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Loyalty Management 2nd Quarter 2012 Issue

Loyalty Management 2nd Quarter 2012 Issue

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Published by Loyalty360
Loyalty Management is a one of a kind, customer-driven publication focusing on loyalty marketing. Defining “customer” as every person a company touches—end users, key accounts, employees, partners, and vendors—Loyalty Management is committed to creating a documented customer-centric forum for sharing ideas, concepts and trends across all industries interested in proactively communicating with their customers and each other.
Loyalty Management is a one of a kind, customer-driven publication focusing on loyalty marketing. Defining “customer” as every person a company touches—end users, key accounts, employees, partners, and vendors—Loyalty Management is committed to creating a documented customer-centric forum for sharing ideas, concepts and trends across all industries interested in proactively communicating with their customers and each other.

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Volume 4 Number 2

Second Quarter 2012

ENLIGHTENING ENLIGHTENING INSIGHTS: INSIGHTS:
Sierra Trading Sierra Trading Post Sierra Trading PostPost T.G.I. Fridays Fridays T.G.I. Friday's MoneyGram MoneyGram MoneyGram Best Buy Xerox Xerox Rug Doctor Best Buy BestBuy Xerox Doctor Rug Rug Doctor Pure Romance Enterprise Enterprise Enterprise Rent-A-Car Progressive Progressive Progressive Insurance Pure Romance Pure Romance

EXPERIENTIAL PROGRAMS: REWARDING CUSTOMER LOYALTY ONE UNFORGETTABLE EXPERIENCE AT A TIME

4 STEPS TO GROW & CULTIVATE YOUR LOYALTY PROGRAM

THE MANY ROLES SOCIAL MEDIA PLAYS IN LOYALTY

CUSTOMERS COME AND GO. FANS RETURN AGAIN AND AGAIN.
For three decades, Affinion Loyalty Group has been a pioneer in the loyalty and enhancement industries. We help our clients retain and motivate consumers while delivering tangible results and incremental revenue. We continually develop ground-breaking products found in almost every wallet in America. 

www.affinionloyalty.com

1-800-622-4863

In this Issue...
SECOND QUARTER 2012 VOLUME 4 NUMBER 2 WWW.LOYALTY360.ORG

FEATURES

20

24

28
Using Data Analysis to Increase Customer Acquisition
Curt Woods— Buxton

30
Experiential Programs: Rewarding Customer Loyalty
Jamie Comiskey— VIPdesk

32
T.G.I. Friday’s Partners with Travelocity
Brian Kuterbach— Carlson Restaurants

The Many Roles Four Steps Social Media to Grow & Plays in Loyalty Cultivate Your Loyalty Steven J. Ramirez— Beyond the Arc Program
Judy Melanson— Chadwick Martin Bailey

LOYALTY FORUM: IN EVERY ISSUE
What’s on Loyalty360.org Letter from the Editor Your Voice Behind the Brand Christa Carone, Xerox 360 Insights: Four Cornerstones of Loyalty & the Expectation Matching Paradox Mark Johnson, Loyalty 360 Q & A: Ask the Experts Loyalty Innovation By the Numbers Loyalty Reads Behind the Brand Michael Hemsey, Kobie Marketing

6 8 10 12 16 18 34 50 62 64

Loyalty Management™ • SECOND QUARTER 2012

3

Why Wait? Start building StrOngEr cOnSumEr rElatiOnShipS tOday.
.COM
©2012 D. L. Ryan Companies, LLC.

In this Issue...
SECOND QUARTER 2012 VOLUME 4 NUMBER 2 WWW.LOYALTY360.ORG

TECHNOLOGY, TRENDS & REWARDS
40 Exceeding Expectations through Customer Service and Loyalty Loyalty 360 Interview with Enterprise Rent-A-Car 42 How Pure Romance Used Technology to Deliver a Superior Customer Experience Chris McIntire, Pure Romance 45 Referral Program’s Social Success Loyalty 360 Interview with Sierra Trading Post 46 Monetizing Loyalty Marketing Assets Gretchen Moen, Affinion Loyalty Group 48 Hyper-Local, Mobile and Deals Loyalty 360 Interview with Jay Loeffler, Cox Target Media & Valpak

BEST BUSINESS PRACTICES
52 Multi-Channel Customer Engagement Jeff Lundal, Experian Marketing Services 54 Connected CRM Craig Dempster, Merkle 56 Insured Loyalty Loyalty 360 Interview with Bart Blackburn, Progressive Insurance 58 Speed, Convenience, Recognition— MoneyGram Rewards® Loyalty 360 Interview with Stuart Kiefer, MoneyGram 61 Shifting the Balance—How to Protect Your Company's Social Brand Scott Buchanan, Medallia

Loyalty Management Editorial & Production Team Erin Raese - Editor in Chief Mark Johnson - Contributing Editor Caitlin Schar - Editorial Director Liz Johnson - Senior Graphic Designer Crescent Printing Company - Print Production Loyalty 360 Team Mark Johnson - President & CEO Erin Raese - COO Caitlin Schar - VP Account Management Liz Johnson - Senior Graphic Designer Jillian Hensley - Manager, Marketing & Web Development Lindsay Wagner - Sales Manager Contacts Article Submissions & Advertising: Erin Raese erinraese@loyalty360.org or 513.800.0360, ext. 210 To subscribe to Loyalty Management, visit loyaltymanagement.com.

20

LE
PG. 66

12

Insights from loyalty expo

© 2012 Loyalty 360, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Loyalty 360 disclaims all warranties as to the accuracy, completeness or adequacy of such information. The opinions shared are those of the contributing authors and not necessarily reflective of Loyalty 360 and/ or its affiliates. Loyalty 360 shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

Loyalty Management™ • SECOND QUARTER 2012

5

LOYALTY 360 ON THE WEB

trending

» Research:
From Forrester:

NOW
"Making Every Interaction Count—How Customer Intelligence Drives Customer Loyalty":

data, loyalty & retention efforts

From Acxiom & Loyalty 360 joint research,

85%
60%

35: the percentage of a company's total base that Loyalty Program memberships make up;
only one-third of those 35% redeem rewards.

of respondents use customer retention marketing strategies, yet barely HALF believe their strategies are working, and 5% admit they do not evaluate their customer retention at all.

Less than half of respondents know who their best, most loyal customers are, and how best to reach them.
Dedicate less than 20% of their marketing budget to customer retention.

38% 42%
COUPONS
(While of consumers report being most interested in joining loyalty programs that offer instant coupons and savings***)

REWARD MECHANISMS MOST OFTEN UTILIZED**…

40%
half 36% 30%

of companies access data individually through multichannels, and 35% report that their data is centrally located with universal access.

63%

EXPERIENCE BASED REWARDS

DISCOUNT BASED REWARDS

51%

“Facing the Challenges of Building Loyalty and Retention—The New Strategic Imperative,”

From a new survey from SAS and Loyalty 360:

of respondents reported formal customer lifecycle or voice-ofthe-customer programs.

** Source: Q3 2011 Global Loyalty Benchmark Online Survey ***Source: North American Technographics Retail Online Benchmark Recontact Survey, Q3 2011 (US)

reported high or moderate integration of loyalty data with other customer data. report moderate-to-high use of customer data to inform loyalty campaigns.

6

Loyalty Management™ • SECOND QUARTER 2012

the ALL

NEW

LOYALTY360.ORG

Inspired by our users' feedback, we've redesigned Loyalty360.org to make it faster and easier to find the news, research, insights and multimedia you're looking for. Launched in March, some of the new features include: Revamped Resource Center—Browse by topic and industry • Loyalty Management Online—Exclusive supplemental articles • Updated Job board and Resume Bank • Simplified Loyalty Today blog aggregator • Streamlined member pages and Find a Partner tool • Go to Loyalty360.org to sign up for your free online account or to become a Loyalty 360 member!

With our new website we bring you some exciting new content as well. Check out the Loyalty 360 Video Blogs and the new Executive Insights series ROSE AD.pdf 1 15/04/2012 20:39 on Loyalty Management Online!
rose1.pdf 1 20/04/2012 18:33

IEG. Summits

FP&A for the Retail Industry
For more information: http:// nance.theiegroup.com/fpa-retail Request an invitation: +44 207 193 1655 Request an invitation: +1 415 992 7605 sforeman@theiegroup.com rshanley@theiegroup.com

June 21 & 22, Boston, 2012
FP&A from Budgeting to Strategic In uence

FROM THE EDITOR

Welcome to our Annual Best Practices Issue
First, I am compelled to begin with a sincere “Thank You” to this year’s Loyalty Expo attendees, speakers and exhibitors for making the 2012 Loyalty Expo such a great success. The show was full of insightful sessions and meaningful discussions around the challenges and achievements encountered in the customer loyalty marketplace. We are grateful for the forum of industry thought leaders that have come together to share their experiences and explore new ideas, and look forward to continuing to provide a community for Loyalty 360 members and Expo participants to collaborate in the months and years ahead. In this post Loyalty Expo issue of Loyalty Management we continue to bring you insights from leading companies and thought leadership in the marketplace today. Exploring best practices, case study examples and interviews with top brands such as Best Buy, Progressive Insurance, Enterprise Rent-A-Car, MoneyGram and Sierra Trading Post, we get the “Inside Scoop” on the rewarding accomplishments and challenges overcome as these brands (and others) continue to strive toward building lifelong loyal relationships with their best customers. We hope you enjoy this issue!

Welcome new Loyalty 360 Members:
500friends Ansira Augeo Marketing Avansys Brierley+Partners Bunchball DBG Loyalty Destination Rewards Experian Marketing Services™ GiftCard Partners Harte-Hanks KULA Causes McDonald’s® Merkle Ogilvy & Mather PMCG Physicians Mutual PossibleNOW Post-Bulletin Propco Marketing Red Robin® Rymax Marketing Services Signature Flight Support Corporation T-Mobile® Talk3 the first club™ The Lacek Group US Cellular Vantiv Walker Information XO Communications

Erin Raese
Editor-in-Chief Loyalty Management erinraese@loyalty360.org

HAPPY 5 ANNIVERSARY SCENE!
TH

SCENE®, we’re proud to have been part of your journey over the past 5 years. Together, we have • Grown membership 24% in the last year alone! • Increased points earned by 23% • Evolved an earn & burn points program into North America’s premier entertainment loyalty program Happy Anniversary to our valued clients at SCENE, Scotiabank and Cineplex Entertainment. Your Friends at Maritz

8

Loyalty Management™ • SECOND QUARTER 2012

we're here to guide you along the way.

loyalty is a journey.

Looking to build your organization's engagement and loyalty strategies? Loyalty 360 makes it easy to find a partner with the capabilities to help you reach your goals. Want to be a part of the largest engagement and loyalty supplier directory? For only $2500/year, sign up to be listed with your own customizable member page. Find tools, tips, and connect with your peers to find the answers to your loyalty questions at loyalty360.org

LOYALTY FORUM: YOUR VOICE

From a recent discussion1 on the Loyalty 360 LinkedIn Group:

EXCELLENT CUSTOMER EXPERIENCE MANAGEMENT …DOES IT REQUIRE A LOYALTY PROGRAM?

A

chain of restaurants has delivered excellent service generation after generation over the last 60 years. They have no loyalty rewards. Still the flow of customers and new additional ones continues as the chain continues to prosper and delight its customers. The WOM is so good that the products, process and people that customers connect with leave them delighted. DR .HE M ENDR A SI NGH

N

ot if you have a cohesive CEM strategy of which Loyalty rewards are just one element thereof. If you are using loyalty rewards as your CEM strategy then it would clearly dilute this as customers would see this as possibly buying their loyalty instead of earning it.

I

f your company is relying on a points & rewards program as its customer loyalty strategy, you might be in trouble sooner than you think. Loyalty is not a point

& reward program; it's an attitude companies need to have towards their customers, and not the other way around. Good customer experience
doesn't require a loyalty program. Unfortunately, customer experience is still the least understood marketing discipline. SA F E L M A NSOU R

MEGA N ASHM A N

Loyalty 360 Pulse: Customer Data

60%
1

that YES! they are using customer data as part of their loyalty marketing strategy to provide a personalized and rewards. customer experience beyond points

of respondents polled confirmed

h t t p : // w w w. l i n k e d i n . c o m /g r o u p I t e m? v i e w = & g i d =1 1 2 6 5 5 7& t y p e = m e m b e r& i t e m = 9 8 3 7 7 1 1 1 & q i d = 0 4 1 b 9 c b 0 - d c 5 a - 45 4 6 - 9 4 4 b - c 0 2 8 c b 4 a 8 4 6 8 & t r k = g r o u p _ i t e m s _ s e e _ m o r e - 0 - b - c m r

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Loyalty Management™ • SECOND QUARTER 2012

I

think we need to know more info on the specific account, the business goals and objectives—the demographics and the psychographics. With the plethora of choices in the marketplace on where one can eat, great service alone does not cut it. Many people like to try new places. If there is a WIIFM (What’s in it for me?) I think that you can get customers coming back again and again (good service and food MUST be a given). Take a look at the airline, car rental and hotel

Share YOUR VOICE with us!
Become a member of the LOYALTY 360 LINKEDIN GROUP or follow us on Twitter & Facebook. Join the discussions and voice your opinion. Your feedback may be included in an upcoming issue of Loyalty Management magazine!

industry; if it didn't work the programs would flounder and be eliminated. Some of the better restaurants are putting together
great social media strategies and are getting more people to come there and eat more often as part of a greater loyalty strategy. Loyalty programs do NOT have to use points. That is a fallacy. There needs to be two-way communication, surprise and delight, etc…there are many tools that need to be utilized to create loyal customers. PH I L I P C O L B Y C I U L L A , J R .

it is a hard road, but was not the whole idea of "unique identifier" (aka membership number) a precursor for understanding your customers and then engaging them appropriately? As a resident
of Asia I understand that there are many restaurants that have delivered excellent cuisine over many generations–often so much so that the service is overlooked. We will queue for the food! R I C H A R D WA R L A N D

D

ear all, I am dismayed that not one of you referred to the proactive use of customer insights! I know

P

ersonally, I find that if loyalty rewards truly pay off, I'm willing to put up with a lot more in the way of experience.

Kroger offers money off gasoline as well as "lower" prices on items, and specialized coupons with their rewards card. For this reason, I have been willing to deal with a careless staff, out-of-stock items and a poor produce selection much of the time. But, there's really no store loyalty here. I'm just loyal to the program. If another ubiquitous grocery chain offered something similar along with a better shopping experience I would likely switch. CEM is only compromised by a rewards program if the company offering it chooses to use it in place of a positive user experience instead of as a part of it. S E A N C . G R AC E

I've always seen loyalty rewards as just a thank you; it's the overall experience that will earn (or not) a customer's loyalty…
Simon Uwins

5% 4

Loyalty 360 Pulse: Customer Service
of consumers say that, yes, a loyalty program keeps them loyal to a brand, despite sometimes poor customer service.

Loyalty Management™ • SECOND QUARTER 2012

11

LOYALTY FORUM: BEHIND THE BRAND

C H R I S TA CARONE
—Xerox

C

include advertising, experiential marketing, public relations, internal communications, integrated campaigns, interactive and social marketing, and the Xerox Foundation. She is also the steward of the company’s brand, leading global activities that serve to protect the value of the Xerox name and multi-billion dollar brand. In an exclusive interview with Loyalty 360 we hear from the woman Behind the Brand.
WHAT ARE THE KEY AREAS OF FOCUS FOR XEROX THROUGH THE REMAINDER OF 2012 AND INTO NEXT YEAR?

H R I S T A C A R O N E is responsible for global marketing strategy and initiatives that

We are focused on telling the story of the new Xerox. A lot of companies talk about transformation; we’re actually doing it. The Xerox brand has tremendous awareness around the world. It’s a point of great pride for us. However, that brand awareness is often primarily associated with the company’s long history as a copying and printing company. It’s understandable: Xerox is still one of the world’s leading providers of document technology—printers, multifunction devices, production presses. Yet, in fact, we sell very few standalone copiers. As important, over the last few years, Xerox has significantly expanded into business services, and now services make up the largest percentage of our total revenue and are the fastest growing segments of our business. We’re now in places you wouldn’t expect— processing automated toll transactions like EZ Pass, managing call centers for major consumer brands, building electronic health record systems for large healthcare organizations, handling employee benefit programs, processing millions of government transactions for student loans, child support, Medicaid…I could go on. But, the net is that the Xerox brand stands for so much than it gets credit for. And, that’s where our brand marketing and communication activities kick in. Through an integrated approach to stakeholder engagement,

we’re focused on broadening the perception of Xerox in the marketplace and forging shared belief in the role Xerox plays to simplify the ways work gets done. IS YOUR EXISTING CUSTOMER STRATEGY FOCUSED MORE HEAVILY ON ACQUISITION OR RETENTION? WHY IS THIS THE MOST VALUABLE APPROACH AT THIS TIME? DO YOU SEE THIS FOCUS CHANGING WITHIN THE NEXT COUPLE YEARS? Both—always, all the time. There are a couple of universal facts to customer retention: Across industries and around the world, if you can retain five percent more of your customers than you currently do, your bottom-line profit will grow anywhere from 25 to 50 percent. And, it takes five times as much money and effort to attract a new customer as it does to retain an old one. In our services business, clients sign multi-year deals that can be worth a billion dollars. We’re shaking hands and putting pen to paper on relationships that span 10 years or more. And, our clients are relying on us to handle important business processes that are the backbone to their operations (like employee training programs and managing customer call centers). Winning that trust, nurturing it and retaining it is job #1 for all Xerox people. To effectively grow our business, we

12

Loyalty Management™ • SECOND QUARTER 2012

T H E X E R O X …brand awareness is often primarily associated with the company’s long history as a copying and printing company…Yet, in fact, we sell very few standalone copiers. As important, over the last few years, xerox has significantly expanded into business services, and now services make up the largest percentage of our total revenue and are the fastest growing segments of our business.”

meaningful ways that are actionable. Whether it’s measuring reputation, brand, customers’ purchasing cycles, clients’ information consumption, purchasing influencers, lead generation, social media trends, Net Promoter, etc.—all the data is there. Now, let’s put meaningful context around it so we can make more informed decisions, with one less PowerPoint deck. WHAT WOULD YOU LIKE TO SEE CHANGE IN THE MARKET’S APPROACH TO THE CUSTOMER EXPERIENCE, ENGAGEMENT AND LOYALTY? I’m a big believer in the Arthur Page Society’s view of more authentic engagement with stakeholders. It’s less about selling to them and more about providing the information, the service, the experience that turns prospects into believers who want to take action and clients who become advocates. So, instead of the proverbial tops-down funnel, we’re aligning our initiatives and investments around the Page Engagement Model—and encouraging activities that: •  Engage the decision-maker by forging a shared belief.  •  Spur the decision-maker to act on that belief.  •  Increase their confidence that their action matters.  •  Build constituency with more audiences through  the network of these advocates. WHAT DO YOU BELIEVE IS KEY IN CREATING THE ULTIMATE CUSTOMER EXPERIENCE?

X E ROX HAS BE EN D O I N G S O M E UN EX P E C T E D T HINGS W IT H IT S BRAN D LAT ELY, like teaming up with Sting to sponsor his global tour a couple of years ago. The alliance meant that Xerox provided behind the scenes technology and services for the tour; brought the Xerox brand to senior-level business professionals through “money-can’t-buy” experiences; and gave this CMO one perk— a backstage pass with Sting.

need to be equally successful with acquiring new business, which means putting Xerox in the right position to be considered for major deals and winning through differentiated value propositions. In the perfect world, ultimate success is achieved when retention and acquisition are high on both fronts. I don’t see this ever changing—and, if anything, feel that approaches to stakeholder engagement serve both purposes all the time.

I think we all need to be reminded that at the beginning, middle and end of every business exchange is a person— a person who deserves your respect, dignity, punctuality, helpfulness, honesty and generosity. Marketing companies big and small must always keep in mind that we are dealing with people first, not corporations and not machines. WHAT WAS YOUR LAST “AH-HA” CUSTOMER EXPERIENCE?

