Loyalty Lab Blog

By Jason Hornik | Senior Director, Product Marketing

Tropicana is the latest CPG brand to launch a loyalty program with the objective of adding value and building direct relationships with their consumers. The program offers incentives through a points-based system for purchases and touts 20,000 reward options from partner brands such as adidas, Harrah’s, Coleman, and TaylorMade.

The loyalty program represents one of the largest marketing investments ever by PepsiCo in the Tropicana brand. Points are awarded by entering under-the-cap codes at the Juicy Rewards Web site:
http://juicyrewards.tropicana.com

Marketing for the launch involves TV spots, product packaging, print and digital executions, as well as social marketing through blogs. Andy Horrow, Tropicana Chief Marketing Officer had this to say about the program:

“I don’t like to think of it as a marketing campaign, but as a platform that supports everything we’re doing. It’s a great way for us to get our customers engaged and our retailers excited.”

This is a bold initiative for the Tropicana brand and they had 10,000 consumers registered in the 3 days prior to the actual launch of their marketing push. We will definitely keep an eye on this program and report back on any roll-out results.

by Mickey Neuberger | VP Loyalty Strategy

6 months ago I wrote about Hotels.com WelcomeRewards Program: http://www.loyaltylab.com/blog/index.php/2009/07/give-your-members-rewards-they-will-use/

Unfortunately, the days of booking 10 $59 rooms and then redeeming the free night for a $400 room at a 5 star hotel are over.

WelcomeRewards Changes Effective March 9, 2010
- The value of the free night will be valued at the average daily rate paid for the 10 qualifying nights.
- The reward night can be used for a higher priced room than your WelcomeRewards credit value, but member must pay the room rate difference

WelcomeRewards really broke out from the traditional hotel loyalty programs like SPG, Hilton Honors etc. by shifting the value proposition. I never understood how they could afford the associated costs but, as a consumer, loved it. Even with the program changes,WelcomeRewards is very competitive. It’s going to be interesting to see if Hotels.com gives back some of the loyalty it stole from the SPGs of the world.

by Joshua Tretakoff | EVP, Services

According to TechCrunch, Amazon is attempting to make a revolutionary counterattack to Steve Jobs. If you haven’t followed, Amazon introduced the most successful e-reader to date, the Kindle.  It’s been so successful, it’s been compared to do for books what the iPod did for music. Naturally, there’s a certain CEO in Cupertino who decided he wanted that segment, so he introduced his answer, the iPad, complete with iBooks.

Now here’s where it gets interesting. Does Amazon simply lay down and surrender their leadership position to Apple? Not according to TechCrunch: they have decided to fight back by giving away a Kindle to every one of their current Amazon Prime subscribers.  Amazon Prime allows loyal Amazon customers to pay $80 a year for the privilege of getting all of their purchases shipped 2-day air, free of charge. That’s a profitable and loyal customer base; if you have paid for Prime, why would you ever shop anywhere else? Now, reward that loyalty with a Kindle, and you have an enormous customer base who can only buy content through you; if even a portion of those loyal customers buy a few books, you dominate the space, and the iPad plays catch up.

Will it work? Will they do it? Stay tuned, but one thing’s for sure: Loyalty will tell the tale.

by David Rosen | SVP Strategy and Channel Development

Shane Koyczan’s slam poetry on YouTube landed him on the center stage of Vancouver’s opening ceremonies. Shane invokes a spirit of Canadian culture that I’m sure makes all Canadians proud of their heritage and should make Americans who have visited Canada appreciative of their national sense of being.

I began my career in Western Canada and felt immediately in-tune with Shane’s words. The Canadians that I worked with and befriended have tremendous respect for each other, for their guests and for a combined sense of working together. I’d contend that this is one of the reasons that coalition rewards programs like AIR MILES have been so successful over the years.

The question in my mind is why Americans (sorry those of us in the United States – Canada is part of North America too) have never (and in my opinion WILL never) embraced this all-for-one; one-for-all life benefit.

For those new to Canadaesque coalition loyalty, approximately two-thirds (Wikipedia) of Canadian HHs participate in the AIR MILES program. Essentially, members earn across a very wide coalition of retail, banking, energy, travel, etc. partners into a common accrual account with which they can redeem from a vast catalog. Sounds great. So why don’t we United Statesians get this?

