Volume 2 Number 1

Winter 2010
powered by Loyalty 360

Across the Ocean Blue


2010: The year you invest in

Social Media

Making the Connection:
Employee Engagement and Customer Loyalty

The Private Label Credit Card Dilemma


This Month in

6 What’s on Loyalty360.org 8 Letter from the Editor 10 Contributors


What drives the success of American and European loyalty programs?
Across the Ocean Blue, pg.32

12 Your Voice: Loyalty Management Readership Survey Amanda Chasteen, Loyalty 360 13 Q & A: Ask the Experts What have you learned in 2009 that will shape 2010? What should be on every marketers’ list of “Loyalty & Engagement Resolutions”? 16 Behind the Brand/People Interview with Kim Marotta, Vice President of Corporate Social Responsibility, MillerCoors Llc 18 Books Loyalty Reads

Building relationships, one person at a time.
Carlson Marketing knows how to take care of your customers. We have unparalleled experience launching and managing relationship marketing programs. Our deep understanding of customer data translates into insight – and value – for you. Our full suite of services, creativity, strategy, execution, end-to-end operational excellence and enthusiasm all combine to make us the perfect marketing partner. When you’re looking for direction on how you can turn customer engagement into organizational value, contact us. Let our experience work for you. carlsonmarketing.com | 763.212.4520

20 Redefining Leadership Rick Blabolil, Marketing Innovators International, Inc. 24 Evolutionary Trends: Driving stronger relationships for improved business results in 2010 Taylor Duersch & Catrina McAuliffe, Carlson Marketing 26 Approaching a New Decade with New Strategies: Partnership Marketing Brittany Simmer, Vesdia Corporation 28 Investing in Customers Ahead of the Recovery David Rosen & Michael Greenberg, Loyalty Lab 32 Across the Ocean Blue Alexander Meili, ICLP 35 10:10 Loyalty Trends for 2010 Robert Passikoff, Ph.D., Brand Keys, Inc. 38 The Confluence of Data, Dollars and Desires Nicole Nunn Walker, MetroSplash Systems Group 40 Keeping Up in a Down Economy Bob Nelson, Ph.D., Nelson Motivation, Inc.


As VP Corporate Social Responsibility for MillerCoors, Kim Marotta expands her passion and commitment to creating stronger communities.

July 2009

Investing in Customers Ahead of the Recovery—a whitepaper by Loyalty Lab
Loyalty Management™ • WINTER 2010

| Loyalty Management


This Month in

42 Rewards Trends 2010 “Variable Rate Rewards,” James C. Purdy, Bridge2 Solutions, Inc. “Travel Loyalty Program Redemption Trends,” John Miller, Connexions Loyalty Travel Solutions “Distinguishing Loyalty,” Render Dahiya, Arroweye Solutions “Concierge,” Michael Breault, Circles 46 Expanding the Universe of International Coalition Redemption Options James Watts, First Annapolis Loyalty 48 Globiphonization Dominic Hofer, Loylogic 50 2010: The Year You Invest in Social Media Jared Stivers, Walker+Stivers Analytics 52 Mobile Applications Advertising and Marketing Amit Gupta, InMobi

Build true loyalty by building better relationships.
A more strategic, data driven approach can help you move to the next level of loyalty. With genuine insights into the needs and expectations of your customers, you can talk with, treat, and reward different customers in unique ways. This is what we call true loyalty.

2010: The Year You Invest in Social Media
Loyalty Management Editorial & Production Team Erin Raese - Editor in Chief Mark Johnson - Contributing Editor Caitlin Schar - Editorial Director Kathleen Ninneman - Graphic Designer Jet Litho Inc. - Print Production Loyalty 360 Team Mark Johnson - President & CEO Erin Raese - COO Amanda Chasteen - Manager, Marketing Operations Charlie Deye - Director of Sales Julie Hellebusch - Controller Contacts Article Submissions: Erin Raese (erinraese@loyalty360.org) Advertising: Charlie Deye (513.226.0925) To subscribe to Loyalty Management, visit loyalty360.org.

54 Loyalty Innovation 56 The Private Label Credit Card Dilemma Jeffrey Harris, SHC Direct 58 Engagement and the ROI of Results Measurement Todd Hanson, Catalyst Performance Group, Inc. 60 Three Components for a Successful Business Model Eric Granado, CSH Consulting 62 Ten Ideas To Build Morale In Any Organization Billy Arcement, MEd, The Leadership Strategist 64 Trends, Implications and Solutions in Engagement Marketing Bob Fetter, Pluris Marketing 66 Engaging Employees in the Road to Customer Loyalty Barry Kirk & Melissa Van Dyke, Maritz 68 Pushing Loyalty: Connecting employee engagement to customer loyalty Michael Konikoff, Fairlane Group 70 Extended Loyalty Program Profile Air Miles & My Planet
Loyalty Management™ • WINTER 2010

Bring this approach to life with comprehensive services from Maritz. It's our business to understand what matters most to people. Enable them with knowledge and tools. And motivate them to change behaviors. To start working on your relationships, stop by booth #100 at the Loyalty Expo. Ready to learn more now? Visit maritz.com or call (877) 4 MARITZ.

We Want Your Feedback As a “voice of the customer” focused publication we want to hear from you–our customers. What would you like to see included in these pages? Share your thoughts on articles and ideas for content. This is your platform. We would like to hear from you. Write us at: mailbag@loyaltymangement.com
© 2010 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 uthors 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.



what’s on loyalty360.org
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you may have missed … OUR


Webinar recordings from the series are available for Loyalty 360 members to access. Log on to loyalty360.org and visit the Multimedia section for a full listing.
Epsilon: Successful Loyalty Marketing: Developing New Member Marketing That Works, an Instructional Case Study Kobie Marketing: iPhonifying Loyalty - Leveraging Today’s Mobile Technologies to Drive an Integrated Customer Loyalty Experience First Data: ReadyLift Loyalty Maritz: Engaging Employees on the Road to Customer Loyalty Carlson Marketing Worldwide: A Brighter Future, a Better Way: Loyalty Marketing for Consumer Goods Packaging

knowledge. deliver y. results. how motivating.
Let us motivate you.
At A nion Loyalty Group (ALG), we o er ways to drive pro table behaviors among your customers using any means possible: points, miles, rewards, incentives, enhancements. Our years of experience ensure we acknowledge, understand and anticipate marketplace and consumer trends, helping us design programs to motivate your customers’ behavior. Some of the most recognizable brands have employed our services to develop loyalty solutions to meet their pro tability goals. We believe loyalty should be a business strategy with a positive ROI. And our proven loyalty solutions repeatedly result in pro tability for our clients. Visit us at www.a nionloyalty.com/loyalty or call 800.622.4863 to learn more about our loyalty marketing services and how we can help create loyalty between you and your customers.

Member Messaging
Loyalty 360 members can now direct message other Loyalty 360 members. Search and view Loyalty 360 member profiles and send messages with attachments directly, without an introduction. Browse by name, company or member level and organize messages in folders. Have something to share with all Loyalty 360 members? Post or schedule a bulletin along with an expiration date.

Member Management
Designated members can assign and manage company associate and/or client memberships.


Loyalty Management™ • LOYALTY360.ORG


Welcome to our first anniversary issue!
This issue takes a look at what we’ve learned from 2009 and provides thoughts, insights and trends for 2010 and beyond. With the challenges of the last few years now behind us, it is truly amazing how we are embracing 2010 and beyond with optimism, enthusiasm and openness to change.
Each of our contributors has shared their predictions and resolutions for the new year. Not surprising, many of us are focused on technology. Technology has grown fast in the past decade rapidly changing and influencing how we communicate with each other and our customer. In this issue, we’ve highlighted a number of new technologies in Loyalty Innovation on pgs 54-5; social media (50-1), and mobile strategies (48-49, 52) which will no doubt be embraced, tested and re-engineered in 2010.

Welcome new Loyalty 360 Members: Alterian Boost Rewards Citibank edo Interactive Incentium Marketing Innovators Mocapay Nielsen Sears Young America

It’s not just a new year, but a new world in loyalty. Here in the states, we’re seeing significant convergence of strategies and technologies from our neighbors in Canada, Europe, and Asia. There is a lot to be learned from these other cultures; the influences will surely affect the way we communicate with our customers and employees. In this issue we take a deeper look into what the world community is doing to influence and impact loyalty strategies around the globe. Compare our differences in Across the Ocean Blue (32-4). See what is working for our neighbors up north in a special Loyalty Program profile on pg 70. 2009 was a year of learning; from how to run an association to producing a publication to continually learning and understanding the dynamics of the CUSTOMER. As Mark and I continue to speak with you, we’re listening to your requests for insights, ideas and support, plus we’re taking your inquiries and actively developing insightful articles and building a diverse, educational

2010 2010 predictions

agenda for the 2010 Loyalty Expo, in Orlando Florida. Be sure to join us June 6 – 8 at the Omni ChampionsGate. Sincerely,

•Submit expense reports within 48 hours of trips •Practice the Power of Nice—Finish the book and work on being nice

Erin Raese Editor-in-Chief Loyalty Management erinraese@loyaltymanagement.com


Loyalty Management™ • LOYALTY360.ORG



Billy Arcement

Billy Arcement—The Leadership Strategist— is a professional speaker, leadership consultant and author of two books. He provides solutions for business and education leaders by turning knowledge into results. Learn more about his services at SearchingForSuccess.com.

Eric Granado
Eric Granado is Director of Issuing & Alternative Payments for CSH Consulting, a recruiting firm focused on the payments industry. The CSH Consulting leadership team has over 50 years of combined experience recruiting in the payments arena.

Michael Konikoff

Michael has spent over 26 years in marketing with the last 16 spent within the loyalty sector. As Senior Vice President, Business Development- Fairlane Group, Michael heads up strategy, including business modeling, planning and consulting.

James C. Purdy

Jim is a founder and executive vice president of Business Development for Bridge2 Solutions, Inc. His career spans three decades in awards development and strategy, managing sales teams and client programs in various executive roles.

Rick Blabolil is president of Marketing Innovators International, Inc. Providing thought leadership to the industry, Rick is past president of the Incentive Marketing Association and Forum for PPMM, and vice president of the Incentive Research Foundation.

Richard A. Blabolil

Michael Greenberg
Michael is Chief Operating Officer at Loyalty Lab. Michael has worked in several roles since joining the company in 2004, and currently oversees daily operations. Before joining Loyalty Lab, Michael was VP of Marketing for Galyans.

Catrina McAuliffe

Vice President, Brand Planning—Carlson Marketing. Catrina has more than 20 years of brand planning experience working with clients to develop consumer centric, strategic marketing plans and creative communications including advertising, public relations, digital, relationship marketing and design.

David Rosen

David is SVP, Strategy and Channel Development at Loyalty Lab. Over the past two years, David has designed innovative loyalty programs for more than three dozen top national brands in the multi-channel retail, consumer goods and services, media and travel industries.

Michael Breault

Amit Gupta
Amit Gupta, Co-Founder and Head of Business Development, InMobi. Amit spearheads InMobi’s growth efforts by focusing on strategic alliances as well as managing publisher relationships.

Michael Breault is CEO of Circles, a leading provider of concierge, events and loyalty marketing services to Fortune 1000 clients. Circles has revolutionized how companies build life-long relationships with their customers and employees, driving behaviors that increase engagement, satisfaction and profitability.

Alexander Meili

Brittany Simmer

European Planning Director, ICLP. Alexander is responsible for the strategic account planning of new and existing clients in Europe. He is influential in furthering ICLP European expansion and recently set up a new office in Madrid.

Brittany Simmer is the vice president of business development for Vesdia’s leading merchant-funded rewards network and partnership marketing programs for retailers, banks and the hospitality industry.

Todd Hanson
Todd Hanson is president and founder of Catalyst Performance Group, Inc. and leads the ROI of Engagement Partnership. He conducts ROI evaluations and trains in ROI Methodology™

Jared Stivers

John Miller

Render Dahiya

President and CEO of Arroweye Solutions. Render Dahiya has led Arroweye Solutions since 2007. Previously, he spent nearly 20 years at FedEx Kinko’s as one of its founding members, helping to build it into a nationally recognized brand.

Jeffrey Harris

Director of New Business Development for Connexions Loyalty Travel Solutions (CLTS), John brings over 10 years of loyalty travel experience and over 20 years of travel industry experience including positions within industry relations, product development and sales.

Jared Stivers is the founding partner of Walker+Stivers Analytics Consulting a boutique agency based in San Francisco that focuses on quantifying social media for marketers.

Melissa Van Dyke

VP—Decision Sciences—Carlson Marketing. Taylor has more than 10 years of experience leading customer analytics, and managing and evaluating marketing solutions in the B2B and B2C space.

Taylor Duersch

President and CEO, SHC Direct. Jeffrey founded SHC Direct and leads its management team. Jeffrey has over 20 years of marketing, sales, sales management and client services/operations experience in the incentive and loyalty marketing fields.

Bob Nelson, Ph.D

Bob Nelson, Ph.D., is president of Nelson Motivation Inc. (nelson-motivation.com) and author of the new book Keeping Up in a Down Economy: What the Best Companies Do to Get Results in Tough Times.

Employee Engagement Practice Consultant for Maritz, Melissa consults with clients on how to build strategic recognition solutions that engage, align and motivate employees to higher levels of performance. Van Dyke’s strategic approach allows companies to harness the power of recognition that resonates to drive business results.

Dominic Hofer Bob Fetter
Senior Vice President, Pluris Marketing. With more than 20 years of experience in sales, marketing and operations, Bob helps leading marketing organizations implement breakthrough ideas, and has helped design more than 150 multi-channel marketing programs for major business-to-consumer and business-to-business companies.

Dominic Hofer is the CEO and Co-Founder of Loylogic, Inc. He is a seasoned loyalty expert and helped building multiple awardwinning frequent flyer programs. He has a Degree in Law from the University of Berne, Switzerland.

Robert Passikoff, Ph.D

Nicole Nunn Walker

Robert is founder and president of Brand Keys, Inc., a customer loyalty and engagement research consultancy based in New York City. He is the author of the best-selling Predicting Market Success, and coauthor of The Certainty Principle.

Nicole has spent two decades in Marketing Management roles with Fortune 500 companies including CA, Sterling Software, AT&T, Amdocs and Texas Instruments. Nicole currently serves as VP of Marketing for MetroSplash System Group, providers of the FuelLinks loyalty platform.

Barry Kirk

As the Director of Strategic Consulting for Maritz Loyalty Marketing, Barry Kirk assists clients in identifying and refining their customer engagement objectives, as well as defining solutions to drive customer retention and loyalty.

If you would like to contribute to a future issue of Loyalty Management please contact Erin Raese at (630) 235.8251 or erinraese@loyalty360.org.

James Watts

James Watts is an Associate at First Annapolis with a focus on the card issuing practice area and has been a part of the Strategic Loyalty Initiative since its inception.


Loyalty Management™ • LOYALTY360.ORG

Loyalty Management™ • WINTER 2010



Loyalty Management Readership Survey
by Amanda Chasteen, Loyalty 360

Here’s what you’re saying about the Loyalty Management magazine:
•50% want to see more coverage on Engagement

What happens to consumer and employee loyalty and engagement when an economy is in turmoil? How do we define trends that are shifting month-to-month, a society in reactionary mode, and plan for the future of market satisfaction? 2009 has brought forth a set of shifts which may immediately sting, but which carry with them the promise of a more streamlined model with the potential to benefit businesses and consumers alike through its adaptability. Let’s consider two trends which are of particular importance in looking ahead to 2010.

•61% discovered new companies, products or services through the ads
•23% have reached out to our advertisers •37% want to see less focus on restaurant loyalty

Ask the Experts

•88% want to read interviews with brand leaders
•12% share the magazine with your friends and family •44% want to see more about technology •41% want more information on financial loyalty programs

Q: What have you learned in 2009 that will shape 2010?

What should be on every marketers’ list of “Loyalty & Engagement Resolutions”?

2009 Individual Trend:
Fracturing & rethinking; a surplus of highly skilled people in the market for work

On average, how much do you read per issue?

What topics interest you most?
Eli Cohen, Polo Ralph Lauren “Case studies with metrics pointing out successful and non-successful programs.”

2010 Individual Advantage:
Entrepreneurship is on the rise and individuals are gaining back a sense of empowerment regarding their definition of work satisfaction and employment. Just as businesses are gaining focus, individuals who have been laid off are challenged to hone in on their passions and springboard from those into the next stage of their careers. For many, this means talent actualization and a return to looking at work as more than a job. What does this mean for loyalty and engagement looking forward? Paradigm shifts are powerful and workers are redefining what it means to be loyal in the workplace. Many are no longer focused on finding a long term fit, but instead on finding a project-based alignment of skills. For consumers, the trends in flexibility and specialization will trickle into buying habits and expectations, as people learn to rethink their priorities and how they define careers, they will rethink what they expect of companies, shattering the definition of what it means to be loyal and taking engagement to a new depths.

26% Read Some

Harmen Donker, FunMiles Antilles NV “Supporting teamwork within my own company as a means of developing loyal clients.” Jean Eric Tousignant, Laurentian Bank of Canada

2009 Business Trend:
Restructuring & refocusing

44% Read Most

9% Skim

21% Read All

Best practices in direct marketing for engaging and on boarding new customers, reactivating lapsed customers, and retaining best customers.
Heidi Brien, Sodexo “Use of CRM techniques to develop loyalty programs.”

2010 Business Advantage:
As hard as the 2009 trend has been on individuals, from an objective business perspective, consumers are looking at more streamlined, focused providers who realize the importance of serving their customers well. Consumers will also find businesses who are thinking outside traditional lines, creating partnerships and hiring expert contractors to complete work instead of carrying the overhead of maintaining burgeoning departments. Narrowing focus also comes with a distinct advantage for loyalty and engagement programs: the ability to more rapidly understand what is drawing in consumers and keeping them coming back for more.

—Connie Chesner

Founder and Consumer Behavior Strategist, Right Brain Discovery

continued on next page »


Loyalty Management™ • LOYALTY360.ORG

Loyalty Management™ • WINTER 2010


Loyalty Forum: Q & A (continued)


Today’s customers demand engagement from those companies they do business with throughout every stage of their relationship with

products and services that provide value and a sense of control.

When it comes to social marketing, customer communities, and other sharing activities on the web, 2009 appears to be the year that social networking solutions began to address real enterprise objectives for both B2B and B2C businesses. What we learned is that top level marketing messages are being heard less, and the top buying influence has shifted to the voice of the customer. Keeping the attention of consumers has gone from difficult to nearly impossible. 2010 opens up new realms of possibilities. Those businesses that invest in the online customer experience will be the winners of tomorrow. You have already seen how prospects and customers want to listen and engage with friends on social networks, get recommendations on buying decisions, blog and tweet about their interactions, and obtain expert support quickly and easily through the web. Right now would be a great time to build a plan as to how you will reach your target audience and ensure they engage with your brand to incentivize repeat visitors. Here are some of the areas you many need to jump-start or revamp: 1.Larger focus and investment into mobile interactions. Mobile phone browsers are vastly improved along with hardware that can search and display content (text, images and video) faster than ever. 2. Look at how multiple touch points (corporate web site, mobile, call centers, community, and other social sites) with customers can be integrated so that you are leveraging a multi-channel experience and not being seen as a disparate company. And, 3. Measurement—as in knowing the net effect. When it comes to social, many companies have just begun to evaluate their efforts, while others have had strict performance metrics from the start. Either way, it’s more important that you measure what action your prospect or customer took as a result.


