Loyalty Lab Blog

By Jason Hornik

Visa and Gap Inc.
American Express and Levi Strauss & Co.
According to a recent article on DMNews.com, more and more brands are partnering with credit card companies to deliver targeted offers to consumers by using the credit card companies’ customer databases. In April, Visa opened its global processing network for partners to send consumers offers based on their purchasing history. There are now 250 pilot partners in American Express Co.’s inSite program, which messages offers and discounts to members when they search the Web.

The challenge for marketers is to evaluate these partnerships in terms of the risk of not participating if their competitors are leveraging these programs. Brands may not directly target competitors’ customers in Visa’s program, but companies cannot block transactions in their stores or on their e-commerce websites from triggering competitors’ offers. Partnering with credit card companies may prove to be a viable strategy for brands as the importance of delivering real-time, contextual offers to customers continues to increase.  

By Jason Hornik | Senior Director, Product Marketing

Many marketers are asking themselves and other marketers the question, “If I want to increase customer loyalty, how should I be budgeting my dollars for social media?”

A recent answer and benchmark is that U.S. companies that use social media to primarily deepen customer loyalty spend almost twice as much as competitors who use it for brand awareness, customer acquisition and other core marketing purposes, according to national survey results jointly released by COLLOQUY and the Direct Marketing Association (DMA).

Additionally, the survey shows that the amount of social media budget marketers allocated to loyalty objectives increased by 293% over the past 12 months, easily surpassing allocation increases for all other social media-related marketing objectives.

Other key findings of the survey indicate that marketers are continuing to test social media strategies and need to determine the necessary metrics to evaluate success among a consumer audience whose adoption rates are rapidly growing.

You can read more about the survey results here.

By Jason Hornik | Senior Director, Product Marketing

In the recent report, Building Customer Loyalty: Ten Principles for Designing an Effective Customer Reward Program published by Cornell University, the authors dust off the Green Stamps books to examine key drivers for building and managing effective loyalty programs in 2010. Their ten crisply defined principles provide guidance directed to program managers in the hospitality industry, but serve as an evaluation framework for other industries as well.  Scan through the list below to conduct a quick gap analysis for your loyalty or customer experience program or read the full report for details and practical ideas.

1. Foster Consumer Engagement
2. Establish a Two-Way Value Proposition
3. Capitalize on Consumer Data
4. Properly Segment Across and Within Tiers
5. Develop Strategic Partnerships
6. Develop Dynamic Tiers
7. Cater to Consumers’ Desires for Choice and Fairness
8. Avoid Commoditization through Differentiation
9. Avoid the Price Sensitivity Trap
10. Embrace New Technologies

By Jason Hornik | Senior Director, Product Marketing

Increasing customer loyalty is seen by marketing leaders as the top force driving marketing innovation for their companies. According to a recent report by Forrester Research, innovation is one of the key strategic priorities to fuel growth among leaders of today’s organizations. And these worldwide executives view marketing innovation as the most important type of innovation for future success – specifically their company’s ability to rapidly create new offerings for existing customers and to extend into new customer groups.

2,700 CMOs and executive leaders were surveyed about their company’s marketing innovation practices and gaps with results presented by Forrester Research in their report titled, “Define Your Marketing Innovation Strategy.”

A highlighted chart from the report below:

By Jason Hornik | Senior Director, Product Marketing

In an earlier post (Will Facebook “Fans” be Missed?) I touched upon the fact that having Facebook Fans, aka people that like your brand, is not an ultimate measure of success. Rather a relationship of value (for both the fan and the brand) is created by activating your Facebook community through content, messages, offers, and other interactions and applying metrics to evaluate these efforts over time. Recently Augie Ray of Forrester Research posed the question of whether a Facebook fan even has value unless a brand does something to create value with the fan. His post What Is The Value Of A Facebook Fan? Zero! evoked such a lively discussion that he made a second post on the topic What Is The Value Of A Facebook Fan? Part 2. I recommend reading both posts as you assess the value of your fans and your relationships with them, as well as the impact of your go-forward marketing programs.