It tends to always come back to the little things in life. That’s why we focus on personalized communications and deploy I recently ran into my local deli late one Sunday evening. cross-media tactics to engage our They were closing; all they needed clients in relevant ways. We’re far to do was lock the door. Cash register from perfect and still have a small A L O T O F C O M PA N I E S T A L K was shut down. The prepared foods dependency on “spray and pray” were put away. The owner’s hand methods of direct marketing (I’m was on the light switch. But, he let not a fan)—but, we’re increasingly A B O U T T R A N S F O R M AT I O N ; me in. He knows I’m a frequent putting more investment into shopper. He knows what my family really customized marketing W E ’ R E A C T U A L L Y D O I N G I T.” likes from his market. He knows that approaches. Sometimes, it’s just I count on him for the convenience to have fun, like we did with our he brings to my hectic life. Other Information Overload video series. stores would have asked me to come back another time. Find out your own info overload pain points at www.iosnews.com This one took care of me today…giving me even more reason to see what I mean. to come back tomorrow. The simplest touches are always the ah-ha's that have the most lasting impressions on the customer WHAT IS ON YOUR “WISH LIST” FOR TACTICS, TOOLS OR experience. TECHNOLOGIES YOU WOULD LIKE TO SEE INCORPORATED INTO YOUR CUSTOMER RELATIONSHIP STRATEGY? IF YOU WERE NOT DOING WHAT YOU DO TODAY, HOW Oh dear…here come the pitches from all the amazing technology WOULD YOU BE SPENDING YOUR TIME? vendors out there. I’m sure many companies will tell me they I’m very fortunate to work for a company that is admired have just what’s on my wish list. But, I’m not yet convinced. and respected for doing good while operating a good business. So, here goes: we don’t lack access to data. Big data, small And, I’m even more fortunate to be in an inclusive environdata, and everything in between. It’s there for our picking and ment that values diverse opinions and that understands the for creating fancy spreadsheets and fancier PowerPoint decks. But, my wish list includes simpler ways to aggregate data in

continued on next page » Loyalty Management™ • SECOND QUARTER 2012

13

Behind the Brand: Christa Carone (continued)
importance of work/life balance. Xerox is a special place and it’s the right place for me. But, if life turned upside down, my first priority is spending more time with my family and pursuing the endless task of keeping up with the laundry. And, if I could set the alarm clock to go off just a little later and have coffee with my friends just once a week, that would be an added treat. WHO HAS HAD THE MOST INFLUENCE ON YOUR PROFESSIONAL LIFE? Five people: 1: My grandfather, who spoiled me rotten all while showing me the value of hard work. He was a big believer in who I could be. 2: My first “real” boss, Karen Rohr, who gave me a first-hand view of how leadership works and who gave me confidence that I could be one some day. 3: Xerox’s former CEO Anne Mulcahy, who took a chance on me during a difficult time for the company and who showed me the value of collaboration and how to form community through followership. 4: Xerox’s former CFO Larry Zimmerman, who was patient in helping me become a smarter business professional. 5: Xerox’s current CEO Ursula Burns, who has infused in me a sense of impatience that never allows for settling for the status quo. WORDS OF ADVICE FOR THE NOVICE MARKETER? Whether you’re selling printers, services, candy, financial advice, an airline or anything in between—standing out matters. Here are some thoughts I have on being consistently remarkable, courtesy of my recent interactions with the Cirque du Soleil brand: •  Consistently and clearly communicate across all customer touch points: Connecting with the core of a brand and expressing that across every single execution in an authentic, real way is the goal. •  Creativity counts: I think many marketers would do well to take a page out of the Cirque book and add more flair to their communications. •  Strive to be unique and universal: You can start by connecting with customers through something fundamental to the human experience—emotion. •  Take risks with relevance: Cirque du Soleil President and CEO Daniel Lamarre may have summarized its risk-taking philosophy when he said, “If you want to do a breakthrough, don’t look around—look ahead.” But this only works if a brand and its employees are so connected that deciding to take a risk is akin to a skier’s pre-black diamond gut-check: We don’t look around, we look ahead and within to decide whether this risk is worth taking. L

INSPIRED BY JAMES LIPTON ON “INSIDE THE ACTORS STUDIO” W E A S K E D C H R I S TA TO S H A R E H E R Q U I C K F I R E R E S P O N S E TO T H E Q U E S T I O N S O R I G I N AT I N G F RO M T H E F R E N C H S E R I E S , " B O U I L L O N D E C U L T U R E " H O S T E D B Y B E R N A R D P I V O T.
~ What is your favorite word? Simple ~ What is your least favorite word? Streamline ~ What turns you on creatively, spiritually, or emotionally? I’m a runner. And, when I hit the road, it’s when I’m most able to tap into those creative, spiritual or emotional thoughts ~ What turns you off? Arrogance ~ What is your favorite (PG-13) curse word? It’s not PG-13 ~ What sound or noise do you love? My children’s laughter ~ What sound or noise do you hate? My children’s bickering ~ What profession other than your own would you like to attempt? Television or movie production ~ What profession would you not like to do? Professional chef (see note above about dependency on local deli!)

14

Loyalty Management™ • SECOND QUARTER 2012

One disengaged employee...
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+ + =

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LOYALTY FORUM: 360 INSIGHTS

& THE EXPECTATION MATCHING PARADOX
MARK JOHNSON

FOUR CORNERSTONES OF LOYALTY
—Loyalty 360
they have expectations that are wildly diverse /divergent based on where they are within their “loyalty lifecycle.” Brands need to be cognizant of this process and manage accordingly. For brands that realize that loyalty is a destination that is in a constant state of transition they need to “release the hostages” (as Pam Prentice espouses) in order to increase the effectiveness of the marketing processes. The processes that comprise short term (engagement and experience), medium term (customer satisfaction) and long –term (customer centricity) require a fresh approach to marketing. That approach is using the foundational cornerstones of loyalty to strengthen the efficacy of one’s “Expectation Matching” efforts.

P

revalent in the marketplace today, one of the things we continue to see and was eloquently discussed at the 2012 Loyalty Expo is the idea of “Hostages.” As espoused by Pamela Prentice (Chief Researcher from SAS) in the Keynote address, the idea of “Hostages” is the belief that brands still want to either control the conversation / dialogue with the potential advocate or they have a complete disregard for the needs of their current and potential audience. The baseline premise in a hostage situation is that one person or group has complete control of the “situation” and the other has little (if any). Too many brands are holding their customers hostage. Why?

What we really need to be moving toward is creating a relationship with customers and using “Expectation Matching” to get there. A term coined by Loyalty 360, “Expectation Matching” is when customer-centric brands create immeasurable brand loyalty and engagement by using the behavioral insights from their customers (gleaned through a pro-active dialogue) to ensure they match their disparate expectations. A brand’s customers have similar, yet distinct interests and expectations. Retaining these customers long-term is dependent upon a brand’s ability to understand them when they acquire them and to use a data-centric marketing strategy to drive brand engagement and create loyal brand advocates. When the expectations of both the consumer and the brand are understood and refined through a process of interactive dialogue, the ‘expectation’ is ‘matched’ and mutually beneficial outcomes and financial benefit for the brand are created.

THE CORNERSTONES OF LOYALTY:
1: Customer Engagement – brands should be designing and implementing engaging customer focused strategies through technologies and processes that allow customers to experience, interact with and communicate to the brand (if they want to listen) in a mutually beneficial manner. 2: Customer Experience – this is the short (and long) term belief that the experiences an individual has with a brand provide value and help drive their longer term engagement and loyalty to the brand. Customer experience impacts customer satisfaction and to varying degrees for the short and long term perspectives, scores and measurement models. Yet, experience can be temporal; with consistent brand experiences across all channels we can create even more engaged and loyal brand champions. 3: Customer Satisfaction –in my opinion the most challenging, especially if it is administered and measured without context of the other the cornerstones. People are inherently irrational and what they may be telling you (without the context of the other cornerstones or behavioral insight) may not be what they actually do. 4: Customer Centricity – the belief that all processes and touch points should provide a meaningful, measurable and valuable process that uses a true “voice of the customer” approach of putting the customer first. When done well, some will pay incrementally for your service or product— a-la Neiman Marcus. L

As individuals partake in a potential journey with a brand, they have expectations that are wildly diverse based on where they are within their “loyalty lifecycle.”
To remedy the hostage situation and deliver “Expectation Matching,” ideals requires a strong foundation for support. When establishing this foundation, the cornerstones of loyalty are Customer Engagement, Customer Experience, Customer Satisfaction and Customer Centricity. The ability to manage all four pieces is paramount to success in long term strategic brand loyalty. As individuals partake in a potential journey with a brand,

Mark is the President & CEO of Loyalty 360. He has significant experience in selling, designing and administering prepaid, loyalty/CRM programs, as well as data-driven marketing communication programs.

16

Loyalty Management™ • SECOND QUARTER 2012

YOUR BUSINESS RESULTS DELIVERED OUR INSIGHT

We see relationships di erently. Visit us to learn more.

aimia.com

LOYALTY FORUM: Q&A

Ask the Experts:
Loyalty Programs: Tender-Neutral vs. Credit Card

Q&A
20% 70%

Q:

I see retailers like Bloomingdales and Express moving toward tender neutral loyalty programs. We are looking to launch a new loyalty program in the retail space—should we base the platform on our store branded credit card or offer a tender neutral loyalty program?

A:

Ideally, you should do both through a multi-tender approach with added value and benefits for store cardholders. Loyalty is a platform to identify consumers and gain insight to their purchase behavior and interaction with your brand. The result is more targeted marketing and better positioning of your brand to key consumer segments.

ful. The goal is to support the brand by reinforcing a consumer’s relationship with the brand and then to challenge consumers to expand their relationship to other products and services.

Multi-tender approaches cast a wider net, identifying more consumers and accelerating consumer insight. With the consumer insight, other services can be offered to strengthen the brand’s position with the consumer. Private tender programs typically identify 20% of consumers while multi-tender approaches can achieve more than 70% identification. Broader identification provides a richer database of marketable consumers. Once identified consumers can be targeted for private tender acquisition. And private tender is important. Today, consumers have a myriad of payment options. The decision to carry a brand’s payment card is a strong sign of brand interest. The cardholder’s commitment should be supported with additional earning opportunities and enhanced benefits. Loyalty should be designed to drive “brand” loyalty and not just loyalty around to a specific product. Would you base an approach on only one product or department such as cosmetics or fragrances? Doubt-

Private tender programs typically identify

of consumers while multi-tender approaches can achieve more than identification.”

Private tender approaches do have financial enticements with lower interchange and marketing subsidies from the issuer. So private tender approaches appear a no cost or even a more profitable option. Of course, a well designed multi-tender strategy can retain these financial benefits, improve private tender acquisition and drive additional benefit across the entire portfolio of consumers. The best choice is to not sacrifice one approach for the other. Instead, seek to leverage the two to gain the greatest benefit for the organization.

JOHN BARTOLD

—VP of Loyalty Solutions, Epsilon

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Loyalty Management™ • SECOND QUARTER 2012

A:

The answer to this question is really a function of what you are interested in driving with your rewards program. If you are not completely clear on your objectives, I tend to favor tender neutral as a complement to a credit card program because it offers you the maximum flexibility. Tender neutral requires more effort, resources and focus, but the program will enable you to capture information about your entire customer base, rather than leaving out those that are not inclined to use your store branded card. In terms of effort, to support the program your organization will have to adopt a “membership mentality”, ensuring that customers are encouraged to enroll and to associate their activity with the account. DSW does a fabulous job at having employees regularly walk the floor to ask consumers to sign up, rather than clogging up the point of sale. Additional resources may include may include the cost of a platform or broader program marketing; however in the longer term, the data gathered on your customer base will

allow your organization to be more efficient in deploying marketing dollars or making direct contact with a broader population using the contact data gathered in program registration. As for focus, none on the effort or resources will really pay off unless you commit to leveraging the customer information to launch and test various programs to drive behavior. Best Buy has reinvented their program several times to ensure that they have the right balance of investment and return. Outside of these three themes, you should also consider how a tender neutral program will help you as the mobile channel gains importance. Without the program as a platform, it’s hard to imagine how an organization will be able to capture the attention of this channel that has so much potential to en-

rich one-to-one interaction. Finally, the tender neutral program can also serve as a breeding ground for identifying new cardholders and capturing additional cardholders. You should enter into tender neutral carefully and recognize that you will likely not get it right the first time. As they venture into new programs, I typically recommend to my clients that they start with a conservative value proposition with at least one good soft benefit and good creative, leaving themselves option of increasing the value, generally or to discreet groups, as the program progresses.

S A R A H W. P H E L P S

—Principal, First Annapolis Consulting

A:

First and foremost, putting your customer’s preferences and needs at the heart of the business should be paramount in determining your loyalty program’s platform. While retailers need to meet the strategic needs of the business, and design a program that will generate incremental profitable revenue, a key component to a successful program design is mining and integrating your customer insights and unique preferences into the program’s development process. Let customers help guide the value proposition and whether it is based on the store credit option a standalone platform, or an integrated “all forms of payment” (AFP) design.

deep customer insight and financial modeling does typically integrate an alternative form of payment (AFP) option for your customers who prefer not to, or simply cannot, apply and accept a credit offer. While both platforms provide invaluable customer insight via transactional and member-supplied data, there are several additional benefits to an AFP program. AFP programs typically recognize and reward a larger universe of customers, which enables more sophisticated segmentation and targeting—especially of your most valuable customers. AFP programs also attribute a higher percentage of overall company sales through the loyalty program, thus enabling retailers to leverage data and insights enterprise-wide for other key business needs. Start by clearly defining your goals. Then, the more you know about your customers and the more you integrate them into your loyalty program development, the better positioned you will be in selecting the platform that works best for your company.

Research and customer listening will help determine not only the appeal and preferred forms of payment, but also how customers want to engage with the brand to help you determine the optimal range of reward choices. Reward options that encompass experiential and brand-exclusive benefits can co-exist with reward options that are exclusive to applying for and using the store card. The balance of the process, rewarding the right behaviors profitably, comprises the true art and science of loyalty program design. It must begin with a precise definition of your goals; take into account the organization’s needs, and then include customer input. Our experience at Brierley+Partners has been that a well-designed program, founded in

Putting your customer’s preferences and needs at the heart of the business should be paramount in determining your loyalty program’s platform.”

AMY BARNETT

— S V P of Strategic Account Planning, Brierley+Partners

Loyalty Management™ • SECOND QUARTER 2012

19

FEATURES

THE MANY ROLES SOCIAL MEDIA PLAYS IN LOYALTY
STEVEN J. RAMIREZ

—Beyond the Arc

“S

ocial media” is the loyalty buzz phrase of the day. There is an endless stream of commentary and recommendations on how to best leverage social media in marketing. In fact, you can’t throw a stone without hitting a social media expert.

With ALL the information available on the topic, how do you sort out what recommendations are best for you, your organization and the customers and industry you serve?
The biggest mistake we see made in social media is activity driven by marketing calendars—not business objectives. Too many marketing departments and firms are using Twitter, Facebook and YouTube to push out promotional company messages, measuring success with likes and re-tweets. Other companies discount social media channels as venting and griping outlets only, preferring not to engage negative commentary. TYING SOCIAL MEDIA TO BUSINESS OBJECTIVES We are not discounting social media as a valuable marketing and communications channel. We are, however, pointing out that Twitter, Facebook and YouTube are also business channels that should be closely aligned with and support three key business objectives:

As is true with any business objective, measurement and analysis is also key. It is not enough to consider 5,000 followers or 1,000 likes the successful outcome of a social media campaign. Instead, companies should be looking at the actual content of Tweets, Facebook status updates and YouTube comments. What do the words mean? How can a company use social media data in a meaningful and valuable way that improves business practices and, therefore, increases productivity and loyalty? This article will examine how three companies going through a service break, special community event and the launch of a new campaign used social media monitoring as well as activity to overcome hurdles, meet business objectives and improve customer loyalty.
Analysis of Twitter & Facebook Data March 2 -14, 2011 Total Comments: 41,000+ Unique Comments: 9,000+ SOCIAL MEDIA ANALYSIS ABOUT BANK OF AMERICA REVEALED THOUSANDS OF COMMENTS ABOUT SERVICE BREAKS & PURCHASE LIMIT RUMORS THAT PUT THE BANK AT RISK OF LOSING CUSTOMERS.

Facebook 12% Twitter 88%

BANK OF AMERICA, MINT.COM MISS SIGNS OF DISSATISFACTION As the largest bank in the United States by assets (and more than 12 percent of U.S. deposits), Bank of America has maximized its share of deposits through acquisitions and may soon need to increase its rate of organic growth. To us, this signals a strong need to concentrate on the customer experience.

• Enhancing customer and product acquisition • Converting online engagement into commerce • Improving customer retention rates

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Loyalty Management™ • SECOND QUARTER 2012

Unfortunately, an account linkage problem that occurred last year between Mint.com and Bank of America caused many customers extreme dissatisfaction, which they expressed through Twitter and Facebook. Some threatened to leave the bank. Others claimed Bank of America had told them the bank had severed ties with Mint.com, a mistaken rumor that was often repeated. While the issue was fixed a week later, the dispelling of rumors and inaccuracies came from Mint.com with Bank of America never responding to the surge of customer concern. Interestingly, complaints about Mint.com access through Bank of America spurred a spike in negative comments overall for the bank with customers commiserating on late tax forms, payments not posted on time, failures to send new debit cards and duplicate accounts. The monitoring and analysis of social media data would have helped Bank of America quickly identify customer concerns and track public sentiment about the business. By categorizing large volumes of comments to determine key themes and trends, text analytics could have translated social media data into actionable insights. Companies that use customer feedback to drive service improvements retain customers and deliver a better customer experience. JP MORGAN CHASE INCREASES THE VALUE OF SPONSORSHIP For the past 35 years, JP Morgan Chase has hosted the Corporate Challenge, a series of 3.5 mile footraces in cities across the globe that raise money for local non-profit organizations. By September 2011, more than 226,000 people had participated in the year’s events, which were being held in 12 cities and 6 countries. Sponsorships can be an effective strategy for increasing customer loyalty and enhancing brand recognition in a community, but how can social media play a part in a successful strategy?

Start the conversation early. The Corporate Challenge in Johannesburg was held on March 3, but JP Morgan Chase didn’t post their first comment on Facebook until April 4. At that point, the only comments were from the bank. After April 4, when all the global Facebook fan pages got rolling, the bank enhanced its communications strategy to maximize response. In the new and growing market of Johannesburg, however, the bank missed a key opportunity to build buzz. Drive engagement. Across the Corporate Challenge fan pages for most cities, the number of comments increased dramatically on race day, representing an average of 22 percent of all comments. In Chicago, almost 35 percent of comments were on race day; in Buffalo 28 percent. A large portion of comments on race days reflects a high level of excitement, representing an opportunity for JP Morgan Chase to engage those active participants over a longer period to strengthen relationships, so the event and sponsor aren’t quickly forgotten. Specifically on Chicago’s race day, JP Morgan Chase posted: “Chicago, on your mark, get set and go....it's race day! Who are you running with today?” In addition to generating engagement, this question also targeted two of the strongest features of the Corporate Challenge—team building and company pride. In Buffalo, JP Morgan Chase used social media to quickly respond to participant concerns. When runners worried the race might be canceled due to a thunderstorm, the bank was quick to post on the fan page that the event was still on. Maximize afterglow. One of the most important goals of a sponsorship event is to maximize “afterglow”—the feeling of identification with the event after it has passed. In this case, JP Morgan Chase adopted an excellent strategy to keep people buzzing about the race. Teams were encouraged to participate in a t-shirt contest by designing a shirt with the Challenge’s logo to be worn on race day by the entire team. After the race, participants could go to the bank’s website to vote on their favorite shirt. The two winning teams each won $1,000 for their charities of choice. Not only did the t-shirt contest drive people to the JP Morgan Chase website, but it also dominated the conversation on the fan pages after the race day. In fact, except for the race itself, the most popular topic on each page was t-shirts. Participants urged others to vote for their shirts or applauded the other teams’ creative designs. This type of engagement, begun by the bank and taken up by participants, is the ideal goal of any social media campaign as it generates a strong sense of community and association with the brand. Data analytics help at every step. Worth noting is that data analytics uncovered comments about confusion on how to vote in the contest, which indicates that JP Morgan Chase needs to improve its voting process in the future. American Express Maximizes Facebook Fan Engagement Build it and they will come is NOT true for Facebook fan pages. In fact, fan pages are all about active engagement. The tactical goal is to quickly move through a 3-stage process: building your fan base, getting them to read your posts, and motivating them to actively participate in the conversation.