My hypotheses:

• Too many people. The Canadian market is really at a sweet spot of sufficient critical mass while still small enough to achieve high rates of sustainable awareness.

• Too fragmented. In the United States, our sheer geographic and population size has led to far more commercial entities in each category. In addition to more national players, regional and super-regional players make building the ubiquity of the coalition really difficult.

• Lack of shared experience. Shane notes that Canada too is a nation of immigrants, but Canada, unlike the United States, Shane recognizes how Canadians choose to stand together. Just watch a couple hours of Hockey Night in Canada and you’ll see how an entire nation unites with common focus and pride.
With that said, I expect that we’ll see a grand attempt at launching similar programs in the U.S. over the next few years. Aeroplan’s (AIR MILE’s top competition in Canada) acquisition of Carlson Marketing may have been their attempt to build a beach head of outstanding talent in the U.S. for that investment.

Stay tuned.

by Joshua Tretakoff | EVP, Services

Been to the local GameCrazy lately? If you answered no, you probably are not a member of their PowerPlay program, but if you are, you received some surprisingly good news. Movie Gallery, the parent company of GameCrazy, Blockbuster Video, and more, has filed for Chapter 11. However, unlike other prominent retailers who have endured this, one of the first things Movie Gallery did was petition the Court to allow them to keep operating their loyalty programs, and even expand them (PDF link).

This should become standard practice for companies who’s fortunes need adjusting: the first order of business needs to be taking care of your best customers. In the past, retailers like Bombay Company, Circuit City, and more have done precisely the opposite by refusing to honor gift cards or stored value cards; they made an already uncertain customer immediately furious, ensuring that Chapter 11 would quickly become Chapter 7. Now, I don’t have a crystal ball on Movie Gallery’s future, but the very fact that they recognized that they have no hope of recovery without holding on to their best customers is a great sign.

Deep within the document is truly the most remarkable nugget:

We are also introducing new enhancements to our customer programs, including our “True $” discount program, which enables PowerPlay members to rent movies in our Core Collection for $1.

That’s right: they not only are continuing their loyalty program, but expanding it with new options that are designed to generate additional revenue at attractive savings for their best customers. When is the last time you heard about a bank in need of a bailout offering you, a longtime customer, an incentive to keep banking with them instead of raising your fees? Or a car manufacturer, desperate for a sales spurt, contacting customers who purchased in the last 4 years and offering them discounted service on their purchase for the next 4 years if they buy a new car? Kudos, Movie Gallery: your best customers thank you.

By Jason Hornik | Senior Director, Product Marketing

Recent initiatives from P&G and General Mills signify a continued investment in e-commerce by CPG brands looking to build direct selling relationships, engage consumers, and garner insights. P&G is planning a full-scale launch of their eStore in the spring of this year despite the fact that e-commerce sales represent less than 1% of their total annual revenue. The site will primarily serve as a research lab to test search, coupons, store promotions, and social media integration. P&G intends to share consumer findings from their new site with their retail partners.

P&G currently sells direct through theEssentials.com, a site they inherited as a result of the Gillette acquisition in 2005, and through partner sites which include Target.com, Walmart.com, CVS.com, Drugstore.com, and Amazon. Overall, P&G is looking to aggressively move their annual e-commerce sales from $500 million to $4 billion.

General Mills is also making deeper inroads into e-commerce, as well as developing digital content for their brands. For example, their recipe site Tablespoon.com boasts 25,000 recipes with detailed nutritional information and at BettyCrocker.com you can download their Digital Kitchen Assistant app for interactive recipe building and sharing with friends.

Leadership at both P&G and General Mills are voicing their increased level of attention to e-commerce:

“The eventuality is a one-on-one relationship with every consumer, and obviously e-commerce needs to be a big part of that.”
P&G CEO Bob McDonald (AdAge.com)

“The beauty of digital is it’s very effective–great ROI and very efficient–to talk directly to consumers and to give them customized and more relevant information about what the brand can do for them.”
General Mills CMO Mark Addicks (Forbes.com)

There is no doubt that CPGs and other consumer brands will create innovative strategies and programs to connect with their most loyal consumers as the iron curtain for selling direct continues to come down.

by Joshua Tretakoff | EVP, Services

Imagine you are a retailer. You want to know not just the purchases that your customers make, but when they visit your stores and don’t make a purchase.  Hard to do, right? What if you could make a benefit of  your loyalty program tied to just that?

