powered by Loyalty 360

Volume 2 Number 3
August 2010
a recession-proof
Tattooing Your
branding secrets of a tattoo artist
Who are
your brand
a new
game in
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What’s on Loyalty360.org
Letter from the Editor
Loyalty Forum: Your Voice
Behind the Brand/People
Interview with Kevin Grieve,
CEO, Mocapay
Q & A: Ask the Experts
Lately we’ve been hearing from
many b2b customer-focused
marketers. These companies have
instituted NPS and customer
referral programs. While these
strategies are working, there’s a
need to take their customer
relationship to the next level.
Loyalty Reads
Step Away From the One-Way Mirror
Peter Murane, BrandJuice Consulting
The 360˚ View: Customer
Understanding Puts You Ahead of
Your Customers
Connie Hill, VeraCentra
Branding Secrets of a Tattoo Artist
Nancy Porte, Vovici
CPG: A Recession-Proof Business?
Andy Wright, Carlson Marketing
Mobilize or Die
Matthew Silk, Waterfall Mobile
3 Loyalty Management™ · AUCUS1 20¹0
This Month in
Step Away From
the One-Way
An interview with Sprint’s
Melinda Parks
Behind the Brand/People
How is online gaming
changing the loyalty
Loyalty Programs: There’s a New Game in Town
Stephen Baer, The Game Agency
The Flexible Redemption Revolution
Ben Ashwell, Loylogic
Four Ways to Win Elections in the New Marketing
Chris Marriott, Acxiom’s Digital Agency
Target Your Social Media Tactics for Stronger
Customer Bonds
Sid Liebenson, Marketing Highway
Influencers Hold the Key to Capitalising Their
Ran Shaul, Pursway
Developing Relationships and Direct Content—How
to Better Serve Consumers
Sandra Zoratti and Lee Gallagher, InfoPrint Solutions
Behind the Brand/People
Interview with Melinda Parks, Director of Loyalty &
Retention Marketing, Sprint
What We’re Hearing
Mark Johnson, Loyalty 360
Loyalty Program Profile
Barnes and Noble
2010 Loyalty Expo In Review
5 Loyalty Management™ · AUCUS1 20¹0
Loyalty Management
Editorial & Production Team
Erin Raese - Editor in Chief
Mark Johnson - Contributing Editor
Kathleen (Ninneman) Ostoich - Graphic Designer
Japs-Olson Company - Print Production
Loyalty 360 Team
Mark Johnson - President & CEO
Erin Raese - COO
Amanda Chasteen - Manager, Marketing Operations
Kathleen (Ninneman) Ostoich - Marketing Manager
Annie Lerner - Marketing Coordinator
Article Submissions & Advertising: Erin Raese
erinraese@loyalty360.org or 513.360.8680, ext. 210
To subscribe to Loyalty Management, visit loyalty360.org.
© 2010 Loyalty 360, Inc. and/or its Affiliates. All Rights Reserved.
Reproduction and distribution of this publication in any form without prior written permis-
sion is forbidden. The information contained herein has been obtained from sources be-
lieved 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 in-
terpretations thereof. The opinions expressed herein are subject to change without notice.
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
This Month in
Hold the
Key to
review the event on page 53!
6 Loyalty Management™ · LOYAL1Y3ô0.OPC
what’s on loyalty360.org


forums + councils
Remember to check
loyalty360.org daily for news
updates from industry leaders.
Want your news featured? Join
the conversation today and email
Head to page 50 to read excerpts
from Mark Johnson’s recent States of
the Industry & read the full texts at
New to the Loyalty 360 website, fo-
rums and councils. Now available to
all Loyalty 360 members. Come join
the discussion on www.loyalty360.org.
Hot topics include:
· Mobile payments, mobile couponing,
social media—Return on investment?
· Bringing together social media and
· Communities—Making them work for
you cost effectively
· anu Tips for engaging your CFO.
What’ s stressing
you out at work?
· Lconomv/Job Securltv :=¬
· Your Manager :=¬
· Co-Worler(s) ì=¬
· Cbange ó¬
Rewarding debit will change behavior by:
Convert more transactions to debit:
· Drlve sales. :/¬
· Malntaln sales. ì=¬
What’ s driving employee
engagement today?
career development:
· worl-llfe balance. :=¬
· compensatlon. ì/¬
· trust ln leauersblp. ì=¬
· seelng bow one's worl ulrectlv lmpacts tbe
bottom llne. ìu¬
· relatlonsblp wltb one's manager. =¬
· prlue ln companv. =¬
The mission of Loyalty 360™, the Loyalty Marketer’s Association, is to provide
an unbiased, market-driven, “voice of the customer”
focused clearinghouse and think tank for all loyalty, incentive/
reward, and engagement marketing needs, insights and responses.