BUFFALO, CHICAGO, LONDON AND NEW YORK ALL HAD THE MOST INTERACTIVE FAN PAGES, WITH ABOUT 80% OF CONTENT COMING FROM PARTICIPANTS.

continued on next page » Loyalty Management™ • SECOND QUARTER 2012

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The Many Roles Social Media Plays In Loyalty (continued)
Over a month, 5,288 comments were posted to American Express’ Facebook Wall. The post that received the highest number of comments per day and likes per day invited customers to share their weekend plans. It is easy for people to fill in the blank, and describing their weekend is fun to do. As long as the topic is of interest, fill-in-the-blank, true/false and multiple choice questions or statements could all be effective ways to drive engagement on Facebook fan pages. Two other highly engaging posts on the Amex Facebook Wall were:

LESSONS FROM AMERICAN EXPRESS’ LINK, LIKE, LOVE INCLUDE:
1: Design your social media presence with the customer in mind. Create a seamless user experience that drives conversion. 2: Design your program to exploit features unique to social media, such as social networks, viral advocacy, and scalability. 3: Tailor your approach for the target customer. Customized methods can yield greater engagement and use of goods and services.

“Goodbye summer, hello fall— Where will your Amex Card be spotted this season?” “Paris, France…for the holidays” “Home Depot” COMMENTS PER DAY: LIKES PER DAY: 46

26.1

“What summer memories did your Amex Card make possible?” “Celebrating our 50th anniversary” “Margarita Beach …Caribbean!!” COMMENTS PER DAY: LIKES PER DAY: 24.1

customers. Described as “Groupon without the Coupon”, American Express’ Link, Like, Love lets cardholders link their American Express card to a Facebook account. Then American Express delivers deals and offers based on Facebook activity, pages likes and shares as well as the activities of Facebook friends. As we examined the data on Link, Like, Love, we gained insights on the customer experience from acquisition to retention as well as brand advocacy. From these insights, we assembled a picture of the customer experience at each major stage of the program—awareness, registration, initial usage, repeat usage and advocacy. SOCIAL MEDIA IS MORE THAN… Social media is more than a way your customers pass time during the day. It is more than a marketing channel for promotions. It is more than a venting playground for gripers to gripe and moaners to moan. Social media is—and should always be viewed as—a business channel. Monitoring, actively participating in and analyzing data on Twitter, Facebook and YouTube can enable your company to better engage its customers and industry, turn interaction into commerce and acquire new customers. L

28.4

These posts succeeded due to the topics –summer vacation and favorite memories– which were cleverly tied to the product, the American Express card. A different type of fan page post proved engaging too, “Join people from around the world & let’s show Japan our continued support— we’ll donate $1 to earthquake relief efforts for every ‘Message of Hope’ posted!” This type of post appeals to people’s aspirations and the “self” they want to portray online. Disaster relief, community activities, other fund raisers, and travel can be engaging for similar reasons. REWARDS PROGRAMS HINGE ON SOCIAL MEDIA In the area of unique rewards programs that differentiate a brand, attract and retain customers, American Express is a best practice yet again with social media emerging as a key vehicle to engage

Steven J. Ramirez is CEO of Beyond the Arc, Inc., a management consulting firm that combines strategy consulting with advanced analytics to help clients identify opportunities to differentiate themselves in the marketplace. The company’s social media data mining helps clients improve their customer experience across products, channels, and touch points.

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Loyalty Management™ • SECOND QUARTER 2012

At Altair Customer Intelligence we help our clients make informed business decisions through acquisition and interpretation of meaningful customer data. We do this by helping companies assess their data, filter the good from the bad and develop strategies using analytics, measurement, and reporting to optimize results – in an affordable way.

Call us today and let us help you determine who your most profitable customers are. Because at Altair, Everyone Wins!

1-800-241-6631 ex. 6843 www.altairci.com

4 STEP S to Grow & Cultivate your Loyalty Program
FEATURES

JUDY MELANSON

—Chadwick Martin Bailey

A

s I write this, it’s springtime in New England. It’s time to plan the garden. Select the seeds. Prepare the beds. There are limits on everything—time, space, resources. I’m thinking a lot about how I can optimize my resources to get as much benefit as possible.

1

REVIEW YOUR GOALS & THE (COMPETITIVE) LANDSCAPE Before you tackle the issue of “what” and “how much” to offer to members to incent their behavior, take time to review:

“If you persist in trying to be all things to all people, you will fail. The alternative, then, is to be something important to a few people.”— S E T H G O D I N , in We Are All We ird.

In a similar fashion, maybe this is a good time to revisit your loyalty program plan to identify the activities or benefits you’re pursuing that are leading to strong results, building profits and strengthening customer relationships. You’ll also need to keep your eyes open for where you should prune back —reducing resources on the activities or benefits where you’re no longer getting the desired return. Loyalty programs, like gardens, are living entities that require ongoing monitoring and periodic refinements to ensure they grow stronger, continue to operate at peak performance, and deliver the results you need for your business.

Desired behaviors: Are you trying to encourage members to visit more frequently? Spend a bit more? Advocate to friends and family? Customer’s needs: What goals are your members trying to realize? What activities are they passionate about? Brand alignment: How well does your program reflect the unique selling point or values of your brands? Where are the misalignments? Program goals: What key metrics do you measure to report on program success: member acquisition or retention, e.g. the percent of customers who redeem? Competitive activity: What outcomes are these programs focused on? How differentiated is your program from theirs?

2

Loyalty programs, like gardens, are living entities that require ongoing monitoring and periodic refinements
Determining which (and how many) rewards to give your customers, in recognition for their revenue-generating behavior, requires careful consideration of multiple factors. Before you proceed down a “program optimization” path—test the soil. It’s impossible to build a successful garden if you’ve chosen the wrong plants or haven’t added the nutrients your soil needs to support them.

FOCUS The focus of your program may be, clearly, on high-value members. That’s okay. Today’s high value customers are fairly easy to identify; they’re the ones who buy higher margin products, visit you often, and spend in multiple departments and categories. But concentrating solely on these customers means that you may be missing an opportunity to lay the foundation for future success. Consider identifying customers who have high value potential (via predictive modeling) and nurture those relationships as well. In addition, you may find, upon reviewing your goals and objectives, there are certain other segments of customers that matter as well—and for whom you need to focus activities and attention. For example:

Here are the four steps to getting your garden—I mean your program—ready to support future growth:

•  On March 1st, top tier guests at Starwood  (SPG) will benefit from some great program enhancements. Those who stay 50+ nights will get additional points, 10 confirmable suite upgrades, 24-hour access to your room (even if you check in at 9 pm) and free continental breakfast. Relevant benefits that recognize the value of on-property upgrades and experiences to these road warriors. •  Caesars Entertainment’s re-launched its  Total Rewards program to celebrate its position as the country’s leading entertainment loyalty program. The new program

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Loyalty Management™ • SECOND QUARTER 2012

offers additional offerings and experiences designed to appeal to Entertainment Seekers (in addition to the core avid gamer); their relaunch included concerts by Cee Lo Green, Mariah Carey, P.Diddy and Gavin DeGraw. •  Best Buy recently gave select members of  its Reward Zone loyalty program a ‘surprise and delight’ reward, a ticket to the Twilight premier. Sales remain the driving force behind their points-based loyalty system, but in surprise-and-delight programs, marketers can choose consumers who might be major spenders but also because they’re passionate or the kind of people who drive incremental buzz online. They’re using this approach to build greater

In surprise-and-delight programs, marketers can choose consumers who might be major spenders but also… people who drive incremental buzz online
engagement among high-value customers and create more PR-worthy and effective programs in a crowded loyalty space. We built a garden in a 10’x10’ raised bed last year, so I need to focus on plants that produce with enough regularity to justify their presence in my garden. Pepper plants—with their long grow cycle and minimal fruit per plant just don’t cut it. Zucchini—requires a bigger footprint, but garden gods willing, we’ll be eating its fruit all summer long. Focus on the people that are aligned with what you are trying to do. DIFFERENTIATE AND INNOVATE Colloquy’s report on the state of the loyalty industry finds the average US household has 18 loyalty program memberships.1 Eighteen!

3

If your program is purely a frequencybased program, differentiation isn’t your goal. However, dialing up program innovation to differentiate from competitors may prove valuable if your desire is to create loyalty, drive incremental spending, stronger customer engagement, and additional brand advocacy.

I love home-grown vegetables: Derby beans, Tendersweet carrots, Big Boy tomatoes. The varieties I pick are those that do well in my garden and that I can’t buy in a store. Although I love to garden—if the only product I could grow was one that I could easily buy, I may reconsider the time I was willing to invest. My pride in this activity would decrease and I’d tell fewer people about my garden. For the members you’ve
1

4

decided to focus on, differentiate your program from competitors. Give your members a reason to return—pride in their association with you and something to talk about! OPTIMIZE PROGRAM BENEFITS You’ve reviewed your objectives and the competitive landscape. You’ve targeted specific members and have embarked on a program to identify innovative ways to differentiate yourself in the marketplace. What now?

To justify changes in your program, you’ll probably need to articulate the incremental value the additional benefits will deliver. You’ll certainly need to do that if the additional benefits require additional investment—or if you are working with franchisors who demand financial justification to justify additional investment! Over the last ten years, we’ve worked with industry leading programs to analyze the cost-benefit of program benefits to support program development or refinement.
continued on next page »

Kelly Hlavinka & Jim Sullivan, "The Billion Member March: The 2011 COLLOQUY Loyalty Census," Censustalk, April 2011, http://colloquy.com/files/2011-COLLOQUY-Census-Talk-White-Paper.pdf

Loyalty Management™ • SECOND QUARTER 2012

25

Four Steps to Grow & Cultivate Your Loyalty Program (continued)
Here are a few examples where we conducted quantitative research using advanced analytics: •  A leading upscale hotel chain  needed to figure out an on-property benefit it could provide in place of a guaranteed suite upgrade since the upgrade wasn’t a viable option at some of their hotels. An alternative was identified and members are given the choice at check-in. •  As it develops and acquires  new brands, this hotel loyalty program needed to identify the right type and level of benefits to offer at to guests at its extended stay hotels—benefits that would be of value to guests who stay, on average, for two weeks at the hotel. providing those benefits— brands can identify the best programs in terms of profit (‘high customer value’ and ‘low cost’), or for other key outcomes like member acquisition, increasing take rate from competitor’s customers, etc. about your program, the benefits it offers and the potential that exists. Focus on what—and who—is most important and pruning back where you may be over-delivering can help ensure that your program grows stronger, operating at peak performance, and delivering the results you need for your business. L

2: Estimate the shifts in •  A leading luxury retailer  market share that could result wanted to optimize structure from changes to program to drive incremental sales and benefits. refresh benefits to incorporate 3: Examine incremental spend •  As it expands around the globe,  more brand-relevant experiential —attributable to program elements for the refresh of its this travel loyalty program benefits—from a couple flagship shopper loyalty program. different angles (e.g., related needed to ensure that the program developed in the US Advanced analytics are a great to tier benefits and presence had equal value and relevance tool for loyalty program optimiof program). for guests living outside the US. zation because it allows us to: The core benefits resonated in 1: Optimize the program based If you’re looking to optimize your international markets but on specific goals: By examining loyalty program resources to get opportunities to increase member interest in thousands as much benefit as possible, relevance were addressed of alternative benefit packages— following this four step plan may through focused marketing and calculating the cost of cause you to think differently communications.

Clients such as the Hilton Family of Hotels, Royal Caribbean, MTV, and Avis/Budget Rent-a-Car frequently call upon Judy Melanson for the experience, insight, and focused use of market information she employs to drive strategy on their highest visibility research projects.

FEATURES

Extracting Insights: Using Data Analysis To Increase Customer Acquisition & Purchase Frequency
CURT WOODS

—Buxton

E

ven when your marketing program is delivering excellent results, it’s always a good idea to ask: “What could we be doing better?”

the unique attributes they shared,” said Haug. “We also needed to improve our campaign tracking and analysis. We had no way of knowing who redeemed our offers and who didn’t.” For assistance, Rug Doctor turned to an expert in customer analytics: Buxton of Fort Worth, Texas. “We were impressed with Buxton’s mastery of data and their track record,” said Haug. “We felt like they could help take our Customer Relationship Management program to the next level.” UNDERSTANDING CUSTOMERS LIKE NEVER BEFORE For the analysis of Rug Doctor customers, the rental receipts proved to be invaluable. Selected receipts from different parts of the country were scanned, coded and sent to Buxton for analysis. This rental data was combined and cross-referenced with other consumer databases to gain a more complete understanding of Rug Doctor customers. This analysis included basic demographic information like age, race, income and family size, but extended far beyond that into psychographic factors like customers’ hobbies, purchasing behaviors and media preferences. The result of this extensive analysis was a

A prime example is Rug Doctor‰, a company that was experiencing healthy sales growth and an expanding sales network. Rug Doctor also possessed the most important factor in brand loyalty: satisfied customers. Surveys consistently showed that Rug Doctor customers were very happy with the company’s hot water extraction carpet cleaning machines and products. “Despite all this, we knew that there was a significant upside if we could better leverage all the customer data in our database” said Walter Haug, Vice President of Marketing at Rug Doctor. The company certainly had plenty of customer data: each time someone rented a carpet cleaning machine from Rug Doctor, he or she filled out a rental receipt. For its direct mail programs, the company used this rental data for customer retention, and purchased mass mailing lists for customer acquisition. To Haug, these scenarios were a great start, but not ideal. “We knew who our customers were in a broad sense, but we needed to know them in an individual sense, including

“best customer profile”—a detailed, in-depth picture of the most loyal and profitable Rug Doctor customers. With this customer profile in hand, the company was in a position to execute a multi-faceted marketing plan to: •  Acquire new customers.  The profile allows  Rug Doctor to search any trade area in the United States for people who share the “best customer” attributes. Since these potential customers are very similar to existing customers, there is a strong likelihood that they will have a strong propensity for the Rug Doctor product. •  Increase purchase frequency.  The data  analysis predicts the best time to target a current customer with a special offer. By sending the right offer at the right moment, Rug Doctor hopes to convince customers to clean their carpets earlier and more often. •  Optimize Rug Doctor locations.  Rug Doctor  uses a direct store delivery network, which gives it a special relationship with its retailers. Each store is served by a company employee who services the machines, stocks the cleaning supplies and checks in with the store manager. As a result, Rug Doctor knows each store and its needs individually. Now, the company can take its retailer knowledge to an even deeper level. For any location

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Loyalty Management™ • SECOND QUARTER 2012

in its network, Rug Doctor can quickly see—at the household level—how many current and potential customers live nearby. Rug Doctor can examine trade areas for oversaturation, explore the impact of competitors and pinpoint areas where it could use more retail locations. “By putting our products where the need is, the customer wins, the retailer wins and we win,” said Haug.

for response rates and return on investment. “We’ve done effective marketing programs before, but now the targeting will be so much more precise, and the analysis will run so much deeper,” said Haug. “We’ll learn something new with every piece of mail we deliver.” MANY OPPORTUNITIES GOING FORWARD The relationship between Rug Doctor and Buxton shows that, even if you’re a well-established and highly successful company, you always have new things to learn. “Rug Doctor is always open to new ideas, and we feel that this is a terrific next step for us,” said Haug. “We’re extremely excited by the possibilities of our relationship with Buxton in the future. We can’t wait to see where it leads.” ABOUT RUG DOCTOR A 40-year-old company based in Plano, Texas, Rug Doctor invented the do-it-yourself rug cleaning industry, and has grown from a regional, west coast firm to an international manufacturer and marketer of hot water extraction carpet cleaning machines and products. Today, Rug Doctor provides more than 5 million rentals a year in 35,000 locations, from grocery stores to home improvement centers. L

We knew who our customers were in a broad sense, but we needed to know them in an individual sense”

—Walter Haug, VP of Marketing at Rug Doctor
A HIGHLY TARGETED “TEST AND LEARN” STRATEGY Using the information in the customer profile, a targeted direct mail campaign is now being developed to increase frequency of purchase and speed customer acquisition. Small mailings with a variety of offers will be tested to determine which messages and creative packages are most effective at generating response. “The idea is to test and learn as fast and we can, and not invest heavier dollars until we know which offers and creative packages really work,” said Haug. Once it is determined which message/offer mix is most effective for both frequency and acquisition, the direct mail campaign will be expanded nationwide. With each mailing, customers who redeem offers will be placed back into the database, allowing Rug Doctor to learn even more about Rug Doctor customers and their unique attributes. Each campaign will be analyzed carefully

Curt is the Chief Customer Officer for Buxton, leading all customer-facing teams within the organization. Curt can be reached at cwoods@buxtonco.com.

FEATURES

Experiential Programs: Rewarding Customer Loyalty One Unforgettable Experience at a Time
JAMIE COMISKEY

ences across member passion points: music, sports and the arts,” said Gretchen Kloke, Starwood’s Vice President of Global Loyalty Marketing. SPG members are given the opportunity to redeem rewards points, known as “Starpoints”, for SPG Moments via an auction model; yet this is not the only manner in which loyalty programs can incorporate experiences into their overall strategy. While there are brands that utilize the same strategy as Starwood of offering experiences as an addition to a rewards catalogue, others choose to offer experiences as an “invitation-only” offering to reward their best customers. Employers are also increasingly using experiences as rewards/ recognition for high-performing employees. The types of experiences that resonate with customers cover a wide range of categories, depending on the customer demographic. Research conducted by VIPdesk reveals that the most sought-after experiences are those in the categories of travel and adventure, dining / culinary, and arts and culture (8%)3, a trend which is also reflected in Starwood’s experience: some of the most popular SPG Moments have included meeting world-renowned chef Thomas Keller at French Laundry in Napa Valley, and brushing up on serving skills with tennis pro James Blake on the courts of Arthur Ashe during the US Open. WHY EXPERIENCES? Offering an experiential component to a loyalty program provides a way to ensure that your customers will remember and talk about your brand for years to come. No matter where they are demographically, the mass affluent to the ultra-affluent, you can incentivize someone with experiences much more so than you can with a piece of merchandise, an appliance or a gift card. There are five primary benefits of adding experiential offerings to a customer loyalty program: 1: Customer engagement & loyalty. In a recent survey, “customer engagement” was reported to be the major benefit realized through inclusion of experiential rewards in a loyalty program.4 According to Starwood’s Gretchen Kloke, “travelers want choices, control and personalized service.” 2: Word-of-mouth advocacy. Rewards program members are 70% more likely to be brand advocates via word-of-mouth, while those who have redeemed for experiential rewards are EVEN 30% MORE likely to advocate for the brand.5 After

—VIPdesk

E

xperiential programs—unforgettable, exclusive events, ranging from unique access to once-in-a-lifetime, money-can’t-buy occasions—have been an important part of the customer loyalty landscape for over a decade. Recently there has been an increasing amount of interest in this topic as major brands including Hilton, MGM Resorts, Leading Hotels of the World, Discover and the Ritz Carlton have revamped their customer loyalty and rewards programs to make experiences a more central focus of their loyalty offering. TODAY,

OF ALL LOYALTY PROGRAMS OFFER AN EXPERIENTIAL COMPONENT AND OVER HALF OF THOSE LOYALTY MARKETERS THAT DON’T HAVE AN EXPERIENTIAL COMPONENT, PLAN TO OFFER ONE IN THE NEAR FUTURE.