—Marti Beller
This past year marked a complete paradigm shift in the financial services industry. In the aftermath of the financial collapse, lawmakers quickly ushered in legislative and regulatory changes that are forcing banks to reconsider their business models and envision new ways of doing business. The CARD Act of 2009, for example, changed the game for issuers. By limiting rate and fee increases, and regulating marketing practices, the law makes it more challenging for issuers to manage risk and maintain profitability. In addition, new regulations on overdraft fees that require consumers to opt-in threaten to further reduce fee income. To compensate, many banks may pass costs along to customers who will bear more direct expense for formerly free or low-cost services like free checking accounts. In other cases, customers may be denied services altogether. Furthermore, pending legislation related to interchange and a proposed Consumer Financial Protection Agency could bring more blows to the embattled banking system. In addition to these legislative developments, changes in consumer behavior that took shape in 2009 promise to become further entrenched in the years to come. The era of free spending came to a halt in late 2008, replaced by a new era of accountability where consumers are reasserting control over their finances. Fifty-nine percent of Americans say they will resist spending at pre-recession levels; thirty-eight percent are reducing their use of credit cards, while the savings rate is projected to average 4% next year—the highest rate since 1998. One major beneficiary of these changes is the debit card. As consumers seek to entrench their newfound frugality, they’re migrating to debit and prepaid products. In fact, Visa reported that their debit volume surpassed credit for the first time ever in late 2008. Even though debit and prepaid products are experiencing growth, deciding how to maximize profits within these product lines remains an area of uncertainty. Any time the status quo is Affinion Loyalty Group shaken up, it’s easy to focus on the resulting threats that emerge. However, these shakeups present new opportunities for those who can view threats as a chance to improve upon business as usual. For instance, some financial services firms have chosen to view consumers’ renewed interest in budgeting as an opportunity to position themselves as partners who can help customers to better manage their finances. Take Chase’s new offering, Blueprint. Blueprint is a financial management tool that allows customers to select which purchases they wish to pay off immediately and which they prefer to finance over time. Spend tracking tools that help customers manage spending in various categories round out the offering. While the net effect of this service is not new, the way in which it is implemented is visionary. It promotes customer engagement by encouraging consumers to actively participate in managing their spending at a detailed level. This kind of engagement will help Chase to retain their most valued customers despite regulatory and economic headwinds. Other banks are also seizing upon these trends. Bank of America’s ‘Add it Up’ program and Discover’s ‘Spend Analyzer’ tool, both introduced this year, seek to align themselves with current customer needs.

2009 appears to be the year that social networking solutions began to address real enterprise objectives for both B2B & B2C businesses.
For example, if you’re measuring web referrals from social, then measure how those visits are converting to buyers. If you’re measuring page views, find out how many of those were paying customers. 2009 was one of the greatest evolutions in social web interaction, and no doubt 2010 will bring a new set of ways to engage. I know we have got to take those extra steps to stay ahead of the competition and maximize our marketing investments. L

—Dan Ziman
Director, Marketing Programs Lithium Technologies, Inc

I’m beIng pulled In a mIllIon dIfferent dIrectIons. except yours.

As loyalty managers emerge from 2009 and look forward to the years ahead, they will need to adapt to a landscape where accountability and restraint dominate the new consumer mindset. Today’s customers demand engagement from those companies they do business with throughout every stage of their relationship with products and services that provide value and a sense of control. Those organizations that can fill those expectations by transforming negative news into positive strategies will earn long-term customers and increased market share.




display ads

direct mail

call center

point of sale


Do you have a question for our panel of experts?
Write us at Mailbag@LoyaltyManagement.com

connect wIth more people In more ways.
In a world where consumers are bombarded by marketing impressions, Acxiom enables marketers to reach the right people with the right message across all key marketing channels: email, mobile, website, display ads, as well as offline.

Loyalty Management™ • LOYALTY360.ORG

www.acxiom.com • 888-3ACXIOM


Vice President Corporate Social Responsibility MillerCoors, Llc

Kim Marotta
Before MillerCoors you were a trial lawyer. How did you decide to make the change from lawyer to corporate executive?
I truly enjoyed being a trial lawyer but after thirteen years of practicing criminal defense law, I was looking for the opportunity to expand my skill set and challenge my capabilities in a different profession. When I was a trial lawyer, I worked closely with the local and state non-profit agencies and tried to partner on initiatives that created jobs, offered alcohol and drug treatment, and improved our communities. My role as Vice President Corporate Social Responsibility for MillerCoors has allowed me to expand my passion and commitment to creating better and stronger communities while continuing to create sustainable partnerships with local, state and federal non-profit organizations.


2010 Resolutions

1. I will celebrate life’s special moments—Starting on New Year’s Eve by making the most of the rare, blue moon which only occurs approximately every 20 years and celebrating with an equally rare brew: the limited-edition Blue Moon Grand Cru. 2. I will cut calories—And enjoy MGD 64, a light-refreshing beer with only 64 calories. 3. I will be responsible—And plan ahead to always designate a driver.

Which book(s) are you currently recommending?
I would recommend Loving Frank by Nancy Horan. It’s a riveting story about Frank Lloyd Wright and his mistress, Mamah Cheney, and their much publicized affair. While Mamah made tremendous personal sacrifice to pursue her love for Frank, in the end she died tragically.

Please tell us about your last ah-ha customer experience.
Recognizing that a company’s commitment to sustainability is important to consumers and that it influences their purchasing decisions and brand affinity.

Kim Marotta is Vice President Corporate Social Responsibility at MillerCoors. In her role, Ms. Marotta is responsible for implementing MillerCoors' sustainable development strategy and managing MillerCoors' alcohol responsibility initiatives. She also works closely with both parent organizations, SABMiller and Molson Coors, to drive performance in these key areas.

Which talent would you most like to have?
I wish I had a beautiful singing voice…Actually, any singing voice would be great with me. I love music, but know better than to sing out loud for fear that I may bring down the rafters—but not in a good way.

What can we expect from MillerCoors in 2010?
We’ll continue to make the best beer in the world. We’ll also continue to promote responsible consumption of our products, support our communities and enhance our efforts on sustainability.

You’re responsible for Corporate Responsibility. What exactly does that mean?
At MillerCoors, we wholeheartedly believe that with great beer, comes great responsibility. That’s why we’re working to grow our business the right way by focusing on five key responsibilities: alcohol responsibility, environmental sustainability, people and community investment, a sustainable supply chain, and ethics and transparency. My job, along with my team, is to create and implement programs and initiatives in each of these areas. You can check out our new web site GreatBeerGreatResponsibility.com to learn more about what we do.

Which person has made the most impact in your life?
The person who had the most impact on my life is my grandmother, who we affectionately referred to as Nonnie. Not only did she help raise me and my brother and two sisters, but she also moved in with us after our first child was born and helped us raise our children. She lived with us for over ten years—until the age of 87—and brought a lot of love into our home. She also taught me many valuable life lessons such as: • Sit down with your family and have dinner every night no matter what time the food gets on the table. It’s more important to spend the time with your children than to be prompt with the meat and potatoes. • Always buy the kids snow boots before the first snowfall because after that you’ll never be able to find them on the shelves. • Never give up on the Chicago Cubs.

Word of advice for a novice marketer:
While my marketing expertise at MillerCoors is limited to the areas of alcohol responsibility and sustainability, I believe it’s important to have a strategic vision and theme that’s reflective of that vision. More importantly, you must believe in that vision and commit resources to it in order to inspire others to do the same. L

If you weren’t working for MillerCoors, what would you be doing?
I’d be working in some capacity in the legal profession, preferably as a judge.

What do you consider your greatest achievement?
Being a mother of four healthy, happy children.

When you’re fortunate enough to have free time, how do you spend it?
I am passionate about golf—although there are days when my game seems more like work than pleasure. For years, I was proud that all of my children enjoyed the game, that is until my twelve-year old son and fourteen-year old daughter both started driving their balls thirty yards past mine grinning and laughing all the way. The game really lends itself to great camaraderie among friends and family.

What’s your personal motto? Laugh often and love much.

My role as Vice President Corporate Social Responsibility for MillerCoors has allowed me to expand my passion and commitment to creating better and stronger communities while continuing to create sustainable partnerships with local, state and federal non-profit organizations.
Loyalty Management™ • LOYALTY360.ORG Loyalty Management™ • WINTER 2010



Loyalty Reads
“I LOVE YOU MORE THAN MY DOG” Five Decisions That Drive Extreme Customer Loyalty in Good Times and Bad
by Jeanne Bliss (A 2010 Loyalty Expo Speaker!)
October 2009 | Portfolio

EMPLOYEE ENGAGEMENT: A Roadmap for Creating Profits, Optimizing Performance, and Increasing Loyalty
by Brad Federman
August 2009 | Jossey-Bass

Consumers now more than ever are carefully considering how they spend every dollar. At the same time, social media that gives buyers a public forum for their thoughts and experiences is enjoying a meteoric rise. Together, they’ve created a completely new business culture, one where businesses need not just loyal buyers, but passionate, vocal fans—the kind that rave about you to friends, neighbors and even complete strangers and drive explosive growth via Twitter, Facebook and e-mail. Only an elite few businesses have these true advocates, and no one knows how to create them better than Jeanne Bliss, who has served as the senior customer executive at Lands’ End, Allstate, Coldwell Banker, Microsoft and Mazda. Her new book, “I LOVE YOU MORE THAN MY DOG” Five Decisions That Drive Extreme Customer Loyalty in Good Times and Bad, outlines the five decisions that a company must make in order to catapult itself from mere business to beloved company—deciding to believe, deciding with clarity of purpose, deciding to be there, deciding to be “real” and deciding to say sorry. The book pulls examples from companies who have enjoyed almost cult-like status among their customers, including Trader Joe’s, Harley Davidson, Zappos and Zane’s Cycles, which sells more than $13 million worth of bikes from a single store. In “I LOVE YOU MORE THAN MY DOG” Bliss explains how implementing these five decisions can truly transform your company, elevating it to beloved status and inspiring customers to begin telling your story for you, forming an army of cheerleaders who will, in essence, do your promoting for you.

“If you think you know everything it takes to attain associate/employee engagement, put yourself to the test. This book provides a holistic approach to engagement that will create the competitive edge required to succeed in this economy.” -Sharon S. Bilgischer, senior manager, logistics global talent, curriculum and documentation, Wal-Mart Stores, Inc.
There is clear and mounting evidence that employee engagement keenly correlates to individual, group, and corporate performance in areas such as retention, productivity, customer service, and loyalty. This timely treatment provides a comprehensive framework, language, and process that genuinely connects People Strategy with Business Strategy. It offers a research-based blueprint for looking at employee engagement with the same regularity and importance as any other aspect of the organization.

TAKE THEIR BREATH AWAY: How Imaginative Service Creates Devoted Customers
by Chip R. Bell, John R. Patterson
May 2009 | Wiley

READ AN EXCERPT FROM JEANNE’S BOOK. Chapter One from “I Love You More Than My Dog” is available at Loyalty360.org

Enter to win one of ten copies of “I Love You More Than My Dog” by Jeanne Bliss. Tell us what company (or brand) has earned your love & devotion. Who do you “Love More Than Your Dog?” Write: mailbag@loyaltymangaement.com

“Are you bored? We’re so spoiled that when something is merely good enough, we just walk away. Chip and John explain that the surefire method for growth and customer loyalty is simple: don’t be boring.” —Seth Godin, author of Purple Cow and Tribes “Take Their Breath Away shows how legendary customer service delivery can win and keep devoted customers for life. I LUV this fantastic book.” —Colleen Barrett, President Emeritus, Southwest Airlines Company

THE SOCIAL MEDIA MANIFESTO: The Revolutionary Guide to Build, Manage, and Measure Online Networks in Business
by Brian Solis
February 2010 | Wiley

“No one knows more about creating profit through service than Chip and John. If you want to know the best way to do it, read Take Their Breath Away. The examples in this book will certainly start your creative juices flowing and help your organization take your customers’ breath away. —Howard Beharformer, President, Starbucks Coffee International
Take Their Breath Away shows you how to create exuberantly devoted customers by providing peerless, mind-blowing customer experiences that leave them stunned. Like casting a magic spell, inventive customer experiences transform people from simple buyers into faithful brand advocates. In an era when value-added has gotten way too expensive, value-unique can provide a fresh approach to getting bottom-line impact. Using real examples, this provocative guide shows you how the best brands create unique, customer-endearing practices that lead to irrational loyalty. The book reveals twelve amazing and imaginative strategies, explaining how they work and how to implement them. Whether you operate a giant corporation, a small business, or the department down the hall, these strategies will amaze you and surprise customers. There is a huge difference between good customers and those who are truly, passionately devoted to a brand or organization. The kind of customers you really want are those who forgive your brand when it makes mistakes, recommend your business to everyone else, and defend it when others are critical. Those aren’t just customers; those are devoted followers—and they can make all the difference between chasing after your competitors or leaving them in the dust. Take Their Breath Away gives you the inspiration, practical strategies, and creative ideas to enchant, surprise, and treat your customers to something more than just an encounter. Learn to take your customers’ breath away and they’ll take your brand to heart.

What if you had an instruction manual for Social Media? Now you do. The Social Media Manifesto is the ultimate guide to branding and building your business in the era of the Social Web. The Social Media Manifesto thoroughly examines the social media landscape and how to effectively use it in business—one network and one tool at a time. The guide for branding your business in the era of the social web, this book leads you through the detailed and specific steps required for conceptualizing, implementing, managing, and measuring a social media program. Both small businesses and Fortune 500 companies will increase visibility over their competition, build communities of loyal brand enthusiasts, and ultimately increase profits. •Everything you need to know about social media marketing, starting with where you need to start and how to determine which social networks to participate in and why

•How to come up with effective ideas based on the proven examples of other peers and companies •How to get buy-in from the team •Ways to establish a supportive ecosystem for these new activities •Specific advice for building a brand and community in each network •Direction in participating in each network in ways that benefit your personal and professional brands •Keys to increasing revenue and inspiring action based on goals •Defining and measuring ROI and adapting it to existing benchmarks and metrics, while defining new methods for measuring success over time •Advice for creating new opportunities and marketing programs using lessons learned in social media This is the first book that includes everything readers need to learn, begin, and accelerate effective social media programs. Readers will walk away with everything they need to know in order to turn the Social Web into a powerful tool for branding and building their businesses.


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Loyalty Management™ • WINTER 2010




n 2009, companies have been just trying to persevere. They didn’t really know what to do with their people initiatives. The world was injected with mixed messages. We talk about the fact that people aren’t motivated by “cash” and yet we reflect on the drivers of corporate behavior such as AIG and Bernie Madoff—where greed is the apparent elixir. The toxic behavior of certain leaders derailed the trust relationship between many groups of people: manager and employee, shareholder and company, government and corporate governance, and general public and the establishment. The resulting knee-jerk reaction of the business community was to pull back spending on programs aimed at motivating employees and channel partners.

reduced their work force, reduced benefits and expected people to produce more and wait blindly to be acknowledged or appreciated for their efforts while serving their best customers. While companies sense the world is passing through a profound transformation, they are frequently looking for answers to guide their understanding and help them make the best decisions. Those that are quick to adapt have a rare opportunity to create a competitive edge by selling in the “new normal.” The name of the game is transformation…and a new kind of leadership. A little over a year ago, everyone was talking about the war for talent. The threat of losing the baby boomers in the workforce to retirement fostered a concern that expe-

capital markets have recovered a certain amount of corporate value, but there remains immense volatility in light of widespread uncertainty. Three-digit swings in the DOW are common place. Productivity is up, but national unemployment is 10.2%. As such, “job satisfaction” is up for the mere reason that having a job is satisfying enough. In cases where hiring is occurring, it’s now common that the skill sets of those being hired are “overqualified.” Companies are taking advantage of this phenomenon of high value, low cost. Market volatility and focusing on shortterm rather than long-term will force a rethinking of how decisions are made and money is earned. The masses are making their statement; the consumer will cast

Redefining Leadership
LEADERSHIP with a capital P... for People
by Rick Blabolil, Marketing Innovators International, Inc. We all can attest to a changed world. 2009 has set the next standard for the speed by which we will inevitably live. Whether you call it change, transformation or evolution, business will remain in a constant state of flux. The flow of information, global interaction and the variability in decision making are the ingredients of a perfect storm. These observations are not about doom and gloom—they are perceptions and reality. How we deal with them will be the test of our optimism and our leadership.

Corporations treated “worker” separate from “consumer” and failed to realize that they are two sides of the same coin. When we live as a consumer we are aware of the way we want to be treated, and realize that this is the way we should treat those we serve.
The supply side of the equation was paralyzed by political and resultant negative popular opinion. While companies ran for cover on the supply side they needed to stem the tide of lost customers, and established loyalty programs to keep or earn their business. The irony is that corporations treated “worker” separate from “consumer” and failed to realize that they are two sides of the same coin. When we live as a consumer we are aware of the way we want to be treated, and realize that this is the way we should treat those we serve. This becomes more obvious in difficult times. We become more empathetic with others. But too often this wide spread empathy is short circuited by the senior leadership of big companies. Such was the case this year as too many companies rienced leadership would leave a vacuum in corporate management. The recession has changed this assumption dramatically. Baby boomers, along with most of the workforce, are desperately hanging on to their jobs. With individual retirement funds and savings in crisis, most boomers will not be retiring for another five years or more. Boomers staying in their jobs, combined with those who have been laid off this year, will create a long jobless line for younger workers. The recession is also forcing people to take any job to generate income and health care benefits. This has created a diverse mix of ages and demographic profiles in jobs at all levels. The atmosphere in the workforce is tenable at best. Unemployment is rampant and will plague our society for several years. The their vote through purchasing. “Corporate social responsibility” is being pulled through by the public. In reaction to the economic downturn, companies have taken notice of thinking more broadly—beyond their boardrooms. Our planet and our people belong in the same dialog as profit. So who will consumers be loyal to? Due to the distrust, loss of wealth, higher costs, government intervention and recession, people will look for “good people” to work with, work for and buy from. Do they trust the company, the brand, the people running the company or the people in the front lines? Corporations will have to step up to corporate social responsibility in order to create loyalty from both internal and external audiences.

What have we witnessed in relation to incentives, recognition and loyalty?

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Redefining Leadership (continued)

Predictions for 2010
Flexibility is the new normal.


Leadership will need to redefine itself.
Based on the combination of these factors, leadership will have to be redefined. Successful leaders will need to be focused on people. They will need to be authentic and genuine in seeking conversation and collaboration—and mean it. There cannot be lip service; this will get flushed out in these market conditions. The intent of leadership and its purpose will be rewarded or rebuked, depending on the level of trust and loyalty it has built with its employees and partners. This is when people will become the defining factor.

The baby boomers have a new timeline, and those who were set to retire will remain in the workforce for several more years. The interesting aspect is that not only will companies choose the “over-qualified” workers because they are available at a low cost, but they will incent them. Companies realize their value and will find a way to hold on to them as long as possible. As the economy turns around there will be new fluctuation and turnover. In the meantime, there will be wide variance of the demographics and skills of people holding similar jobs in the workforce, and it will confound the norm. Job performance will blur beyond job descriptions and compensation. Recognition and incentives will become more creative to accommodate the over-qualified, and reward systems will become very personal.

Loyalty is Earned.

This is not a story of “kumbaya”—it is about changing a mindset in light of an economic downturn.
Leaders will need to know that people are a company’s greatest assets, and their front line of defense in tough economic times. Working with their employees, successful leaders can weather the storm and position themselves advantageously for better economic days. They understand that their employees and channel partners are the means to innovation, cost savings, increased profitability, organizational growth, and more satisfied and loyal customers. Leaders will need the fortitude and courage to run against Wall Street’s addiction with short-term results (quarter by quarter) and manage for the long-term—a series of quarters strung together with a vision of continued success over time. So what is profound in 2009? The wave of economic success driven by thinking only of “me” has washed up on the beach. Society and business must redirect itself to the mentality of “us.” It’s no longer about how great an individual we are, it’s about how we function together. The sales proposition will be about the buyer not the seller. Competition will remain important, but winning at the expense of someone else, or by negatively impacting our society or environment, should not be part of the win/win strategy. This is not a story of “kumbaya”—it is about changing a mindset in light of an economic downturn. Unemployment is likely to remain high for the next 24 months and consumer credit will be tight. Corporations will need to value the contributions of their key asset—people—while they navigate cost containment. The businesses that truly do the right things for the right reasons will attract the top talent, customers and investors. Loyalty will be a function of clearly communicating the heart of a company, its intent and purpose. That’s capitalism at its best. L

It’s a conversation economy.
The “sales proposition” has evolved into the “buyer’s proposition.” Sales 2.0 is about the alignment, collaboration and acceleration that results from embracing the buyer’s perspective and needs in your company’s go-to-market strategy. It combines customer-focused processes with Web 2.0 productivity and technologies to enhance the art and science of selling while creating customer value. This is not a fad, it is a paradigm shift. The old top-down “push” approach has become obsolete in today’s marketplace. The power has switched from the seller to the buyer in the new “value provider” mindset. Companies must demonstrate a real understanding of their customer’s needs and be ready to deliver a solution tailored to align with each client’s business objectives. Are sales people nimble and agile enough? Incentives, loyalty and engagement initiatives can play a key role in driving and rewarding behaviors that help create the required change and lead to the desired results.

Does your brand have a loyal following?
Loyalty goes beyond points and transactions. It is the mechanism that engages your brand with consumers. Epsilon knows loyalty. Our loyalty marketing thought leaders can help you build loyalty solutions that create meaningful customer interactions.


Loyalty Management™ • LOYALTY360.ORG


Customer Dialogue - It’s All About Me. And Me.