We’re here for you
or a resource provided.
a partner found,
when you need a question
Loyalty 360 brings you the best of the best in loyalty marketing
and supports your customer strategy needs. Some of the tools we oer include:
a weekly e-newsletter “is Week in Loyalty”
opportunity to view and post white papers, case studies, and research
access to past webinars and Loyalty Expo presentations
latest news and events happening in the marketplace
“State of the Industry,” an interactive dialogue with seasoned industry leaders
access to new community-driven forums on loyalty360.org
8 Lovultv Munugement" · LOYAL1Y3ô0.OPC
As you can see by the variety of content in this issue of
Loyalty Management, things have certainly been busy at
Loyalty 360. Here’s a recap of what’s been happening
and what you can find as you read through the magazine:
Thank you to everyone who joined us at Loyalty Expo 2010. The quality
of the speakers and level of engagement of attendees made this year’s show a
huge success! At Expo, you told us that you were interested in learning more
about some key topics impacting your loyalty initiatives. In this issue, we’re
exploring a number of these topics such as: taking my B2B customer loyalty
initiatives to the next level (Ask the Experts, page 16), CPG and loyalty (two
articles, pages 20 and 30), mobile and social.
And speaking of Expo—We’re excited to announce Loyalty Expo 2011
which is going to be held March 20-22 at the Hyatt Grand Cypress in Orlando.
For more information, please visit www.loyaltyexpo.com.
I also encourage you to visit our just-relaunched website (loyalty360.org).
More robust and interactive than ever, we’ve been hard at work creating an
online community so that you—our members—have everything loyalty at the
tip of your fingers. Be sure to check out the forums and councils, network
with peers, access best practices and latest research, and join the discussion.
In his ongoing commitment to bringing you all the latest loyalty news
and strategies, Mark Johnson, CEO of Loyalty 360, continues to attend a vast
array of conferences. On pages 50 and 51 he shares what he’s been hearing in
the marketplace, key loyalty trends and challenges, and best practices.
Lastly, we’re pleased to announce the launch of our Engagement 360
Awards! Think your company is effectively engendering engagement and
loyalty with its employees and customers? Participate in the awards audit and
find out! Created in conjunction with Performance Point, Engagement 360
Awards will celebrate those companies that connect employee engagement
and customer engagement to achieve bottom line results. Companies that
apply will receive a comprehensive review of your engagement efforts; plus,
you’ll see where you rank among other organizations. Awards will be given at
the Loyalty Expo 2011. For more details and to register visit
Enjoy the issue!
Erin Raese
Loyalty Management
Welcome new Loyalty
360 Members:
Ben Ashwell
As the Sales Consultant and Marketing Man-
ager at Loylogic, Ben Ashwell combines in-
dustry thinking with multi-channel commu-
nication and business development strategy,
gathered from broad experience managing
multiple loyalty business units.
Stephen Baer
Stephen Baer is a Managing Partner at The
Game Agency (TGA) where he oversees
campaign strategy and execution. TGA is a
marketing services company focused on ex-
panding their clients’ presence in the video
game space to help them acquire and retain
Tim Crank
Tim Crank is the Managing Director of En-
gagement Marketing for Young America Cor-
poration, a full-service loyalty, incentives and
promotions company.
Lee Gallagher
Lee Gallagher, Director of Precision Market-
ing Solutions, InfoPrint Solutions, has exten-
sive experience in teaching marketers on how
to deliver relevant and meaningful communi-
cations at each customer touchpoint.
Connie Hill
Connie Hill, President and Founder of Vera-
Centra, brings more than twenty five years
experience delivering strategy and execu-
tion services to the marketing community.
Ms. Hill’s passion for technology and process
drives VeraCentra to innovate new platforms
that help marketers manage the complexities
of data driven, customer relevant programs
and campaigns.
Mark Johnson
Mark is the President and CEO of Loyalty
360. He has significant experience in selling,
designing and administering prepaid, loyalty/
CRM programs, as well as data-driven mar-
keting communication programs.
Sid Liebenson
Sid Liebenson has more than 30 years of suc-
cessful experience in direct, database, and
customer relationship marketing. Named
2008 Chicago Direct Marketer of the Year,
Sid is a Managing Partner of Marketing High-
way, an agency dedicated to helping clients
facilitate meaningful, effective, and produc-
tive dialogue in the digital media environment.