30%

Today, 30% of all loyalty programs offer an experiential component and over half of those loyalty marketers that don’t have an experiential component, plan to offer one in the near future.1 More than a decade ago when experiential programs first started gaining traction as a component of loyalty programs, they were designed for affluent consumers. However, for the past five years, experiences geared towards mass markets have increased in popularity: of loyalty programs that include experiential rewards are offered to all program members Only limit experiences to a subset of membership. 2 One early adopter of experiential rewards is Starwood Hotels and Resorts, which added an experiential component, branded “SPG Moments”, to the Starwood Preferred Guest (SPG) program in 2007. “Moments was created as an exclusive program for members of SPG in which Starpoints can be transformed into unparalleled experi-

43% 13%

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Loyalty Management™ • SECOND QUARTER 2012

their experience, your customer will share their experience with their social network via tools such as Facebook, Twitter, Tumblr or a blog, promoting the positive experience with their social network—giving your brand exposure and credibility in a way that you alone could not. 3: Brand identification and perception. A relevant experiential offering will influence the perception that consumers have of your brand: both loyalty program members and non-members alike. One successful example of experiential offerings that drove brand perception is the Barclaycard “NFL Extra Points” Visa card, launched in September 2011. Cardholders were given the opportunity to redeem points for a once-in-a-lifetime opportunity, such as going on the field during half-time at the Super Bowl. The NFL Extra Points card appeals to football lovers due to the experiences that they offer their members, as well as drives card spend, due to the desire of cardholders to earn the rewards offered. 4: Financial benefits. There are three financial benefits that an experiential offering will provide: increased member acquisition/ enrollment, increased point earn by members, and increased points redemption. 5: Stand out from the competition. Over 85% of consumers are members of at least one loyalty program6—meaning that it is necessary to stand out from the crowd. According to Starwood’s Gretchen Kloke, “We want to reward our members for their dedication to Starwood’s nine brands and make the SPG experience so rewarding that it’s impossible for travelers not to choose Starwood.” PROVEN RESULTS: CUSTOMER SATISFACTION Since including experiences into their overall loyalty program, Starwood has seen an increase in customer loyalty. Today, one out of every two guests staying in a Starwood hotel anywhere in the world is a member of the Starwood Preferred Guest program, which has increased from 33% just five years ago when the program was launched. However the real results are proven every day by customers who are engaged with the Starwood brand in a manner they otherwise wouldn’t. Says one member of the Starwood Preferred Guest program, “Being part of the SPG family opens up a lot of opportunities you wouldn't otherwise experience or even buy." L

Getting Started with the “Three D’s”
There are three phases of developing an experiences program: Discovery, Development and Delivery.

Phase 1: Discovery.
The Discovery Phase helps to determine your program goals, budget, redemption platform and frequency and volume of offers. This is also where you will identify the target audience, demographics and spend trends; as well as determine the overall “feel” of your program: how exclusive will it be and how it will be promoted and communicated consistently, all while incorporating and promoting your overall brand identity.

Phase Two: Development.
This is where you determine how you will implement your program, and map out program best practices and service delivery. Considerations at this point include the price-point and access level for packages, the entire redemption process, and establishing sourcing and approval standards.

Phase Three: Delivery.
This phase encompasses all aspects of not only the actual experience execution but also day-to-day program management. Included are key program considerations such as customer communication, agency interaction, on-site staffing and post-event activity such as customer satisfaction surveys, follow-up and program marketing.

Jamie Comiskey, Vice President for Experiential Marketing with VIPdesk, leads the team responsible for VIPdesk Experiences, a turnkey, scalable solution for customer loyalty, rewards, recognition and point redemption programs.

1

VIPdesk research conducted November 2011 VIPdesk research conducted November 2011 3 VIPdesk research conducted November 2011 4 VIPdesk research conducted November 2011 5 “New Champion Customers”, Colloquy, 2007 6 June 2011 Capital One Rewards Barometer
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Loyalty Management™ • SECOND QUARTER 2012

31

FEATURES

T.G.I. Friday’s partners with Travelocity
T.G.I. Friday’s partners with Travelocity to offer loyalty members a chance to experience that Friday feeling—any day of the week, anywhere in the world.
BRIAN KUTERBACH

—Carlson Restaurants

EVERYONE NEEDS A BREAK SOMETIMES.

Whether it is a cocktail at happy hour or a beachfront vacation getaway, we know our guests have an ideal destination where they like to unwind and recharge their batteries. Recently, T.G.I. Friday’s® partnered with Travelocity to offer its loyal customers the chance to enjoy both.
T.G.I. Friday’s guests are able to join its Give Me More Stripes® program to earn points toward free food, receive exclusive membership perks and participate in exclusive events and promotions. Earlier this year, we partnered with Travelocity to offer Give Me More Stripes members a chance to win one of four weekly trips for two anywhere in the world and daily prizes of $100 Travelocity Gift Vouchers. Our objectives for this campaign were to offer a great value to members, drive restaurant visits and increase membership. To enter to win, existing members could dine at any of our U.S. locations. Those who became new members received an automatic entry when they signed up for the loyalty program. To make it easy for new members to join, we took advantage of existing platforms where guests could sign up including QR codes on in-restaurant point-of-purchase materials, via SMS (text JOIN to 698443), online via www.givememorestripes.com, and an application on in-restaurant Jukeboxes (where available). To promote the program, we activated a full media integration with messaging and engagement through www.tgifriday.com, mobile texts, wwwgivememorestripes.com, and social media platforms. The sweepstakes was also featured in our e-newsletters and “thanks for playing” triggered emails were sent to members after they entered to win. We were successful in achieving our enrollment goals with 18,400 QR scans and more than 86,000 new loyalty members. The Travelocity partnership not only provided an exciting sweepstakes prize package, but also delivered brand trust and relevancy, use of a highly recognizable brand icon in the Travelocity Roaming Gnome and tens

of millions of impressions on Travelocity’s website, e-newsletters, Facebook and Twitter posts. If you are looking to enhance your loyalty program, here are a few best practices we recommend. FIND A LIKE-MINDED PARTNER

At first glance, T.G.I. Friday’s and Travelocity might not have much in common. But if you dig a little deeper and examine the brand promises from each, you begin to see many logical symmetries. Friday’s is known for its great social scene, with a contagious enthusiasm in an environment that always feels like happy hour on a Friday afternoon. Similarly, Travelocity is known for its quirky brand personality and ability to help travelers find the ideal destination and accommodations for a top-notch vacation and getaway from the everyday. Both brands offer an experience and focus on excellent service. Additionally, each company serves a similar audience demographic: consumers ages 21 to 45 who want to socialize and feel liberated from the everyday grind. COMPLEMENT THE IN-STORE (OR IN-RESTAURANT) EXPERIENCE

When considering a big-ticket prize that will drive loyalty members to participate in a sweepstakes, find a way to extend an element of your brand that consumers already appreciate. When guests enter a T.G.I. Friday’s, they know they can expect great service, a lively crowd and stellar cocktails. With this promotion, we wanted to offer a prize that would enhance this experience. Taking the notion of happy hour a step further, a trip for two to anywhere in the world offers the same opportunity to re-energize and let loose but takes it to the next level. UNDERSTAND YOUR AUDIENCE The only way to incentivize existing loyalty members and encourage new members to join is by showing them that your brand understands their lifestyle. We knew that while our loyalty members appreciate the exclusive rewards, they are often looking for a more experiential connection to the Friday’s brand. The perfect option that enhances our guests’ experience with us and gives them even more of that Friday’s feeling was through a chance to travel to any destination in the world. L

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Loyalty Management™ • SECOND QUARTER 2012

T

he only way to incentivize existing loyalty members and encourage new members to join is by showing them that your brand understands their lifestyle.

Brian is director of partnership, licensing and gift card marketing at Carlson Restaurants. In this role, Brian is responsible for forging strategic business relationships that extend the T.G.I. Friday's® brand and reinforce its promise of providing an energizing Friday feeling—any Loyalty360_2012_3_Layout 1 12-03-30 10:16 AM Page 1 day of the week.

Dare to be different!
You don’t have to settle for a “me too” program. Discover loyalty strategies that stand out. At Fairlane Group, it’s all about results!

Engaging People for Better Results Loyalty • Incentives • Recognition www.fairlainegroup.com For more info, please contact blue sh@fairlanegroup.com 905-669-9194

TECHNOLOGY, TRENDS & REWARDS

PLINK – Facebook credits-based online-to-

offline loyalty program

Launched in late January, Denverbased Plink is a Facebook Creditsbased loyalty program that rewards Facebook members for dining and making purchases at restaurants and offline retailers. The company believes the social network’s virtual currency has tremendous potential to influence loyalty by connecting social media marketing to offline sales. It is hard to imagine, but U.S. consumers spent $2.2 billion on virtual goods last year and is expected to reach $2.9 billion this year, according to Inside Network. Facebook Credits, the growing driver of this phenomenon, already represents 15 percent of Facebook’s revenue. Consumers use Facebook Credits to buy virtual goods and advance in popular Facebook games. Today, more than half of Facebook’s 800+ million users play social games. In addition, Facebook is constantly adding new ways to spend Credits including downloading music, watching movies or TV episodes. In 2011, we began to see a glimmer of what Credits will look like when it grows up. While most Facebook users don’t know what Credits are used for, this year that will change, especially after Facebook’s IPO. At launch, Plink’s online-to-offline loyalty program included 7-Eleven, Dunkin’ Donuts, Outback Steakhouse, Quiznos, Red Robin and Taco Bell. Recently, Plink added Arby’s and enables Plink members to earn Credits at more than 28,500 locations nationwide. Plink members join at Plink.com through Facebook Connect or sign-up form, safely and securely register the credit or debit card of their choice, and begin earning Facebook Credits by dining-out or making purchases at participating partners. As an example, spend $5 at Arby’s and earn 10 Facebook Credits. National restaurant chains are the initial focus of Plink, but the company’s goal is to have a partner representing every major offline category. The company believes Credits is the missing ingredient that’s been needed for offline businesses to tap into Facebook.

Loyalty
MICROSOFT – Cross-channel and multichannel
capabilities at POS
Today’s retail paradigm—with digitally empowered consumers who have so many choices about what to buy and where to buy it—has put increased pressure on retailers to build lasting customer loyalty by keeping up with fast-moving trends and exceeding shopper expectations. Microsoft Dynamics AX 2012 for Retail offers a solution to help retailers deliver a customer-centric and connected multi-channel experience that keeps the retailer at the forefront of the consumer’s mind, reaching them how, when and where they shop. Now available in more than 25 countries, the new product provides enterprise and midmarket retailers with an end-to-end solution that includes cross channel capabilities, social and mobile commerce, enriched point of sale, and powerful enhancements for merchandising to deliver a complete shopping experience. It enables retailers to build loyalty and engagement by helping deliver uniquely consistent, convenient and personalized experiences for shoppers, enabling employees to offer higher levels of customer service, and boosting a retailer’s ability to deliver on brand promise through proactive execution. Retailers worldwide, including AkzoNobel Decorative Paints, Ashley Furniture Industries, DavidsTea., Kwit-Fit Nederland Groep B.V., Malabar Gold, Mattress Firm, P.F. Chang’s China Bistro Inc., Simon Pearce and Turisme de Barcelona, have chosen Microsoft Dynamics AX for Retail during the past year. Retailers interested in learning more about Microsoft Dynamics solutions for the retail industry can visit http://www.microsoft.com/ en-us/dynamics/erp-ax-retail.aspx.

EPICOR – Retail Clienteling
One of today’s “killer apps” that’s taking customer engagement and loyalty to new levels is the Epicor Retail CRM Clienteling module— a new mobile app designed for tablet devices, which delivers critical insight on customer’s purchase history, product preferences, and personal attributes directly into the hands of sales associates on the floor. Optimized for the Apple® iPad®, Clienteling assists retailers with building closer customer relationships while boosting the bottom line. The solution enables retailers to provide a much higher level of personalized service to each shopper who steps into the store resulting in an ultra-personalized shopping experience. Clienteling allows retailers to leverage customer information gleaned from previous purchases made in any channel— store, e-Commerce, m-Commerce, kiosk, etc. By capturing the customer’s patterns, history and habits based on information constantly gathered within a live, multi-channel CRM database, it is able to provide visibility into a shopper’s ‘virtual closet’—

showing specific images of items previously purchased. Understanding the individual’s specific style, sizes and preferences enables associates to cross-sell, up-sell and foster a richer, more personal engagement that inspires loyal customers to return through store doors. Epicor Retail solutions and services are trusted by hundreds of the world’s leading retailers to drive increased efficiency and profitability, and inspire their customers to build longlasting relationships. Epicor Retail software solutions are designed and proven to meet the evolving merchandise and service expectations of today’s cross-channel shoppers and the business requirements of the most demanding retail environments. Epicor retail customers include hundreds of marquee names, from Aéropostale to Zales.

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Loyalty Management™ • SECOND QUARTER 2012

Innovation
PRODUC TS, A DVA NC E M E N TS, & T EC H NOL O GI E S

PROPCO – A new approach to companion air
Customers love companion air tickets, but not when they come with frustrating restrictions. Propco’s new Companion Plus program reshapes this popular reward without the usual limitations—and gives users the guaranteed lowest price for two tickets. With easy-to-navigate 24/7 online booking, customers can choose their airline from 19 domestic airline partners—including most major and low-cost carriers—and 40 international airlines, with no blackout dates. Propco’s Companion Plus booking engine steps up customer choice, allowing redeemers to choose outbound and return flights independently and filter based on price, airport, number of stops, and departure and arrival times. Customers can even mix and match airlines and input their frequent flyer numbers. For customers who prefer to redeem by phone, Companion Plus offers an in-house, bilingual call center. Companion Plus’s ease of fulfillment makes it as welcome to marketers as to customers. Redeemers access the booking engine through unique PINs or codes designated for one-time or multiple use, depending on your business’ needs. Multiple delivery options include direct mail, email, statement inserts, ads, mobile marketing, and more.

CODEBABY – "Interactive Virtual Assistants"
Customers don’t just want to be pleased—they want to be engaged. Recent trends show that customers have high expectations for online brand engagement, but at the same time want an efficient online experience. They don’t separate site navigation, helpfulness, and ease of use from the product or service you sell. In fact, a Harvard Business Review study found that “...customers who attempt to self-serve, fail, and are forced to pick up the phone, are 10% more likely to be disloyal than customers who were able to fully resolve their issue in their channel of choice.” So you know you have to get it right the first time. You’ve probably learned that emotion is a key driver in turning customers into loyal advocates. Emotion also influences buying decisions. Imagine extending a positive web-based emotional experience with a 3D, interactive, virtual assistant. Extensive research by Byron Reeves at Stanford University found that interactive characters who express social roles, emotions, and organized personalities that match a company’s brands and transactions, motivate online decisions. In addition, he discovered that interactive virtual assistants encourage customers to return over time and increase the trust of online information. At CodeBaby, they’ve built these attributes into interactive virtual assistants. They demonstrate human expressions, gestures, animations, textures, voices and scripts but avoid the creepy Uncanny Valley. Additionally, the character conversations are carefully mapped out to optimize the online experience by helping customers navigate, select products, get answers, browse and shop, fill out forms and register for loyalty programs. Customer experience and loyalty managers now have a new tool to transform online transactions into social conversations in the customer’s channel of choice.

Clienteling allows retailers to leverage customer information gleaned from previous purchases made in any channel

continued on next page »

Loyalty Management™ • SECOND QUARTER 2012

35

Loyalty Innovation (continued)

FIR ST DATA O FFERW ISE PL ATFO R M DELIVER S “ U NIVER SA L COM M ERCE” E A SE FO R M ERCH A NT S , CO NSU M ER S
Move over printed coupons and offers, First Data has launched First Data OfferWise, a new open platform that dramatically simplifies the offer redemption process for consumers and merchants—streamlining and automating the offer redemption at the point of sale (POS). This advancement allows offer publishers to electronically attach offers such as deals, e-Coupons and loyalty programs to one or more of a consumer’s payment cards or mobile wallet. Developers can easily integrate into the OfferWise solution and allow offer publishers to close the loop between online and mobile distribution of offers and in store transactions thanks to a breakthrough Application Programming Interface (API) developed by CardSpring. The standard API enables merchants to work with their offer publisher of choice and provides an open platform that enables any publisher to deliver online/ offline marketing and commerce applications. First Data believes OfferWise is fundamental to today’s age of Universal Commerce, a new reality where consumers expect a more integrated buying experience that’s quick and consistent everywhere. Merchants can now dramatically simplify the offer redemption process for their customers by linking directly to any type of payment card. Offers are redeemed in real time at the merchant’s POS with immediate feedback provided through the payment terminal or smartphone. For consumers, they no longer have to print off copies of their purchased online offers or other coupons and bring them to the merchant’s location; instead, they can link their offers directly to Consumers explicitly need to accept and can remove individual offers or loyalty programs. Additionally, the platform leverages the First Data® TransArmor® solution that uses a combination of tokenization and encryption technologies to secure sensitive payment card data. WhaleShark Media, developers of RetailMeNot.com, was the first offer publisher to launch a project using the OfferWise solution, which the companies chose to launch at the SXSW Interactive Festival. any type of payment (credit, PIN or signature debit, mobile wallet) and redeem them automatically at the point of sale. The OfferWise solution was built from the ground up to protect consumer and merchant privacy. Both merchants and consumers control access to data and applications, providing a strong opt-in model and protected consumer experience.

CO NSU M ER INSIG HT A N D SEG M ENTATIO N USIN G FACEB O O K DATA
MicroStrategy Wisdom The Wisdom for Facebook application leverages the rapidly growing 5 million-strong Wisdom Network to deliver extraordinary insights derived from users' Likes, interests, and preferences. Wisdom allows you to dive into the Social Graph to discover peoples’ preferences based on their actual “Likes” and sit behind the controls of one of the most powerful recommendation engines ever built. It allows users to segment Facebook information in a myriad of ways and discover an almanac of information on millions of topics. According to Michael Saylor, MicroStrategy founder and CEO, "Wisdom for Facebook is a collective intelligence application that gives you a level of insight never before possible— powered by the Likes of millions of fellow users.”
TM

MicroStrategy Wisdom allows you to get to know your Facebook app users as well as their friends do. Segment your users based on their interests and motivations. Find out what activities they enjoy, places they like to go, and recent milestones in their lives. Use Wisdom to target segments with personalized content, special offers, and recommendations based on who they are, where they come from, and what they like. Available at www.wisdom.com, on iTunes, or through a user's Facebook log in at: http://apps.facebook.com/wisdomapp. MicroStrategy Alert—Personalized Marketing and e -Commerce for Facebook Fans With MircroStrategy Alert organizations are able to build mobile applications tied into loyalty programs and Facebook accounts. Alert adds marketing and commerce features to a brand’s Facebook page to personalize the consumer experience, increase fan engagement and monetize a fan base. Turn fans into friends with highly personalized interactions that are driven by deep fan insight and segmentation.

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Loyalty Management™ • SECOND QUARTER 2012

TECHNOLOGY, TRENDS & REWARDS

I N S I D E S C O O P:

S V M : A New Coalition for Fuel Rewards
Loyalty 360 Interview w i t h J O H N C U L L E N —SVM

G

ift and prepaid card provider SVM LP has formed a new business unit that will focus on gasoline rewards. The new business, named FuelCircle, will initially use SVM's relationships with oil companies like BP, Chevron, ExxonMobil and Sunoco to create a branded, nationwide network for the redemption of stored-value, fuel rewards. FuelCircle will target multi-channel reward issuers for a collaborative, loyalty platform. In a Q&A with Loyalty Management, Vice President and General Manager of SVM, John Cullen, discusses the value that this new coalition will bring to the US marketplace.
THE TIMING OF FUELCIRCLE SEEMS PERFECT; AT A TIME WHEN GAS PRICES CONTINUE TO SKYROCKET AND WE SEE MORE AND MORE ON THE NEWS ABOUT HOW PEOPLE ARE MAKING CONSCIOUS DECISIONS ABOUT WHERE THEY PURCHASE GAS BASED ON THE HIGH FUEL COSTS, IT SEEMS A PROGRAM LIKE THIS COULD REALLY HELP EVERYONE. AS A CONSUMER, HOW DO I BECOME A PART OF FUELCIRCLE AND WHAT'S THE BENEFIT TO ME?