That’s just what a maker of GPS software, Navizon, has done.  Instead of just charging their customers for their software, they actually are paying customers to install their application on their iPhone, so they can use their loyal customers to map cell towers and WiFi access points.  Now, the customer has an ongoing incentive to use the software, and the company gets rich, real-time geographical and behavioral data, all with the user’s permission.

Being able to make your customers more loyal, and your loyal customers your most valuable ones, is the name of the game. Knowing when your customer comes in and doesn’t buy, especially your most loyal ones, is often more valuable: where are they going after they leave you?

David Rosen | SVP Strategy and Partner Development

Today, MediaPost’s Research Brief highlighted the latest survey on loyalty from the CMO Council.

It’s a solid overview of general member satisfaction and general marketer satisfaction with their programs.  In fact, generally very good news for the loyalty industry:  Members really do appreciate the additional value that loyalty programs deliver and marketers’ returns justify increased investment in 2010 and beyond.

I was, however, struck the by title:  “Loyalty Programs Need to Engage.”

Based on the research, there still is a significant gap in marketers’ ability to build a dialog with their members that is based on points of interaction that extend beyond the transaction.  While a clear majority of the respondents are increasing their digital spend, few seem to be ready to take the highly personal inputs of the engagement to drive big lifts if frequency, retention and measurable advocacy.

As reported in the Council’s research:

When it comes to in-depth profiling of customers, the vast majority of marketers still only aggregate and analyze limited customer data sets.

• 73% collect basic demographics and
• 68% track the location of members

But critical insights are not being leveraged:

• Advocacy rates (14%)
• Brand loyalty and attachment (27%)
• Personal preferences (31%)
• Satisfaction levels (33%)
• Product preferences (38%)

Clearly the gap needs to close.  This year, we’re doing our own research in collaboration with Razorfish on member engagement and loyalty.  Stay tuned – and if you would like an advanced peek, email me at david@loyaltylab.com

by Joshua Tretakoff | EVP, Services

Do you know Frank Eliason? You should. He’s also known as Comcast Frank, or, more importantly, ComcastCares on Twitter. Frank singlehandedly put a face on the customer service for Comcast, realizing that the biggest reason why customers defected was that there was a perception of indifference or unresponsiveness. Instead of sitting on a phone tree waiting for a rep, just message @ComcastCares; Frank responds quickly and efficiently. Event better, Frank monitors Twitter for mentions of Comcast,  and offers proactively to intercede on the customer’s frustrated behalf. In short, he completely changed the perception of Comcast from an indifferent behemoth to a proactive advocate.

Frank also writes his own blog. This week, he writes about his experience with a loyalty program on a flight.  Read his trials and tribulations for yourselves: what is supposed to be a program that rewards you for loyalty only succeeded in putting him through so many bureaucratic hoops that it is almost worse than being treated anonymously.

What struck me was the complete lack of addressing the customer by name in the communications the airline used. Instead, they constantly used the Loyalty Number or Error Code; it felt almost Brazil-like. And, as Frank points out, the only warmth in the communication at all came from their ad in the e-mail to have you get a discount at Hertz. First and foremost in a loyalty program, remember its not about the points: it’s about the way to help make a customer into your best customer. Every message, interaction, communication, and customer experience needs to be viewed through the customer lens. No amount of points will make a customer forget being treated as just another number if you truly want their business.

By Jason Hornik | Senior Director, Product Marketing

In his updated bestseller, CRM at the Speed of Light, Paul Greenberg digs into Social CRM with nearly 700 pages of lively guidance and practical examples of how brands can innovate to better engage their consumers. This book provides a comprehensive view of the Social CRM landscape and is bound to trigger ideas for your strategies, tools, and techniques as the title so claims. A recommended cover-to-cover read:
http://www.ebooks.com/ebooks/book_display.asp?IID=471477