If you would like to contribute to a future issue of Loyalty Management please
contact Erin Raese at 513.360.8680, ext. 210 or erinraese@loyalty360.org.
10 Lovultv Munugement" · LOYAL1Y3ô0.OPC
Chris Marriott
A 15-year veteran of digital marketing, Chris
Marriott is the Vice-President, Global Man-
aging Director for Acxiom’s digital agency,
a top 20 interactive agency with over 300
employees and offices in San Francisco, New
York, Nashville, London and Singapore.
Peter Murane
Murane, President and Founder of BrandJuice,
has twenty-two years of brand management,
innovation and new product development ex-
perience driving organizations such as P&G,
The Clorox Company and General Mills.
Nancy Porte
With over 20 years experience, Nancy Porte,
Vice President, Customer Experience, is re-
sponsible for the Voice of the Customer pro-
gram at Vovici, while managing customer
support, customer training, and CRM sys-
Ran Shaul
Ran, Co-founder and EVP Customer Solu-
tions, is a marketing and customer relation-
ship management expert and one of the lead-
ing practitioners of influencer marketing. Ran
has overall leadership over all customer proj-
ects at Pursway, laying out the strategy and
overseeing the implementation of influencer
marketing initiatives.
Matthew Silk
Matthew Silk is Senior Vice President for Wa-
terfall Mobile, Inc., responsible for corporate
development, strategic partnerships, and
client services. He leads the marketing and
media efforts for the company’s West coast
operations as general manager of Waterfall’s
Austin office.
Andy Wright
Andy Wright joined Carlson Marketing
Worldwide in 2005. As a member of Carlson
Marketing’s Executive Team, Wright is known
for his thought leadership and his ability to
knit together the talent that exists across the
global network that spans 16 countries.
Sandra Zoratti
Sandra Zoratti, Vice President, Global Mar-
keting Solutions at InfoPrint Solutions, is re-
sponsible for transforming the company from
a pure hardware centric organization into a
communications-based solutions business.
Ben Ashwell
Stephen Baer
Ran Shaul
Matthew Silk
Lee Gallagher
Tim Crank
Connie Hill
Sandra Zoratti
Andy Wright
Nancy Porte
Chris Marriott
Sid Liebenson
Peter Murane
Mark Johnson
12 Loyalty Management™ · LOYAL1Y3ô0.OPC
Who will lead mobile payments?
Issuers, telco providers
or retailers?
s long as the wireless carriers own the client, the bill-
ing and the network, they will “control” what happens in
the space (at least this is the story in North America) This
is one of the big roadblocks to innovation and adoption…
Barnard Crespi Founder, Marketing Executives International
onsumers. But we have to do a better job of explain-
ing the features and benefits to them. AND selling them
on security.
Parissa Behnia Idea Chef, 678 Partners LLC
t’s got to be issuers and providers. They are the only ones
directly benefiting from this new form.
Telco’s and retailers will have to comply—but there is
no direct benefit to them. Sure—there is significant indirect
benefits including loyalty, promotions, messaging and so on.
So my take is: The issuer has to lead by gathering the
right providers. For providers: Whomever can properly
bridge the gaps of credit card entry, cash transactions will
be the winner(s).
I think that a couple of important constituents were
omitted from your list: device makers and card schemes.
Nokia took the lead on the device maker side by focusing
on a device-based solution that hasn’t taken off—once they
have attractive devices using the SIM as the secure element
available this is likely to change. There is much speculation
that Apple will try to drive this forward; however, Samsung is
the most active currently and have devices available as seen
in Mobile World Congress.
Visa and MasterCard are also taking an increasingly pro-
active role and I think that the combination of card schemes,
handset makers, issuers and telcos collaborating is required
to grow the mobile payments business. While retailers will
need to play a roll in adopting the POS solutions I think that
they will be motivated to do so by loyalty and marketing ap-
plications rather than payment.
Daniel Angel Head of Business Development, Orange Personal
Communications Services, Ltd
So my take is: The issuer has
to lead by gathering the right
providers. Whomever can
properly bridge the gaps of credit
card entry, cash transactions will
be the winner(s).
—Daniel Angel
bviously a chicken and egg issue, users must own an
NFC enabled devices with Token or Encrypted elements,
Issuers must have a way to provision Credit Card/Debit
Card credentials to cloud or device, and Merchants must
overhaul old POS devices to NFC enabled equipment.
MO’s, looking for a way to control the customer;
however there is huge liability in letting consumers’ bill
merchandise to their cell phone bills. Two issues, first, on
average consumers’ do not pay their Credit Card bill in
FULL and second, most cell phone consumers do not have
bank accounts or credit cards! The screening for a mobile
phone account is near non-existent.