Evolutionary Trends:
Driving stronger relationships for improved business results in 2010
by Taylor Duersch & Catrina McAuliffe, Carslon Marketing

We all know from personal experience life is busy. There’s fast-talking dialogue on television; advertising on the internet, and even in the bathroom stall; it’s on the television, the subway, the highway; and there’s direct mail, junk mail and e-mail that’s anything but relevant to me. At the same time, we all have more control than ever to choose who we engage with visually and conversationally—DVR’s, no-call lists, email opt-out, and the ability to ignore connection requests. So what’s going to happen in 2010? We see three key trends:

1. Make it About Me - Emergence (or Resurgence) of “Me”
There is so much going on, consumers are spacing everything out, except when it is obviously and demonstrably personally relevant. This has a few key consequences. Be seen as wanting to know, hear, acknowledge and respond to customer concerns. Listening has never been more important or relevant. Standard answers (ex. FAQs) only take you so far, logic also has to play a part of the conversation—making sure that the answer takes into account the situation, the customer value, their emotional state and their ability to influence others. It is a challenge to do this without dialogue. An interesting outcome of this has been the emergence of “we research” both among consumers and corporations. A recognition of the importance of trusting our own judgment and similarity to our consumers in our decisionmaking ability.


oyalty marketing is evolving, and the trends year to year aren’t dramatic; they’re evolutions. When you look at what really drives successful relationship marketing, the foundations haven’t changed that much—nor should they. What’s changed are the cultural and technological advances to support the core elements of good marketing to drive customer relationships, engagement and loyalty. We’ve highlighted some trends and made some predictions for 2010 around analytics and customer dialogue specifically that we’re seeing locally and globally, across the street and around the world. The common denominator? All roads lead to building stronger customer relationships.

Fueling The Analytics Engine
A golden age of marketing analytics is upon us. Over the past few years several bestselling books have espoused the value of analytics to drive decision making in every aspect of business and across every industry. At the same time customer loyalty programs continue to proliferate as a means of capturing and linking the data required to fuel the analytics engine. Two prominent analytic objectives are being adopted almost everywhere we look. 1. Improve the efficiency and effectiveness of marketing spend down to the penny. 2. Find opportunities in the customer data to get partner participation and funding to offset loyalty program costs, increase revenue streams, acquire new customers. In 2010 companies will go after these objectives in a ways that will eventually lead to the Holy Grail of customer relationship management. Here’s how:

nities to increase sales via strategic offers and product bundling. This is true in industries from telecom to grocery. The volume of analytics that can be done in the presence of these data processing speeds and the innovations that will occur will be staggering when compared to what was being done even two years ago. Best of all, the price is right when compared to the cost of the infrastructure many large and mid-sized companies have employed to enable even the most rudimentary of analytics. Second, companies will get smarter. They will get smarter about how they make money from customer relationships and will realize that the relationship outcomes matter just as much as the effectiveness of programs and tactics. This will motivate marketers to find and implement marketing tactics that not only improve the effectiveness and efficiency of marketing spend, but that do so while building the strongest possible relationships with customers and prospects. Don’t think this matters? Then watch out for those that do. Soon we will see the emergence of companies that can and do profitably build one-on-one customer relationships, with every customer, in a way that destroys customer consideration for competitors and puts out every relevant product and service offered by the company, building that relationship into play.

This trend is likely to continue both metaphorically and literally. Literally, “causes” today act as “Merit Badges” (Iconoculture). In 2010, it’s worth thinking through “what does your brand/ company represent that resonates with the consumer?” •Are you connecting with causes that are relevant to them? •Are your positive actions making it easier for them to jump on the bandwagons they believe in, but wouldn’t otherwise have a reason, understanding or connection? •environmentally-friendly •natural/organic •locally produced •fair trade •humane Metaphorically, the economy has made it not only socially acceptable, but cool to be a smart shopper. Thrift is a “badge” for many consumers and a reflection of concern for themselves and family. Recognizing this in dialogue is important to remember and defining the “right” value proposition is key. •ostentation is out, and savings and “smarts” are in •belonging to rewards programs and earning “something for nothing” is a sign of “smarts” rather than miserliness •understanding the balance of emotional and rational reciprocity is crucial; rewarding loyalty and advocacy is a necessity for successful long-term customer retention; soft benefits are as potentially important as hard benefits

3. Consumers are seeking reliable sources they can trust
Today these sources tend to be their peers rather than traditional icons like “brands” or “experts.” Those companies who advocate for consumers (or their causes) will also engender greater trust. But credibility, or the lack thereof, has never been so challenging. That’s the draw of social media like Facebook or Twitter, where you can engage with people you know and trust. But even here, among friends, there’s competition for your time—do you connect with friends, play the games, connect to the links, take the quiz, test your intelligence, read the fan pages, connect with your favorite brand(s)? Conversation is interactive, but how can you have a conversation with someone you don’t know? Listening is key to successful conversations and the core element essential for consumer dialogue to building better relationships. Listening can enable understanding of personal interests and motivations. Relevance will drive engagement, recognizing “I am the cause.” And transparency of intent and behavior are increasingly essential for credibility. So, the net of this for 2010 is that evolutionary trends will drive stronger customer relationships for improved business results, locally and globally, across the street and around the world. L

There is so much going on, consumers are spacing everything out, except when it is obviously and demonstrably personally relevant.
2. Today’s Cause Is “Me”
Recent proprietary research conducted by Carlson Marketing examined two concepts, one for a cause-related program and one that helped consumers save money. When rated monadically both appeared to perform identically. However, when asked to choose between the two, consumers chose the one that directly benefited them. We believe the recent economic events have forced consumers to protect their own and their families interests first, in spite of good intentions. Consumers are often interested in a deeper relationship as long as there is something in it for “me”: •make “my” life simpler •meet “my” need for products, emotions, experiences and connections •let “me” serve myself until “I” need you, then be ready to help “me”— whatever it takes

Interactions Not Just Transactions Drive Stronger Customer Relationships.
To build successful customer relationships, and to build loyalty marketing programs that will “win” in today’s market, requires that companies recognize customer interactions count as much as customer transactions. This means looking at a customer from more than just the economic side. But primarily we see a continual focus on companies recognizing the economic side of the equation, rather than recognizing the value of every interaction of that customer—whether it’s using multiple communication channels, writing reviews, referring peers, etc. The value of building relationships based on the “whole” person will drive a new perspective and greater understanding of your customer to put you on the path to building stronger relationships and improved business results.

First, companies will continue to get bigger and faster in terms of the data available for analysis and the degree to which every useful nuance in the data can be discovered. Companies
will increase their use of data appliances which speed data processing and analysis by factors of 10 or even 100. Suppliers like Kognitio, Netezza and Xtreme Data are enabling marketers to sift every transaction from every customer over extended periods of time revealing opportu-


Predictions for 2010

First, companies will continue to get bigger and faster in terms of the data available for analysis and the degree to which every useful nuance in the data can be discovered. Second, companies will get smarter.
Loyalty Management™ • WINTER 2010


Loyalty Management™ • LOYALTY360.ORG



Approaching a New Decade with New Strategies: Partnership Marketing
by Brittany Simmer, Vesdia Corporation

3.After the Purchase: •Companies can increase revenues by nearly 50% by retaining only 5% of their customer base. (Frederick Reichheid, author of "The Loyalty Effect") But currently, participation in reward programs is an under-utilized tool in every marketers arsenal. This is due in part to a historic lack of attention paid by reward program operators to merchants, even before the purchase takes place. Reward programs’ focus has been traditionally after the purchase has been made, how a consumer can redeem their reward currency, without acknowledging how, why or, most importantly, where the consumer made their purchases to achieve their reward. However, loyalty providers are leading the way into a new era of marketing: a pay-for-performance

Proving the Mettle of the Marketing: Reporting
When it comes to proving marketing’s ROI to your CMO, CEO and that lovable CFO, wouldn’t it be fantastic to provide meticulous reporting, tracking of performance over time and various other types of measurements to prove the business case over and over again? While some metrics have value (e.g. CMPs), the most powerful data will ultimately drive business growth and use insight from current activities to determine where the dollars should be going. Partnering with a loyalty provider, due to their strategic relationships with reward program operators, allows merchants to “slice and dice” shopper spending data to demonstrate the true value of their marketing. Other popular attributes of partnership marketing are “before and after” tests to track purchase volume through a


s we begin to recover from holiday festivities, it might feel like there’s not much to celebrate in the world of marketing. There’s no question that 2009 has been a tough year. During an economic downturn, often the prevailing mindset is to cut marketing dollars. Recent studies have taught us better, but it’s still difficult for CMOs and CEOs

to cut big checks for programs which may or may not show a real ROI— and even more difficult for CFOs. Measurable results—not just impressions—have never been more important. According to iMedia, 59 percent of marketers said that they plan over the coming months to “heavy up” on measurable, result-driven strategies, stating that if “we can’t prove it’s working, we’ll slash it.”¹ At the same time, consumers are in the midst of trying to increase the value of each dollar spent, often throwing past loyalties out the window. Merchants, in turn, are challenged with the cost of acquisition. With all those challenges we faced in the economic upheaval of 2009, marketers may be ending this year feeling a bit beaten up. But, we at Vesdia are optimistic and by this time next year we’ll be singing “Auld Lang Syne” to some out-of-date marketing strategies and tactics and raising our glass to the next generation of partnership marketing.

Reward programs, armed with partnership marketing in a multi-channel environment, are increasingly the most important feature of payment cards.
model which creates a foothold in partnership marketing, giving consumers the opportunity to earn desired rewards faster, operators more value to their reward program, and merchants a much lower cost of acquisition and the ability to develop lasting loyalty. There are three distinct constituencies that help create a powerful partnership marketing solution: consumers, reward program operators and merchants. Each of these constituencies has a unique set of interests their loyalty provider need to satisfy: •Consumers are looking for enhanced earning opportunities, and the ability to earn rewards at a higher rate for purchases, tied to a payment card routinely carried in their wallet. •Reward Program Operators, which are usually defined as credit card loyalty or frequent flyer programs, find that when consumers are earning at a higher rate they can also anticipate an overall increase in card usage, higher customer retention rates and increased satisfaction and activity over time. •The Merchants, the least understood from the perspective of the loyalty industry, are the most important component to these programs. Merchants have the opportunity to take advantage of million dollars worth of multi-channel, reward program marketing communications, leverage existing brand equity and access an engaged audience inclined to purchase loyally. particular base of consumers, measuring marketing share of merchant partners vs. competitors, allows for various types of reward currency, and reporting down to the individual transaction level. The long-term results of utilizing partnership marketing via a reward program go beyond sales. Research by Colloquy, a loyalty marketing consultancy, found that reward program members are 70 percent more likely than others to actively recommend products, services, and brands.³ It’s those consumers who will keep coming back, helping to grow your brand in any economy. Regardless of the economic environment, spending millions of dollars on traditional media without the ability to measure success or target consumers is no longer an effective or viable consideration. Data shows partnership marketing solutions drive consumer spending in a more meaningful, measurable and cost-effective manner. We must understand, however, that partnership marketing is hard work and there are no short cuts. Setting goals, consistent communications and adjustments based on feedback are the keys to success. I invite the industry to enter 2010 embracing that idea. Develop these types of alternative marketing strategies that can be proven to help grow business. If that happens, we’ll all be ready to celebrate this time next year and toast to something more substantial then just surviving. L
³MediaPost, Reward Programs Members are Brand’s Best Friends, By Les Luchter

When used properly, partnership marketing can

reduce operating costs while establishing a meaningful dialogue with consumers, building a
relationship with the customer that marketers could never achieve before.
Leading the Way: Reward Programs
Partnership marketing is a measurable marketing medium with the ability to cross into the growing world of multi-channel customer and retailer. Reward programs, armed with partnership marketing in a multi-channel environment, are increasingly the most important feature of payment cards. These programs are becoming the foundation of differentiation, offer a competitive advantage, and have grown to cater to vastly diverse consumer needs.² Consider the brand experience stages: 1.Before the Purchase: •Over 60% of U.S. households said that loyalty card programs were important in their shopping decisions. (AC Nielson Survey) 2.During the Purchase: •Consumer spending is 46% higher with companies that offer loyalty card programs. (Loyalty Monitor study by Total Research Corp. and Custom Marketing Corp.)
¹iMedia, Brand Summit, February 8, 2009 ²The Future of Credit Card Rewards Programs


New Year Predictions

Here at Vesdia, we’re optimists. We believe the contraction in consumer spending will rebound by 50% in 2010. Though we also believe it will be the Year of the Consumer, with loyalty being redefined, companies will have to provide consumers with additional perceived value in order win their business. I also believe the USC Trojans will go 13-0 in the regular season.


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Loyalty Management™ • WINTER 2010



Investing in Customers Ahead of the Recovery
by David Rosen & Michael Greenburg, Loyalty Lab

An Economic Bright Spot
Despite the slow recovery and cautious budgeting, one area clearly not affected by the recession is marketers’ investment in retaining and enhancing the value of their existing customers. Simply put, smart marketers are investing in customer loyalty when nearly all other areas of spending are being cut. The logic is simple: Why tap into limited dollars on largely unquantifiable advertising and promotion to boost new customer acquisition when focusing on preserving and growing the value of an existing customer base is so obvious? The loss of a single “best customer” requires the acquisition of ten to twenty new “average customers.” In a world where typically seven out of ten newly acquired customers fail to make a repeat purchase, converting a fraction to a second purchase alone would drive consistent yearover-year comparable sales. Identifying and cultivating as few as two percent of a customer base as advocates infuses a brand with new customers with the highest likelihood of consistent, year-over-year spend.

Independent research backs this up. “Of the marketers in our survey, 71% report that their 2009 budgets have been reduced relative to the budgets they had in 2008—and the cuts are hardly insignificant. Just more than half of respondents report cuts of 20% or higher.” 1 As this chart from Forrester Research shows, loyalty programs and email marketing, two of the most directly retentionoriented marketing line items, are the 2nd and 3rd least impacted areas of marketing, coming just after social media, which is in its growth stage.

Maximizing Loyalty Investment

While loyalty has clearly been a bright spot in the dark economy— more than 50% of the top 200 national retailers have made meaningful investments in their existing or new consumer loyalty programs in 2009 with large consumer household brands rapidly following suit—strong return on that investment is not guaranteed based merely on desire and a checkbook. Using our basic loyalty framework—connecting strategies to segments with outcomes impacting frequency, retention, and advocacy; and based on our close work with nearly 100 retailers, travel providers and consumer brands over the past Figure 1 – 2009 Marketing Reductions By Media Type2 two years, we’ve identified six keys to Given your decreased budget, how much has your spending decreased in each of the following areas? maximizing investment in customer TV, print, radio, or magazines loyalty. Staff and training

Branding and advertising Direct mail Marketing technology Online advertising Web site development Loyalty programs Email marketing Social media
Base: 45 marketing leadership CMOs who have had their 2009 marketing budgets reduced Source: “Marketing Budgets Suffer Significant Cuts”, Forrester Research, Inc., July 2009

1.Drive Customer Centricity from the Top

2010 predictions
2010 will likely be known as the year the global economy emerged from the Great Recession. While loyalty marketing was one of the few sectors that benefited from the downturn, the industry must now shift the tone of its message towards growth. Loyalty Lab’s David Rosen and Michael Greenberg outline the six most important areas where marketers can maximize their loyalty investments as their focus moves from retaining best customers to creating significant numbers of new ones.

1.Loyalty programs will seamlessly integrate their social media and community efforts by explicitly rewarding engagement more broadly. 2.Mobile will rapidly become the preferred channel and devise for engaging with loyalty programs including the adoption of targeted offers, delivered via mobile based on where members physically are at that moment. 3.Gaming will take on an even more prominent role in loyalty program engagement while gaming will increasingly look and behave like loyalty programs.

Investing in Customers Ahead of the Recovery
2009 has been a difficult year to justify additional business investment. Inventories have been depleted to save cash, factory orders as a result have softened. Imports, production, consumption are stagnant, and most impactful on a daily basis: unemployment continues at near doubledigits levels. Signs of recovery are mixed but hopeful. In Q3 several signals showed a bottom in economic conditions, including the highest level of the consumer confidence index in a couple of years plus an upturn in the S&P/Case-Shiller Real Estate Index. But retailers, CPGs, and manufacturers are experiencing significant anxiety regarding whether consumers will open their wallets in the 2009 holiday season. The NRF recently forecasted a 1% decline in 2009 holiday sales from already poor 2008 results.

Loyalty is not a promotional tactic— for that matter, loyalty is not really a marketing strategy. Cultivating the relationship that brands have with their customers lies at the core of companies’ cultures. The notion of customer centricity is an old one, but companies getting the most out of their loyalty investment put customer experience at the center of their culture. This cultural change inevitably comes from the leadership team—most often from the CEO. Culture inspires a proactive focus on the customer, leading to initiatives and ideas that improve the customer experience and drive market share gains and advocacy. Culture instills a sense of purpose around every customer interaction and every business decision that aligns to a more loyal customer base.

“Marketing Budgets Suffer Significant Cuts”, Forrester Research, Inc., July 2009.

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Loyalty Management™ • WINTER 2010


Investing in Customers Ahead of the Recovery (continued)
2.Segment Priorities Rationally
Marketers cannot and should not attempt to place equal effort against every customer. By going very wide, companies fail to go sufficiently deep. But do not interpret this as a tacit recommendation to ignore certain customers when they come through the door. Do, however, recognize that there are many current and past customers that just aren’t listening. Best in class loyalty marketers focus on three basic segments: •Retain Highest Value Customers: Typically 3% of customers represent 25% or more of total value based on their own spending and significantly more based on their influence and advocacy. While they’ve behaved loyal in the past, the downside of losing them in the future is huge. Their demonstrated spending makes them ideal targets for competitors. Frequency isn’t the issue here—retention is most important, with advocacy a close second. •Retain and Grow Next Best Customers: Often the next best spenders, but more often those that have the potential to be best customers based on category purchases, acquisition channel, demographics or other brandaffinity traits. Generally the focus is frequency, to take market share from competitors and other substitutes. If it is still early in the relationship, there is an opportunity to establish a connection that will endure for months or years. •Grow New Customers: Often the only time marketers have customers’ attention is in the first few days of the relationship. The window is very short—the experience must be special. Thirty days later, they could be gone forever. In many cases, a simple focus on a second interaction, whether it be a purchase or a social interaction, is all that is needed to establish a relationship that will lead to a loyal customer.

4. Model Consumer Value On More Than Purchases
Best customers should be quantified and identified based not only what they individually spend, but on who they know, how well they promote the brand and to what extend their influence leads to more purchases by others. A customer who makes a single purchase of a product online, but follows up with a well-crafted review of the product can influence hundreds of subsequent purchases. Marketers must learn to identify customers who have influence and recognize and reward that behavior as richly as they reward purchases.


5.Keep It Simple
The best programs are not necessarily the ones with the most sophisticated rules. The opposite is more often true. Customers are often members of many programs, often within the same category of product. As a result, the easier it is for customers to understand the program’s value proposition, the higher levels of participation, engagement and return on marketers’ efforts. Great marketers lead with basic programs and innovate based on testing and learning. Great programs are successful based on very simple metrics of enrollment, engagement, repeat purchase and retention—not the most elaborate program design.

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6.Learn and Adapt
Programs which are successful in the short term and long term share one common trait—ongoing improvement and engagement. Consumers are engaged on a regular basis through entertaining, relevant, and timely interactions, whether they be promotional or informational.

3.Separate Rewards From Loyalty
Many retailers, credit card companies, travel and consumer brands confuse rewards with loyalty. Rewards and points are merely a tactic for holding customers’ attention and managing the “give to get” relationship with loyalty members. Real loyalty emanates from superior products and services, great value, relevance of communications, and in some cases, a shared set of values and purpose. Rewards have a role in developing customer loyalty in three areas: •Gaining Permission to Track Activity: By rewarding activity, companies give value in exchange for good data, which is also of value. For many companies, the insights and other tactics available from richer customer data alone is worth the price of rewards. •Financial Incentives For Relevant Customer Segments: Some customers are responsive to financial incentives, whether it be coupons, sales, or rebates. This group will change behavior solely based on the program rewards. While this will not be 100% of your customers, it will be a large enough segment to justify investment and resources to maximize your return. •Recognition For Relevant Customer Segments: Just as some customers respond to financial incentives, other segments respond to recognition. Again, this will not be 100% of your customers, but it will be large enough to justify resources and attention to maximize your return.

