Loyalty Lab Blog

By Mark H. Goldstein | CEO

For those who still can’t find a new plasma screen or the time to take a trip to Tahiti, have travel loyalty programs got something for you! Seems it’s getting to harder to please all of those top-tier customers at Starwood and the company has had to get creative in conjuring up the dream rewards. In the case of one couple, it was a meeting with John Travolta. The downside to all of this success is that loyalty programs have had to tighten up reward redemptions, making the good stuff harder to get. But then again, a dinner with Gisele just might be worth a few extra points!

By David Rosen | Senior Vice President

My wife forwarded me one of those links that spreads among moms and dads of school-aged children last week.  www.freerice.com is a web site that purports two goals:

1. Provide English vocabulary to everyone for free (a get)
2. Help end world hunger by providing rice to hungry people for free (a give)

How does it work?  Go to the site, and select a multiple-choice response of a word’s definition.  As you answer more and more questions, more rice will be added to the donation.  As you answer more and more question, your vocabulary-level will be scored. 

On the bottom of the page, corporate sponsors’ logos appear providing subtle advertising and the funding for the donations.

It’s addictive and it’s worthwhile.

by Joshua Tretakoff | VP, Client Services

Interesting article in today’s Promo Magazine e-newsletter. Traditional loyalty programs reward you for purchases or ongoing spend, but increasingly, we’re seeing clients who understand there is so much more value to be derived from a loyal customer. Take SpiffyBaby, for instance: their program not only offers credit for dollars spent, but also for reviews of the products purchased. Simple, straightforward, and valuable.

Loyalty Lab has partnerships with leading review providers for our clients, such as BazaarVoice, for just this reason. As reviews establish credibility and encourages customers to buy, integrating reviews and feedback into your loyalty program is a no-brainer. After all, your most loyal customers will be the most trusted reviewers, right?

by Joshua Tretakoff | VP, Client Services

One of the most frequent issues I see with our clients is their desire to differentiate themselves from their competition. I always advise them to do the same thing: boil it down to the basic reasons why a customer selects you, then use a combination of emphasis on those core values with a “surprise and delight” combination to really enhance the experience.

Case in point: can you imagine how hard it is to compete on something as basic as airport long-term parking? Think about it: all you have to work with is raw real estate and pricing. What else is there? Well, it’s surprisingly competitive. When I fly out of Oakland, CA, I usually park at Expresso Parking. Sure, they absolutely claim to have the lowest prices, but that’s just the start. They looked at the experience and focused on ways to enhance the experience.

First, I use their valet service: indoor parking, so no weather issues, and always right next to the waiting shuttle. Yes, it’s a few dollars more a day, but they offset that with a AAA discount and a $5 off coupon for providing them feedback on how they did, after the experience, so it cancels out for short trips. Next, as you get to the facility, they greet you grab your bags out of your car, and transfer them to the shuttle, without any delay. There’s a place to grab a free cup of coffee, as well as a complimentary muffin, should you choose. Head onto the shuttle, and the driver politely asks if you’d like a copy of the day’s paper for your flight. In 5 minutes, you are at the airport, stress-free.

On your return, it’s even better. The shuttle (fast, friendly, clean) picks you up, and the driver asks for your valet ticket. 5 minutes later, you arrive at the brightly lit facility, where your car is waiting for you, mere feet from the exit of the shuttle. It’s been washed, and cleaned, and a sealed bottle of spring water is placed in your cupholder. You can pay at the human cashier, or use their automatic machine (it even reads your AAA card to apply the discount). Finally, a thank you note is in the car, inviting you to visit their special site to provide feedback and get a discount on your next stay.

This company looked at the core of the experience, and focused on it’s dehumanizing aspects. They figured that, if they could introduce some creature comforts and some nice touches, they’d carve a unique niche in a swollen environment. By adding in the feedback mechanism, they almost immediately seduce you into loyalty: you know they have a financial stake in their success, so they will more likely make sure your comments reflect changes or improvements. They even offer a frequency loyalty program on top of it, to really try to make sure they are appealing to all customers. This is the fanatical focus that makes them stand head and shoulders above their competition: pull in with the basics, but keep with the elevated experience.

Today’s New York Times features an article about a small manufacturer who through his online loyalty program was able to better directly serve a niche of customers who were introduced to his brand without upsetting his retail partners. How? by building a loyalty program for only bulk buyers, his bulk snack buyers became much more likely to buy while his retailers looked the other way (knowing that these buyers would never buy in bulk in-store anyways).