WHERE DO I LEARN ABOUT THE OFFERS AVAILABLE TO ME? As a consumer you will learn about offers at participating FuelCircle retailers, their websites, existing consumer driven retailer marketing communications and the 40,000 gasoline stations in the network. FuelCircle will support our participating retailers on the FuelCircle website as well as on the FuelCircle/Retailer consumer portal where the consumer will be able to see existing FuelCircle offers across the network for all kinds of products from grocery items to tires and office products to mattresses. Additionally, the FuelCircle mobile application will support offers “near me” and also provide nearby price per gallon information so that the consumer can make an informed decision for gasoline purchase/redemption. HOW DO I RECEIVE MY REWARDS? After registering, consumers shop the FuelCircle network, earn points for qualifying purchases and when a pre-established points threshold is exceeded, points are automatically converted to dollars and loaded electronically, in real time, on the consumer’s FuelCircle gasoline reward card. Retail receipts indicate points earned on the current shopping trip, total points and the dollar balance on the reward card. Additionally, opted in consumers are notified by SMS message, email or both when new rewards have been earned and their reward cards have been reloaded. THE GOAL IS TO HAVE A COALITION OF MERCHANT PARTNERS. AS A RETAILER, WHAT ARE THE BENEFITS FOR ME TO PARTICIPATE? Recent research by Colloquy indicates that the average US household is a member in 18 loyalty programs, active in 8, and our own research indicates they are avid participants in only 2 or 3. Why the consumer apathy? We believe that main culprit in the loyalty landscape today is anemic rewards. The coalition solves for this since consumers can go about their every day purchasing at FuelCircle merchants and accumulate rewards across the network. FuelCircle allows the retailer to fund rewards at a level that they can afford, which increases retailer ROI and improves promotion efficiency. Further, FuelCircle retailers of all types and sizes share in the positive halo-effect created as consumers redeem earned rewards for something they want and need, gasoline. CAN THIS EASILY INTEGRATE INTO AN EXISTING PROGRAM OR IS IT BEST SUITED AS A STAND-ALONE OFFERING? What we have built is a flexible solution that is consumer focused. For those who see gasoline as an incentive that they would like to leverage all year long, FuelCircle can easily integrate into an existing program or allow their consumers to redeem existing point balances for FuelCircle reward cards. However, since FuelCircle retailers will be participating in a wider coalition of FuelCircle point issuers, the program is perfectly suited for those retailers that find our program better suited for seasonal or event marketing strategies.

You’re absolutely correct. This year gas prices have already approached the record highs we saw in 2008 and we know that consumers make conscious decisions based on the impact gas prices have on their disposable income. Statistically speaking, we travel less, eat out less, buy fewer groceries, combine trips and reduce overall spending to a degree. Consumers become members of the FuelCircle program via a simple registration process that occurs in the lane at a participating FuelCircle retailer. FuelCircle does not require the issuance of a separate loyalty card as we have a database solution that will cross link the consumer’s existing retailer loyalty card information to a unique FuelCircle ID number. For retailers that do not have a loyalty card, we provide one or allow the consumer the option of registering with an alternate ID, like a phone number or email address. These registration options are supported by the FuelCircle technology solution that is easily integrated into the retailer’s POS system. The benefit to consumers is free gasoline. Once registered, they simply shop participating FuelCircle retailers where they earn and accumulate FuelCircle points and then redeem those points for gasoline at one of the 40,000 branded gasoline stations in our network. WHO HAS FUELCIRCLE PARTNERED WITH IN CREATING THIS EXTENSIVE NETWORK? FuelCircle has partnered with Chevron, Texaco, BP, ARCO, Exxon, Mobil and Sunoco to create the first ever nationwide network for fuel reward redemption.

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Loyalty Management™ • SECOND QUARTER 2012

AS A MERCHANT PARTNER, WILL I BE ABLE TO TARGET SPECIFIC CONSUMERS/CONSUMER GROUPS OR WILL MY OFFERING HAVE TO BE THE SAME AND OFFERED TO EVERYONE? The FuelCircle promotion engine supports full customization. So to the extent that the retailer has segmented data that can target various consumer groups, FuelCircle will support this same level of execution. Additionally, as consumers opt into email, SMS or MMS messaging or turn “on” notifications when using our smart phone application, we will have the ability to target consumers that are participating in the FuelCirlce program and provide real-time, relevant, selfselected consumer offers. WHAT SETS FUELCIRCLE APART FROM OTHER FUEL BASED OFFERINGS? A number of things. First and foremost, the nationwide network of trusted, branded gasoline partners. It is this network that has allowed us the opportunity to have a real dialogue with retailers that also have a national footprint and want to leverage the power of gasoline as an incentive. Second, we have built a low cost, royalty-free and technologically stable solution on both the issuance and redemption side of the equation. Lastly,FuelCircle has in its network, non-competing multi-channel retail participants that allow the retailers to stop sharing their customers with their competitors by leveraging the high value consumers place on fuel, and for the consumer; they’ll be able to take control of their gasoline expenses by CHC369_Advert:CHC352 Advert 4/4/12 10:32 AM Page 1 shopping the FuelCircle network and earning real discounts off gasoline.

HOW IS THE FUELCIRCLE TECHNOLOGY UNIQUE AND HOW DOES THAT BENEFIT RETAILERS AND CONSUMERS? As we went about scoping our technology solution, our emphasis was on ease of use and simplicity. This extends from initial deployment to the day-to-day use of the promotion engine which is used to manage the fuel reward offers. Installation is done via the download of an executable file that requires little or no support from retailer’s IT personnel. In terms of the way the promotion engine is used, the system rather intuitive and allows for easy set-up, execution and management of rewards. For the consumer—if you have ever used a gift card, you already know how to use the FuelCircle reward card. At the pump there is no need to swipe your loyalty card or enter your phone number. There are no prompts asking you to select the level of reward you would like to use. With FuelCircle you simply insert your reward card, dispense your fuel and get on your way. WHAT IS THE ROLL-OUT TIMING? FuelCircle will roll out in phases: First, with membership groups, selected financial institutions and loyalty operators with existing point systems; all of whom have been looking for a nationwide fuelbased redemption network. This will bring scale to the FuelCircle network of retail issuers which is the second phase of the program. In late Q3 or early Q4 we will be in several test markets as participating operators look to gauge the response and unique purchase dynamics by using fuel as the ultimate reward. L

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TECHNOLOGY, TRENDS & REWARDS

I N S I D E S C O O P:

Enterprise Rent-A-Car—Exceeding Expectations through Customer Service and Loyalty
Loyalty 360 Interview with J I M S T O E P P L E R —En te rp rise Re n t -A-Ca r
the best features of the program is that Enterprise Plus members can use the rental days they earn at more than 5,500 Enterprise Rent-A-Car locations throughout North America, including the United States, Canada and Puerto Rico. Members also can access exclusive check-ins at participating locations, and a dedicated phone number for expedited service. We also provide members an Email Extras e-newsletter to deliver special offers to redeem online in real time. Enterprise Plus members accumulate points to quickly earn Silver, Gold and Platinum status which provide access to even more reward options, including bonus points and vehicle upgrades. WHAT WAS THE LEVEL OF INVOLVEMENT OF CUSTOMER FEEDBACK IN THE PROGRAM? THE REDEVELOPMENT PROCESS? WHAT WERE YOU HEARING FROM THE CUSTOMER? Feedback from our customers drives our business. For Enterprise Plus, we heard from our customers through surveys, focus groups and general feedback that they wanted rewards for their rentals. HOW WILL DATA/ANALYTICS INFLUENCE YOUR CUSTOMER ENGAGEMENT, RETENTION AND LOYALTY STRATEGY? We measure our performance in every part of the business, and that applies to our loyalty program. We’re listening to how our customers are responding to Enterprise Plus, and we’re monitoring hard metrics as well, including redemption rates and the popularity of our special offers. We’re always listening to our customers to learn how we can improve the rental experience. WHAT ASPECT OF THE NEW ENTERPRISE PLUS PROGRAM ARE YOU MOST EXCITED ABOUT SHARING WITH YOUR CUSTOMERS? We’re really excited that there are no blackout dates with Enterprise Plus. Our members can redeem their points at thousands of Enterprise Rent-A-Car locations every day. There’s also no automatic expiration on points; members keep their points as long as they rent once every two years. The best thing about Enterprise Plus is that we get to give back to our customers. We work hard to build relationships with customers who rent from us, and we want to reward them for their loyalty to Enterprise Rent-A-Car.

E

nterprise Rent-A-Car‰ is committed to great customer service and believes it is a large reason the brand has built and maintained a loyal legion of followers. This spring, Enterprise launched a new and improved Enterprise Plus loyalty program to maintain this commitment to service and reward loyalty customers for their continued patronage. In an interview with Loyalty 360, Jim Stoeppler, Enterprise Brand Director shares a look at how Enterprise Rent-ACar is communicating with and listening to the customer, and the value in a loyalty program offering.
WHAT WAS THE MOTIVATION BEHIND CREATING A NEW ENTERPRISE PLUS LOYALTY PROGRAM?

We strive to always exceed our customers’ expectations by delivering the high level of customer service that has helped build our company over the years. With our Enterprise Plus loyalty program, we’re giving our customers one more reason to keep coming back to Enterprise. WHAT MAKES THE ENTERPRISE PLUS PROGRAM STAND OUT IN THE MARKETPLACE AND UNIQUE IN IT’S OFFERING TO YOUR LOYAL CUSTOMERS? Enterprise Plus members earn points with every qualifying rental, which they can use toward free rentals of any available vehicle on any day, with no blackout dates. One of

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Loyalty Management™ • SECOND QUARTER 2012

WILL ENTERPRISE RENT-A-CAR ADD PREMIUM EXPERIENCE OFFERINGS AS PART OF THE LOYALTY PROGRAM OPPORTUNITY FOR YOUR BEST CUSTOMERS? IF SO, WHY IS THIS AN IMPORTANT ASPECT OF THE ENTERPRISE PLUS PROGRAM? Enterprise Plus provides our customers with free rentals, vehicle upgrades and other rewards for their loyalty. Giving customers a chance to earn more rewards gives them one more reason to rent from us. They already appreciate the excellent customer service our employees provide, and being rewarded for renting from us is icing on the cake. ARE THEIR PLANS TO INTEGRATE PROGRAM COMMUNICATIONS INTO A MULTI-CHANNEL STRATEGY? IF SO, WHY IS THIS VALUABLE? Email is a tried and true way to reach customers, and it’s a key part of our strategy for reaching Enterprise Plus members. But the conversation goes beyond that. Our employees understand

our business and are the best at educating our customers about the benefits of renting from Enterprise. We also love hearing from our customers on the Enterprise Rent-A-Car Facebook page. Additionally, we’ve invested in online and broadcast media to spread the word about Enterprise Plus. WHY IS OFFERING A LOYALTY PROGRAM OPPORTUNITY TO YOUR CUSTOMERS IMPORTANT TO ENTERPRISE RENT-A-CAR? The key to our success is keeping our customers happy. Each of our employees work to keep our customers completely satisfied from the start to the finish of the rental process, and it’s even better when we can reward them for renting from us. L

E NTE RP RIS E PLUS OFFERS MEMBERS MANY BENEFITS, INCLUDING: •  EARNING POINTS WITH  EVERY QUALIFYING RENTAL TO USE TOWARD FREE RENTAL DAYS OF ANY AVAILABLE VEHICLE ON ANY DAY—WITH NO BLACKOUT DATES—AT MORE THAN 5,500 ENTERPRISE RENT-A-CAR LOCATIONS THROUGHOUT NORTH AMERICA, INCLUDING THE UNITED STATES, CANADA AND PUERTO RICO •  MEMBERS-ONLY CHECK-IN  AT PARTICIPATING LOCATIONS •  DEDICATED PHONE NUMBER  FOR EXPEDITED SERVICE •  SPECIAL OFFERS THROUGH  THE PROGRAM’S EMAIL EXTRAS E-NEWSLETTER •  OPPORTUNITY TO ACCUMULATE POINTS TO QUICKLY EARN SILVER, GOLD AND PLATINUM STATUS TO GAIN ACCESS TO EVEN MORE REWARD OPTIONS, INCLUDING BONUS POINTS AND VEHICLE UPGRADES

Enterprise Plus is free to join, and customers at least 21 years old can enroll at enterprise.com, by calling Enterprise’s Loyalty Member Services or through a rental agent at any participating location.

Loyalty Management™ • SECOND QUARTER 2012

41

TECHNOLOGY, TRENDS & REWARDS

How Pure Romance Used Technology to Deliver a Superior Customer Experience
C H R I S M CI N T I R E

—Pure Romance

P

ure Romance is one of the nation’s fastest-growing woman-to-woman direct sellers of relationship enhancement products. Founded in 1993, the company’s products are marketed through a variety of channels, including via the web and catalog, but its signature sales experience is Pure Romance’s network of in-home parties organized by more than 75,000 independent Sales Consultants. This direct sales marketing approach has enabled Pure Romance to experience rapid growth—more than 20 percent in each of the past ten years, with projections of 40 percent this year—and to expand beyond the United States into Australia, Canada, Puerto Rico, South Africa, and the U.S. Virgin Islands. In order to continue this success, Pure Romance needed to strengthen the customer service experience. Despite selling a very personal and intimate line of products, Pure Romance needed technology to build and sustain the relationships that drive the business.
Pure Romance’s approach to business is simple; Consultants are in business for themselves, but not by themselves. Each Consultant’s independent business strategy is to engage customers with unique products and make it appealing for them to become party hosts. Pure Romance must provide optimal service to every “customer” on this continuum. Customer Service Representatives (CSRs) deliver very personalized service in part because they are selling intimate products, but also because they are encouraged to build relationships with their most important customers—the Independent Consultants. One of the most significant loyalty strategies is to offer

incentives, including trips for high sellers and recruiters. With the right data in hand, the company can reach out to party hosts, potential recruits and Consultants to encourage them to meet sales milestones and earn these rewards. Over the years, Pure Romance has invested in numerous technology systems to capture and manage data on customers, Consultants, and entitlements, including software for direct sales genealogy and sales management, enterprise resource management, surveys, and customer billing. However, each solution stored data in its own separate silo: when CSRs needed information, they often had to physically travel to various departments in the company to get answers, and then call the Consultant or consumer back. This is inefficient from a company resource perspective, but more importantly, it irritated customers and Consultants. Pure Romance recognized that it needed a holistic customer service optimization system to integrate data from these multiple systems to enable CSRs to provide relationship-building, personalized customer service. The goal was to create a true, multichannel customer service approach: to deploy a technology solution that would interface with Pure Romance’s multiple disparate systems and provide a “single view” into the data and information needed to build and manage consumer and Consultant loyalty. In addition, the company wanted to be able to connect with customers via popular social media networks such as Facebook and Twitter within this single application. The company chose VContactCenter™, a cloud-based CRM contact center solution developed by Vertical Solutions, Inc. INTEGR ATED DATA DRIVES LOYALT Y MANAGEMENT Pure Romance CSRs need access to a variety of data, often segmented by Consultant and her customers, on such items as recent orders

The goal was to create a true, multi-channel customer service approach

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Loyalty Management™ • SECOND QUARTER 2012

and returns, open calls, and call history, as well as to be able to drill down into each item for more detail. Before the technology rollout, CSRs needed to open multiple applications or make requests from various departments. The CRM solution integrates directly with all relevant Pure Romance databases, enabling CSRs to access all information via a “dashboard” located within the application. CSRs now have all of the information about customers and Consultants in one, centralized location. This approach means that all CSRs can service all customers—rather than having one group to support VIPs, another specializing in returns, etc., every CSR can help a customer, no matter what prompted the call. With technology that automates business processes, CSRs have guidance at their fingertips to help them provide consistent support based on practices proven to build loyalty. Pure Romance executives are now able to view multiple aspects of the business at a high level: CEO and VPs can access information on sales, incidents, and Consultants. Each user has access to a customizable portal that delivers the most important information at a glance. And, operations can gather information to guide product modifications and changes as well as to run reports regarding complaints, returned products, and stats measuring IT and the Contact Center. This information is now tracked and managed in one central repository. The technology also enables Pure Romance to track and monitor leads from the website, and report on many angles of the sales process, including by customer, product, and conversion of a customer into a Consultant. Pure Romance is also monitoring company reputation on social channels such as Twitter and Facebook while directly in the application, using a “feed” within the dashboard, with set parameters to

“follow” any mention of the company name or products. If a post contains a customer complaint, CSRs can generate an incident ticket directly from a Twitter “tweet” or Facebook “post.” This not only streamlines response in today’s instantaneous world, it builds customer loyalty—Pure Romance is engaging with customers on every channel. TECHNOLOGY DRIVES PERSONALIZED RESULTS While it might seem counter intuitive, Pure Romance has found that technology is the key to building personalized relationships and managing customer loyalty. CSRs now spend more time interacting with customers, and less time tracking data. Management can focus on creating incentives and loyalty programs that work rather than painstakingly gathering the data required to fulfill them. Product issues are discovered and resolved quickly, minimizing the impact on loyalty and company reputation. And customers are monitored via every channel with which they interact with Pure Romance, be it the web, online, or social media. Most importantly, the technology has enabled the company to focus energy and attention on its most important asset: the 75,000 and growing network of Independent Sales Consultants that drive the business. L

Chris McIntire is VP, Business Development for Pure Romance, an international company that sells relationship aids. He is responsible for using information to shape the future of the company, and champions the use of technology to build customer loyalty.

Reap the unexpected. What happens when an agency combines state-of-the-art technology, advanced analytics and customer strategy with ingenious creative and digital media savvy? Optimized results. On a scale sure to impress the market.
Expect more. merkleinc.com.

Loyalty Management™ • SECOND QUARTER 2012

43

ANALYTICS
Uncover the pro t potential in every customer.
®

SAS Customer Intelligence solutions help you nd the most pro table growth opportunities and drive the best marketing actions to achieve optimal cross-business impact. Decide with con dence.

Scan the QR code* with your mobile device to see a video or visit sas.com/potential to learn more.

*Requires reader app to be installed on your mobile device

SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. ® indicates USA registration. Other brand and product names are trademarks of their respective companies. © 2011 SAS Institute Inc. All rights reserved. S83316US.1111

TECHNOLOGY, TRENDS & REWARDS

INSIDE SCOOP

Referral Program’s Social Success
Loyalty 360 Interview w i t h S i e r r a Tr a d i n g Po s t

S

ierra Trading Post‰, a multichannel retailer known nationwide for offering “Great Deals. Great Brands,” has been providing customers everyday savings on outdoor gear, shoes, men’s clothing, women’s clothing, accessories and home furnishings for more than 25 years. Finding, through customer feedback efforts, that WOM is most often how first-time customers have come to know the brand, Sierra Trading Post created a referral program to reward their fans for spreading the word.

WAS DE VELOPMENT OF THE REFERR AL PROGR AM A RESPONSE TO CUSTOMER INTEREST OR AS A RESULT OF MARK E T RESE ARCH? We regularly hear from customers that they want to share Sierra Trading Post with friends, and so it made sense for us to create a way to make that easy for them wherever and however they interact with friends and families—email, Facebook and/or Twitter. WHAT MARK E TPL ACE CONDITIONS OR INFLUENCERS INSPIRED THE INCORPOR ATION OF THE SOCIAL PL ATFORM INTO THE REFERR AL PROGR AM? It’s clear that social media channels aren’t going away any time soon and in fact are still growing. We see how people have folded that sort of social engagement into their lives. WHAT DO CUSTOMERS APPRECIATE MOST ABOUT THE REFERR AL PROGR AM? WHAT DO YOU PERSONALLY LIK E MOST ABOUT THE PROGR AM OFFERING? I think it’s got to be two-fold. 1) Having the personal URL makes sharing very easy. 2) Being able to track who has accepted the invitation to shop at Sierra Trading Post and become our customer is a huge hit with our customers who use Get $10, Give $10 as well. HOW HAS THE REFERR AL PROGR AM BEEN INTEGR ATED INTO YOUR SOCIAL STR ATEGY? We are promoting Get $10, Give $10 heavily on our social media channels, particularly Facebook and Twitter, which makes sense because those two platforms have proven to be great resources for social endorsement and sharing useful material. ANY FUTURE PL ANS TO RE WARD THE SOCIAL INFLUENCERS AND SIERR A TR ADING POST FANS FOR THEIR ACTIVIT Y AND SOCIAL WOM EFFORTS? We look at social influences and fans all of the time because it’s fun to work with customers in this way. If you’ve got some ideas, share them with us! OF COURSE, WE HAVE TO ASK , WHAT’S NE X T FOR STP REFERR AL PROGR AM AND SOCIAL INITIATIVES IN 2012? We’re just looking forward to growing and learning more about our fans and customers and, in particular, giving them opportunities through social to tell us how we can serve them better. For additional details about the Sierra Trading Post referral program or to create a free account, visit stp.me/Get10Give10. L

Their “Get $10 Give $10” program recently received a major boost in resources to create a more user-friendly and social-friendly platform for customers. The result has been substantial growth in new customer acquisition and program revenue.