Rewards help drive activity and retention, but shouldn’t be confused with customer loyalty.
Look Forward to the Future
A consensus of opinion exists that those companies that have been most effective investing in customer loyalty in the recession will be best positioned to grow most quickly when the economy stabilizes and emerges from its current state. Our internal experience with many top brands shows ROI turns positive very quickly, as enrollment grows. Reaching a critical mass of program members is the most important component of return in the first year of a program, as fixed costs are quickly spread across a wide base of members. Smart tactics can drive that ROI even higher, as marketers leverage what they learn from early enrollees to tweak messaging, funding, offers, recognition, and rewards. By starting sooner, marketers will achieve this first milestone before (or just as) the economy starts to accelerate, positioning their program for greater success. L

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Loyalty Management™ • LOYALTY360.ORG


Across the Ocean Blue
The differences between European and American loyalty programs and what drives the success of each
by Alexander Meili, ICLP

Loyalty programs have been a staple of North American customer strategies for more than

Different approaches to communication
Results from ICLP studies on cross industry B2C programs from Europe and North America show that one of the most apparent differences between programs in each region is communication with members. European loyalty programs are typically marketed through below-the-line (BTL) methods and are seen as ‘relationship building’ exercises to develop long-term customer profitability. Because of this they tend to have a strong focus on personal and targeted communications. Tesco is one of the world leaders in segmentation marketing, with a 121-point contact strategy utilizing more than 9 million variants of their Clubcard statement where no three customers get the same statement. Conversely, American programs tend to also use tactical above-the-line (ATL) media such as radio, television and billboards to ‘sell miles’ or promote this week’s special offer for double points, which typically require much higher budgets and have not been widely seen in Europe. Hence programs in the US could be regarded as being more of a short term tactical sales promotion tool rather than using more elaborate techniques like their European cousins. Europeans were the first to actively engage mobile communications to promote interactivity with members. This is not surprising given the fragmented nature of the US telecoms and cellular market compared to the EU, where most countries have one home domestic carrier. Between 2006 and 2007, European programs operated by Finnair, Aeroflot, Lufthansa and others began offering direct member account access via SMS and WAP technology. Today, American programs have caught up and are possibly moving ahead with smart phone applications in the travel and finance sectors, while those in retail have begun offering mobile coupons. This channel is effectively being driven by the hugely successful iPhone application platform. With over one billion iPhone application downloads to date, no program can ignore this medium.

two decades, having successfully penetrated a variety of sectors, including airlines, hotels, banking and retail. European programs, on the other hand, have had a slow start and, in some areas, still lag behind North America in participation and innovation. Many European programs are a copy of American programs applied globally. Some, however, are following an altogether different philosophy about relationship marketing, delivering brand loyalty and claiming true competitive differentiation. Here, we’ll compare and contrast the two strategies.
Understanding the history

European programs took root in the early to mid-1990s (roughly 10-15 years after American loyalty programs) with the launch of frequent flyer programs such as Iberia Plus, Swissair’s Qualiflyer and British Airways Executive Club. Programs from hotels such as Accor and Sol Meliá followed shortly thereafter. This pattern has continued and today, there is a tremendous push in the European region to implement loyalty programs in sectors other than travel, for example SNCF’s Grand Voyageur rail program; Germany’s retail Payback program; Belgium’s Carte Plus by retailer Delhaize, Italian retailer Esselunga with Fidaty, UK’s Nectar and Tesco Clubcard, as well as European versions of Air Miles in the UK, Netherlands and Spain. Arguably, European programs (particularly in the UK, Germany and France) tend to have a strong focus on the customer proposition whilst US programs are ahead in terms of number of members. However for traditional loyalty programs both regions are approaching maturity and saturation. The average affluent North American consumer belongs to seven programs; the European consumer belongs to four. Eighty percent of European consumers say they have at least one loyalty card or belong to a loyalty program; for American consumers, that number rises to three.1 Both regions also report significantly more memberships than population. US loyalty programs collectively have more than 1.8 billion members2; European programs, 900 million. 3 As well as being less promiscuous than their US counterparts, the European consumer also claims to be less influenced by loyalty programs. 80 percent of North American respondents said they always show their loyalty card when shopping, compared to 50-60 percent in Europe.4 However, significant numbers of additional respondents across both regions reported using their card frequently, which shows an overall engagement level not to ignore in either market.

European loyalty programs are typically marketed through below-the-line (BTL) methods and are seen as ‘relationship building’ exercises to develop long term customer profitability. Because of this they tend to have a strong focus on personal and targeted communications.

Different approaches to communication
Results from ICLP studies on cross industry B2C programs from Europe and North America show that one of the most apparent differences between programs in each region is communication with members. European loyalty programs are typically marketed through below-the-line (BTL) methods and are seen as ‘relationship building’ exercises to develop long term customer profitability. Because of this, they tend to have a strong focus on personal and targeted communications.

Loyaltycard and ICLP research


Colloquy 2009




Nielson, 2007

With major US hotel and airline brands providing customers with open choice but little to choose between, US programs have had to innovate faster than European programs to create greater differentiation to their audiences. American programs have therefore maintained first-mover advantage in innovations like social media and web 2.0. This is particularly true of larger programs, such as Starwood Preferred Guest, InterContinental Hotels Priority Club, American Airlines’ AAdvantage and even Procter & Gamble’s Vocal Point. Dell is a shining example of this sophistication in social media strategy, and in June 2009 reported that it had earned $3million in revenue directly through Twitter since 2007. Dell Outlet curently has 624,000 followers on Twitter. Given the above short term tactical versus long term relationship variations between program objectives in the US and Europe it is not surprising there is an apparently large disparity in the frequency of program communication. Many travel and retail companies in North America will communicate weekly with their members and importantly, that is what their members expect. European customers, on the other hand, receive monthly or quarterly mailers detailing activity, points accruals and corresponding rewards along with targeted offers. Any more communication than this would be seen as overtly selling and detrimental to a relationship. This can be largely attributed to different cultural perceptions of how often customers like to be contacted before it is viewed as an invasion of privacy. Both adhere to official legislation in this area, although Europeans maintain greater focus on the emotional implications of excess customer communication. This also helps to explain noticeable differences in the ‘look and feel’ of creative. European communications favors a more modest design, using space generously to build a quality brand image. American communications tend to favor striking colors and strong copy, more like adverts and direct response sales mechanics, resulting from having to stand out from a greater number of competitors and more frequent messages. continued on next page »


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Loyalty Management™ • WINTER 2010


Across the Ocean Blue (continued)
Differences in messaging/creative
Although the overall program structures are fundamentally the same (partners, elite status, bonus points, membership cards, etc.), there are some interesting distinctions between U.S. and European travel programs: European programs still require elite status to be earned through activity. This is to protect the exclusivity of their earned benefits. Another culturally required practice that has been unique to European programs (primarily British Airways) is ‘account pooling’, inspired by practices in the Middle East, in which multiple members of

10:10 Loyalty Trends for 2010
by Robert Passikoff, Ph.D., Brand Keys, Inc.

Differences in Travel Program Elements Categories Redemptions U.S. Upgrades (automatic) Gift cards Accruals Program Rules Program Features Higher tier (executive) bonuses No expiration of points/miles Can buy elite status Europe One-way tickets Environment and charity Revenue-based metrics Baby break (status extension) Account pooling

Another culturally required practice that has been unique to European programs is ‘account pooling,’ inspired by practices in the Middle East.

iels Bohr once noted that “prediction is very difficult, especially about the future,” but then he didn’t have access to predictive loyalty metrics, which are leading indicators for behavior of the increasingly more-wily consumer. Consumers now have greater control over the brand and marketing messages that enter their personal touch point zone; this is entirely changing consumer tendencies. Add to that a sea of brands where it’s hard to differentiate one from the next, and you see what we’re seeing now: category drivers—and the category and customer attributes and benefits, they consist of—are shifting like crazy. These “drivers” are critically important to understanding loyalty and engagement, and to getting it right when dealing with today’s ‘bionic’ consumers. Properly configured, category drivers can tell you far more than just who a consumer is—a typical demographic and attitudinal point-ofview. These drivers tell you what consumers will actually do in the real marketplace. This matters if you’re keeping score by counting your sales and profits, and not merely awareness levels or recommendations to friends. Having examined these measures in the Customer Loyalty Engagement Index (26,000 consumers assessing 440 brands in 63 categories), Brand Keys offers trends for marketers in 2010 that will have direct consequences to the success—or failure—of next year’s branding and marketing efforts.

1) Value is the new black
Loyalty programs in North America (primarily travel) are significantly more generous with points/mileage crediting with open access to masses of redemption inventory, while European programs tend to reward strictly on transaction and revenue to avoid dilution and displacement, especially on key routes that drive each carriers’ premium revenues. In addition, American programs have eliminated point expiration dates, while currencies of European programs tend to expire after 2-3 years. Free or discounted upgrades are seen as the most valued program commodity in the US but are not as frequently offered in European programs to protect premium revenue. Also, the US leads the way in electronic gift cards for customer service issues or redemptions, while Europe is working to close the gap across the prepaid market given the commercial opportunities of both breakage and overspend. The US programs are reaping the benefits of this. Conversely, awards like one-way tickets, carbon offsets or charity donations are quite common in socially and environmentally conscious Europe, but are either new or have not yet found popularity in the US5, which could be for opposing cultural reasons. Finally there are differences in program rules that further reflect the short term US versus longer term European view of customer relationships. For example European programs such as Miles & More have a benefit that is rare in the US. The ‘baby break’ (i.e. maternity leave), allows new mothers with elite status to request a one-year extension on their re-qualification. However, the ability to buy elite status is a common practice in the US as a cash generative option, but larger

6) Old tricks don’t work/won’t work
In case your brand didn’t get the memo, here it is: consumers are on to brands trying to play their emotions for profit. In the wake of the financial debacle of this past year, people are more aware then ever of the hollowness of bank ads that claim “we’re all in this together” when those same banks have rescinded their credit and turned their retirement plan into case studies. The same is true for insincere celebrity pairings: think Seinfeld & Microsoft or Tiger Woods & Buick. Celebrity values and brand values need to be in concert, like Tiger Woods & Accenture. That’s authenticity.

the household can collectively pool their points, benefiting families especially those with more than one wife. To date this household approach has not yet been adopted widely in America as it does require policing, by using one mailing address to ensure there is no pooling of miles by corporate accounts resulting in a disastrous change in mileage breakage rates.

Excessive spending, even on sale items, will continue to be replaced by a reason-to-buy at all. This is trouble for brands with no authentic meaning, whether high-end or low.

2) Brands increasingly a surrogate for “value”
What makes goods and services valuable will increasingly be what’s wrapped up in the brand and what it stands for. Why J Crew instead of The Gap? J Crew stands for a new era in careful chic—being smart and stylish. And the first family’s support of the brand doesn’t hurt either.

Customer relationship results
In summary, both markets are rather mature in program development and market penetration, with the US having a more competitive background and environment leading to both innovation and a relatively short-termist view on their customer relationships. In Europe however, brands have implemented programs as a way of gathering customer data for better business decision making and the ability to better understand and meet customer needs in the future. Therefore programs in Europe need to offer benefits at just the lowest cost of customer self identification, often not so competitively. Over time, primarily through the proliferation of global programs, as well as web 2.0 and social media sharing information across customer groups, the gaps will continue to close. Cultural differences between customer sets will remain, due to Europe’s greater complexity in geodemographic segmentation and the need to tailor an approach based on languages, cultures and countries. Loyalty programs which have been properly designed to support corporate strategy and are executed according to market culture, customer needs, and value, will continue to play an integral part in driving company performance and success on both sides of the ocean for many years to come. L

7) They won’t need to know you to love you
As the buying space becomes even more online-driven and international (and uncontrolled by brands and corporations), front-end awareness will become less important. A brand with the right street cred can go viral in days, with awareness following, not leading, the conversation. After all, everybody knows GM, but nobody’s buying the cars.

3) Brand Differentiation is Brand Value
The unique meaning of a brand will increase in importance as generic features continue to plague the brand landscape. Awareness as a meaningful market force has long been obsolete, and differentiation will be critical for success—meaning sales and profitability.

8) It’s not just buzz
Conversation and community is all. Ebay, for example, thrives on consumer feedback. If consumers trust the community, they will extend trust to the brand. Not just word of mouth, but the right word of mouth within the community. This means the coming of a new era of customer care.

4) “Because I Said So” is so over
Brand values can be established as a brand identity, but they must believably exist in the mind of the consumer. A brand can’t just say it stands for something and make it so. The consumer will decide, making it more important than ever for a brand to have measures of authenticity that will aid in brand differentiation and consumer engagement.

9) They’re talking to each other before talking to the brand
Social Networking and exchange of information outside of the brand space will increase. Look for more websites using Facebook Connect to share information with friends from those sites. More companies will become members of Linkedin. Twitter users will spend more money on the Internet than those who don’t tweet.

5) Consumer expectations are growing
Brands are barely keeping up with loyalty expectations now. Every day consumers adopt and devour the latest technologies and innovations, and only hunger for more. Smarter marketers will identify and capitalize on unmet expectations. Those brands that understand where the strongest expectations exist will be the brands that survive—and prosper.

10) Loyalty & engagement are not a fad; They’re the way today’s consumers do business
Marketers will come to accept that there are four engagement methods including Platform (TV/online), Context (Program/webpage), Message (Ad/Communication), and Experience (Store/Event). But there is only one objective for the future: Brand Engagement. Marketers will continue to realize that attaining real brand engagement is impossible using out-dated attitudinal models. The watchword is “loyalty.”

“The vast majority of [U.S.] members redeem awards for their own benefits”, Colloquy, June 2009.

Predictions for 2010:


1.The winners in social and new media will be those who are willing to try and fail, not those who fail to try. 2.Brands who haven’t refocused on core differentiation strategy will struggle to compete in this increasingly aggressive market. 3.At least two new major players in the loyalty space will emerge from new market entrants and innovative business models.

The future may not be what it used to be, but marketers that have loyalty and engagement metrics in place will have a handle on the trends that are going to show up in their offices. Accommodating these trends will require a paradigm change on the parts of some companies. But, whether a brand does something about it or not, the future is where it’s going to spend the rest of its life. How long that life is up to the brand, determined by how it responds to today’s reality. L


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Loyalty Management™ • WINTER 2010


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Data, Dollars and Desires
by Nicole Nunn Walker, Metrosplash Systems Group

The supplier is typically very motivated to create brand loyalty and rely heavily on investing in direct marketing techniques like coupons, direct mail and advertising. The suppliers often offer marketing development funds (MDF) to the retail channel in support of brand promotion, but are given very little visibility as to the effectiveness of those funds and limited correlation metrics around MDF investment and product/brand movement. The reporting that is available tends to be manual/paperbased and somewhat subjective. With the sophistication of supply chain management technology today and the landfill of loyalty/ transaction data that is being captured there is an opportunity for the two channels, supplier and retailer, to collaborate on better promotions that actually influence the consumer and create sales lift for both channels. The term of confluence is also appropriate in this concept: streams of disparate data flowing together to provide meaningful trends and analysis. Confluence by definition means a place where things merge or flow together. To converge promotional spend data with loyalty data and finally supply-chain management data both the Supplier and Retailer can speak the same language and optimize performance for profitability of the brand and the merchant outlet. Other industry luminaries have referred to this notion as collaborative commerce, a true collaborative transaction between the Manufacturer, the Retailer and the Consumer. From the consumer perspective, if the Supplier and Retailer use the data provided to them by the consumer (transactions) to both anticipate their desires and reward their behavior, they will create an undeniably devoted customer: loyalty again for both the brand and the retail outlet.

Financial institutions have been doing this type of transaction analysis with their payment processors and rewards programs for nearly a decade. Transactions are their business and they study consumer transaction trends carefully. For the supplier, moving products is their business and they study supply-chain management techniques carefully. The supplier now has the opportunity to evolve to the next level of analytics by harvesting trends from retailer-level data and investing MDF in hyper-targeted promotions that move their products specifically. One very tangible example of this confluence in action is when P&G collaborates with a grocery retailer to fund a very specific fuel reward promotion around a specific market basket of P&G brands. Nothing has proven to have a stronger influence on the grocery shopper than fuel rewards (cents-pergallon discounts). Consumers are acutely aware of fuel prices and will drive well out of their way to save a penny or two per gallon. P&G has acknowledged the consumer’s desire (lower gas price) and promoted their brands in a highly visible way (fuel discounts) to move more product (SKU-level sales lift). Meanwhile, the retailer has used the fuel reward as a “token” in their own sticky loyalty schema. Win, win, win for the Consumer, the Supplier and the Retailer. While the big-box retailers appear to be the obvious choice for rich transaction and loyalty data there is an untapped conduit of this meaningful data in the convenience-store (C-store) channel. The c-store retailer interacts more frequently with the customer and typically carries the top high-movers of a Supplier’s brand at even a convenience price. Suppliers should consider a collaborative commerce model with a confluence of the data, desires and dollars transacted in the c-store channel now approaching 148k outlets in the United States. L


2010 predictions One-way websites will become obsolete. More and more, companies will create websites that operate in two directions with chat and status update functionality.


ow more than ever, there is need for marketing accountability, to maximize ROI by investing in programs that quickly and measurably influence consumer behavior at the lowest possible cost. Add to this the need for programs that give consumers a reason to look beyond price when making a choice, and which bring them back on a regular, even habitual basis.

The question is: Has the Manufacturer or the Brand been represented in the process of rewarding the consumer and ultimately influencing their purchasing behavior?
There are a handful of super brands like Coca-Cola with mycoke® rewards who have ventured into the arena of supplier-level or brand-level loyalty but for the most part this is unchartered territory. The brands are heavily dependent on the retail channel to entice the consumer towards their brands obviously subsidizing them with trade and promotional dollars. The retailers or merchants have a rich-source of data coming from their Point-of-Sale systems and loyalty programs that when analyzed properly can tell a very diagnostic story about which consumer is buying what and why. This insightful data is typically analyzed and used for promotion planning only at the retailer level. Very rarely is this data shared with the supplier or offered as reference point for collaborative reward funding that can truly influence the consumer’s buying behavior for a specific brand.

To create consumer influence or “confluence” it is essential to look at what the consumer wants or desires. To identify a consumer desire is to understand what influences their behavior. At the convergence of a marketing plan influencing consumer behavior stands a well executed loyalty program with a truly desirable reward for the consumer. There have long been loyalty programs with incentives that reward consumer behavior at the retailer level: retention, frequency and total spend. Obviously retailers like the Grocery and Supermarket channel are leaders at this practice. The travel industry service providers like airlines, hotels and rental cars have also seen great success in rewarding the loyal behavior from their consumer.

One very tangible example of this confluence in action is when P&G collaborates with a grocery retailer to fund a very specific fuel reward promotion around a specific market basket of P&G brands.


Loyalty Management™ • LOYALTY360.ORG

Loyalty Management™ • WINTER 2010



4. Increase Employee Autonomy, Flexibility and Support
Once employees have been enlisted to get involved and make suggestions and improvements, they need to be encouraged to run with their ideas, take responsibility, and champion those ideas through to closure and completion. My research revealed that “autonomy and authority” and “flexibility of working hours” were marked as being important by 89 percent and 85 percent of employees, respectively. To the extent that managers and the organization are able to provide these motivators for employees, it can greatly impact their morale and performance in having them do their best work possible. No one likes to be micromanaged. Employees prefer to be assigned a task and allowed the freedom to develop a work plan that suits them. Roles and responsibilities may be previously defined, but a job varies with the individual who occupies the position. Here is where truly knowing your employees becomes important: understanding their strengths and weaknesses allows a manager to best assign projects and tasks in a more meaningful way. Take it a step further by allowing employees to pick and choose the projects and responsibilities on which they would like to work.

Keeping Up in a Down Economy
by Bob Nelson, Ph.D., Nelson Motivation, Inc.

Proven Ways to Support Employees in Difficult Times
•Include employees in the decision making process, especially as it relates to their roles and responsibilities •Encourage employees to develop existing skills and provide ample opportunities for career development •Identify employees who show the most promise as leaders and offer them the chance to participate in leadership training and development •Establish policies that allow employees flexibility in their schedules, and let them work directly with their managers to develop a plan that benefits them as well as the company •Develop company-wide healthy living programs that promote a healthy lifestyle such as fitness, nutrition, and mental well-being


ecessionary time can be very scary. Stories of economic woes fill the headlines, but the real toll of the recession is its impact on everyday people: those who have lost their jobs, benefits or wages—and those who are concerned about losing these things, which includes most everybody else. Tight economic times bring more stress, anxiety and fear to all employees, which, if left unchecked, create a negative work environment that leads to declining morale, eroding trust and loss of productivity for the company. A recent survey by Quantum Workplace, a company that tracks employee engagement scores of over 1.5 million employees within 5,000 companies nationwide, found that 66 percent of the firms report a decrease in employee engagement that appears to be in direct response to the negative circumstances of the recent recession. According to Peter Capelli, a professor of management at Wharton, “Workers in a downturn can get so nervous that they just freeze up and aren’t able to do good work, especially if they’re afraid of being laid off and it’s not clear what the standards are.” The key, then, is to focus on the right things that help to motivate your workers to improved performance, and overcome their inherent fears. Just what are these “right” things? To answer this question, I examined employee motivation research I have conducted with variances in management practices of those companies whose employee engagement scores have increased during the current recession, compared with organizations whose scores nosedived over a comparable period. Based on this research, I identified six clear dimensions that any manager or organization can implement to create a more motivating work environment for their employees today: •Create a Clear and Compelling Direction •Direct, Open and Honest Communication •Involve Employees and Encourage Initiative •Increase Employee Autonomy, Flexibility and Support •Continued Focus on Career Growth and Development •Recognize and Reward High Performance


Create a Clear and Compelling Direction
The starting point of any organizational change is setting a clear and compelling vision for the organization. If employees are not inspired by what the organization is trying to do, it will be more difficult for them to have the motivation and direction to succeed—especially in tough times. Frances Hesselbein, President of Leader-toLeader Foundation, once put it this way, “No matter what business you’re in, everyone in the organization needs to know why.” Do a reality check and ask employees what the mission and purpose of the organization is. If you get a different answer from each person you ask, it’s a good indication that things have drifted, or perhaps have not been clear for some time.