The use of the loyalty program is interesting and innovative. Good job PeaceWorks!

by Mark Goldstein | CEO

Ah…isn’t this a great article. It again shows that there is no grey out there. If brands want to engage with consumers online, be careful. Consumers need their space and there is no shortage of it on the Intenet. The more pushy or buttoned-up a company is online, the more quickly these illusive consumers find a new sandbox to play in. It’s no different from when we see kids start up new MySpace and Facebook profiles after their parents became ‘their friends’.

Here is the article……from the if-you’re-representing-IBM,-perhaps-your-avatar-shouldn’t-be-a-grungy-rat dept……….
Just as companies are beginning to question the wisdom of spending time in Second Life, IBM has decided that perhaps part of the problem is that its employee representatives don’t have enough common sense to recognize what’s appropriate behavior in Second Life and other virtual worlds. The company has put together rather informal guidelines that basically sound like common sense: Don’t discuss intellectual property with unauthorized people. Don’t discriminate or harass. Make sure your avatar is appropriate as a representative of IBM. These are pretty much all things that would normally go without saying — but apparently IBM felt they needed to be said (which is either a statement about IBM employees, or what IBM management thinks about IBM employees). In the meantime, Second Life is probably helping IBM and other corporations out by banning all the vices that made Second Life popular in the first place. Now it’ll be safe for all the corporate types. Of course, that’s about all who will be left since everyone else will have moved on to the next (more fun) world that isn’t locked down with rules and swarming with marketers trying to pitch them.

by Ed Martin|VP, Engineering

One of the things I like about living in Northern California is the easy access to the variety of wineries and related events, mostly concerts and outdoor events. Many of my favorite wineries have web sites where I can purchase tickets to these events. I happily log into the web site, see that the site is secure, and merrily enter my personal info and credit card to get my tickets.

After my experience with one winery web site (and I’m not going to mention which one), I’m questioning whether or not I should trust them or others with my personal data. On that website, I noticed that on the page where I entered in my data (including my credit card), it wasn’t using SSL, i.e. no little padlock meaning an insecure transmission. I thought, this was clearly a mistake. I wasn’t about to enter any data this way, so I called the winery directly.

The agent on the phone, though courteous, was completely oblivious to my security concerns. He first informed me that although the forms page was not using SSL, the page it posted to did (The obvious question was how do I, as a visitor to the site, know that the form post is secure??) Ok, the winery clearly hired a sub-par web consultant to build their pages. I can live with that. However, what was even more frightening was I later found out my personal data was collected on a spreadsheet and emailed to one of their vendors as an attachment!

Unfortunately, this isn’t an isolated incident. I’ve seen similar behavior in some past clients I’ve worked with, where we’ve received “sample” or “test” data that contained real customer personal information. Even worse, we’ve received the files over email, unencrypted. I’ve since informed those clients of the risks, and they’ve since done a better job with their data protection.

The problem is clearly one of education. Data security is something that many companies don’t seem to take enough action to enforce. All you have to do is read the news weekly to find there’s some personal data breach by yet another company. As I’ve demonstrated above, it’s not enough any more to just have a secure web site. What’s done with the data after it’s collected will matter to the consumer as well.

At Loyalty Lab we’ve taken the extra step of becoming Visa CISP (Cardholder Information Security Program) certified. The Visa CISP, if you’ve not heard of it before, is a set of best security practices that any company handling credit card data should follow. It follows the PCI (Payment Card Industry) best practices, and consists of 12 major requirements, broken down into the following categories:

• Build and Maintain a Secure Network
• Protect Cardholder Data
• Maintain a Vulnerability Management Program
• Implement Strong Access Control Measures
• Regularly Monitor and Test Networks
• Maintain an Information Security Policy

In order to receive the certification, you must pass a security audit every year to ensure your company is meeting the PCI security requirements.

Having worked the last 10 years in a variety of marketing systems, I’ve dealt with a myriad of security controls to ensure the protection of private consumer data. The Visa CISP program is the best I’ve encountered. As a consumer, you should be looking for sites that are Visa CISP certified to know your data is safe. As a merchant, any personal consumer data should only be exchanged with a partner who is Visa CISP certified.

by Joshua Tretakoff | VP, Client Services

Interesting article over at 37 Signals on 5 Business Lessons from Costco. One “lesson” in particular sparked my interest:

5. Use surprise to create excitement.

Mr. Sinegal, who is 69 but looks a decade younger, also delights in not tilting Costco too far into cheap merchandise, even at his warehouse stores. He loves the idea of the “treasure hunt” – occasional, temporary specials on exotic cheeses, Coach bags, plasma screen televisions, Waterford crystal, French wine and $5,000 necklaces – scattered among staples like toilet paper by the case and institutional-size jars of mayonnaise.