A QUICK LOOK AT THE PROGR A M BA SICS:

1: An existing customer sets up a free account and invites friends to shop STP. 2: If those friends are first-time customers, they get $10 toward their first purchase. 3: The referring customer then gets $10 for each new customer.
Sierra Trading Post has eased the customer’s ability to share their enthusiasm for the brand by offering each participant a personalized URL on Twitter and Facebook, the ability to share from an email contacts list, and an account to track responses and rewards. With the further understanding that, “Referral at its core is a social action,” Sierra Trading Post provides Loyalty 360 insights and perspectives about the huge successes gained through referral program initiatives and the value of social integration. HOW DID SIERR A TR ADING POST DECIDE TO BASE THEIR CUSTOMER ENG AGEMENT STR ATEGY ON REFERR AL S? Well, referrals are a key component in growth, and it made sense for us to look at easing a customers’ ability to share their enthusiasm for Sierra Trading Post.

Loyalty Management™ • SECOND QUARTER 2012

45

TECHNOLOGY, TRENDS & REWARDS

Monetizing Loyalty Marketing Assets
GRETCHEN MOEN

—Affinion Loyalty Group

THE JOURNEY ACROSS ALL TOUCH POINTS

Due to changing customer needs and technology, the loyalty industry will see major evolution in program design and customer experience over the next few years. This applies to many industries, and retail is no exception. Like never before, retailers such as Best Buy‰ are under a tremendous amount of pressure to deliver an experience customers want. But let’s look at the current situation for a moment. Companies have been doing more with fewer employees and shrinking budgets for the past three years. As they add staff in 2012, we will see a renewed focus on retention of existing customers instead of acquiring new ones. Mark Johnson from Loyalty 360 recently shared a quote from Peter Sachse, the CMO of Macy’s, “We don’t need new customers. We need to keep the ones we have and get more out of them.” How do you achieve this? One critical component is correcting negative engagements that a customer might have with your brand. THE BRIGHT SIDE OF NEGATIVE ENGAGEMENT

L

However it is achieved, positive customer experience is king. OYALTY TOMORROW…AND TODAY A recent poll by Loyalty 360 found that 78% of respondents believe that having a great customer experience makes them loyal. Creating a true customer advocate involves delivering quality customer service across all touch points. Marketers are realizing that this means integrating all channels, especially mobile and social, into the overall customer experience. Best Buy exemplifies the multi-channel approach to customer engagement. The company is building better relationships with customers and generating fans via digital, mobile and social platforms. For example, Best Buy has dramatically increased its Facebook fan base over the past year. Through daily deals, special offers, insider movie clips and other promotions, they use these platforms to listen and engage with customers.

82% 79% But
46

According to the 2010 Customer Experience Report by RightNow, of people stopped doing business with a company as a result of a negative experience. told others about their dissatisfaction. And, a full 66% were on a mission to discourage others from buying from the brand in question.

A recent poll by Loyalty 360 found that of respondents believe that having a great customer experience makes them loyal.

78%

don’t despair: of consumers said they would be willing to go back to a company after a negative experience.

92%

This kind of continuous engagement with fans is important. As brands jumped into the pool of social media and allocated a lot of resources to obtaining as many friends as possible, we saw almost no focus on what to do with fans once you had them. As a result, brands are beginning to see people “un-fan” them. Simply reporting the number of fans to the CEO or CMO is not enough in 2012. They want to understand the value of that fan. And, as Loyalty 360 notes in a recent trends article, marketers are embracing the fact that customer engagement is the journey, loyalty is the destination. The idea of loyalty is much bigger, broader and richer than it has been in the past. And it is growing ever more complex. Today and into the future, loyalty is less about points, discounts, miles and rewards, and more about the way the processes, technologies, ideas and interactions engage an individual with the brand. The only way to achieve loyalty is through deeper engagement.

This study confirms the truth: if you work to make them right, negative engagements are huge opportunities for your brand. Best Buy is a good example. They have leaned into the issues from this past holiday season. They acknowledged the problems and took action to be accountable. They are rebuilding trust in the Best Buy brand promise. And boosting consumer trust is critical—according to research from NPD Group, 80 percent of purchases within consumer electronics still take place through the brick-and-mortar channel.
Loyalty Management™ • SECOND QUARTER 2012

THE SECRET SAUCE

1: Make negative experiences right.

So, what is Best Buy's secret? Here are four tips to monetize your loyalty marketing assets:

3: Be where your customers are. 2: Know your customers Employ a multi-channel approach. Consider mobile, and what they want. social, web and in-person Pursue meaningful offers touch points. and brand partnerships for your customers. 4: Don’t be afraid to try new things and fail.

MONETIZING LOYALTY MARKETING ASSETS But, deeper engagement can sometimes be at odds with minimizing loyalty program expenses and generating revenue. In a recent webinar*, Mike McDonnell, Vice President of Product Management and Client Solutions at Affinion Loyalty Group, and Barb Olson, Senior Director of Marketing at Best Buy, discussed the need to monetize assets in the context of the current loyalty marketing climate. Best Buy has four main focus areas to deliver more value to their members, which creates higher engagement and thus monetizes their investments further. 1: Consumer incentive partners. Best Buy partners with large national brands to offer customers Reward Zone points for using those partners. For example, customers might be selected to sign up for Netflix and receive 500 Reward Zone points as well as 100 points per month for six months. 2: Point conversions. Best Buy partners with other leading loyalty and promotional programs to allow customers to exchange their currency for Reward Zone points. For example, Reward Zone points was a featured promotional award in MyCokeRewards and is currently a partner in Points.com loyalty currency exchange. 3: Business incentives. During the webinar, over 20 percent of survey respondents expressed concern that their current incentive awards are too restrictive and not unique. Approximately 19 percent of respondents expressed concern their incentives are not attainable. Through their new website, www.rewardzoneincentivepoints.com, Best Buy allows businesses to leverage the Best Buy brand and Reward Zone points as customer or employee incentives to drive their business objectives. The currency answers the concerns of loyalty marketers. It is attainable, usable and provides extensive variety, given the thousands of items at Best Buy. 4: Online and new innovations. Best Buy partners with online and newly emerging brands to leverage the strength of Reward Zone, Bestbuy.com and their broad selection of products in over 1,100 physical stores. For example, Best Buy ran a cutting edge promotion with Zynga Cityville, letting Cityville players download a Best Buy store in their game. The result was great exposure for Best Buy within a population of young, social gamers. These are lessons that Best Buy and Affinion Loyalty Group embrace. Our focus is well-designed, inspired customer experiences to move loyalty programs into the golden zone of influenced member engagement. L *Loyalty 360 members can access playback of the Affinion Loyalty

Group & Best Buy webinar titled, “Monetizing Loyalty Marketing Assets: A Conversation with Best Buy” at Loyalty360.org.

Gretchen Moen is the Director Brand Communications for Affinion Loyalty Group (ALG). Affinion Loyalty Group is a leading loyalty provider whose products and services touch more than 125 million consumers. With 30 years of experience, the company drives incremental revenue by increasing customer loyalty for its clients who include top financial institutions, hotel and airline companies, and automotive manufacturers.
Loyalty Management™ • SECOND QUARTER 2012

47

TECHNOLOGY, TRENDS & REWARDS

HYPER-LOCAL, MOBILE AND DEALS
Loyalty 360 Interview with J A Y L O E F F L E R —C ox Target Media & Va l pak

E

verything is converging to the three pillars of new commerce: hyper-local, mobile and deals. Venerable brand Valpak‰, a coupon and deals company for over 40 years, is evolving its well-honed direct marketing strategy of connecting local merchants with local consumers to be at the forefront of this convergence. Having recently announced a loyalty program, Valpak is testing new mobile and deals strategies around that program within specific markets. Loyalty 360 had the privilege to hear from Jay Loeffler, Manager of Corporate Strategy with Cox Target Media & Valpak to gain insights and perspectives on the current marketplace trends influencing the changes in direct marketing strategies today. Below, he shares his loyalty philosophy as well as details about the new Valpak loyalty program.
WHAT INSPIRED VALPAK’S DECISION TO CREATE A LOYALTY PROGRAM? Valpak understands the importance of rewarding customers who utilize our savings platforms amidst the flurry of competition in the marketplace. With fewer barriers to entry in the digital environment, consumers have many choices when they search for savings in their local market. Valpak has been an integral part of consumer savings for nearly half a century—people know and trust us already. The Valpak brand has meant even more to consumers during the recent economic downturn; we feel it is imperative to reward our loyal customers by incenting increased usage and trial of new savings on a variety of platforms (i.e. mobile, web, social, etc.). This way, consumers win by having access to savings anywhere at any time, and receive rewards for their continued loyalty and valuable feedback. forms. Valpak provides a holistic solution for advertisers including; print, mobile, web, email, SMS text, etc. Our goal is to create one destination of incredible savings that consumers can access anywhere at any time. In order to create awareness and adoption, incentives will be introduced to promote trial and frequency of use. Once consumers experience our platforms and content, we are confident we will be a primary destination as their one-stop shop for savings. HOW ARE YOU DEFINING “HYPER-LOCAL” MARKETING? WHAT MARKETPLACE CONDITIONS HAVE FUELED THIS NEW TREND?

Loyalty becomes a product of actively listening to consumer preferences, and delivering content that fits those desires”

WHAT ARE THE GOALS FOR THIS NEW PROGRAM? HOW WILL CONSUMER RELATIONSHIPS WITH BOTH VALPAK AND PARTICIPATING BRANDS BE IMPACTED BY THE PROGRAM OFFERING? Valpak is looking to reward consumers who not only use its products and services, but access those services on a myriad of plat-

Valpak defines hyper-local as connecting relevant content with consumer preference and delivering the results when and where consumers want it. The old methodology of exclusively pushing content to consumers to stimulate trial is a thing of the past. Customers can pull content to a variety of devices at virtually any time or place. The ability to understand consumer preference and serve up the relevant content when and where they want it is how companies can begin to get hyper in their local marketing efforts. Valpak’s strength is its franchisee network, people who live, breathe, and intimately understand each of their respective local environments. This gives Valpak a competitive advantage

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Loyalty Management™ • SECOND QUARTER 2012

in the sense that indigenous knowledge fuels unique content that can stimulate local demand. It is about standing out from the pack, because increased competition has made savings a commodity. Developing unique local offers provides a distinct advantage, one that Valpak is delivering on. HOW HAVE CONSUMER INSIGHTS HELPED TO INFLUENCE VALPAK’S PLANS TO TEST MOBILE STRATEGIES? IS THIS SOMETHING THEY HAVE BEEN ASKING FOR? Mobile continues to increase in adoption and usage. Valpak closely monitors these trends and will continue to listen to the marketplace and develop relevant solutions for the mobile consumer. We also realize that the density of content

“The old methodology of exclusively pushing content to consumers to stimulate trial is a thing of the past”

needs to be much more robust in the mobile environment. Due to the accessibility of content anywhere at any time, lack of content within a given geography can create disconnect with consumers and lead that consumer to deem you irrelevant. It is an evolving space that will continue to become more competitive; Valpak feels that it is poised to compete very effectively in the space for years to come. WHAT IS YOUR PERSONAL PERSPECTIVE ON THE FUTURE OF THE DAILY DEAL LANDSCAPE? HOW WILL WE SEE THIS EVOLVE IN THE COMING YEAR(S)? My perspective is that the industry will continue to experience consolidation as it matures. Merchants will gain more power in the equation as the economy continues to rebound, and the need to stimulate demand with steep offers will become less prevalent. My opinion is that tools giving the local merchant more accountability on redemption will be a huge focus in the short term; while consumers will demand more local content that fits their desired preference. Loyalty will be a big focus; however, simple rewards platforms will not be enough to differentiate platforms. The local content connection at the right place at the right time with the right offer is what will drive loyalty. The space evolved from one of a treasure hunt for consumers, to one where consumers want to be heard and only receive content that fits their lifestyle. The ability for companies to continue to acquire local, relevant content to satisfy demand will be the difference between who survives and who fades. Valpak feels that the local knowledge it has developed over 40+ years, combined with its merchant friendly platform will continue to define it as a leading purveyor of deals for years to come. WHAT IS YOUR CUSTOMER LOYALTY PHILOSOPHY? In the savings space, the most important thing is providing relevant content to consumers at the right time. Loyalty becomes a product of actively listening to consumer preferences, and delivering content that fits those desires. Anything less is just a gimmick that will create a short term buzz with no long term sustainability. L

ABOUT VALPAK® Valpak, one of the leading direct marketing companies in North America, is owned and operated by Cox Target Media, Inc., a subsidiary of Atlanta-based Cox Media Group, Inc. With almost 170 franchises throughout the United States and Canada, The Blue Envelope® delivers savings and value to nearly 40 million households each month. Annually, Valpak will distribute some 20 billion offers inserted in more than 500 million envelopes. Valpak also offers digital solutions with www.Valpak.com®, an online site for local savings, which has nearly 70 million offer views each month, as well as mobile phones, including apps for most smartphones.

Jay Loeffler is the Manager of Corporate Strategy with Cox Target Media and Valpak. Before coming to Valpak, Loeffler worked at both Wachovia Bank and Turner Broadcasting in both a sales and marketing capacity. Jay’s experience includes developing specific sales strategies for national clients such as DirecTV, Netflix, and AT&T; as well as global acquisition strategies for more than 52,000 local advertisers across a 180 market franchise network. This dichotomy of experience provides unique perspective on both local and national prospecting and sales behavior in an ever changing economic environment.
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BY THE NUMBERS

Recent Industry Research
O N L OYA LT Y
a c c e n t u re 2 0 1 1 g l o b a l c o n s u m e r re s e a rc h s t u d y

ON SOCIAL MEDIA
IBM In s t it ut e f or Bu s i n e s s Va l ue s ur vey of 1 , 0 0 0 c on s um ers w orl d w i d e & 3 5 0 exec ut ives : “fro m so ci a l m e d i a t o so c i al c r m” by Ca rol y n Hel l er Bai rd a n d Ga ut a m Pa ras n i s

23% 24% 49%

of consumers surveyed feel “very loyal” to his or her service providers

81%

social network users who do not like that marketers use their data without their knowledge in order to target.

f r o m TA L K 3

61%

indicated that they had no loyalty at all.

38%
of consumers who agree with businesses’ belief that social media will increase advocacy

of consumers report a discount as the reason for interacting with companies via social sites

57% 66%

the number of consumers who agree with businesses’ belief that social media will increase advocacy

indicated that they are strongly influenced by at least one loyalty program offered by their service providers.

23%
36% 37%

of consumers who go to social media or social networking sites to interact with brands

said that use of friends to influence them would result in decreased loyalty.

FROM COMSCORE: “ HAN DH E LD SHOPPING — HOW MOBILE IS CHANGING THE RETAIL E NVIRON M E NT,” DEC 7, 2011 Two of every five smartphone owners have used a mobile device to make a purchase

36% of purchasers used their smartphone to make a purchase while in a store
64%

37% of all smartphone owners have used location-based coupons
63%

42% of all smartphone owners would be interested in using location-based coupons
42% 58%

ON TECHNOLOGY
Ji Wi re “Mobile Audience In s ight s Repor t” Q4 2 0 1 1

34% 75% 34%

of mobile shoppers comparison shop while in-store

of mobile consumers take action after seeing a location specific message

Need an argument for establishing a customer retention/loyalty program? Bain Consulting says:
• • Companies lose 20-40% of their customers annually Reducing customer loss by 5% could improve the bottom line as much as 85% Increasing customer loyalty by 1% is equal to reducing costs by 10%

of consumers have redeemed an online coupon in the past 90 days, newspaper coupon redemption (22%), mobile coupon redemption (18%)

71%
50

O N P R E PA I D C A R D S

of gift card recipients spend more than the amount of their card

52%

First Data: 2011 U.S. Gift Card Consumer Insight Study

of gift card recipients prefer a $25 gift card compared to a gift valued at $45

43%

of gift card receivers are interested in storing their gift card info on a mobile phone

Loyalty Management™ • SECOND QUARTER 2012

Loyalty is Dead. Long Live Loyalty.
Most people started with loyalty programs that have long passed their ‘best before’ date. Today’s consumers want loyalty programs that offer rewards and experiences beyond just a ‘do-this-get-that” model. Maritz Loyalty Marketing can help ensure that your brand’s loyalty programs generate a meaningful value exchange between you and your consumers – affecting their experience at every stage and through all brand touch points. Talk to us to see how the new loyalty can make you king of your own round table. Contact Rob Daniel, VP Research & Loyalty, at rob.daniel@maritz.com or (905) 696-5326. Visit us online at www.maritzloyaltymarketing.com

BEST BUSINESS PRACTICES

Multi-Channel Customer Engagement: OVERCOMING

BIGGEST
MARKETING CHALLENGE
JEFF LUNDAL

the

—E x p e r i a n M a r k e t i n g S e r v i c e s

T

oday’s marketers are increasingly challenged with how to integrate data, campaigns and measurement across multiple customer channels. Recent Experian marketing services survey data revealed that 46% of marketers named multi-channel coordination as their biggest marketing challenge in 2011.

While today’s consumers are ingesting information across multiple channels, they are also becoming more and more demanding of their brands. They expect companies to listen and interact with them in a consistent and relevant way at all times. “Don’t waste my time” is the customer’s mantra because they are busier than ever, have more choices than ever, and are bombarded with more marketing messages than they can possibly process. With this new reality, brands that aren’t obsessed about their customers will score a miss when it comes to engagement as well as marketing and financial success. CREATING A CUSTOMER ENGAGEMENT FRAMEWORK Relationships are built over time through a series of customer engagements and experiences. If the experiences are mostly positive, the relationship grows stronger, and vice versa. To engage effectively with customers across channels and over time, brands must carefully plan how to advance the customer through each stage of his or her life cycle. Experian Marketing Services recommends a repeatable approach that marketers in various industries can employ to optimize the customer experience. This “customer engagement framework” is a fourstep methodology that flows like this (see chart on the top right, pg.53):

1 : L I S T E N RECOGNIZE

CUSTOMERS AND THEIR INTERACTIONS ACROSS AN EVER-EXPANDING RANGE OF TRADITIONAL, DIGITAL, MOBILE AND SOCIAL CHANNELS.

2 : A N A L Y Z E DEVELOP

NEW INSIGHTS ABOUT CUSTOMER BEHAVIOR AND PREFERENCES USING ADVANCED TOOLS AND METHODS.

3 : P L A N LEVERAGE BEST PRACTICES 4 : S P E A K DELIVER PERSONALIZED

AND STRATEGIES FOR MANAGING CAMPAIGNS AND MARKETING PROGRAMS.

INTERACTIONS USING STATE-OF-THE-ART TOOLS FOR COORDINATED, CROSS-CHANNEL EXPERIENCES.

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Of course, this needn’t be a linear series of steps. Rather, it is a process that, to be effective, must be repeated multiple times across channels and the customer life cycle. The great thing about the customer engagement framework is that it provides a methodical approach to implementing end-to-end marketing initiatives—all centered on the object of your obsession, the individual customer. Applying the process effectively, however, requires a clear, honest understanding of your organization’s execution capabilities, marketing prowess and ability to innovate.