Continued Focus on Career Growth and Development
On first glance, it may not seem like employee learning and development should be a priority during tough times. After all, if things are tight, does the organization really have the money, resources and time to spend on helping employees learn and grow? Shouldn’t employees instead be focused just on keeping their jobs instead of developing new skills? But, there is no better time than a downturn to help employees learn new skills and new ways to contribute to the organization’s success. Taking an action-oriented approach in helping top performers further develop their skills and strengths can help in bad times as well as good. In my research with employees, management support of employees who want to learn new skills was one of the top motivators— reported by 90 percent of employees as being important to them. Since all development is essentially self development, providing opportunities for employees to learn and grow benefits both them and the organization.

It’s critical to be honest with employees. Doing so will almost always lead to an increase in teamwork, respect and dedication. 2. Direct Open and Honest Communication
Communicating opening and honestly was the top-reported employee motivator, cited by 95 percent of employees as the variable they most wanted—and needed—at work to do a good job. Everyone needs to have answers to their questions and adequate information about their jobs, as well as information about what’s going on in other parts of the organization, new products and services, and the organization’s strategies for success. Even when the firm is struggling, it’s critical to be honest with employees. Doing so will almost always lead to an increase in teamwork, respect and dedication, especially if delivery the of the bad news is also used as an opportunity to brainstorm and communicate with employees about ideas and plans for turning things around.


Recognize and Reward High Performance
The most significant driver of desired behavior and performance known to mankind is the notion that “you get what you reward.” As a manager in any organization you will get more of the desired behavior and performance you want from your employees by taking the time to notice, recognize and reward them when they excel in their work. In my research I’ve found that it’s almost universal that today’s employees want and expect to be recognized when they do good work, although only 12 percent report that they are consistently recognized in ways that are important to them and 85 percent of employees say they feel over worked and under-appreciated where they work today. What is the best way to motivate employees in tough times? Surveys, studies and discussions with employees from all industries have revealed a very simple formula for successfully rewarding employees: Treat your employees with respect, pay them fairly, and notice, recognize and reward them when they do a good job. Sure, money is a motivator, but it is not the only motivator and it does have its limitations. Often, simple, creative, no-cost ways to show your appreciation in a timely way can have a larger impact on your employees in making them feel special and motivating them to rise to the occasion in difficult times. There are many circumstances managers cannot control, but there are many more they can directly impact in positive ways. By focusing on those things that can be controlled, managers can help buffer employees from the negative impact of the economy and help them focus their energies to achieve better results. While none of us can individually change economic conditions, all of us can decide how we react to poor economic times and focus our efforts in specific ways that can have a positive impact where we work. In so doing, we can create a more positive and productive work environment that will help your company thrive in challenging times. L

Predictions for 2010


3. Involve Employees and Encourage Initiative
Giving employees explicit permission to act in the organization’s behalf whether that is through idea suggestions, problem solving, exceptional customer service, or a host of other possibilities is also very motivating. My research found 92 percent of employees feel it is important for managers to ask for their opinions and ideas at work, and 89 percent feel it is important for their managers to involve them when making decisions at work. As Martin Edelston, chairman and CEO of Boardroom, says, “Sometimes the best idea can come from the newest, least experienced person on your staff.” Like the hourly paid shipping clerk who suggested that the company trim the paper size of one of its books in order to get under the 4-pound rate and save some postage. Boardroom made the change and did indeed save some postage: $500 million the first year and several years since. Explains Edelston, “I had been working in mailorder for over 20 years and never realized there was a 4-pound shipping rate. But the person who was doing the job knew it, as do most employees know how their jobs can be improved.”

•Unemployment will continue to be at a record high through mid-2011 •Workplace stress will continue to increase and employees will become numb and fatigued at the ongoing demands of their jobs •Employer interest in employee motivation and engagement will increase as employers become more concerned with retaining their best workers


Loyalty Management™ • LOYALTY360.ORG

Loyalty Management™ • WINTER 2010



2010 Rewards Trends
Through new technology these programs are able to provide travel reward and purchase options similar to that of full service online travel agencies (OTAs), with customizable branding to create a more compelling reason to stay on the program’s website. Members no longer have to transfer miles/points and then wait days or weeks for processing to be completed before redeeming the transferred reward currency. By combining full service online travel capabilities along with the flexibility to use program currency to redeem a wider array of travel products, customers gain additional value from their rewards program, resulting in enhanced loyalty to the brand and commitment to the rewards program. For example, in 2009 United Airlines began to allow Mileage Plus members the option to redeem miles for hotel stays and rental cars on the Mileage Plus site. Around that same time, Starwood Hotels provided members the ability to redeem SPG Points for flights on the Starwood site. These programs are unique because of the technology being used to facilitate the redemption, which does not require transferring miles/ points to another program, but rather keeps the member experience on the brand’s site while providing more robust redemption options. Now members have the benefit and ease of using each program’s single currency to book flights and hotel stays on their own sites. This trend is also seen in many bank card programs. •Reward Value •Real-time reward pricing allows the reward price to fluctuate while retaining the program sponsor’s ROI goals. •Customer Satisfaction •Leveraging world-class fulfillment organizations, participants can track reward fulfillment and receive their rewards in an average of 4-6 business days. With such significant advantages in the reward marketplace, you may be wondering if there is truth to all the hype. Do participants really want choice and does real-time pricing really make a difference? A quick question to ask yourself as a consumer, “Am I satisfied to look at 4 or 5 digital cameras, 5 or 6 TV’s, 3 kitchen mixers, one set of bedding and overall a choice of only hundreds of items when shopping for personal ‘wants’?” I offer some staggering statistics that Bridge2 Solutions has monitored from redemption trends on our 400+ operating catalogs. •As compared with a traditional merchandise catalog of 1,000+ items, Bridge2 Solutions will fulfill over 150,000 unique reward items (SKU’s) in 2009, proving personal choice to be a significant driver and differentiator in loyalty programs •In a six month period, top redeeming items in the Bridge2 Solutions catalog decreased in price by an average greater than 20%. Additionally, within nine months, most of the items had been discontinued and replaced Business markets change and adapt to new pressures, and currently Variable Rate Rewards reflect the new standard for customer engagement. As a silver lining to an otherwise tough commercial year in 2009, watch for continued innovation, new products and emerging services that reflect tomorrow’s new world of business and consumer loyalty. Just as today’s reward products change quickly, so will the technology and services available for future loyalty initiatives. 2010 promises to be an exciting year of new, improved and remarkable solutions!

Variable Rate Rewards

2009 Results Validate Variable Rate Rewards
by James C. Purdy, Bridge2 Solutions, Inc.
During 2009 the face of business and the entire financial structure of the U.S. and the world changed. What remained constant was the need to retain loyalty from employees, and customers and reward them for certain positive quantifiable business actions. Adapting to the ever growing pressure to retain loyal customers while reducing cost, Variable Rate Rewards have proven to deliver new results for our new world.

Variable Rate Rewards allow the sponsoring organization to provide reward pricing to customers calculated in real-time by category-specific formulas. This practice gives the sponsor the benefit of real-time price drops while ensuring an expected ROI, regardless of the current item price. Variable Rate Reward systems integrate directly with best-in-class inventory and fulfillment databases to provide millions of reward choices and the most current models at current prices. Combining the benefits of the Variable Rate Reward systems with active program management, measurement and feedback produces significant positive program results. This combination creates a win/win for both program sponsors and their customers/participants. •Increased Program Engagement •Participants have been measured to visit the program site a multiple of 4-6 times more frequently due to the ever changing inventory that mirrors the consumer marketplace •Redemption Mix Change •Participant redemption has moved favorably towards merchandise given the breadth of selection, ease of catalog navigation/selection and quick fulfillment.


By combining full service online travel capabilities along with the flexibility to use program currency to redeem a wider array of travel products, customers gain additional value from their rewards program.

Travel Loyalty Program Redemption Trends
by John Miller, Connexions Loyalty Travel Solutions
As airlines and hotel companies continue to seek incremental revenue and create more value for their brands, they are unlocking the value of their loyalty programs by expanding reward options for their members and allowing them to redeem their loyalty miles/points for ancillary travel products. Until recently, airline and hotel loyalty programs have required members to go through a cumbersome process to transfer their reward currency into another loyalty program in order to redeem for an alternative travel product.

By converting to a “points plus cash” model, programs can even further increase the value of the brand’s website; offering the ability to add a cash payment to offset any miles/points shortage. Points plus cash redemptions allow program members the ability to earn travel rewards faster, and is a compelling reason for the customer to increase spend with the program. More redemption options on a single website provide a better customer experience and drives incremental revenue to the brand’s own site instead of a third party’s site thus allowing the brand to regain control of its inventory and gain valuable information about program members. The ancillary travel product redemption option along with the “points plus cash” model are catching on with smart loyalty program managers as they look for ways to increase the value proposition of both new and mature customer loyalty programs. continued on next page »


Loyalty Management™ • LOYALTY360.ORG

Loyalty Management™ • WINTER 2010


2010 Rewards Trends (continued)
Concierge Prepaid

Distinguishing Loyalty
by Render Dahiya, Arroweye Solutions
I think we can all agree that 2009 was a turbulent year. But I believe the story will read quite differently for the prepaid card industry, which is forecasted to come out ahead amidst the shakey economy. In fact, industry experts agree that the prepaid cards are in a high growth category. And according to Mercator Advisory Group, authors of an annual prepaid market assessment, this growth is attributed to “being in the right channel with the right product.” I couldn’t agree more, especially when it comes to loyalty and incentive.

Trends: Concierge viewed as strategic marketing channel
by Michael Breault, Circles
There are two key trends that are impacting today’s customer loyalty programs: •Desire to further sub-segment customers in loyalty and rewards programs. Driven by the need to balance increasingly tighter marketing budgets with the need to be laserfocused on retaining their “best” customers, companies must continue to better understand the profiles of their customers. •Even greater focus on differentiation. Brands need to cut through the “market clutter” and have their messages come through clearly to their desired customer base. In this tighter economic market, me-too loyalty programs will not deliver the ROI companies need. Fueled by these trends, brands are increasingly turning to non-traditional marketing channels such as concierge to drive the permission-based, two-way dialogue through which they can more fully engage their customers. For the most part, companies have an understanding of their client base, but it is limited. The general demographic and purchase behavior information (such as transactions, enrollments, response to direct marketing, satisfaction surveys) they have is not enough to effectively guide them in forging strong, personal relationships with their customers. More and more brands are realizing, however, that interactions with concierge offer an incredible opportunity to capture customer information they cannot capture in any other way, and that leveraging that information in real time delivers value to the customer and drives heightened engagement. Because concierge is a powerful, interactive, and conversation-based marketing channel, there are direct and frequent interactions with customers as they rely on concierge to help them with travel planning, individual and group dining, personal and business gifts, business meeting arrangements, etc. Not only are we seeing that users of concierge are increasingly accepting of information and offers delivered through this channel, in fact, but that their satisfaction actually increases because they view these offers as personalized and relevant— a welcome change from the barrage of typical marketing to which they are subjected. Through these conversations with customers and the various levels on which they are serviced, concierge is also uniquely able to help the brand sub-segment its customer base. Every interaction between concierge and the customer not only increases the relevance of the brand, but also builds a unique store of personal knowledge such as hobbies and passions, likes and dislikes, important dates and milestones, and business needs. This cache of customer information—information that’s very intimate, personal, and valuable—arms the brand with the insights into individual behaviors, preferences and patterns they need to sub-segment their customer base in a meaningful way. At the same time, concierge can cross-sell smartly and deliver key messages and information, test product ideas, etc. in a lower cost, more dynamic fashion. No battling with clutter or marketing overload. By knowing customer behavior and preferences, concierge is uniquely positioned to talk directly to their customers in a unique and proactive way—delivering targeted, relevant, value-add messages via an intelligent, permission-based conversation. And in the end, this ongoing dialogue and the value it provides to the customer, coupled with the leverageable customer insights it provides to the brand, drives engagement more effectively than traditional marketing ever can. And this engagement is what brands desperately need. L

Loyalty, One Card At a Time
With the goal of increasing usage, marketers and loyalty providers are seeking new solutions, increased flexibility and more customization to reinforce their brand. They want differentiation, and a generic prepaid card mailed in a windowed envelope just doesn’t cut it anymore. Those who succeed in delivering a more personal experience will likely come out ahead. We’re seeing more companies looking to customize the images and designs of cards, add their logos and distribute the programs in a unique and branded card carrier. Why? To break through the clutter and build a connection. Traditionally, production methods and ordering processes have made it cost-prohibitive to achieve this level of customization. 2010 is the year we recognize the possibilities and efficiencies of a digital on-demand prepaid card solution. A digital environment means cards are produced as needed, when needed, giving program managers the opportunity to quickly respond to their customers. Technology is available today to produce completely customized cards within 24 hours. The beauty of this solution for the loyalty market is threefold. First, it allows loyalty managers to tailor their card designs and carriers to be meaningful to the recipient. Second, it simplifies and expedites the process of getting a new program to market. Lastly, it lowers inventory costs by eliminating spoilage and limiting fulfillment expenses. The economic woes in 2009 remind us that the programs we invest in need to be effective, but also efficient and smart.

Making a Connection
Loyalty is personal. It’s rooted in building affinity between companies and each of their employees or customers—and building affinity is dependent on consumers having a consistently positive experience with the brand at every touch-point. This is true in the aisles of an airliner, on the pages of a Web site or through the experience of receiving a plastic card as a reward. It’s clear that prepaid cards can be an important part of a company’s loyalty strategy—they can reinforce a brand and establish long-term relationships.

On the Horizon for 2010 All signs point to continued growth for the prepaid market in 2010. Increasingly, prepaid cards will become a mainstream offering. As more options are made available to loyalty providers, the more critical it will be to tailor card programs to stand out. Ultimately, on-demand production is a vehicle that makes this possible. Like every industry, there will be winners and losers. The companies that succeed in the loyalty and incentive space will be those that can quickly respond to demand and create a meaningful, relevant connection with their target.

The economic woes in 2009 remind us that the programs we invest in need to be effective, but also efficient and smart.
Loyalty Management™ • LOYALTY360.ORG


Predictions & Trends 2010 •We will continue to see a customer-centric shift that is forcing organizations to rethink customer engagement. Engagement is now about attention: Are your customers paying attention to what you have to say? Are they interacting with you? •How we evaluate the success of loyalty programs has evolved. Participation, and no longer membership, is the metric: on average, people belong to 14.1 loyalty programs but participate in only 6.2 of them. Brands need to be looking at redemption: Statistics show that someone who redeems is much more engaged than someone who’s simply earning.

Loyalty Management™ • WINTER 2010



New Year Predictions:


International Coalition Redemption Options
by James Watts, First Annapolis Loyalty


•2010 will see at least a couple of the nation’s largest banks launch enterprise-wide rewards programs. •U.S. retailers will increase their focus on data-driven marketing and loyalty, much like Tesco in the U.K.


o matter the international market (from Canada and Europe to Asia), the goal of any successful coalition program manager is to find the right balance between offering a compelling value proposition to the consumer and to the coalition program sponsor. From a consumer standpoint, as long as coalition is able to sign up sponsor merchants with significant market share, and offer a reasonable value proposition in everyday spend categories, there should hypothetically be enough incentive to sustain a viable program. However, the merchant side of the equation can be slightly more complicated. As a coalition program matures and markets change, coalition managers become increasingly reliant on the program’s sponsor merchants, and must find ways to demonstrate program effectiveness and value.

In 2006 Payback, a German based merchant coalition, reported that redemption for gift vouchers at sponsors accounted for over 70% of redemption activity in the program.
This issue is compounded by the fact that many sponsor merchants in coalition markets are facing international price-based competition. For example, in 1993 when Safeway became Air Miles Canada’s exclusive Western Canadian grocery store program sponsor, the company had over 30% market share in country. As the competitive landscape evolved, the grocery store chain quickly saw its market share erode to big box retailers like Costco, a company that operates with scale and slightly thinner margins. Safeway Canada’s market share in Western Canada is now over 5% less than when the alliance was formed.

To address this trend, coalition managers have been expanding the universe of redemption options for their programs. For example, Air Miles has moved far away from its mantra “a travel mile is a mile,” a testament to a time when one Air Mile travel mile could literally only be used to fly a mile on an airline like Air Canada. Today, an Air Miles cardholder can redeem for gift cards (which are primarily sponsor branded), merchandise, experiences, and travel rewards. In 2006 Payback, a German based merchant coalition, reported that redemption for gift vouchers at sponsors accounted for over 70% of redemption activity in the program. This expansion in redemption options not only creates a stronger value proposition for sponsoring merchants, but also acts as a key differentiator. Increasing competition has caused coalitions to appeal to broader consumer demands for a wider range of redemption options. Payback, which reports almost 60 million members, competes against other coalitions within Germany that cumulatively claim similar member totals.

Increasing competition has caused coalitions to appeal to broader consumer demands for a wider range of redemption options.
Although a merchant redemption option seems like a win-win, many of the world’s largest coalitions have yet to implement a merchant redemption option. For example, Air Miles Canada started offering the option in 2006 and Air Miles U.K. still relies exclusively on air redemption. Increased competition and decreased reliance on key program sponsors will continue to shape the direction of coalition rewards program. Vanilla rewards programs such as Air Miles Canada circa 1993 are quickly becoming a thing of the past as coalition programs are continually evolving to strike a balance between a strong consumer and merchant value proposition. While true coalition programs are currently isolated to certain regions of the globe, the changes being made abroad to strengthen merchant value proposition may help to bring coalitions closer to feasibility in other parts of the world. L

Illustrative Cost per Point Impact of the Integration of a Sponsor Gift Card Redemption Option Merchant contractual cost per point Discount given on gift card by merchant Merchant breakage on gift card (15%) Redemption margin (25%) New effective cost per point (25% decrease) $0.0150 $0.0010 ($0.0015) ($0.0025) $0.0120

Sources: First Annapolis Analysis of coalition investor materials & conference material


Loyalty Management™ • LOYALTY360.ORG

Loyalty Management™ • WINTER 2010



Best Practice in 2010: Global Engagement
Today, the World’s biggest loyalty programs can be found in the airline, hotel and financial services industries. Most of them manage global member bases but face difficulties in engaging them across the globe. No doubt, these programs lose out on hundreds of millions of points-sales revenue and probably spend too much money building an infrastructure that ultimately only delivers a ‘quasi-global experience’ to their program members. Future ‘Best Practice’ will go to global loyalty programs that deliver local experiences globally.

Both technologies are delivered by specialized ‘earn’ or ‘burn’ solution providers. In terms of future ‘Technology’ we should certainly expect the convergence of global earn and burn technologies.

Trend in 2010: iPhone Apps
There is no doubt that the best way to reach global affluent consumers, i.e. members of the leading frequent flyer, frequent guest and frequent buyer programs, is through their mobile phone. It’s always in a traveler’s pocket and it is the most accessible, most social communication channel. But so far, the mobile communication channel has not been fully exploited by the loyalty programs. The thing that changed last year is that Apple discovered the holy grail of mobile usability, and implemented it in the iPhone. Today, every user needs one and every company needs to be on the AppStore. By the time this article is published, Apple will offer more than 100,000 iPhone applications and we will probably use ‘iPhoogle’ to navigate through the AppStore jungle. So there is no doubt that in 2010 we will see the first loyalty program launching an iPhone application that covers all relevant loyalty processes to its members. From accessing their point balance to actually redeeming their points from wherever they are located, this will be a big step forward in providing a mobile channel that is powerful for both program sponsor and program member alike. Loyalty programs that lead the way in 2010 will develop iPhone-based, global points earn and burn solutions to reach out to their members—‘Globiphonization’. L

by Dominic Hofer, Loylogic, Inc.

