Loyalty Lab Blog

By Michael Greenberg | COO

Ever since the WSJ article on the end of email, its been a cage match between email service providers and social media/emerging technology. Hyperbole aside, this is just part of the natural evolution of technology. Ideas that were cutting edge become mainstream and eventually become background noise.

What makes this time so different from years past is the sheer number of channels for interaction. Its tempting to try and take on all of them, but unless you have a large team or superhuman skills, you won’t be able to put enough time and energy into each channel to get a good return.

So the key here is to pick your battles, find the channels that make sense, and put in the resources to make them work. We love what Express is doing on Twitter – focus, cadence, good content, personality, and fits naturally with the rest of their marketing and brand voice. We also love what Pink does on Facebook – it also has focus, cadence, good content, personality, relevance, and stays exactly on brand.

Brands can learn a lot from these examples. Success in the new (mostly) social channels comes from resourcing and focus more than anything else. Just check out Chris Brogan, who has become the foremost social marketing guru through sheer force of will…51,000+ tweets, over 100K followers. And he seems to have conversations with every single one.

by Joshua Tretakoff | EVP, Services 

One thing loyalty programs try to do best is identify customers; many times, that can be the sole purpose of them. Why? To ensure that the company can better understand each person as an individual, and reward them for their ongoing patronage. In the quest to get better usage by customers, companies employ technology to make it easier for customers: key fobs, using your phone number, even simply waving your cellphone at a pad…all in the name of better identifying customers.

Now comes a new approach being discussed: what about using a license plate as a loyalty card? Seems crazy, but for large loyalty programs, at destination retailers, it may make financial sense. Imagine not having to carry anything into your favorite store, but still getting credit for your purchases. Convenience, taken to the extreme.

by Michael Greenberg | COO

If you go back and read The Loyalty Effect there’s a lot of reference to the referral value of customers as one of the 4 incremental sources of value from customer loyalty. Referral value has been very tough to measure in the 13 years since the book was published…until now. Social media provides an excellent view of the influence of a customer, plus new value from content contribution.

Connecting relevant social media to your customer data is increasingly possible and provides many benefits. We’ll be covering this topic from many directions over the coming months. Learn much more from our white paper, available for download here.

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 Joshua Tretakoff | VP, Account Management

Today’s Multichannel Merchant has a good article on a case study as to how marketers can use the various Web 2.0 and social media elements that are getting such press to tangibly build loyalty around specific products. In this case, they focus on the launch of last year’s Xmas hit, the Pleo toy dinosaur. By using a combination of online forums, Flickr, YouTube, Twitter, and other tools, they created a constant buzz in advance of the product launch that has continued well after, and translated into multiple referral and upsell opportunities.

Retail marketers are often jokingly referred to as “dinosaurs,” but it looks like we can all learn to leverage these exciting new tools to avoid extinction.

by Joshua Tretakoff | VP, Account Management

The Baltimore Sun reports today on a growing problem with the coupon industry in the Internet age: fraud. Hapless retailers, being plagued by reprints or outright mockups of coupons from the Internet, are frequently pushing back by banning the acceptance of coupons that are printed at home.

Like the waning popularity of mail in rebate programs, this has all the earmarks of a long-standing incentive mechanism that may be ripe for declining results from consumer backlash. Instead, I think we’ll see an uptick on the adoption of POS systems that use real-time customer lookup to see any coupons associated with a customer. For those that can’t afford the POS capital investment, loyalty programs will most likely fill the void: rebate programs are being phased out in favor of point acceleration in many electronics retailers, so I expect we’ll see the same with coupons if this keeps up.

by Mark H. Goldstein | CEO

If The Gap says TV doesn’t deliver a good marketing ROI, can you imagine what CPGs must really be thinking when they aren’t on the golf course at their big-wig ad agency’s private club?

Clearly, the big switch is on. Those TV dollars are flowing to Internet customer acquisition spends—–and finally trickling down to retention and loyalty budgets.

That $5M or whatever in TV spend—it might be missed a little bit. But imagine what $5M could do for your loyalty program? Imagine if you could spend an additional $2.50 over 2.5 million customers to get each them back into your store or to your site? That’s 3 big candy bars or 1 latte or 1/2 a t-shirt or 2+ music downloads! Imagine what your customers might irrationally do for that? For one thing, they’ll listen to you. And another, they’ll be that much more likely to re-buy or be won-back. Think about it.

by Mark H. Goldstein | CEO

Microsoft (not a Loyalty Lab client) bought innovative affiliate marketer www.Jellyfish.com last year—well, they put the money to good use. Their cashback service, live today, represents impressive execution. I am a fan of reward programs and this one is going to work. Consumers respond to winning and Microsoft has a unique offering now relative to Google, AOL and Yahoo that mainstream America will jump onto. Their Cashback service will begin to stem Microsoft’s market share slide and allow them to stay in the game while they debate the next best way to be competitive to Google. Microsoft’s ownership of Jellyfish ensured the Jellyfish team was focused on one important project: Make money for Microsoft assets. Buying Jellyfish was a smart way for Microsoft to have a great Cashback offer for Microsoft Search. M&A does work.