JUST HOW INNOVATIVE IS YOUR MARKETING? One way to look at marketing readiness is in the context of the Marketing Sophistication CurveSM, left. The curve provides an intuitive guide for brands to evaluate their level of marketing sophistication across the channels that they employ to reach and engage both customers and prospective customers. There is a definite distinction between multi-channel and cross-channel marketing. While multi-channel means being present and active in multiple channels, cross-channel means being consistent and coordinated in terms of messaging and engagement across channels. Measuring and then improving cross-channel sophistication means you will reach your customers better and more frequently—and develop more meaningful and profitable relationships with them. Learning where your company falls on the marketing curve is the first step. Once there is an understanding of the current level of marketing sophistication, an actionable roadmap can be developed to take sophistication to the next level. Specific initiatives can be undertaken to enhance the people, processes and technologies that enable you to better reach, engage and empower the center of your marketing universe, your customers. L

Jeff Lundal is the Senior Vice President and General Manager of Data Management with Experian Marketing Services. For over 20 years, Jeff has been passionate about helping clients make more meaningful connections with their customers through stronger data management and cross channel linkage strategies. By overseeing the data management function, Jeff ensures clients have access to the latest range of data tools and advance appropriately through the marketing sophistication curve.
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BEST BUSINESS PRACTICES

CONNECTED CRM—
CRAIG DEMPSTER

Uniting Customer Centricity and Business Strategy

T

—M e r k l e
HE CHANGING MARKETING LANDSCAPE who are in the driver’s seat. The immediacy and diversity of a multitude of digital tools gives them the power to make decisions about the brands they interact with. To succeed in the customer era, we as marketers can’t fight this consumer empowerment. We must embrace it and develop solutions that create sustainable competitive advantage by building customer strategy as a business strategy. As consumer expectations and buying behaviors are evolving, marketers gain access to new streams of reliable customer data. The opportunity for true CRM is limited only by the skill sets required for the effective use of that data and the implementation of a CRM strategy. Technology has a material effect on how consumers and brands interact, and marketers must utilize technology and analytics to target effectively, create actionable insights and apply appropriate measurements to build and refine marketing strategies. Communication plans based on these insights will build individual multi-channel customer relationships that result in loyalty and advocacy. Companies that master customer relationship marketing (CRM) as an organizational competency will differentiate themselves. What marketers have been talking about in theory for more than a decade is now a reality. We now have the power to communicate with individual precision to the right person; with the right message; at the right time; through the right touch point. The key to everything is the ability to bring it all together and put the customer at the center of the business strategy. This is connected CRM. TAKING A HOLISTIC VIEW Connected CRM is a systematic way to identify, serve and retain high-value customers better than competitors by delivering customer interactions that improve financial results and drive shareholder value. Connected CRM involves developing a customer-centric strategy and implementing it based on enterprise-wide segmentation. It requires communication and media plans based on those segments; using precisely targeted messaging delivered through personalized channel interaction. And it calls for systematic measurement and refinement on an ongoing basis. This is not just about mass vs. direct vs. digital. Or channel vs. media. It’s about the customer’s interactions with all of them. It’s about understanding the explosion of data from all of the disparate customer touch points and using it to create insights, targeting and measurement that lead to more effective integrated marketing communications.

The most important factor affecting the way consumers are marketed to today is the digitalization of media and channels —and the resulting proliferation of customer touchpoints. While we’ve been professing the benefits of one-to-one marketing for well over a decade, only now are we beginning to fully understand its potential and find ways to, in fact, reach a state of customer centricity. There is a resurgence of excitement, innovation and focus on the marketer’s ability to engage with customers on an individual level and maximize relationships with them. Customer-centric marketing isn’t merely a tactical implementation plan. Executed correctly, it’s a fundamental shift in the organization’s framework, which in turn causes a forward shift in the organization’s trajectory. Shifts of this magnitude are rare, but sweeping—and enduring. In fact, we now find ourselves in the midst of a customer revolution. It’s much like the brand revolution of the 1950’s, when the advent of television meant market domination for a few major brands, like Tide and Chevrolet. Or the channel revolution of the 1990’s and early 2000’s, when online shopping became the norm and a new crop of e-commerce innovators, led by eBay and Amazon, swept the marketplace. Today, it’s the customers themselves

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customer information in one place. This CRM knowledge center combines customer data across media and channels. It contains media spend information across touchpoints and includes data about the currencies associated with each customer. All of this integrated data allows for more effective customer touchpoint budget allocation, targeting, insights and measurement—and ultimately enables more customer-centric interactions. All of the components of CRM—the data, analytics and technology… and their connections to media and channels – come together within this environment. The figure above illustrates the fundamentals of connected CRM: •  Information: Create and manage a 360° view of the customer •  Insights: Identify, segment and manage high-value customers •  Optimization: Allocate resources that optimize ROI and long-term customer value •  Targeting:  Micro-target, customize and personalize media and channel experience •  Measurement: Create metrics as currencies and measure the incremental impact of each marketing activity •  Agility:  Organize in a fashion that allows the CMO to respond to changes in customer, competitor or marketplace behaviors faster than the competition. In successfully building a customer-centric organization, the first critical step is to create an information platform that integrates all of your Today, the consumer’s power to engage with organizations more completely, through so many media and channel touchpoints, has driven our ability to develop an integrated customer communication strategy. Connected CRM places customer needs, behaviors and value at the center of all interactions, resulting in increased revenue, profit and shareholder value. Marketers who use the principles of connected CRM to build customer strategy as a business strategy have found a path to customer loyalty and sustainable competitive advantage. L

Craig Dempster, EVP, CMO, Merkle. Craig is charged with developing the enterprise marketing strategy and directing an expanded marketing function. He oversees the team that manages all of Merkle’s marketing activities, encompassing demand generation, industry marketing, product marketing and corporate marketing communications functions.

Join the Circle

•••

and put the Power of Gasoline to Work for Your Brand

FuelCircle is a fuel reward solution designed to help brands realize their specific loyalty objectives. FuelCircle is the first U.S. based coalition for loyalty operators and the first nationwide network for reward redemptions. As a FuelCircle partner, you will:
• Grow Brand Share • Stimulate Product Trial • Increase Shopper Frequency • Attract & Retain More Customers

FuelCircle offers our partners:
• A relevant reward in discounted gasoline • Control over your branding, participation level and messaging • Simplicity with proven technology and easy program integration • Flexibility to work in conjunction with your existing reward program • Various participation levels including year-long, event specific and more

For more information contact FuelCircle

1.847.553.9137
An SVM Company

BEST BUSINESS PRACTICES

INSIDE SCOOP

Insured Loyalty
Loyalty 360 Interview with B A R T B L A C K B U R N —P r o g r e s s i v e I n s u r a n c e

Progressive Insurance‰ believes in the value of customer service and the importance of retaining loyal customers. In a Q&A with Loyalty 360, Bart Blackburn, Marketing Process Manager at Progressive shares the Inside Scoop behind their success. In the interview below, we learn about the Progressive approach to loyalty, the value in listening to the customer, and the importance in exceeding expectations to earn loyal customers for life.
WHAT DIFFERENTIATES PROGRESSIVE'S APPROACH TO LOYALT Y? At Progressive, we automatically enroll customers in our free loyalty program. Our program offers customer experience benefits like accident forgiveness so that their rates won’t increase just because of one accident. Once customers are enrolled, they immediately earn small accident forgiveness, so small accidents won’t affect their rates, and are able to use our network of pre-approved repair shops. And the discounts get larger over time. Our loyalty program has four levels based on tenure: silver, gold, platinum and diamond. At each level, customers will also be eligible for additional discounts like a young driver discount, a continuous insurance discount, which allows customers to save more over time, and large accident forgiveness. WHAT DRIVES (NO PUN INTENDED) CUSTOMER LOYALTY IN THE INSURANCE SECTOR? HOW DOES PROGRESSIVE BEST ADDRESS THESE CUSTOMER INFLUENCERS? Our loyalty program is driven by customer feedback. At Progressive, we value customer research and feedback and use that information to decide what customers want in a loyalty program. We want to thank customers for choosing Progressive and provide benefits like accident forgiveness that they will enjoy. A LOYALTY PROGRAM IS OFTEN A CHALLENGING EXPENSE TO SELL TO A CFO, HOW DOES PROGRESSIVE DEFINE & DETERMINE THE VALUE OF ITS LOYALTY PROGRAM? We designed our loyalty program to boost customer retention, improve customer satisfaction scores, and to differentiate ourselves from our competitors. Our current loyalty

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program is boosting customer retention by providing specific incentives like accident forgiveness to encourage customers to stay with the company longer. The value of our loyalty program helps the company be more profitable by retaining customers. WE'VE HEARD THAT CUSTOMER LOYALTY IS TRULY PART OF THE CULTURE AT PROGRESSIVE. WHAT ARE SOME EXAMPLES, ANY GREAT CUSTOMER STORIES YOU WOULD LIKE TO SHARE? Progressive takes customer service seriously. We strive to constantly improve our service and product offerings to meet and exceed our customers’ highest expectations. Independent studies and our internal customer satisfaction measurement tools show that they are. For example: •  Our standing on the J.D. Power and Associates National Auto  Insurance Study, which includes a customer satisfaction index, has risen steadily over the last 10 years. From 2010 to 2011, Progressive’s score increased by 10 points. •  Brand  Keys  ranked  us  #1  in  the  insurance  category  on  the  Customer Loyalty Engagement Index for our ability to engage with and create loyal customers. We’re proud of our continued improvement on well-known and well-respected customer service surveys. However, we know there is always room for improvement, and we’re working hard on it. We want to be consumers’ number-one choice for auto insurance and we are using these surveys and indices as a tool to let us know how we’re doing and how we can improve.

Riverview, Fla., Claims Contact Representative Margaret Bechtel showed a customer that setting up their claim can be an enjoyable experience. A recent caller says, “Wow! I can’t say enough good things about Margaret! Not only did she have a great attitude, but I could tell she genuinely cared, which he says is rare in customer service these days. Margaret was helpful and expedited his claim quickly while staying effective.” WHAT IS PROGRESSIVE'S APPROACH TO EDUCATING EXISTING LOYAL CUSTOMERS ABOUT THE PROGRAM? It is very important for us to thank customers for choosing Progressive and provide benefits like accident forgiveness that will help save them money. To inform customers about our program, we email and send letters to our customers so that we can congratulate them on their level of loyalty and explain the benefits of the program. We also send out communications to our more than 35,000 independent agencies. And we advertise our loyalty messages on television, in print and on the radio. We also put notes in our internal systems so our customer service representatives can recognize our customers on the phone for their specific level of loyalty. Customers can also log in to their policy at www.progressive.com to view their level of loyalty. HOW WOULD YOU LIKE TO SEE THE PROGRESSIVE LOYALTY PROGRAM CONTINUE TO LEAD, INNOVATE AND EVOLVE? We’re always interested in providing our customers with innovative ways to save money and giving them more rewards for their loyalty. We will continue to improve our program and implement new levels of rewards. To do that, we will continue to look at customer research and feedback and use that information to decide what customers want in a loyalty program. Progressive has a long-standing culture of innovation and superior customer service. Among its long list of industry breakthroughs, Progressive was the first to: •  Provide claims service at the scene of an accident. •  Sell auto insurance online. •  Offer Name Your Price®, an innovative, easy-to-use online tool  that helps customers choose the coverage package they want at a price that fits their needs and budget. •  Offer a concierge level of claims service, an option that handles   every aspect of a car’s repair. Progressive also created Snapshot®, an optional Pay As You Drive® insurance discount program that gives customers more control over their car insurance costs. With Snapshot, customers can save up to 30 percent on their car insurance based on their driving habits. L

“Brand Keys ranked us #1 in the insurance category on the Customer Loyalty Engagement Index for our ability to engage with and create loyal customers.”
Below are some great customer experience stories: Scott McManus, an Austin, Texas, claims contact representative, helped a customer realize that an accident can be a good experience. A customer writes, “It was the second time in the last couple of weeks that I’d been involved in an accident. This gave me the feeling I was at a low point in life. The way that Scott obtained my information and the empathy he showed me really helped me feel better about my situation. It really made me feel great about my decision to have Progressive.” Direct Sales Representative Sherry Reed of Colorado Springs, Colo., showed a customer what it means to be a Progressive customer. The customer says, “What a wonderful job Sherry did for me today. I called in to start my policy and the service she gave me was dynamite. If everyone there is as good as Sherry is, then I’m excited you are the best insurance company ever!”

Bart works in the customer experience group at Progressive Insurance where he is primarily responsible for building customer experiences that increase retention and reinforce Progressive’s unique brand attributes. In his role, he leads Progressive’s Customer Loyalty Program and the Proof-of-Concept contact center organization. Prior to Progressive, Bart worked at McKinsey and Co. and British Petroleum. He holds an engineering degree with highest distinction from Purdue University and a master’s degree from Harvard Business School. Bart and his family live in Chardon, Ohio.

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BEST BUSINESS PRACTICES

I N S I D E S C O O P:

Speed, Convenience, Recognition— MoneyGram Rewards®
Loyalty 360 Interview with S T U A R T K I E F E R —Mo ne y Gram

M

oneyGram‰ International, a leading money transfer company, has revamped the MoneyGram Rewards program. Initially planned for an official launch on February 1st, MoneyGram Rewards members in the US were given an early opportunity to start 2012 by diving into the new rewards opportunities, more than two weeks ahead of schedule, when the new program went live on January 15th.

Rewards program, transaction information can be saved and stored, making it quicker and easier to make future transactions and view transaction history. As an added benefit, members can request to have MoneyGram notify sender via email or text message, when their recipient has picked up the money. The new points based program provides MoneyGram the opportunity and flexibility to incorporate surprise and delight elements, drive behavior through additional incentives and give bonuses throughout the year. While we have to wait and see what the initial response will be to the new program, MoneyGram has structured the rewards to ensure that their best customers will be rewarded more than ever before.

“W

After conducting a global consumer market research study, MoneyGram has responded by offering their customer a program that fits the needs and benefits of today’s marketplace demands. The old frequency/discount based program has been replaced with a points program rewarding MoneyGram customers for eligible money transfers. Wanting to be rewarded for the amount sent in addition to frequency, customers can earn 125 points per transaction, and when they send over $250 in one transaction they will earn an additional 25 points. Points can then be redeemed for MoneyGram pre-paid Visa and a variety of other gift cards. In addition, MoneyGram has added an elite tier for their top members, at 1,000 points members receive Platinum Member status and will earn 25% more points per transaction for the remainder of the calendar year, and the entire following year as well! Driving online interaction is an integral component of the new program that not only benefits the MoneyGram customer, but also provides the opportunity to build greater levels of engagement, allowing MoneyGram to better identify their customers and their unique needs. Online access and smartphone integration will be key components of the enhanced MoneyGram experience. Further elevating the customer experience, when customers enroll in the MoneyGram

e saw an opportunity to weave the use of the program throughout our organization— allowing it to touch multiple products and departments.”

Loyalty 360 had the privilege to speak with Stuart Kiefer, Vice President, Rewards & Alternative Channels with MoneyGram. Below he shares insights around the involvement of customer feedback in the program planning process, social media integration, and plans for international program expansion. WHAT INSPIRED THE CHANGES TO THE MONEYGRAM REWARDS PROGRAM? We wanted our program to be engaging and to become more synonymous with our brand. We saw an opportunity to weave the use of the program throughout our organization—allowing it to touch multiple products and departments. By moving from a discount program to a points-based solution, we’ve created a platform that our marketers can use in a variety of ways. This format can address consumer acquisition, retention, customer service, cross-selling, agent promotions and more. The notion of aspirational value comes into play as well. The ongoing engagement of a points solution allows the consumer to develop a deeper relationship with our brand and think beyond the current transaction.

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WHAT WAS THE LEVEL OF INVOLVEMENT OF CUSTOMER FEEDBACK IN THE PROGRAM REDEVELOPMENT PROCESS? WHAT WERE YOU HEARING FROM THE CUSTOMER? We conducted market research around the globe and received consistent responses from our consumer base. First and foremost, our consumers expect us to have a program. Secondly, our customers want to be recognized not only for their loyalty, but for the on-going interaction with our brand. Our consumers did not want to be recognized solely for the fee that they pay for our service but more so for the volume of their activity. Generally speaking, our customers feel good about the opportunity to send money to loved ones both domestically and abroad. Providing them with benefits and rewarding their loyalty strengthens their connection with our brand. WHY WAS A POINTS BASED PROGRAM A BETTER PLATFORM FOR MONEYGRAM AND YOUR CUSTOMERS? Our old model did not encompass all of our products, nor did it create the on-going dialogue and incentive toward the next interaction. The old program did not afford us the ability to differentiate between our very best consumers and a consumer using or services on a less frequent basis. Now, our best consumers can be recognized as such and we have an opportunity to open a dialogue with other segments of our customer base and potentially capture a greater percentage of their usage in our category of services. HOW WILL THE NEW PROGRAM PROVIDE MONEYGRAM A BETTER OPPORTUNITY TO ENGAGE WITH THEIR CUSTOMERS? Our new program allows us to open an on-going dialogue with our consumers. It creates the opportunity to introduce new products and services, cross-sell existing products, and create a relationship that did not exist under the old model. The new model allows us to recognize and reward our very best customers and it gives our consumers a choice in how they want to redeem their points. As we weave the program throughout our brand, we will integrate our points model into our various holiday promotions and special events—making MoneyGram Rewards part of everything we do. ARE THERE PLANS FOR SOCIAL MEDIA INTEGRATION? Social media is playing a larger role in our communication program at MoneyGram. MoneyGram Rewards will be included in that overall strategy. Stay tuned for more details in the coming months. MONEYGRAM REACHES CUSTOMERS AROUND THE WORLD. CAN YOU SHARE ANY PLANS FOR ROLLOUT OF THIS NEW PROGRAM IN ADDITIONAL GLOBAL MARKETS? The existing program is already deployed in Canada, France, Germany, Italy and Spain. We are in the process of evaluating a conversion schedule as well as determining a schedule for rolling to new rewards countries around the globe. Our model was designed to make our program as consistent as possible as we launch in additional countries. MoneyGram does business in over 190 countries so we have a tremendous opportunity with our new program. WHAT ARE SOME OF THE INHERENT CHALLENGES OF GLOBAL IMPLEMENTATION AND PROGRAM STRUCTURING? When you are evaluating the launch strategy a program for a company with a global footprint the challenges are significant, but the opportunities are even greater. As a loyalty marketer, you must consider currency related issues, the acceptability of direct marketing practices, prevalence of consumer internet access and mobile communication, relevancy of your redemption catalog, and the list goes on. Ultimately, you need to take the time to understand the

demographic and psychographic makeup of your customer base and tailor the program to fit the needs of your customers within the geographic area. WHAT IS MONEYGRAM MOST EXCITED ABOUT FOR THE YEAR AHEAD FOR YOUR INDUSTRY, YOUR COMPANY AND CUSTOMER LOYALTY IN 2012? From a loyalty perspective we’re thrilled with the domestic launch of MoneyGram Rewards. Early indications around consumer adoption and agent interaction are very good. The support we receive from Brierley & Partners, our loyalty solution provider, has been outstanding. They are much more than a vendor to us, they’ve truly become a trusted advisor and partner in our quest to create a global solution. Looking forward to 2012 and beyond, our opportunities are endless are we create and execute on our strategy to take this new model into numerous countries around the globe. Learn more about MoneyGram and the MoneyGram Rewards program at: MoneyGram.com. L

“When you are evaluating the launch strategy for a program for a company with a global footprint the challenges are significant, but the opportunities are even greater.”

Mr. Kiefer joined MoneyGram in 2010 as Vice President, Product Management—Rewards & Consumer Database. In this role, he leads MoneyGram’s global loyalty product (MoneyGram Rewards) and the global consumer database. Mr. Kiefer and his team are responsible for direct marketing activities, data analytics and CRM.
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G ROW
Customer Base and Brand Loyalty this Spring!

Contact SVS to learn how to retain and grow your customer base with our state-of-the-art loyalty platform. Call 502.326.4600 or visit us online at www.storedvalue.com.
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3/12/12 10:06 A

BEST BUSINESS PRACTICES

Shifting the Balance: How to Protect Your Company's Social Brand
SCOTT BUCHANAN

—Me da l l ia

M

anaging customer sentiment has always been a difficult task. It’s now even tougher, thanks to customers’ ability to air their opinions—good or bad—on social media sites. You have probably searched a review site like Yelp for a restaurant or TripAdvisor for a hotel but decided against an option based on just one negative review. And so have millions of others. A weak or nonexistent social brand can have real effects on a company’s reputation and bottom line.

Methods are emerging to identify phony comments, like the beta fake review detecting algorithm from Cornell University, which can distinguish the real from the fake about 90 percent of the time. In tandem with direct company engagement on social channels, these tools truly have the potential to restore the balance and combat the skewing effects that fake or negative reviews have on a company's reputation. Take a proactive approach to your brand’s social media presence and seize the opportunity to strengthen relationships with customers and improve your bottom line. This requires you to invest in the right tools—including feedback management platforms that make it easy to respond to customers online, and word-of-mouth modules that direct customers (post-interaction or survey) to social outlets where they can share experiences with their network. These two simple steps put you in a stronger position to own your social brand. L

Social media has gained massive influence in the last couple of years, and companies are seeing customer participation on review sites as a double-edged sword. Companies leverage reviews as a sales tool, but they can also be a source of lost revenue. A poor review about a particular hotel location or restaurant affects more than that single property—it can mar the public image of the brand as a whole. When and where possible, companies need to take greater control of their social brands. A first step to better managing your social brand is to directly engage customers through social media channels. By monitoring Twitter and sites like TripAdvisor, businesses can find problems early. But monitoring alone isn’t enough; a company must take a proactive approach to managing and responding to social feedback. It is possible to save at-risk customers whose grievances may influence other potential purchasing decisions if left unchecked. Feedback tools that make accountability clear and embed closed-loop workflows can drive rapid responses that are consistently on brand.

