditional older-school firms like Maritz Marketing.

Note –Amazon is only entering the fulfillment side of the business. But it’s another great leap for cloud computing. As more and more functionality is available via web services, the better and easier it will be to build powerful loyalty programs!

by Mark H. Goldstein | CEO

Dave Friedman at Razorfish speaks succinctly when he says ‘the home page really doesn’t matter’. This may be really important for Marketers to understand and track over the short term. With the rise of cross-linking, social media and brand name recognition, authorities or friends you trust now recommend (or syndicate or digg) you interesting information. Home pages are but a billboard to anyone who doesn’t know you, or if they are finding you in an offline environment.

Read this carefully.

by Mark H. Goldstein | CEO

No surprise that the real growth in payment types is in the debit and prepaid side of banking. Credit cards are increasingly feeling like ‘an old man’s product’ as the youth continue to use the debit card they were given at college, etc. The unbanked, non-resident population, and perhaps those with a blemished credit history, are seemingly gravitating toward some type of debit vehicle. The non-stop coverage this summer on excess credit card debt surely doesn’t help the marketing efforts for new credit cards either.

Read today’s article from Retail Wire.