Technology in 2010: EarnBurn Convergence


hile 2009 was the expected challenging year for many companies and industries, we also find some winners; one of them definitely being the loyalty industry. Over the last couple of months, many companies stress-tested their existing loyalty programs and learned that they have a great tool at hand to navigate through economic downturns. For 2010 we can surely expect some major technology initiatives from the loyalty industry. Going ‘global’ and going ‘iPhone’ will lead the way. Are you ready to ‘globiphonize’ your loyalty program?

What didn’t work in 2009: Frequent Flyer Program Spin-offs
There is no need to spend many more words about the very successful spin-off of Aeroplan from Air Canada back in 2005. Even if the Aeroplan share price got hit hard, the FFP spin-off model remains a success. It even proved again its value to Air Canada when the program ‘accelerated’ CAD 70 million to buy reward tickets back in December 2008 and issued another loan of CAD 100 million on June 29, 2009. Tesco’s CEO Terry Leahy However, where is the next also revealed that its airline spin-off? Weren’t we all leaning across the Pacific offer of double points to follow the development of on the Clubcard loyalty the previously announced Qascheme had improved its ntas Frequent Flyer spin-off? Well, it won’t happen. On Auperformance amidst the gust 7, Qantas CEO Alan Joyce recession. said that “Qantas will be postponing the spin-off of its Frequent Flyer program indefinitely”. Why has no airline followed the successful model of Aeroplan? Why does Groupe Aeroplan not succeed in acquiring another Frequent Flyer Program? Well, Alan Joyce made another statement on August 19, 2009: “Given the strategic value of Qantas Frequent Flyer to the Group, we will be retaining full ownership for the foreseeable future.” Maybe airlines should keep close hold of their most valuable assets—their ‘affluent frequent flyer customers’—and gather as many earn partners around the program to provide cash advances when needed. An example comes from December 9, 2008: “Delta will receive an immediate $1 billion boost to its liquidity from a purchase of SkyMiles that American Express will use in part for its membership rewards program. Delta said it expects to receive an additional $1 billion from contract improvements through 2010.”

What worked in 2009: The Economic Downturn
Loyalty winners in 2009 came from loyalty programs that carefully studied the impact of the economic crisis on their members’ household budgets. A very good example of this is (again) Tesco Clubcard. In May 2009, Tesco re-launched Clubcard in the UK, including £150 million worth of investment, with the aim to add another 1 million members to the program. The objective was met on October 12, when Clubcard added the 16-millionth UK member. Shortly after, Tesco’s CEO Terry Leahy also revealed that its offer of double points on the Clubcard loyalty scheme had improved its performance amidst the recession. Smart marketers quickly re-worked their reward portfolios and showed their members how valuable their loyalty points can be; especially when times get harder for families. In September 2009, American Express introduced options to redeem Membership Rewards points for everyday charges such as groceries, gas, phone, wireless and cable bills. Other examples can be found within the airline industry, where airlines such as Delta, Alaska Airlines, TACA and many more dealt with overcapacity by adding additional reward seat capacity or offering one-way reward flights.

Key to the success of any loyalty program are the ‘Rewards’ that it offers. Over the last couple of years, the financial services industry has successfully demonstrated that affluent cardholders can be lured away from airline co-brand credit cards when offered valuable and liquid points currencies together with large selections of relevant rewards. Most of these programs are based on a new breed of reward solution that is completely e-commerce based. Equally successful are the so called ‘Merchant Funded Reward Malls’, offered primarily in the travel and financial services sector. These solutions integrate with hundreds of leading online merchants through a number of affiliate networks and provide loyalty program members an opportunity to earn points while shopping online.

All these applications are fully controlled by Apple and exclusively available to iPhone customers. That, for sure, is pretty powerful. Imagine if Microsoft invented the internet and would have controlled paid distribution and access to websites.


2010 predictions Future ‘Best Practice’ will go to global loyalty programs that deliver local experiences globally. In terms of future ‘Technology’ we should certainly expect the convergence of global earn and burn technologies. Loyalty programs that lead the way in 2010 will develop iPhone-based, global points earn and burn solutions to reach out to their members— ‘Globiphonization’.


Loyalty Management™ • LOYALTY360.ORG

Loyalty Management™ • WINTER 2010



ocial media as a whole is hands down the most cost effective tool in driving engagement and influencing purchase decisions. If you look at some of the most effective social marketers today, their costs are often measured in terms of an employee’s time. There is absolutely no upfront cost in setting up a social presence, there is no media to buy and even the most advanced practitioners dedicated only a fraction of their marketing budget. Given these facts it would seem only a matter of time before a corporate social presence is given the place at the table it rightfully deserves. But this is a good thing for forward looking companies who see the inherent benefits in social media rather than focusing on the potential threats. The opportunity to carve out your space ahead of the competition is right now, and here’s how to do it.

The Year You Invest in Social Media
by Jared Stivers, Walker+Stivers Analytics You’ve most likely heard all the buzzwords surrounding social media: Tweeting, Facebook Fans, Mommy bloggers and the like. In fact, many of you are probably fairly well versed in social media in your private lives. Anyone who has posted a photo on Flickr, set up a Facebook page or simply commented on a blog has contributed to the social revolution. But despite the fact that even our parents are now setting up pages on Facebook, we have been remarkably slow as marketers to take advantage of this new medium.

While many companies are taking this first step they often miss one important concept:

social media is a conversation not a monologue.

The Basics
The first thing to do, if you haven’t already, is get a basic corporate presence set up. A good starting point is to create a Facebook Fan page, sign up for a Twitter account and create a corporate blog where you can interact with your customers. Let’s take a look at those one by one. Facebook Fan pages are free, feature-rich and allow you to become part of your customers’ personal day to day lives in the way no other medium can. These pages are exceptionally well suited for B2C businesses as people often use their consumption choices as a way to express themselves. While many companies are taking this first step they often miss one important concept: social media is a conversation not a monologue. Simply posting your marketing on a Fan page every so often is not taking advantage of the true nature of social media. Good social marketers, such as Absolut Vodka, capitalize on the intimate relationship this social network provides by offering their fans exclusive deals and a sense of access to the brand. The result for Absolut is over 500,000 fans: brand ambassadors waiting to hear from them and willing to spread the word. Twitter has evolved to become more than a way to simply express your thoughts in 140 characters or less, but a new communication channel between a company and its customers. Like a Facebook fan page, a Twitter account is only good if you use it, but it can go far beyond the occasional product announcement. Dell recently announced it made $6.5 million in sales due to Twitter with the number of followers increasing 23% in the last three months alone. And while that’s a small percentage of their overall global revenue, the cost per sale from this particular social media channel has inspired Dell to ramp up the investment. The final basic component of a social media strategy is a corporate blog. Blogs allow for a more conversational approach to speaking with prospects and customers as well as facilitate a dialog in ways a corporate web site cannot. Taking this one step further you will often see employees blogging in a public forum not directly related to the company they work for but rather the industry. One of my favorite bloggers, David Berkowitz, writes excellent posts for the social media community which in turn positions his employer as an agency more than capable of guiding clients through the social landscape.

Let Your Employees Contribute
Having an expert blogger on your payroll is certainly a good thing, but you can also take advantage of the social nature of your employees. Often time companies will make the news for imposing draconian measures that seek to avoid an embarrassing employee mistake in the social world by outright banning the use of Twitter or other social channels. However, most companies simply ignore social media and the role that employees should be playing. Those on the forefront however, create a social media policy that outlines how the company should be portrayed and encourages its workforce to go out and spread the message. Awareness, preference and purchase no longer follows a linear path from the corporate marketing dept. to the potential customer but rather the marketing funnel is now interconnected touching prospects several places on the social web. This is a good thing; forward looking companies are taking advantage of these connections and using their employees to grow the bottom line.

The best way to measure the contribution of your social presence is to allow a customer to complete a transaction directly from the social network. Cosmetics giant Sephora has done an excellent job creating a Facebook community where it showcases special offers for its fans. One click gets you to the product page where each transaction can be attributed to Facebook. For most of us, especially those with longer sales cycles, it’s not that simple. This is where the brand building aspect comes in. Continuing with the Facebook example your best indicator of success is the number of Fans you have. With Twitter it’s the number of followers and also your “retweets” or how many of your posts are passed along by other people. One simple metric is to benchmark yourself against your competitors; the number of Facebook Fans and Twitter followers is prominently displayed for all the world to see.

2010 Predictions


Dell recently announced it made $6.5 million in sales due to Twitter with the number of followers increasing 23% in the last three months alone.

The Bottom Line
While social media is still a small part of most marketing budgets the ROI provided from this channel has gotten marketing managers to take notice. Investing in social media should be a no-brainer given the direct impact on sales as well as the deep level of engagement provided by this medium. As we get better at creating and nurturing conversations with our customers and prospects a well thought out and executed social presence can be the difference between good companies and great companies. L

Hitting Your Numbers
In the end, the goal of social media is the same as all of your marketing; build the brand and increase sales. In order to effectively achieve these goals without spinning your wheels it’s important to set goals and periodically take stock of where you are. Like most online marketing there is no lack of metrics in the social sphere but directly attributing your online presence to sales can get a little tricky.

•Real time search will index your facebook status updates so quickly when that special someone changes their relationship status to “single” the rest of the world will know about it before you do •Your personal (facebook) and professional (LinkedIn) online personas will merge and become one so don’t post any status updates or cheeky comments you wouldn’t want to see on the cover of a newspaper •As Twitter becomes more ubiquitous we will all speak in sentences 140 characters or less •And one that I know will be true: Google will replace Microsoft as the 800 pound gorilla we all love to hate.


Loyalty Management™ • LOYALTY360.ORG

Loyalty Management™ • WINTER 2010



Advertising and Marketing
It’s big, it’s great and it’s here.
by Amit Gupta, InMobi

Mobile Applications


obile applications are a fast growing area in the mobile ecosystem and are a hot topic in most industry forums these days. Due

Advertisers are also looking at application advertising & marketing as a way to gain consumer loyalty. In one example, McDonalds had a way to track the number of burgers bought through the consumer’s mobile phone and every 10 burgers would entitle the consumer to 1 free burger. We have indeed witnessed a rising number of advertisers focusing on loyalty management. But it has to be kept in mind that this needs a lot of thought in terms of incentives, initiatives, procedure, management etc. So far, we have only witnessed some of the more mature brands going in for mobile form of loyalty management.

to their unique format and captive audience they offer a huge potential for mobile marketing and advertising. In fact, it has become one of the preferred mode of mobile advertising for many brands and agencies for a lot of reasons. Though the appeal of in-application advertising is manifold, below are some of the aspects.

•The fundamental reason is that mobile applications can deliver a richer and more compelling user experience than most other modes of mobile advertising. As the phone capabilities start getting better, the feel of the application also improves. For example, a game with motion sensors to move in different directions is way more attractive than a game with button controls. Hence as better phones begin to hit the market, more innovative apps are developed that use the enhanced features of phones giving users a very engaging experience. Hence, an increasing number of brands have begun to sponsor an entire application and provide it for free for consumers creating a big opportunity for brand awareness. •The applications on mobile phones can avail all the mobile phone features such as the camera, GPS, media player or 3D graphics. If ad campaigns are designed to effectively utilize the mobile phone capabilities, then it can lead to very engaging and successful ads. For example, since most phones come with GPS capabilities, the ads could make use of the location based information. •Applications that provide value to the user, usually stay on the users phone and potentially bring in a viral effect. Moreover, if the application is design such that it does not need to be connected to the internet, then it can also be used when the users are offline. This shoots up the amount of usage of the application, in turn resulting in more impact of the brand to the user. Some of the brands that use applications in this category are Zippo, Dockers, Branded Games etc.

An increasing number of brands have begun to sponsor and entire application and provide it for free for consumers creating a big opportunity for brand awareness.
For brands that already have a loyalty program in place, it is just a matter of developing mobile applications so as to phase out the use of membership cards and other forms of identity and integrate it all into 1 device—the mobile. We have seen that the mobile phones are being used for more and more applications reducing the number of other devices needed. Phones now do the job of a music player, a watch, camera, radio, computer and many other applications. It is just a matter of time until mobile phones become an instrument of identity. Loyalty management through mobile phones is still in its nascent stage and brands that are investing in it now are enjoying the benefits of being first in the trade. L


New Year Predictions: 1.Usage of internet via smart phones in the eastern world will grow exponentially and will begin to catch up with the west. 2.mCommerce will see a higher levels of adoption and emphasis will be given to the user experience creating a seamless experience on mobile payments. 3.Location-based services will be the need of the hour resulting in increased penetration of GPS-enabled phones as well as phones with superior geo-tagging technology.


Loyalty Management™ • LOYALTY360.ORG



Loyalty Innovation

The S2H REPLAY rewards people for being physically active (running, playing sports, dancing, etc) by measuring the amount of activity done over a period of time (see www.s2h.com). Currently each 60 minutes of activity generates a unique reward code which can be uploaded to a micro-site to accumulate points. These points can be used towards gaining rewards (free movie tickets, DVDs, sports equipment, MP3s etc), and on S2H.com, they can be used for challenges to other users (i.e. parents challenge children; friends challenge friends; teachers challenge students), play games or used to improve the look of a user’s online avatar. Businesses in pharma, healthcare, insurance, sports, education, retail and more can benefit from customizing this promotional product, distributing this to their customers or employees and gain by: •building valuable and unique brand awareness and loyalty •rewarding their customers and employees for their physical activity •distinguishing themselves as a promoter of healthy living •driving traffic to their website & collecting valuable customer data

Partnership—now possible between instore merchants and loyalty and affinity programs OfferIQ’s Patent Pending proprietary Virtual Incentive Platform (VIP)™ bridges the gap for successful partnerships between retailers and card loyalty and affinity programs. Retailers can now tap these relationships to effectively target different and unique offerings to potential new customers and existing ones. Plus, consumers can now recognize the redemption of the offer at point of sale without any point of sale hardware or software adjustment at all! OfferIQ brings mobile coupon delivery and redemption to the physical shopping world. With OfferIQ, any retailer (regardless of size) is armed with the cost-effective, turnkey solution needed to create an immediate, repeating, and strengthening interactive cycle of offers and rewards with their customers. Through OfferIQ’s embedded technology, retailers will effectively gain a competitive edge by: •Offering customers special, relevant, targeted offers in real-time •Easily and inexpensively targeting customers based on individual behavior, preferences, location and buying patterns •Setting offer parameters based on customer segments and profiles •Sending offers via email or location based mobile •Analyzing each offer and offer segment using a flexible, online reporting dashboard •Creating virtual “frequent shopper programs” to reward loyal customers. •Gaining new customers driven by OfferIQ’s issuer/bank partners and consumer aggregators No POS changes. No associate training. And easy for your customer. Find more at www.offeriq.com

Is the US ready for a new digital currency? The Creditz system was designed to offer merchants the power to build relationships while motivating consumers to stay loyal to specific establishments, increase visits and spend more. Sophisticated technology was developed based on listening to the customer—retailers and their customers. Utilizing IBM's latest db2 database and Series I infrastructure technology, the Creditz system allows merchants to offer their customers general and targeted offerings. Merchants are now able to offer personalized promotions by customer value, customer segment or by customer preference and receive these offers online via email, laser targeted mailings, or wireless personal devices. In parallel, as transactions take place the Creditz system will record, store, mine, filter, and analyze the buying patterns of the customers and merge this data with personal preferences and survey data of each individual consumer. The result is true secure consumer data like never before—flexible and personalized customer recognition with the power of market intelligence. Creditz gives consumers digitalized cash they can redeem at any Creditz merchant; instant digital cash, instant ability to spend on any product and service the consumer wants.

The pilots being undertaken by Bling Nation in North America are definitely worth looking out for with the integration of loyalty & payments using mobile & rfid technologies.
—Upendra Namburi, loyaltyredefined.blogspot.com

Convego Air Mobile
G&D unveiled a completely new form factor for debit cards. Convego Air Mobile is a sticker which enables the user to pay contactlessly. The sticker contains the full functionality of a credit or debit card. Once the thin and pliable foil has been affixed to a cellphone or PDA, the device can be used to pay bills at all cash terminals and ticket machines supporting the worldwide contactless MasterCard PayPass standard. The Convego Air Mobile sticker is an important transitional technology on the way to contactless payment transactions by cellphone. Current terminal infrastructure limitations present a clear barrier to NFC and require targeted investment by MasterCard. A key factor to trigger investment is consumer acceptance of NFC, and sticker technology could help boost uptake until phones with embedded NFC technology become widely available. For instance, when G&D worked with O2 on an NFC trial in the U.K last year, 85% of participants said the make and model of the handset would influence their decision to adopt NFC services. The Convego Air Mobile sticker addresses this consumer decision in the short term, allowing the user to continue with their current handset. What are the implications for prepaid? A companion contactless sticker to a prepaid card account, or indeed the sticker acting as a prepaid account in its own right presents all kinds of opportunities...

Bling Nation
Bling Nation® is a payments network provider for community banks nationwide. Bling Nation enables financial institutions to more profitably support payments between their local demand deposit accounts (DDA) and merchant account holders by bypassing the current debit payment model. Bling Nation’s Community Payments Service enables banks to convert potential on-us debit transactions to actual on-us transactions by offering merchants and consumers secure, contactless payments at the point of sale. Customers tap their mobile phones on the contactless reader installed at the point of sale at local merchants in the network. After every successful transaction, customers receive instant payment confirmation via SMS text message to their mobile phone, which includes their current bank account balance. PCI compliant, Bling Nation provides a secure payment network that significantly reduces instances of fraud that are associated with traditional debit and credit networks. Because no personal or bank account information is shared during the transaction, Bling Nation’s technology drastically reduces the risk associated with device cloning or identity theft. For community banks seeking to reduce operating expenses, while owning any local debit transactions between their own DDA customers and their merchant customers, Bling Nation delivers a closed-loop payment network in which the bank acts as both the issuer of consumer payment mechanisms and the merchant acquirer. Allowing participating customers to make contactless payments that are processed entirely within the network reduces the number of participants in the payments value chain and, as such, enables banks to claim a larger share of transaction values. L

Creditz gives consumers digitalized cash they can redeem at any Creditz merchant; instant digital cash, instant ability to spend


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If “loyalty” is tied solely to a branded credit card, all those inactive card holders are essentially invisible to analysis.

But, what if the basis of your loyalty program and your main source of customer data and insight is your private label card? If this is the case, here’s a rather critical question to consider: is your private label card really as powerful a tool for cultivating customer loyalty—especially in today’s credit averse environment— as it perhaps once was? The fact is, a number of retail marketing leaders have been determining that the answer is, “No…it is not,” …and here are two major reasons why: First, a large base of card-holders does not equate to a high rate of active card use…and diminished card use means diminished customer insight opportunity. We all know why customers sign up for private label cards. It’s a response to the opportunity to get a 10% or 15% discount on everything purchased that day (or as soon as the card is approved). The tactic definitely works for stimulating applications. But what matters much more is the percentage of card holders who continue to use the card. Few retailers claim that more than 40% to 50% of their cards are actively used. What that means is that if “loyalty” is tied solely to a branded credit card, all those inactive card holders are essentially invisible to analysis, development of insight into their shopping behavior and, consequently, your ability to communicate with them in a targeted and cost effective manner. Secondly, some percentage of the customer base— even best customers for a given brand—have never accepted the card and will not ever do so. They have other cards they use—airline mileage cards, rebate cards, etc., or have determined instead to utilize debit cards or simply pay with cash.

So the question becomes even broader, e.g., what percentage of the total customer base—and their associated shopping activity—is generally invisible? In cases where most loyalty cultivation efforts are associated with a retailer’s credit card, the answer simply cannot be known. Without insight, what is there to do but extend one discount offer after another to the world in hopes of increasing store traffic?

Changing the Customer Conversation
A better way is to get promptly to work on the development of a data base that is not dependent upon the use of any particular credit card. Assuming your POS system can link a customer identity number (email address, for instance, loyalty program member number or even

The goal is a stronger, more personalized relationship—it’s the best hope for success in a difficult retail environment.
phone number) to a specific transaction, you may begin the process of gaining insight into all the important aspects of your customer’s purchasing behavior…shopping frequency, locations visited, transaction value, what items are purchased, and based on intense analysis of customer preferences, what other products might be appropriately suggested for trial. The goal is a stronger, more personalized relationship…it’s the best hope for success in a difficult retail environment. Don’t have the resources “in house” to make the most of the data you are able to gather? Then move quickly to find an outside provider of specialized expertise in data management, segmentation, analytics campaign design and testing, and overall fact-based strategy development. The right partner will contribute to your ongoing success by helping you improve your communications ROI, increasing incremental sales per customer and optimizing your investment (e.g., reducing expense) in direct marketing. L

The Private Label Credit Card Dilemma
by Jeffrey Harris, SHC Direct


erhaps there has never been a time when it has been more important than it is right now to know and understand the shopping practices and preferences of your customers so that you may communicate with them in ways that they will find meaningful and inviting…that is, other than by besieging them with emailed discount offers. But, what if the basis of your loyalty program and your main source of customer data and insight is your private label card?