By Jason Hornik | Senior Director, Product Marketing

This summer several brand marketers and retailers are testing cross-promotions to tap into social gaming for motivating their target consumers to buy their products, redeem, play, and repeat. 7-Eleven, typically known for running promotions with movie and TV studios, branched out with a 6-week promotion involving product codes that are redeemable for virtual gifts across several of Zynga’s games on Facebook (FarmVille, Mafia Wars, YoVille). Green Giant Fresh tested and is expanding their cross-promotion with FarmVille to drive retail sales through on-package offer codes for gifts of Free Farm Cash. And just this week Cascadian Farm announced that they will also be partnering with FarmVille on an in-game promotion next week involving their organic blueberries plus a traditional coupon for in-store purchase (NYTimes.com article).

These marketers are all bold to explore new territory in a test and learn environment using social gaming tie-ins and unique offers as active motivators. And how will success be measured? The brands cite various metrics for effectiveness including incremental lift in product sales, site visits, customer acquisition rates, blog posts, brand and product category awareness. But the one commonality is that these brands are all taking an initial step to determine the value of social gaming offers and no doubt capturing their own consumer data and preferences along the way for re-marketing.

By Jason Hornik | Senior Director, Product Marketing

In the end, probably not. As of this week, Facebook has done away with the act of Becoming a Fan of a business, brand, band, or celebrity and swapped in a more universally-used Like button (such as on Green Giant Fresh’s brand page below).

The change might seem trivial, but brand marketers are commenting on and evaluating whether the shift in vernacular will substantially affect their efforts to interact with people engaged with their brand on Facebook.

Facebook’s intent is that more of its 400 million users will like businesses or brands as it implies a lower level of commitment than actually becoming a fan. And in theory this should result in an increased number of users that a brand can directly speak with through a user’s news feed.

Although the effort to build a sizeable audience on Facebook has merit, the number of users that like your brand now or became a fan prior to this week is not an ultimate measure of success. Instead, brand marketers should be focusing on ways to determine whether their content and messages are resonating and adding value to their relationship with their Facebook community. Such metrics can be redemptions of product offers that you post on Facebook, the number of users that further engage with your brand by joining your loyalty program, or by the number of users that are sharing your content with friends. The key is to be moving towards a more complete view of your brand advocates by understanding their interactions on Facebook (and other social networks) and mapping that to their purchasing behaviors for your brand over time.

By Jason Hornik | Senior Director, Product Marketing

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Best Buy’s long-term investment in their mobile strategy can be seen in the multitude of ways consumers are now able to use their mobile phone to interact and transact with the brand. Consumers can access the mobile version of Best Buy’s Web site to locate their closest store, check their rewards program points, research information about a product while in-store, and easily make a purchase. They have also released several updates to their iPhone app that launched last year, as well as publishing an app for the Android platform this year.

Best Buy is working to connect the virtual and physical experiences with their brand so that consumers can shop, learn, and buy with their mobile phone. This video highlights their commitment to mobile and serves as an excellent benchmark for other retailers and brands:

By Jason Hornik | Senior Director, Product Marketing

Many marketers continue to ask themselves what role mobile marketing and commerce should play in their brand’s strategy. For Target, a new mobile coupon program that connects a customer’s mobile and in-store experience is one answer. Target customers can opt-in to the program on their phone at m.target.com, by texting COUPONS to 827438 (TARGET), or from their computer online at www.Target.com/mobile. After opt-in, customers receive a text message with a link to a mobile Web page that contains multiple offers, all accessible through a single barcode. Customers can then redeem the single-use offers by having their phone (with the coupon barcode) scanned at checkout.

In addition to using the new mobile coupons, Target customers can view online assortments, check product availability and store locations, access Mobile GiftCards, manage their gift registry, and be notified of deals on their mobile phones.

As smartphone adoption continues to grow at a steady clip, brands should be defining, testing, and rolling out mobile programs that work to add value to the overall customer experience. This program by Target is a great example of using mobile to provide deals and convenience in an easy to grasp way.

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.