The power of customer comments and reviews has stimulated a side industry of fake reviews, with individuals offering to enhance or damage a company’s reputation for as little as $5 a posting.
The power of customer comments and reviews has stimulated a side industry of fake reviews, with individuals offering to enhance or damage a company’s reputation for as little as $5 a posting. A second step, then, is to defend against this behavior by creating opportunities for your customers to offer social feedback—whether their experience was great or less than great. Automated tools are available to direct legitimate customers to relevant social media properties after they complete an online survey. Companies are investing in these tools to increase the volume and authenticity of their social feedback and ratings. The practice of review optimization is also key for businesses looking to improve how potential customers perceive them online.

Scott Buchanan is the Director of Marketing at Medallia, Inc. He helps companies use real-time feedback technology to inspire more customer happiness and greater business impact.

Loyalty Management™ • SECOND QUARTER 2012

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LOYALTY FORUM: BOOKS

Loyalty Reads
Brandwashed—Tricks Companies Use to Manipulate Our Minds and Persuade Us to Buy
Martin Lindstrom with Foreword by Morgan Spurlock
Crown Business | September 2011

From the bestselling author of Buyology comes a shocking insider’s look at how today’s global giants conspire to obscure the truth and manipulate our minds, all in service of persuading us to buy. Marketing visionary Martin Lindstrom has been on the front lines of the branding wars for over twenty years. Here, he turns the spotlight on his own industry, drawing on all he has witnessed behind closed doors, exposing for the first time the full extent of the psychological tricks and traps that companies devise to win our hardearned dollars. Picking up from where Vance Packard's bestselling classic, The Hidden Persuaders, left off more than half-acentury ago, Lindstrom reveals: • How marketers and retailers stoke the flames of public  panic and capitalize on paranoia over global contagions, extreme weather events, and food contamination scares.

• The first ever neuroscientific evidence proving how addicted we all are to our iPhones and our Blackberry’s (and the shocking reality of cell phone addiction—it can be harder to shake than addictions to drugs and alcohol). •  How  companies  of  all  stripes  are  secretly  mining  our  digital footprints to uncover some of the most intimate details of our private lives, then using that information to target us with ads and offers ‘perfectly tailored’ to our psychological profiles. •  What  a  3-month  long  guerilla  marketing  experiment,  conducted specifically for this book, tells us about the most powerful hidden persuader of them all. • And much, much more. This searing expose introduces a new class of tricks, techniques, and seductions—the Hidden Persuaders of the 21st century—and shows why they are more insidious and pervasive than ever.

The Welcomer Edge
Richard Shapiro with Foreword by Robert Spector
Vantage Point | February 2012

Scoring Points
Clive Humby
Kogan Page, 2nd edition | August 2008

The Welcomer Edge provides practical recommendations and strategies so that any company—regardless of industry or size—can maximize the quality of its customer service and the quantity of its loyal customers. The principles outlined in The Welcomer Edge are universal for all sales and service environments. It describes four distinct categories of service professionals—the people that will make any customer service/sales function or department a success. Understanding that each category has definitive service personalities will help a business at its most critical moment: the encounter that brings two people together to “make the sale” or further increase brand loyalty. At the heart of this book is the “Welcomer”—a special category of friendly, engaging people who are innately intuitive and perceive customers as “people first.” Identifying and recruiting welcomers—as part of a company’s team—is the key to success. Author Richard Shapiro provides real life examples and anecdotes to help transform this concept into action. The bottom line is that The Welcomer Edge shows how sales and customer associates can have a powerful impact on revenues because they determine the outcome of the all-important first impression, and this translates into whether or not a business will achieve its most critical goal—repeat business.

Swiping a grocery store's loyal-customer card has become second nature to shoppers these days. Scoring Points, one of the seminal marketing books of the last decade, tells the story of how British supermarket chain Tesco conceived, launched and developed its hugely successful Clubcard program—and transformed itself into a winning brand. Authors Clive Humby and Terry Hunt, two key members of the project, and Tim Phillips, a leading business writer and broadcaster, bring a compelling, behind-the-scenes account of Clubcard—the successes, failures and lessons learned. They show how Tesco made customer loyalty marketing work, even when almost every other loyalty program failed, thanks to vision, a strong team ethic and a company-wide commitment to customer satisfaction. It includes three new chapters, including an examination of the US retail market and the authors' work with both Tesco and Kroger.

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The Nordstrom Way to Customer Service Excellence: The Handbook For Becoming the "Nordstrom" of Your Industry
Robert Spector & Patrick D. McCarthy
Wiley, 2nd edition | March 2012

Virtually every company wants to be the Nordstrom of their industry. Nordstrom is one of only five companies to make Fortune's "best companies to work for" and "most admired" list every year the surveys have been taken.

every business can learn from the world's most famous customer-service-driven company. New material in this revised edition includes:  • "How To Become The Nordstrom Of Your Industry"  • Tools for creating a customer-driven culture  • Chapters on Nordstrom's online customer service  and the innovative social commerce features of its website  • Breakthroughs on Nordstrom's multi-channel  approach to customer service

“The Nordstrom Way shows the direct link between empowering your employees and creating a long-term relationship with your customers. More businesses should follow Nordstrom's example.” —Howard Schultz, Chairman, Starbucks Coffee

Despite its position in the hard-hit retail sector, Nordstrom, Nordstrom follows a set of principles that has made with 193 stores in 28 states, never experienced a quarterly it a leader in its industry. Discover what endears loss during the recent economic downturn. The Nordstrom Nordstrom to its customers, and learn how to apply those Way to Customer Service, Second Edition explains what same standards to your company.

Lift Strategies – Quick Tips to Engage Customers and Elevate Profits
Jen DeTracey
Lift Strategies Inc. | March 2012

Do you want to grow your small business or franchise? 89 Quick Tips to Boost Your Business! With limited time and energy, how does a business owner find the resources to dramatically increase and retain fans without destroying healthy profits? Jen DeTracey, innovator of the LIFFT® Process, shows you how to tweak your operations and promote your business. Making these small improvements to your business will result in significant gains. Her advice

in Lift Strategies is gleaned from helping hundreds of small business owners craft real marketing systems and execute effective action plans. Lift Strategies is filled with tangible examples, tips and stories that explore how to: • Make customers feel good • Attract emerging fans • Gain brand equity • Understand the impact of less is more • And much more!

The Power of Habit: Why We Do What We Do in Life and Business
Charles Duhigg
Random House | February 2012

Shopper Marketing: How to Increase Purchase Decisions at the Point of Sale
Markus Stahlberg & Ville Maila
Kogan Page, 2nd Edition | April 2012

In The Power of Habit, award-winning New York Times business reporter Charles Duhigg takes us to the thrilling edge of scientific discoveries that explain why habits exist and how they can be changed. With penetrating intelligence and an ability to distill vast amounts of information into engrossing narratives, Duhigg brings to life a whole new understanding of human nature and its potential for transformation. Along the way we learn why some people and companies struggle to change, despite years of trying, while others seem to remake themselves overnight. We visit laboratories where neuroscientists explore how habits work and where, exactly, they reside in our brains. We discover how the right habits were crucial to the success of Olympic swimmer Michael Phelps, Starbucks CEO Howard Schultz, and civil-rights hero Martin Luther King, Jr. We go inside Procter & Gamble, Target superstores, Rick Warren’s Saddleback Church, NFL locker rooms, and the nation’s largest hospitals and see how implementing so-called keystone habits can earn billions and mean the difference between failure and success, life and death. At its core, The Power of Habit contains an exhilarating argument: The key to exercising regularly, losing weight, raising exceptional children, becoming more productive, building revolutionary companies and social movements, and achieving success is understanding how habits work. Habits aren’t destiny. As Charles Duhigg shows, by harnessing this new science, we can transform our businesses, our communities, and our lives.

Shopper Marketing explores the subject of focused marketing initiatives aimed at browsers and shoppers who are instore and can be influenced in their final buying decisions. Written by 35 experts from top companies around the world including dunnhumbyUSA, Millward Brown, Tesco’s Fresh & Easy, MARS Advertising, and Nestlé, Shopper Marketing shows the most effective ways of converting shoppers into buyers at the point of purchase. Surveys point out that shopper marketing is growing even faster than internet advertising and research has indicated that: • At least 70% of brand choices are made in the store  • Over  two-thirds  of  purchase  decisions  are  not  planned  in advance • Only 5% of shoppers are loyal to one brand within a product  group  Providing practical advice about shopper needs and trends, retail environments, shopper marketing strategies and much more, this accessible title is a must-have for all marketing, sales and retail practitioners, as well as students of sales and marketing.

Loyalty Management™ • SECOND QUARTER 2012

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LOYALTY FORUM: BEHIND THE BRAND

MICHAEL HEMSEY
—Kobie Marketing

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S PRESIDENT OF KOBIE MARKETING, Michael is responsible for leading all facets of the loyalty marketing organization. For (almost) twenty years, Michael has cultivated a rich background in CRM, client services, product development, marketing, technology, finance and operations, serving the world’s largest retailers and issuers. According to The Forrester Wave™: Loyalty Program Service Providers, Q1 2012 report, Kobie Marketing was identified as a “loyalty marketing leader, ranking highest for technology platform, program management services and customer satisfaction.”
WHERE DO YOU SEE KOBIE MOVING/GROWING WITHIN THE NEXT 3 YEARS? We serve many industries, and want our clients to drive our product roadmap. As such, leveraging new and existing payment and service channels in innovative ways (think mobile, tablet, POS, social) will create new acquisition, retention and cross-sell opportunities like never before—both online and offline. Our clients’ success is tied directly to the relevance of their brand to their customers, and our programs will continue to make those connections. Our industry leading technology platform, Alchemy®, will continue to be a focus for Kobie Marketing. We believe the backbone to great customer experience starts with the best technology. In the next three years, it will be even more important to create seamless cross-channel integration and develop innovative loyalty marketing programs as new technologies and services are developed and become a part of our consumers daily lives. WHAT WILL BE YOUR KEY AREAS OF FOCUS THROUGH 2012 AND BEYOND? WHAT’S ON THE WISH LIST? Like the loyalty programs we implement, we recognize that employee advocacy is key to any organizations success. Our teams are as passionate as our client partners about the programs we manage, and we will continue to invest across all of our disciplines. Our primary focus is on hiring and retaining the best talent in the industry. As for the wish list, I’d like to play 18 holes of golf versus the current 12 holes I manage to string together without a triple bogey. As a fall back, I may have to take up tennis.

CONGRATULATIONS ON THE RANKING FROM FORRESTER. FROM YOUR PERSPECTIVE WHAT DOES KOBIE MARKETING DO THAT REALLY SETS IT APART FROM OTHERS IN THE INDUSTRY? Three years ago we decided as a company to differentiate ourselves by delivering The Best Customer Experience. We want our clients to have the best customer experience working with the Kobie team, and we want their customers to have the best customer experience interacting with their brand. This is why we are in business, and is no different then how we advocate loyalty program strategy and delivery. What this means in practice is that we must never sacrifice an existing client relationship (for any reason), and we must always deliver the most engaging customer experience for every channel we manage on behalf of our customers (call center, web, mobile, social, print, digital, and the like). We also demand that every program or service we deliver be profitable and prove a return on investment for our clients. Loyalty programs, CRM, analytics, marketing, campaigns, rewards, incentives— are only valuable and worthy of investment if they drive incremental behaviors, and bottom line profits that otherwise would not have occurred. We work diligently to prove our client’s programs are some of the most profitable in their industries. We’re also dedicated to the complete loyalty experience. Our approach is simple—we build end-to-end loyalty programs that focus on customer centricity at every touchpoint. Everything in our product and service roadmap is focused on innovating based on the needs of the market and our clients; turning loyal customers into raving fans.

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INSPIRED BY JAMES LIPTON ON “INSIDE THE ACTORS STUDIO” WE ASKED MICHAEL TO SHARE HIS QUICK FIRE RESPONSE TO T H E Q U E S T I O N S O R I G I N AT I N G F RO M T H E F R E N C H S E R I E S , " B O U I L L O N D E C U L T U R E " H O S T E D B Y B E R N A R D P I V O T.
~ What is your favorite word? YES ~ What is your least favorite word? NO ~ What turns you on creatively, spiritually, or emotionally? THE DISCOVERY OF GREAT IDEAS ~ What turns you off? PESSIMISM, OF ANY KIND, IN ANY FORM. IT DEMONSTRATES A LACK OF ABILITY TO IMAGINE, OR CHANGE ~ What is your favorite (PG-13) curse word? KICK ASS ~ What sound or noise do you love? LAUGHTER ~ What sound or noise do you hate? THE EMERGENCY RESPONSE ALARM ~ What profession other than your own would you like to attempt? CULINARY CHEF, PROFESSIONAL GOLF,
BEST SELLING NOVELIST (TURNED SCREENWRITER), AND A PIRATE

~ What profession would you not like to do? TAX ATTORNEY FOR THE IRS ~ If Heaven exists, what would you like to hear God say when you arrive at the Pearly Gates?
“WOULD YOU PREFER SMOKING OR NON?” THEN A, “JUST KIDDING”

KOBIE HAS BEEN FOCUSING ON THE IMPORTANCE OF THE OVERALL CUSTOMER EXPERIENCE. WHICH ORGANIZATIONS DO YOU SEE WHO ARE DOING THIS MOST EFFECTIVELY? ANY IDEA WHAT THEIR SECRET IS/HOW THEY'VE BECOME SO SUCCESSFUL? AMC is a great example of an organization with an excellent customer engagement strategy. The Stubs concept is all about the customer—allowing moviegoers to save and share virtual ticket stubs and get free upgrades and earn rewards that keep them coming back. The program was designed to deliver engaging content via real-time POS—a area of focus not only for AMC but for many organizations interested in effectively engaging customers, when and where it matters most. In essence, the Stubs program “responds” as members walk into the theater. It’s a simple philosophy really: deliver a meaningful message to a member at the right time through their channel of choice. Another key ingredient to delivering this experience well is the way AMC trains its staff to become ambassadors of the program. The benefits of the program are simple yet highly valued which make it easy for employees to advocate for the brand. KOBIE WORKS WITH A VERY DIVERSE GROUP OF CLIENTS; THIS ALLOWS YOU TO SEE TRENDS ACROSS MANY INDUSTRIES. WHAT ADVICE DO YOU HAVE FOR MARKETERS FOCUSED ON INCREASING CUSTOMER LIFETIME/CUSTOMER RETENTION; WHERE SHOULD THEY FOCUS THEIR IMMEDIATE EFFORTS? Focus your immediate efforts on delivering a meaningful and engaging customer experience. Keep your customer as the core of your loyalty strategy across all touchpoints in the customer lifecycle and make an effort to truly understand how your customers utilize channels, to become more brand loyal. IF YOU WEREN'T BUILDING KOBIE MARKETING WHAT WOULD YOU BE DOING? Publishing my short stories, novels and screenplays.

WHAT ARE YOU MOST PASSIONATE ABOUT? Making It Happen (whatever “it” is). WHO'S BEEN MOST INFLUENTIAL IN YOUR LIFE, WHY? My parents—their focus on the importance of education and creativity shaped me in profound ways. WHICH BOOKS ARE YOU CURRENTLY RECOMMENDING? American Gods; Game of Thrones (any of the series); The Elephant’s Journey; and The Master and Margarita. IF YOU COULD INVITE 4 PEOPLE TO DINNER (PAST OR PRESENT) WHO WOULD THEY BE AND WHY? George Carlin, Mozart, Al Pacino and Picasso. I mean, just imagine the conversation.

How are you spending your free time?

Traveling extensively, with my family and friends. L

Our approach is simple— we build end-to-end loyalty programs that focus on customer centricity at every touchpoint.”

Loyalty Management™ • SECOND QUARTER 2012

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LOYALTY EXPO 2012 INSIGHTS

WHAT ARE LOYALTY EXPERTS TALKING ABOUT?
BOB FETTER

—Pluris Ma rketing

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ngagement is a buzz word of late, with every marketing firm and brand waking up to the notion that—stop the presses—engaging with and rewarding customers in relevant, timely ways generates word of mouth and increases sales. For one segment of the population however, engagement strategies have always been at the center of the sales pipeline. I am speaking of course, about loyalty marketers. You know the industry based on a system of engagement and rewards that consistently help retain customers and drive predictable sales? They are the founding fathers and mothers of systematic, optimized engagement.
Every year loyalty program managers and CMOs gather to swap strategies, success stories and network at the Loyalty 360 conference, the Loyalty Expo—a marquee event for hundreds of people whose life’s work is to find ways to elicit the love and support of consumers, the L360 festivities are the spot for the original engagement and loyalty gangsters. So what was everyone talking about this year? BIG WHAT? Big data is also a hot topic, but one that still engenders much confusion about exactly what “it” is and, really, how “big” it is. In a nutshell, big data is about the potentially massive amounts of data that can come from a few primary sources. First is, yes, gaming data. When an application like Farmville becomes successful on Facebook, and daily usage soars into the millions, this application generates big data. Second, it is data generated by sensors like RFID, which can be implanted anywhere. As the web becomes more interconnected with sensors and similar devices, the data generated will, in fact, be big. Third is data generated by consumers through “normal” activities like mobile applications usage, web browsing and social media interactions. It is clear from the conference that brands are struggling with how to fit big data into their overall consumer engagement strategies, but they know that integrate they must. MATH WORKS! Of course, if big data is a hot topic, then analytics can’t be far behind. While there is nothing revolutionary to report on advances in statistical techniques and methods, it is the successful and innovative applications of these techniques to solve real problems that create buzz. A key concept re-iterated many times at the show is the necessity to reduce the problem through the development of usable segmentation techniques that allow marketers to view their customers in terms of personas. Developing and managing content strategies to 8-12 useful personas makes optimizing content a reality, rather than a dream. This year’s Loyalty Expo, in my mind at least, was exciting and a resounding success. The Loyalty Community is an exciting community to be involved with, and new developments in the coming months around mobile and local solutions will only fuel the excitement. L

According to a recent Loyalty 36o Pulse Survey 52% of responding attendees report that they are able to put what they learned at this years Loyalty Expo into practice immediately. An additional 14% within the next year!
LOYALT Y GAMES I heard it in the halls, on panels, and in my informal conversations. I saw it in the literature spread throughout the conference and it was clear to me that the loyalty industry is doubling down on something it practically invented: Gamification. For years everyone in the loyalty space has leveraged a system of points to reward and retain customers in a way that drives sales. It’s always been a game that retailers and consumers play. So what made the buzz on gamification this year any different (except for the use of the buzz word)? Consumers and their adoption of games! While the principles of gamification remain the same, the playing field has shifted dramatically. Consumer behaviors are changing. It can be argued that gaming has always existed in the consumer psyche, as evidenced by the age old art of haggling, whereby a consumer works an angle for a discount or conversely, whereby a retailer uses techniques of chance to conduct a sale. But think for a moment about how much consumer behavior has changed just in the past couple of years. People are spending an inordinate amount of time building farms on Facebook, checking in to Foursquare for badges, hunting down “deals of the day” and exchanging virtual credits for real or imagined goods. In the casual gaming industry, business is booming in all directions, and loyalty, more than any other segment of the marketing industry, is paying close attention.

An insightful industry veteran, Bob Fetter is directly responsible for expanding Pluris' leadership position in media and communications, retail, and other key markets where optimizing marketing spend is becoming critical to consumer marketers. With more than 20 years of experience in sales, marketing, and operations, Bob helps leading marketing organizations implement break through ideas.

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Loyalty Management™ • SECOND QUARTER 2012

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ENGAGEMENT & EXPERIENCE EXPO
October 28 - 30, 2012 | Hyatt Regency | Dallas, Texas

EE

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WE WILL BE COVERING TOPICS SUCH AS:
Customer Experience Customer Engagement Customer Data Customer Intelligence Emerging Technologies Voice of the Customer Social Media Mobile ROI

On the Road to Loyalty: Engagement is the Journey, Loyalty is the Destination

EARLY BIRD RATES AVAILABLE— To begin your journey, reserve your spot today! www.engagementexpo.com
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Loyalty Management™ • SECOND QUARTER 2012

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