New Year Predictions:


As customer relationship marketing experts and based on our discussions with many and diverse retailers …

•We anticipate consumer spending will be up by at least 2% during the course of 2010, as compared to 2009. •We Look for a larger portion of marketing funds to be funneled away from traditional media in 2010 (as compared to 2009) in favor of mobile and electronic marketing. •Significant progress by retailers will be made in 2010 in the effort to monetize the use of social media.


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Engagement and the ROI of Results Measurement
by Todd Hanson, Catalyst Performance Group, Inc.

2010 trends and resolution
•2010 will be a year of unprecedented opportunity with both big losers and big winners. Innovation will be the differentiator. •Increased use of holistic engagement strategies that integrate loyalty, reward, recognition, incentive, meeting and event best practices targeting employees, customers and even vendors. Win. Celebrate. Repeat. Lose. Learn. Try again.

Engagement is good for business. In fact, a large percentage of businesses measure it and billions of dollars are spent attempting to improve it through incentives, motivational meetings, rewards, recognition and loyalty programs. Unfortunately, program results are rarely measured so there is little proof that the investments pay off. This shocking reality is troublesome at best. At its worst, the inability to prove value makes a company’s investment in engagement questionable.
in “The Engagement of Economics” whitepaper available at www.ROIofEngagement.com.

The Silver Bullet

The Definition of Engagement
Don Peppers, Founding Partner of Peppers & Rogers Group, has worked to clear the confusion regarding the amorphous term “engagement.” During a recent conversation, Don shared, “I think the world is full of fuzzy acronyms and names for things. Engagement was in danger of being one of those very fuzzy concepts.” In order to help clarify the concept, Peppers blogged about the term and received a couple dozen comments through the blog and on Twitter. This helped him hone a definition. “Engagement implies that somebody is involved. And more than involved it means that you, in fact, take initiative, initiative that is positive. We have a very simple definition of engagement,” Peppers continued. “Engagement is most simply defined as positive and proactive involvement."

The Results Measurement Gap
Return on investment, or ROI, has been the buzz in the incentive, rewards, recognition, meetings and loyalty arena for 10-plus years. Countless articles have been written about it, keynotes presented and more. In fact, search “ROI” in Google and the result is a stunning 99 million hits. Yet, rarely do companies measure results of their engagement programs. One example of the gap in results measurement was apparent during a recent Human Capital Institute webinar on recognition, attended by more than 300 participants. A poll revealed that approximately 50% of the respondents measured results by considering engagement scores, yet only 10% measured ROI of their engagement programs. So, why don’t companies measure ROI of engagement programs? According to a study conducted by the Incentive Research Foundation, IRF, the two most common reasons are that the company views the program as a necessary expense and the program does not have the visibility of senior level management. When asked why more companies don’t measure results, Rodger Stotz, Principal at Delta Qi Consulting and Chief Research Officer at Incentive Research Foundation, said, “I think that many companies rely on literature that illustrates higher engagement scores correlating with improved financial results. In addition, most companies don’t know how to do it. Unless the program is under scrutiny, the need isn’t perceived as compelling enough.” When questioned regarding the wisdom of such a mindset, Stotz added, “When a program is under scrutiny, ROI is exactly what is needed to defend or justify a program.”

Engagement as a Driver
There is growing evidence that engaged employees and customers drive business results. In 2008, the Human Capital Institute and IBM partnered on a study that looked at three-year financial track records of 287 publicly traded companies. The findings included that companies focused on measuring and addressing engagement and aligning incentives, a powerful engagement tool, were more likely to outperform others in their industries. The Center for Talent Solutions, CTS, (formerly “Center for Talent Retention”) has been helping firms increase engagement levels of employees and measuring individual performance for years. It has found that what it calls “fully engaged” employees deliver, on average, 22% better performance than normally engaged employees. In a case study undertaken by CTS, one company went from a $112,000,000 loss to a $56,000,000 gain while actively pursuing specific programs designed to improve engagement levels. This study and others like it are highlighted

assure credibility with discerning CFOs and In the early 70’s, a young professional CEOs. named Jack Phillips completed his first impact Another important part of the process is study for a top executive at his firm. It was to isolating the effects of the program. For exbe the first of many. As his skills developed, he ample, sometimes objectives are met or not began to write and speak about the ROI methmet for reasons other than the program itself. odology he developed. 1983 marked the pubThere are other factors impacting results that lishing of his first book on the subject and in create static. The development and use of iso1993, The ROI Institute was launched. Today, lation techniques has been a major contributor the methodology is used in more than 50 counto the overall acceptance of studies completed tries on thousands of studies each year. using the ROI Methodology. The now trademarked ROI Methodology Lastly, the methodology insists that when has become a widely-accepted formula for comparing financial benefits to a program’s measuring results, up to and including return cost, the cost is to be “fully loaded.” As a result, on investment. When asked about whether engagement programs are typically measured, Phillips said “Not many. Most of these programs are developed with a –Don Peppers, Founding Partner, Peppers & Rogers logical, common sense approach, particularly a goal or objective is achieved and the reward is matched to meet all direct and indirect expenses are included that need. Unfortunately, there is not much in these calculations. analysis around these programs, particularly The ROI of Results Measurement the type of analysis that we recommend.” Current events and a flagging global econPhillip’s ROI Methodology is a systematic omy have only amplified the interest in and approach that takes a potentially complicated need for results measurement. Although ROI task and breaks it down into logical, sequential Methodology™ makes it doable and credible, steps. It generates six types of data and all six is it really worth the effort? types are needed to fully understand the sucAccording to Phillips, “This process is needcess (or lack of success) of a program. In the ed in this industry now. It can be implemented process of calculating ROI, Phillips insists on with a minimum amount of resources and using very conservative “Guiding Principles” cost. An organization must be proactive and to assure that standards are met, especially not wait for the request to prove value. Meawhen converting data to money. This helps

Engagement is most simply defined as positive and proactive involvement.

surement, routine accountability, and process improvement should be a part of the culture.” At its core, measuring results serves as a process improvement tool. Data is collected, insight is gained and the insight fuels continuous improvement that is evidence-based. It almost assures a strong ROI for results measurement. For example, a pharmaceutical company gained insight into the challenges its sales force experienced with program communication and registration. Not only did the evaluation identify a previously unknown problem, it provided valuable insight that pointed to a solution. The net result was a small investment improved participant satisfaction, reduced administrative errors and saved countless hours of time with sales professionals. That alone Group provided a good ROI. In addition to driving evidence-based continuous improvement, results measurement enables companies to defend existing engagement initiatives and justify future investments. Imagine the power associated with being able to prove the value of an investment with a credible evaluation. Rodger Stotz said, “Despite the compelling evidence that improving engagement improves business results, we still should be measuring ROI. And when we do, we should share the results in order to learn from each other.” L


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Three Components for a Successful Business Model
by Eric Granado, CSH Consulting

Once you’ve accepted that everything you do as a company contributes to the company’s success, it’s time to start active employee development. This can be broken down to three key components:

Have you ever gotten upset after receiving an email or voicemail only to realize later that you misunderstood what the other person said? I’m a firm believer that 90% of business problems can be solved with effective communication. Communication is not only telling clients, employees, and partners exactly what you can do for them, but also listening effectively. A client is not often looking for just the least expensive option. Their needs will vary and it’s up to you to provide the best solution for their specific needs. It is best to train employees to first listen to what the client or partner is saying, and then clarify any potential problems that are mentioned in the conversation. Suddenly, your sales person turns into a consultant, and is better adept to provide superior customer service, and ultimately, is able to suggest the best possible solution. To conclude, when you have a full staff of employees who are professional and excited about their career path, experts in their field and extremely efficient communicators, you have

Career Path
Everyone in the organization should have a clear, career path defined. This doesn’t mean you tell your Call Center Manager to target and assign different people to go to Risk or Sales, accordingly. What this entails is sitting down with your management team and having a conversation about their goals and interests within the company, and where they see themselves headed. The management team should then do the same with all employees. This is a great chance to get feedback on what can be improved or enhanced. The goal is to increase employee loyalty because the focus is changed from this being their job to establishing a career path. When the company views employees as an asset, they will be more inclined to invest in the company.

Communication is not only telling clients, employees, and partners exactly what you can do for them, but also listening effectively.
Industry-Specific Training
The more your employees know about their industry, the better able they are to perform in all aspects. For example, being thoroughly knowledgeable of the key indicators and value added propositions that keep customers loyal to your brand and making the distinction between frequency and loyalty programs are significant. This can make a huge difference on profits and garnering long term customer loyalty and exceeding their expectations. Encourage your employees to learn as much as they can about the gift and loyalty industry, in any venue possible. This doesn’t necessarily mean you’re taking employees away from their daily duties to do a training class. You can distribute trade publications/magazines, encourage employees to sign up for industry related webinars and join networks so that they are receiving real-time information on what’s going on in the gift and loyalty space. the recipe for a successful organization. This new business model isn’t about simply increasing fees in the fine print or giving top execs a haircut when profits are down. This model is about understanding the needs of your clients and employees and creating solutions that work for everyone. Your clients will recognize that you understand their needs on more than just a transactional level. You will be able to build a firm foundation within the business world. In the payments groups I belong to, I see conversations about instituting regulations and mandatory certifications to increase the quality of business that’s being given. If we want the industry to change, if we want low turnover with maximum employee development, if we want merchant and customer loyalty, the way to change the business world is to start changing the way we do things now. Building up trust and communication will ensure you have a steady client stream for years to come. L


ust recently, I was having a conversation with a potential client; the CEO was searching for an individual to formulate a sales team. I started with the progression of usual questions (type of professional background needed, years of experience, preference to candidates from particular companies, etc). The CEO stopped me and said “I’d like this executive to have payments experience, but beyond that, it’s all about finding the right personality. Our company is here to develop people and we need to find individuals that want to excel. We look for energetic leaders and someone that can develop others into leaders.” What a refreshing take. This country was founded on the premises that if you work hard, do your job well, then you will succeed. In fact, part of the blame for the recent economic crisis can be attributed to people that sat back, made investments they knew were questionable and just watched the money fall from the sky. As a result, many employees who worked hard and did a great job were laid off. Trust and loyalty was broken—employees have lost faith and belief in their company. Fewer organizations can assure employees will have a job tomorrow and deals with clients are lost even more due to the

economic turbulence. Banks are receiving TARP funds, but not putting that money back into the economy through small business loans because they don’t trust the economy to hold up. This pattern is not only exclusive to the current housing, insurance and auto crisis. Who in the payments industry hasn’t run into a small business owner and got to talking about transaction processing, and the next thing you know the merchant is telling you a horror story of their last or current processor, the fees they are paying, or the problems they’re having with customer service? Because of unethical behavior or misrepresentation from others in the payments industry, we’re all paying that price in bringing on merchants now.

It’s time for a new business model. A model that isn’t about the bottom line, but a model that understands that everything contributes to the bottom line.
When we encourage our employees to excel, we as a company are going to ultimately be stronger. If you behave with complete integrity and openness with your clients, you can build that loyalty so that you are more than good on your word and that you are their consultant for the long term.

2010 Loyalty & Engagement Resolutions


1. Take as many risks as possible without letting myself say no; even if I think the entire idea is completely, utterly crazy! 2. Read one personal development book each month. 3. Get out of the comfort zone and dare to be different; identify what’s missing & find solutions.


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5. Stay Informed
A few years ago a popular term was “managing while walking around.” Staying locked in your office is not the way to find out what is going on in your department. Talk to employees. Watch as you walk where your employees work. This can be a powerful learning tool. I recall a top manager with whom I was working as a consultant who rarely left the office to wander through the organization. The result was a minimum degree of loyalty and commitment to carrying out work responsibilities, and a lack of information regarding how things were affecting the work force. And, this ultimately was a contributing factor in the loss of the leadership role by this individual. On the other hand, Herb Kelleher, former CEO of Southwest Airlines is a prime example of a leader who always knew what was going on in his organization. Kelleher placed employees high on his list of relationships to grow. He was beloved and very effective leading his airline. Can anyone doubt the success of Southwest? How informed are you about what is going on within the walls of your department or company?

2010 predictions & resolutions


Resolution •Complete new book, Common Sense Leadership in Uncommon Times by the end of 2010 Predictions •It will take all of 2010 for the US Economy to recover •The New Orleans Saints will win the Super Bowl •Florida will repeat as BCS National Champion •I will be one year older at this time next year

Ten Ideas to Build Morale in any Organization
by Billy Arcement, MEd, The Leadership Strategist In today’s competitive business environment, an organization cannot afford to have employees give a half-hearted effort. Their contribution must be all that it can be in order to foster organizational prosperity. And, any businessperson worth their salt knows that without growth, an organization will falter and die. What can managers and supervisors do to foster growth and build employee contributions? Here are ten ideas that will achieve both goals—increased employee contributions and organizational profits. They are not presented in any order of importance because all are important. Why not use these ideas to evaluate what is going on in your organization?

9. Make Integrity Your Guiding Star
If people are to begin to trust you, they must feel you possess integrity as the cornerstone of all your actions. High standards of behavior keep you on the high ground and present a consistent behavior pattern employees can predict and trust. Workers may not always agree with your decisions, but they will follow them with less resistance when they know every decision is laced with integrity. Workers want a consistent ethical performance, not a self-serving mindset. How would your workers describe your level of integrity?

6. Make Work Interesting
Many miss the significance of this statement. Few things can massacre morale and motivation more than working at an uninteresting job. Yes, most jobs are not fascinating all the time. But one way to assure continual interest is to match job requirements with the skills and talents of workers. The more closely you can create congruency with work responsibilities and employee skills, the greater the work satisfaction will be. And, managers who do this have incredible results. Do you know the skill and interest level of your employees and are you matching them to their work requirements?

1. Lead by Example
I’m probably from the old school but, as a manager, I always felt that I could not ask anyone working for me to do something that I would not be willing to do. If employees feel that the work they are assigned is a task they know you would do, resistance is dramatically reduced. Secondly, walk your talk. If you say everyone should come to work on time and you never do, that message sends a mixed signal. Workers understand that rank has its privileges, but they also understand excess. There is a converse relationship on this point. That is, the more excess they see their leaders practice, the greater the morale gap. What is the privilege gap in your organization?

3. Compensate Fairly
While money may not always be the magic motivator, it certainly is judged as a reward for our efforts. Compensation (pay and benefits) is best gauged by how well an individual performs their job, the need for what they do, and the difficulty of replacing them. Use these three points to measure the fitness of your entire compensation package. Staying competitive builds longevity in the work force and that lends itself to continual growth and ultimately survival in competitive markets. Good employees deserve good compensation. Keeping everyone feeling that they are being treated fairly in this arena is an important morale builder. How does your compensation package compare to your competitors?

To help keep your workforce intact, create a strong team spirit, develop a high level of trust, and operate in an environment that displays your loyalty to employees.
10. Build Loyalty and Teamwork
Again, trust enters the picture. Loyalty can only grow when workers trust management. Workers accept leaders when they feel a reciprocation of respect in the work place. Leaders who cannot be trusted cannot build a loyal following. Likewise, a team spirit cannot grow if workers sense a selfish attitude on the part of their management. Practicing all the previous nine ideas I’ve shared will build a high functioning team. The leader cannot do it all. He or she must have cooperation from those they lead and that only comes when a team spirit is emphasized and permeates the entire organization. Another item to consider today is that young workers (Gen X) are not as loyal to the organization as previous worker generations and are much more mobile. Therefore, to help keep your workforce intact, create a strong team spirit, develop a high level of trust, and operate in an environment that displays your loyalty to employees. How strong is your teambuilding process?

7. Bring a Cheerful Personality to Work
Admittedly, there are times when being cheerful is difficult. But, as a leader, you have the obligation to set the attitude atmosphere. Your demeanor is critical to the success of the organization. Be friendly, genuinely caring for all employees under your charge, and approach all with as positive an attitude as you can muster. Therefore, it’s very important to make pessimism part of the past, not the current way you run your business. Following the “Yellow brick road of positive thinking” will produce results that might astound you. How is your attitude? Is it worth catching?

2. Grow Your Employees
The success of your organization will be in direct proportion to how well you educate employees on their responsibilities. In my observations on this practice, the worst violation of this idea is in the ranks of management. We find a good worker, make them a supervisor and then believe they are going to receive divine intervention to help with their decision process. There must be constant support to help a new supervisor or employee understand the rudiments of their job responsibilities. Osmosis does not work in these cases. By constantly evaluating individual progress and making the necessary adjustments and providing more training for every employee serves as a great morale builder. Professional growth is a stimulator. Do you have a growth plan for every employee in your organization?

8. Be Open to New Ideas
Never forget that others within your organization are capable of making substantial contributions. Many times, all you have to do is ask their opinion or seek their ideas. I talked about utilization of employee suggestions in point four. Here, I want to take the idea a step further by suggesting that leaders should always keep an open mind to ideas given to them by employees. Keeping a closed mind and the mentality that “this is the way we do it here” is a sure turnoff. You don’t have to implement every idea provided but you’d better listen to those given and implement the ones that can benefit employees and the organization. Be willing to be a perpetual student who views employees as potential teachers. Remember, it’s not always the boss who has the best ideas. How many times in the last month have you opened your mind to new ideas from those who work for you?

4. Involve Workers
Often times, the best ideas for improvement come from individuals doing the work in areas that are being evaluated for improvement potential. Don’t ever overlook the fertile ground collectively know as the brainpower of your employees. Managers who understand this rank among the best, and their departments are among the most efficient and effective within the organization. Toyota is famous for the thousands of suggestions provided by employees. Few can argue that Toyota is not a successful enterprise. How many suggestions have you implemented from your employees in the last year?

Well, how did you rate yourself on these ten points?
Assess as accurately as possible what is going on within your organization. Once you’ve reviewed these ten ideas, why not add a few ideas of your own? Then, make sure that every day these practices become the way your organization functions. Following these patterns of behavior and leadership will build strong morale within your work force and make managing and leading a much easier task. There is no better way to grow your business! L


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Trends, Implications and Solutions in Engagement Marketing
by Bob Fetter, Pluris Marketing

TREND : Marketers are adopting social media by
creating Twitter accounts and Facebook fan pages, and then using those media for promotions such as couponing or specials.
Again, this strategy is similar to the blast email strategy where every follower or fan receives the same promotion. Most marketers have no ability to measure the effectiveness of promotions in Social Media other than by follower or fan count, so they turn to Social Media Monitoring services.

Do not accept the Sunday Circular mentality when advertising digitally.
TREND : Those who are doing targeted direct mail
are seeing year over year improvements in results because mail box clutter has been significantly diminished.
In fact, many niche catalogers are seeing surprisingly high performance results because the pendulum swung too far the other way. Many direct marketers have reduced catalog prospecting to zero as well, due to expense.

IMPLICATION : This use of social media will have
the same effect as blast email.
Consumers will not be excited about the promotion posted every day at 11:30a.m. It becomes advertising akin to traditional print advertising, only the medium is different. Also, most niche marketers do not generate sufficient attention in social media to make effective use of a monitoring service. A typical mid-market retailer might generate a few hundred mentions per month across blogs, micro-blogs, forums, comments, etc. These comments are typically positive or neutral in sentiment. Social Media Monitoring is better suited to large brands with avid audiences, such as Xbox, or brands that have a significant and ongoing dialogue with their consumer base, such as DirecTV or Comcast.

IMPLICATION : The implication of the reduction
in direct marketing as a viable prospecting tool is potentially quite large.
We have directional evidence that new consumers coming from online sources have significantly less potential for lifetime value than those who are traditionally sourced from direct mail. This may just be a sign of the times as consumer loyalty may be down when any offer made by a company can be quickly price shopped in real time. Despite this, direct mail still has a valuable place in the marketing mix.


ver the past 12 months, we have seen a significant rise in interest surrounding “engagement” marketing, in direct correlation with the rise in interest surrounding Social Media Marketing. In continuous discussion with marketers and consumers, I have noticed several trends that are worth discussing.

TREND : Most marketers are continuing to use a “blast” email strategy.
Essentially, this involves doing the minimum amount of work to get the same email out on a daily or weekly basis to every registered email user in the database. With the recession and all of the economic issues surrounding the rising cost of direct mail, marketers have significantly increased the use of the email channel. The marketers that I have spoken with do this email blasting with the knowledge that they would like to do something else, but instead continue this strategy because email is “free” and doing something else will be too much work. These same marketers readily admit that the effectiveness of those emails is continually decreasing, yet their email database is growing quickly enough to offset declining performance per email.