The treasure hunts, Mr. Sinegal says, create a sense of excitement and customer loyalty.

It’s remarkable how the day to day simple understanding of human nature always catches your attention. At Loyalty Lab, we focus on working with clients to help them understand that their loyalty program is not always about points or the accumulation of rewards, but about the most important motivators: fun and excitement. In many cases, it’s far more interesting to see what’s in store for you when you don’t know what to expect (keep those massive jars of smoked almonds away from me!), than how many points you’ve earned. The combo is the key.

Go have fun, and take your customers with you!

by Joshua Tretakoff | VP, Client Services

We’ve seen “loyalty” described as many things: a customer who gives you their email address; a certain number of purchases in a year, and so on. What’s interesting is the proliferation of folks who get so bogged down in the mechanics of a “loyalty program,” that they fail to think of the end objective: truly personalized clienteling.

One of my vices are cigars. My cigar choices tend to have some common threads: they are usually Honduran, Connecticut Shade wrappers, and definitely on the inexpensive side. I have preferences on size and shape, to be sure, but those tend to vary. I usually buy them from a few key dealers online, and I tend to be rather adventurous in my tastes. One of the companies I buy from has slowly started to engage me over time: capture some preferences, feedback, etc. Interestingly, their specials have become more and more appealing to me. In essence, they have combined my “loyalty” with some key data I have shared with them, resulting in a much more personalized experience, and a far larger share of my wallet than I ever expected.

At one of the companies I worked, the pace was so fast, that a co-worker described it as “going down a gravel road at night, at 80 miles an hour, with headlights that can only see 10 feet ahead.” In loyalty programs, a similar statement can usually be made. You are collecting all of this truly rich data, but usually do not have time or effort budgeted to act upon it. In essence, the data should always be secondary to the actions that can be done with that data.

The data is just the start of your loyalty efforts; make sure you focus on the finish line, too. The celebratory cigar is on me. :-

by Joshua Tretakoff | VP, Client Services

I recently was convinced that I needed a new bike (I cycle from my house to the ferry to get to work, daily). I test rode a few bikes, and settled one for a national chain dealer: good bike, great price. At checkout, the cashier asked me if I wanted to join the loyalty program: for $25, I would get 10% back on all of my purchases, including the purchase of the bike. Excellent, I though. The cashier cheerfully handed me a card, and asked for my email address, then informed me I could go online to manage my account.

A few days later, I decided to see my point balance. I went online, registered, and was prompted for my card. After entering it, I was told “We’re sorry, this card is associated with someone else. Please contact Customer Service at 1-800-xxx-xxxx.” I picked up the phone, waited on hold for 15 minutes, and got to a cheerful representative. After describing my plight, she snorted and said, “Oh, they probably just messed up your email address. Yep, sure enough, they entered in as all capital letters and a different name.” IShe corrected it. On a hunch, I asked what email address she had on file; she looked and read me a different email address than I provided. She corrected it, and within moments, the fix was made, but I was told it would take a day or so to fully propagate.

What did this experience teach me about my value to the bike dealer?

• The Loyalty program was an afterthought to their whole goal of getting more customers information in their systems, as a whole. The cashier was instructed to “always get the email address,” but was not clear on why, and why it would be so critical.
• The store operations team was probably not involved with the decision to do this; otherwise, they would have allowed an interface in the store for the customer to enter their information, without having several people wait for the cashier to slowly (and incorrectly) type in my information.
• The Customer Service team, in trying to be helpful and friendly with the customer, expressed sympathy and blamed it on the store, when in fact the problem was caused by both the store, the system (case-sensitivity on email addresses?), and the CSR’s inability to know to check all bases with the customer, without prompting.
• The Web team is not aware that case sensitivity was a problem.
• Everyone who touched the customer was cheerful.

In essence, while the bike chain wants my loyalty, they invested only in the bare minimum to get it from me. What they really needed to do was to involve all company stakeholders. They needed to emphasize in training in all customer-facing staff. They needed to validate that their systems met the requirements of the program. And they needed to communicate to the customer what the common resolutions were.

Yes, I finally got my points. But the hassle I had to go through was only worth it because of the size of my savings. If it had been less, I would have not only abandoned it, I would have had a bad taste in my mouth from the experience and shopped elsewhere for my next purchase.

Loyalty does not start or stop with the technology that enables it: that only allows the client to focus on the deliverables that make it work, as a whole. Sure, the store staff could definitely benefit from some common sense (the Retail Experiences Group does a good job of advising retailers on this), and the customer service team could be redirected to correct this, but the key is: look at the technology as not the end, but the beginning of a comprehensive loyalty program.