Loyalty Lab Blog

by David Rosen | Senior Vice President, Strategy and Channel Development

In the January 9, 2009 issue of the NYT, Your Money columnist Ron Lieber advocates looking to your loyalty programs as a great way to extend your spending and continue to enjoy some of those old-school luxuries that were routine pre-meltdown.

As we used to say in business school, “let me build on Ron’s point:”

1. Don’t be a point hoarder.  Use your rewards, you’ve earned them.  And when award thresholds are met, and rewards are used, you see the value and you likely want more.
2. Treat yourself and your family.  Many of us are cutting back on splurges.  Redeeming your points or miles allows you a guilt-free endulgence and break from self-imposed austerity.
3. Extend your spending.  Generally, some thing free leads to something more.  A free flight often is tied to a hotel.  A retail reward redemption only covers a portion of the purchase price.  The economy is built on the back of consumer spending, so think of your loyalty programs as your personal stimulous bill.
4. Earn more.  Maximize your flight and hotel miles/points with focus; shop online with loyalty partners like MyPoints, American Express or the online malls attached to your other programs; take advantage of double and triple accrual offers from your retail programs.

Marketers have annointed 2009 “The Year of Consumer Loyalty.”  Be sure that you are being reaping the benefits of the relationships that you have with your favorite companies.

by Joshua Tretakoff | Founder; VP, Account Management

In the world of loyalty marketing, there are usually two business segments that lead the way in trying new things and seeing fascinating results: Travel and Grocery.  The latter reports today on the effect of a loyalty program on coupon redemption:

“Although the recession has revived penny-pinching, Americans are still redeeming only 1 percent to 3 percent of paper coupons. In contrast, the nation’s largest traditional grocery chain says as many as half the coupons it sends regular [targeted] customers do get used.”

Excellent use of targeted loyalty marketing to achieve a redemption rate that seems astronomical.

by Joshua Tretakoff | Founder; VP, Account Management

Santa, it’s time to get with the 21st century. See, word comes today that 130 million good little American boys and girls relied on a loyalty program this holiday season to guide their purchase decisions.  The highlights of this study, conducted by Ipsos Public Affairs/SoundBite Communications, and reported by Promo:

* 62% percent of respondents (almost 130 million Americans) planned to shop with particular retailers to take advantage of their loyalty programs, such as frequent shopper rewards, coupons or discounts.

* 23% planned to do all or most of their holiday shopping where they can take advantage of these programs.

* Loyalty programs are particularly powerful with parents with children under 18 and adults under 55.

The evidence is overwhelming: Holiday 2008 will go down as the best reason yet to have a strong, engaging, and cost-effective loyalty program in place. Otherwise, pack it in, and head to the elf breakroom.

Happy holidays, all!

by David Rosen | Senior Vice President 

Another great idea from Open Table.  A lot of you are like me, either hopelessly addicted to web-centric business models or too lazy to pick up the phone and make a phone call.  Eeek.  Human contact.

OpenTable which has gobbled up nearly every relevant restaurant’s reservation book and put it on line, is currently promoting an offer for $35 fixed price dinners if booked online through their service.  To sweeten the offering even more, they are doubling the rewards points for these reservations as well.  (personally, I use OpenTable regularly due to it’s incredible efficiency and my high satisfaction, the rewards element doesn’t even factor into my behavior — but you didn’t hear that from me!)

Visa has been doing similar programs for years in major markets.  Effectively, restaurants band together to create an event during a traditionally slow week — in this case the week prior to Thanksgiving.  Goals:  fill empty seats, induce trial, and quite frankly get people spending some money.

Now go out and enjoy yourselves and stop fretting about your 401ks.

by Joshua Tretakoff | VP, Account Management

Our clients often ask for some tips on what simple tactics they can use to emphasize the value of their loyalty programs. One of the simplest? Wish your best customers a happy birthday. Here’s some examples:

Polo Factory Stores: they make a point of capturing this information at the point of sale. The integrated e-mail program is excellent, and this reinforces it. After all, who deletes an e-mail that offers you a birthday gifts? Note how the communication is reflective of their brand, but also reinforces a sense of personalization. The time that it’s triggered is interesting: it comes on the first day of the month your birthday falls in. If they were even smarter, they could time it on the day or week of your birthday.

Friday’s:  Clever use of the birthday cake idea. Their Give Me More Stripes program is nicely woven in, as is the clear benefit and fun nature of their program; plays well to their brand.

It may be a tough time to tell someone they need to buy more with you, but everyone has a birthday, and everyone loves getting birthday presents. Make sure you are on their birthday list!

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 Joshua Tretakoff | VP, Account Management

In the “I wish it were here, but it’s only in Japan” front, NTT, Japan’s dominant cellphone service provider, has announced a service that puts over 100 different retailer’s loyalty cards on the cell phone. No more wallet problems; instead, the cell phone has an application that stores all of the key loyalty card info, and communicates via a contactless system:

“Key-Shuttle (for which Japanese and international patents are currently pending) is the NTT Com-developed technology that integrates the information in the phone. Once a dedicated application is downloaded into the phone, Key-Shuttle enables loyalty points, ID photos and other membership information of multiple retailers to be registered under a single platform.

The system includes features for security and privacy, such as unauthorised access detection and user-required permission before a retailer can share membership information with other retailers. Reward cards registered in Gyazapo are more difficult to duplicate or falsify than traditional plastic cards, making this a more secure system for loyalty programmes.”

by Michael Greenberg | President

Many moons ago I wrote an article titled “Build a Fence Around Your Customers” on Chief Marketer. The idea is even more current now given the economic environment.

As a relationship marketer, you cannot forget – even for a day – that your competitors are gunning to take your customers away from you. When discretionary spending starts to move sideways, customers are even more susceptible to the siren song of lower prices and promotions. So now is absolutely the time to stay focused on identifying potential defectors, identifying and servicing top customers, and creating compelling reasons for customers to consolidate wallet share with you.

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.