SOLUTION : Use social media best practices
derived from direct mail.
If your company has dived into Social Media through a Twitter account and Facebook Fan Page and you are using those media for promotional activities, here are a few best practices to improve your social media effectiveness: 1. When you do a promotion using Social Media, create and store campaign metadata about that promotion as you would in direct mail. Save the date, time, specific promotion and targeted audience (your followers or fans). By doing this, you can then start to analyze the effects of that promotion on store or web traffic. 2. When you make an offer in Social Media, ensure that the link in that offer actually goes to the offer. Sounds simple, but I am amazed at how many times the link is to the home page of the specific branded web site and not the actual offer, forcing me to either search for it or simply leave. 3. Ensure everything is trackable by source. For example, if you are going to advertise a mobile promotion on Facebook, Twitter, your branded web site and in-store promotions, ensure you use different sign-up messages to track the source of the consumer. Similarly, if you are doing a coupon-based promotion on Twitter and Facebook, use different offers or coupon codes to track redemption by source.

SOLUTION : Cross-Channel Contact Strategies.
Develop a plan to vary contact cadence by consumer. To do this effectively, you need to tightly integrate email promotion history and web behavior into your analytic environment. You need to know those who don’t open 99% of your emails versus those who open 25%, and for those who clicked through, where did they go and did they convert? What is the right mix of direct mail, email and social? Techniques such as simulation and scenario analyses are effective in guiding contact strategy development. If you can track promotions down to margin generated, you have a great start in designing effective contact strategies.

IMPLICATION : We are killing email as a marketing channel.
Consumers rapidly disengage with our emails knowing that each email is not tailored for them, nor speaks directly with them. This is particularly worrisome when you consider that the increased use of Social Media and Mobile among consumers is causing a decrease in the use of email as a communication mechanism. Friends are more likely to post status updates or use text messaging to alert each other to things they consider important.

The increased use of Social Media and Mobile among consumers is causing a decrease in the use of email as a communication mechanism.
SOLUTION : Analytically Driven Email.
We spent years building powerful models to direct mail performance. Now that we have the capabilities to inexpensively communicate in an engaging way with our consumers, we throw those teachings away because email is “free.” By marrying off-the-shelf technologies, such as content management and an offer catalog, we can vary email content to engage our consumers based on their interests, channels, social site membership, transactions with us, and any modeling element that we find value in using. Think of an email as a canvas upon which you can drop highly customized content blocks to drive consumer engagement. Now, how do you get those emails opened? Vary the subject line by developing and targeting personas that occur naturally within your consumer base. If you engage by interest, you have a real chance at standing out in a crowded inbox.

The times are certainly changing and changing rapidly. It is a fact that our consumers will always be ahead of us, always trying new things to enhance their lives. Have you seen FourSquare? We have a chance to engage them digitally, but we must be smart about it and we must continually evolve. Investments in marketing technology must be made with one requirement firmly in sight. We don’t know what we need, but when we know we need it, we need it now. L


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LM: So it’s really about an integrated approach to customer experience management. Don’t companies find that overwhelming? M: Absolutely. And that does discourage some companies from getting started. I’ve spoken with people who want to address customer experience but believe it is so complex that embarking on a customer loyalty and employee initiative will not be effective because so many different people “own it”. But, the key is getting started somewhere and linking where it makes sense. For example, we worked with a very large financial institution that had the goal of consolidating over 200 disparate employee reward and recognition programs into a single integrated reward platform. The driver was really to save money and get better control over the resources invested. And they did that, saving an estimated 35% in administrative costs. But, the best thing was how it impacted business results, including retention, employee satisfaction, and—this is the key point—customer experience. In analyzing both customer satisfaction data and reward program statistics, we found that the bank branches with the most associates recognized were also the branches with the highest customer satisfaction ratings. We don’t think that was just a coincidence. Any employee engagement initiative should be grounded in how to deliver greater value to customers. LM: Are there natural leverage points between customer loyalty and employee engagement? M: Definitely! In fact, it’s the synergies between these initiatives that make them so powerful. If you think of it in terms of a Venn diagram, with your customer loyalty program in one circle and your employee engagement initiative in another, there will definitely be areas where organizational efforts do not overlap. B: However, where they do overlap, there’s a lot of power. M: Without a doubt. We think of both types of initiatives along 6 dimensions: strategy, communication, measurement, management, technology, and rewards. A simple way to start is simply by considering each one of these dimensions for both efforts. For example: Have you considered customer appreciation as part of your employee recognition strategy? Have you communicated all of the customer loyalty program parameters to your employees, educated them on the benefits to the customers, and been clear in the metrics you’re hoping to drive with your customer loyalty programs? Have you considered if there are technology and management overlaps in the resources you use for your customer and employee programs? And have you considered if consolidating your reward spend on both fronts makes sense? Again, there will always be work you’re doing for one group that doesn’t directly affect the other...but the closer these programs are aligned, the more powerful they will be. B: That’s why I’d take your Venn diagram, Melissa, and add one more circle that says “Brand” or “Culture” because so often that’s the unnamed force that is impacting both employee engagement programs and customer loyalty programs. When I think about programs that I personally enjoy being a member of—Starbucks, for instance—it’s because both the interactions with employees and the program itself reflect my understanding of that brand or the culture it represents. That experience is about much more than what I’m earning in the program. Conversely, I’m sure everyone can think of examples of loyalty programs that are just about the points with little to no real connection to a brand experience. That can be a factor of program communications, but I also tie it back to Melissa’s point about the impact of employee attitude. M: Right. If the way the employee introduces the loyalty program to you, or interacts with you as you try to use the program, is inconsistent with your expectations of the brand...well, that’s putting a whole lot more work on the shoulders of the mechanics of your program. B: That’s why whenever I’m asked to join a loyalty program—even in places where I know I won’t ever join—I take a moment to ask the employee to explain it to me because I’m just curious to see how they’ll do. About 50% of the time, they do great and I make a point of telling them so. But as a loyalty marketer, it’s the other 50% of the time that keeps me awake at night. M: Sounds like that other 50% needs some strategic employee engagement work! L

Engaging Employees Customer Loyalty
a discussion with Barry Kirk & Melissa Van Dyke, Maritz

in the Road to

The following is a discussion with two experts who address people-centered solutions for different audiences— customers and employees. Barry Kirk focuses on strategy and design for customer loyalty and engagement programs at Maritz and Melissa Van Dyke, also with Maritz, specializes in strategy and design for employee recognition and engagement.
Loyalty Management (LM): People tend to think of customer loyalty as being all about the specific programs that companies run to engage customers, but there seems to be overlap between customer loyalty and employee engagement. Do you see them as linked? Melissa Van Dyke: You just have to look at the numbers. We know from our own research that 43% of customers who defect from a brand do so because of service. And 77% of those defections are because of employee attitude. The link is indisputable. Barry Kirk: I completely agree. If any aspect of your customer experience involves interactions with your employees, then you can’t have customer loyalty without employee engagement. Just recently I spent a day in a client’s retail environment observing how the employee-customer experience played out. I was absolutely impressed with the level of care the employees were taking with each customer. At one point I leaned over to the manager of that store as he watched and quietly said to him, “That is your loyalty program.” What I meant was that the customer experience is foundational to building sustained and mutually beneficial relationships. Can you build on that with great communications, point structures, game dynamics and rewards? Without a doubt, but you need that spark between customer and employee first. M: Without it you are relying too heavily on loyalty program mechanics to fill the void that should be your valued customer experience. The real message here is that you need to be at least as focused on engaging your employees as you are on retaining your customers. LM: So that seems like a lot—launch a whole employee engagement strategy on top of your customer loyalty program. B: Well, that’s only true if you assume we’re talking about two distinct initiatives here—a customer loyalty program and a completely separate employee engagement program. I think a more enlightened view is to see both as part of a single, holistic loyalty strategy, simply because the two pieces are so interdependent. How that sort of an approach shows up will vary from organization to organization. In some cases you might be able to actually launch both as a single program on a shared platform. It’s more likely, though, that the integration would come in the form of an overarching strategy that takes into account the impact that each group has on the other. For example, do your employee performance metrics include the success of the loyalty program and do you provide the right incentives to achieve those performance objectives? An example could be recognizing employees for the number of customers they sign up for the loyalty program, or their effectiveness in encouraging the customers they serve to use their program card with each purchase. M: Another great example of that is a recent project we did with a charitable organization to encourage employees in chain restaurants to solicit customer donations. You’ve seen that—where you make a small donation and get to sign your name on a card for all to see. The employee program was simple and included targeted education, communication and rewards. Although we didn’t control any other part of the employee or customer experience, the program helped increase donations at participating stores 43% over the prior year. Engaging the employees made a significant difference.

You need to be at least as focused on engaging your employees as you are on retaining your customers.

43% of customers who defect from a brand do so because of service. And 77% of those defections are because of employee attitude.
brand customer experience

B: There is also an additional piece to this puzzle that I think is often—even usually— overlooked. That’s the best practice of encouraging your employees to actually become members of the customer loyalty program themselves. The rationale for that should be obvious—that your employees get first hand experience of the benefits of the program so they can better sell it to customers. It’s really difficult for me to recommend the chicken versus the veal if I’ve never tried either—I can read you what it says in the menu, but not much else. The same is true for your loyalty program—an associate with direct experience earning and redeeming is in a far better position to be an evangelist than one who is simply reciting a script.

customer loyalty programs

employee engagement initiatives


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uilding a program is not an instant guarantee that the program will be successful. In far too many cases, companies treat this as a cost of doing business rather than building a sustainable program that has a positive effect on the bottom line. They build a program, put some rules around it, even establish some branding and take it to market. Far too often these programs underacheive. Not only is the value proposition not clear to the customer, but little if any effort is put into establishing a corporate loyalty culture from the senior executive level down to the customer front facing employee base.

Having your employees completely engaged so that they become ambassadors of the program, ambassadors of the corporate brand and overall company ambassadors. These are the people that will have the most lasting affect on your customer base and their loyalty. People do want to earn their program rewards, but will quickly become disengaged with a program if the service levels aren’t there. The message though, needs to resonate down from the top of the organization and become part of the corporate culture. The most senior level of executives needs to believe in not only keeping their employees well trained and engaged, but also be able to bring the message down to the employee base. They need to establish a strong link between employees and brand. Employees need to believe in brand attributes and understand the importance of the allure of their brand in the buying decision process. Employees need to understand how to treat customers as individuals and make each and every customer a brand advocate. A company that does this extremely well is one of Canada’s leading retailer’s, Harry Rosen. Harry was interviewed a couple of years back by Profit Magazine in their “Ask the Legends” series and had this to say: “From the very first day, it has been our intention to befriend the customer. We try to enter into some sort of personal relationship with them, where we learn something about them and always use that information to help sell them the right things. As we expanded, I would go from store to store and work on the selling floor. It meant so much to the staff to see that the principles we espoused in training were in fact the practices of senior management. That’s the glue: management walking the talk. We’ve also been able to select the kind of employee who enjoys living by this idea that there’s nothing more important than the customer.” By the way, Harry Rosen pays his staff based on customer retention as opposed to sales commission! When building customer loyalty, you need to make sure that you have loyal, well treated, well trained and highly engaged employees focused on making the buying experience one that customers will come back for over and over again. This linkage will most certainly drive bottom line results and overall loyalty. And like the movie they will come back again and again. L

There is enough research out there to support that engaged employees have a very positive effect on corporate revenue growth. In a case study designed to measure the effect of employee satisfaction on customer loyalty, Sears Roebuck found that for

every 5 percent improvement in employee satisfaction there was a 1.3% increase in customer loyalty which produced a 0.5% increase in revenue growth.
This amounted to $200 million dollars.

Pushing Loyalty:
Connecting Employee Engagement to Customer Loyalty
by Michael Konikoff, Fairlane Group

Engaged and happy employees, especially those who have front facing positions with customers are critical to the overall success of establishing the loyalty connection. These people are critical to making the experience at point of contact a good one for the customer. Loyalty will be lost if the in store experience is a bad one. People want to be “Wowed.” In a recent study by Verde Group, the Retail Council of Canada and the Jay H. Baker Retail Initiative at the Wharton School, it was found that “Wow Factors” do have a huge impact on loyalty. They found that customers who have enjoyed “Wow Experiences” are over 75% more loyal to the stores than those who have not enjoyed a great shopping experience. Of course “Wow” shopping moments aren’t just from engaged sales people, but they do play an integral role.

When building customer loyalty, you need to make sure that you have loyal, well treated, well trained and highly engaged employees focused on making the buying experience one that customers will come back for over and over again.

“If you build it they will come.” A great line from a great movie.
Guess what? He built it and they came. It wasn’t easy though; he needed to clear the field, build a back stop, put up lighting, put up stands. Basically, build it in a way that would attract them to come. Once they realized that he had built this gem of a baseball diamond and it had everything they needed, they came again and again. Too bad the same doesn’t hold true for loyalty programs.

Aiming for in store excellence from your employees is a critical success factor for any loyalty program. While customers want great in store experiences, they also need staff that are fully trained on driving the loyalty program internally. A great example of this would be Shoppers Drug Mart Optimum program. No transaction is completed without the cashier asking if the customer is part of the program. If they aren’t, customers are asked if they would like to join the program. In addition to this, all staff are encouraged to be members of the program and understand the value proposition and program rules. This is what I refer to as “Pushing Loyalty.”


thoughts for 2010

Economic conditions will continue to improve in 2010 which we predict will bring an increase in overall budgets for loyalty. The other change we expect to see is that people will start changing their redemption patterns. Instead of using their loyalty points for products they need, they are going to

start using their points for products they want.


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extended loyalty program profile

retailers team up to create canada’s largest green rewards program
The Background
Founded in 1992, the air miles reward program, a company of LoyaltyOne Inc., is Canada’s premier coalition loyalty program. More than 10 million active Collector accounts, representing approximately two-thirds of all Canadian households, actively participate in the Program. The AIR MILES Reward Program allows Collectors to indulge in leisure, entertainment, merchandise, travel and other lifestyle rewards quickly, simply by doing their everyday shopping for products and services at AIR MILES Sponsors. AIR MILES reward miles can be redeemed for more than1,200 different rewards, such as movie passes, family attractions, electronic merchandise, sports and recreation, travel and more.

Train for Tough Times
Prepare Your Sales Team for Winning in a Slow Market


ia 0% ter 10 Ma l


The Bonus Rewards of Coalition
In addition to earning bonus reward miles for choosing eco-friendly everyday products, AIR MILES Collectors can also find bonus reward miles on My Planet designated products at specialty stores including Global Pet Foods, Canadian Springs/Labrador Springs, Uniglass Plus Ziebart/Vitro Plus Ziebart, Goodyear Tires, and Co-op Country Stores, among others. In April 2009, AIR MILES introduced a selection of environmentally sustainable products and services available to Collectors in exchange for their reward miles. With over 140 products available, My Planet rewards range from transit passes to green energy services to high efficiency household appliances to less-toxic cleaning products. Edmonton Transit Systems will provide AIR MILES collectors with bonus reward miles when they purchase an adult monthly transit pass—the first government entity in Canada to offer this type of incentive for green purchases. This offer complements the many My Planet redemption and earning opportunities related to eco-friendly transportation, and AIR MILES is pursuing similar agreements with other government entities and service providers across Canada. AIR MILES newest My Planet partner is Bullfrog Power. Bullfrog, Canada’s leading 100 percent green electricity provider, is offering bonus reward miles to new residential customers who sign up for low-impact renewable power. Alongside the 18 retailers and service providers that have joined the My Planet program, LoyaltyOne is working with WWF-Canada to help shift consumer behavior, catalyze change in the business community and raise awareness about the importance of conservation. Additionally, WWF-Canada has been designated as a Charity Rewards partner in the My Planet program where AIR MILES Collectors can redeem their miles for a cash donation to WWF-Canada. “Canadians want to know how to do their part to create a more sustainable future,” said Gerald Butts, President and CEO, WWF-Canada. “LoyaltyOne and the AIR MILES Reward Program are committed to using the power of their sponsor coalition to help consumers make greener choices, and influence businesses to take action on the environment.”

At only $99, Selling Power’s practical Sales Training Book 2 could be the most significant investment you make to boost the efficiency of your sales team!

The Details
A group of 18 major Canadian retailers and Sponsors in the AIR MILES Reward Program have joined forces to participate in My Planet, an initiative that encourages consumers to consider making greener lifestyle changes and rewards them for choosing eco-friendly products and services. AIR MILES Collectors can earn coveted bonus reward miles when they purchase My Planet-designated products and services available at over 2,400 AIR MILES Sponsor stores and outlets across Canada. This significant partnership enhances My Planet redeemable rewards, information and online community initiatives, creating a program that offers more tools and incentives to more people than any other sustainability initiative in Canada. Participating Sponsors include grocery stores (Metro, Safeway); hardware/home centres (Rona, Tim-Br Mart), pharmacies (Jean Coutu, Lawton Drugs); government (Edmonton Transit); renewable energy provider (Bullfrog Power) and financial institutions (AMEX).

The Sales Training Book 2 contains 17 powerful one-hour selling skills workshops. It includes a sales meeting guide for each session and additional reading material for your team.
The Best Sales Training Book in a Decade!
Selling Power – the nation’s premier sales management magazine – created a fantastic, new sales training tool which has already produced millions of dollars in increased sales for sales managers who demand better results from their team. you win! You’ll benefit from the training blueprints of Tom Roth, David Yesford, Robert B. Cialdini, W. Wayne Turmel, Joanne Black, Mark Shonka, Dan Kosch, Jerry Acuff, Linda Richardson, Keith Eades, Wendy Weiss, Sharon Daniels, Jim Holden, Rob “Waldo” Waldman, Michael St. Lawrence, Bill Stinnett, Andrea Sittig-Rolf, Phil Geldart, and Terri Sjodin. Follow their proven and easy-to-apply guidelines and lead your team to greater success.

What Is The Sales Training Book?
It is a collection of the best sales training workshops from the best sales trainers in America today. It covers every sales practice from prospecting to getting appointments, building rapport, delivering presentations, applying consultative sales methods, handling objections, mastering negotiations, dealing with rejection, closing the sale, using emotional intelligence, and applying psychology every step of the way.

Turn Fresh Skills into Thousands of Dollars!
With these 17 one-hour sales training workshops, you and your team can win more sales than you ever thought possible. This powerful new book can add tens of thousands of dollars to your sales! It keeps you one step ahead of your competition.

For 17 years, leading Canadian retailers & service providers have used AIR MILES as a highly effective reward for loyalty, and now they can also use AIR MILES as a reward for sustainability.
Why It Works
A recent survey of 2,020 households across Canada that collect AIR MILES reward miles confirmed that bonus reward miles would be a strong incentive for them to choose ecofriendly products and services, with 53 percent saying it would push them to shop greener. This finding supports other research by AIR MILES that shows that offering bonus reward miles can increase sales of a product by over 50 percent. Collectors also cited competitive pricing (81 percent) and availability of green products where they shop (59 percent) as factors that would encourage them to buy environmentally friendly products. “For 17 years, leading Canadian retailers and service providers have used AIR MILES as a highly effective reward for loyalty, and now they can also use AIR MILES as a reward for sustainability,” said Bryan Pearson, CEO of LoyaltyOne Inc., which operates the AIR MILES Reward Program. “By combining the reach of the AIR MILES program which touches millions of Canadians on a daily basis, with the commitment of our sponsor organizations involved in My Planet, we have the potential to create a massive shift among Canadians to a more sustainable lifestyle.”
Each issue we’ll be sending our secret shopper out to experience a particular brand first hand. Our shopper will sign up for the loyalty program, and interact with the company at least three times, then share their experience with all of us. Your suggestions for the next brand review are welcomed: email your ideas to mailbag@loyaltymanagement.com

Benefit from the Country’s Top Trainers
To create this book, Selling Power worked closely with the nation’s top sales trainers. We’ve selected the best of the best to help

The introductory price of $99 (plus shipping) will only be in effect for a short time. To order, just fill in the coupon below and mail with your payment today, or call 1-800-752-7355.

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Thumbs Way Up!
May this extended Program Profile inspire you to think outside the box. How do we bring this idea to markets around the world? A rewards program that encourages eco friendly behavior, providing incentives to consumers who make better choices, is a great thing. Rewards not just for Canada, but for the planet! L PO Box 5467, Fredericksburg, VA 22403






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4120 Dumont St Cincinnati, OH 45226



june 6 - 8, 2010




focus on maximizing customer, employee,

interested in speaking or exhibiting? contact Erin Raese: erinraese@loyalty360.org

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