The WSJ sums up their foray:

Microsoft Offers Reward
Consumers Can Get
Cash for Purchases
Via Search Service
By JESSICA E. VASCULAR and ROBERT A. GUTH
May 22, 2008; Page B3
Microsoft Corp. announced a plan to pay consumers who buy items they find through the software company’s search service, the latest in a series of moves to gain ground on Google Inc. in the lucrative business of Internet search.
The idea to get consumers to use a search service by enticing them with financial rewards has been tried by companies before with little success. Microsoft, a relative latecomer to the search business, believes it can improve upon the concept by implementing it on a broader scale and by coupling it with new options for advertisers.
Microsoft Chairman Bill Gates announced the new service, Microsoft Live Search cashback, at the company’s annual event for advertisers. The program includes products from 700 merchants, including Barnes & Noble.com and Overstock.com. Consumers who buy items from participating merchants after searching for them and clicking on an ad can get a cash rebate via an online Microsoft account they create.
The offering is designed to help attract a greater share of commerce-related queries.
Microsoft also is hoping the program will draw new advertisers seeking a more precise return on their investment and choices beyond traditional models, such as paying every time an ad is viewed or clicked on.
Merchants who participate in the program will be able to select a variety of options for buying advertising from Microsoft, including paying Microsoft only when a customer completes a sale. Google has begun testing a similar model that calls for advertisers to pay Google only when a consumer completes a specified action, such as buying a product or filling in a form.
The Live Search rebates are set as a percentage of the purchase price of an item and vary among merchants. Users can find a 5% rebate on a $60 coffee maker or 2% on a $120 digital camera, for instance.
Ellen Siminoff, chairman of search-marketing company Efficient Frontier Inc., said advertisers are eager to test new models that can help them spend their dollars more wisely, but that a variety of tools already exist to help them calculate spending on the likelihood it will result in a particular action, such as a sale. She predicts marketers will spend more money on the program if it increases the number of searches through Microsoft’s search engine.
In April, Microsoft sites captured 9.1% of the U.S. search market, roughly flat from April 2007, according to comScore Inc. Google’s market share in the period rose to 61.6% from 56.1%.
Microsoft withdrew an unsolicited offer to buy Internet giant Yahoo Inc. May 3 but has floated a proposal that includes acquiring Yahoo’s search-advertising business, according to people familiar with the discussions.
The software company has tried to use financial incentives before to lift its share of the search market. In 2006, Microsoft tried a sweepstakes-like search service through which users could win prizes if their search terms matched those on a random list. Last year, it started its Live Search Club, in which users earn prizes for completing puzzles that involve searches.
The company’s latest attempt is based on technology and partnerships Microsoft acquired by buying comparison-shopping site Jellyfish late last year.

by Mark H. Goldstein | CEO

Moosejaw, my clear #1 outdoor retailer website (with Altrec at #2 and Backcountry fading but holding on at #3) is pushing PayPal at its in-store kiosk. Expect REI and other big boxes to follow with making PayPal a featured check-out option. AND….Don’t expect PayPal parent eBay to not aggressively push for PayPal everywhere either…PayPal is now one of the favored payment choices for the ‘card carrying’ generation aged 35 and younger.
Traditional credit card providers and stores need to recognize this and add more relevant perceived convenience and reward value to their card services. This doesn’t mean offering low-cost debit options to compete with PayPal, IMHO—it’s too late for that. PayPal has critical mass and owns the peer-to-peer payments world. It likely means continuing to add web and service innovation at the edges that directly appeal to today’s younger buyers and influencers….it also means lots of experimentation with mobile payment and bar code technologies. Don’t expect immediate success but by not experimenting, established card firms are far more likely to miss it when critical-mass adoption takes off.

by Mark H. Goldstein | CEO

Today I went to SocialMedia Business School. Cool school too; located on Pier 38 overlooking the Bay. I sat in a class with 100 other developers listening to what it takes to have a successful Facebook app. Produced by SocialMedia, the leading ad network on Facebook and a kick-butt startup…

Rule 1. In designing the app…MOST important thing to figure out up-front….”Why should every person want to tell everybody they know?”

Rule 2. 50% of your development team’s energy needs to go into analytics, constantly in real-time tweaking the app, tuning the invites, the data model, text, images, links based on the latest second’s data you have on your customers at your fingertips.

Rule 3. While the initial download is great, re-engagement is critical because it’s not about the downloads—it’s about the number of daily active users of your application. Why should someone reengage with my app? Can’t be one-time flash in the pan and ‘cute’, otherwise you fade fast.

Rule 4. The ‘pictures from last weekend’ is the killer content, in part why Monday and Tuesday are highest traffic days—it’s what everyone wants to see!

Rule 5. On Facebook, everyone is trying to ‘outsmart’ the other…the proving ‘I’m smarter than you’ is what it’s all about. Beat your friends at a game, outguess them in a quiz, rank your smartest buddies, find the hottest new thang……

Rule 6. Finally, despite Facebook’s clamp on spamming friends and some folks claiming ‘Facebook Fatigue’, developers I quote said ‘it’s still possible to be successful as a Facebook app developer’ but the ‘get a million users fast Gold Rush’ is a thing of the past.