Acquirers/Processors/Networks will want to certify
any transactions going over the wire to ensure security.
And that’s just the surface—we then can speak about the
underlying Revenue/Costs such as Fraud, Cost of Fraud,
Charge Backs, Overhead and Loyalty, etc.
What will it take? An inner circle of partners playing a
key role in each part of the value chain with a vision of a
disruptive technology that changes the paradigm.
Emilio J. Matt US Business Development Manager, Microsoft
O nteresting topic. However there is only one thing I
miss in your question. The possibility that the User will
lead mobile payments. For the user it needs to be a
good, flexible, easy to use, usable in many places and an
affordable solution.
I personally have my doubts if it is user friendly if
a ‘deal’ is made between a telco and a bank to put the
payment part on the SIM that is owned by a telco. It will
make it a lot harder to change from bank or SIM card
So I hope that a dual SIM system (one telco SIM and
one bank/loyalty/NFCSIM or the SD card with payment
solution will be adopted soon. To promote and get a mass
adoption, it should be a solution that is available for mass
public. This could be a telco who is offering this with SD
cards or SIM cards for every phone. But it can also be
Apple with all the speculations. If Apple will offer this in
their phones, mass adoption and lead by and through
Apple is a serious possibility. In that case, banks and
telcos will see it going out of their hands.
So my answer is that is will be the company who
will be able to distribute the NFC technology on mobile
devices to the mass public. This need to be a company
with control on certain mobile hardware parts.
Michel Bayings Mobile & RFID Business Consultant, Logica
What will it take? An inner circle of partners playing a
key role in each part of the value chain with a vision of a
disruptive technology that changes the paradigm.
As part of its weekly poll series, The Pulse, Loyalty 360
recently asked its members to weigh in on this hot-button
issue. Here are the results:
Telco: 32%
Providers: 27%
Retailers: 27%
Issuers: 14%
Be sure to check loyalty360.org for upcoming poll questions.
—Emilio J. Matt
13 Loyalty Management™ · AUCUS1 20¹0
CEO, Mocapay
Many people are asking about mobile
payments. Who’s going to lead the charge
(suppliers, banks, consumers, telco) and
will consumers really use it? We’d love your
It will vary by global region depending upon the
current and historical market structure along with the
payments and wireless infrastructure. For example, chip-
based cards and corresponding readers were deployed
in Europe in the 90s due to a poor telecommunications
infrastructure to combat payments fraud. In the US,
which had a robust telecommunications infrastructure,
real-time payment authentication and authorization
was viable and cost-effective, so there was no business
case for smart cards or readers. In the US, there is not a
compelling business case for merchants to spend capital
for NFC-readers for several reasons.
Kevin Grieve
14 Loyalty Management™ · LOYAL1Y3ô0.OPC
First, Visa recently expanded its no-signature rules
to most of the verticals they serve, which means “tap and
go” (mobile) is not much different than “swipe and go”
(plastic). Second, there is not a critical mass of NFC-enabled
phones deployed in the US market. Third, unless merchant
acceptance of NFC-based mobile payments achieves a
critical mass of 30-40% merchant adoption, open loop
tender is unlikely to gain consumer interest. And finally,
payment associations are charging merchants a higher
interchange rate to accept mobile payments and have not
allowed PIN debit prompting for a mobile payment. With
merchants focused on lowering their cost of payments, the
combination of new hardware spend and higher interchange
rates, NFC-based mobile payments is DOA in the US.
That means, mobile payments are likely to begin with
merchant-issued tender such as gift cards, loyalty cards and
coupons. Mobile payments innovation will be delivered by
suppliers and technology enablers.
Mocapay, recently named a winner in this year’s Red Herring
100, continues to pave the way in mobile payments and
loyalty innovation. Loyalty360 takes a deeper look into the
man behind the brand – Kevin Grieve. Kevin Grieve is the
CEO of Mocapay, a mobile marketing and mobile payments
company including mGift, mLoyalty and mCoupons. Kevin
is responsible for overall business strategy and market
15 Loyalty Management™ · AUCUS1 20¹0
How are you seeing organizations
building mobile into their loyalty
Mobile is a natural fit for loyalty programs.
Many of the merchants with whom we speak are
interested in cardless-based loyalty and/or gift
What do you see for Mocapay into
We will see continued consumer and
merchant adoption of mobile marketing and
mobile payments.
Tell us about your last ah-ha customer
experience (did it include mobile?).
After I purchased my first iPhone and then
downloaded and used Shazam. That is when I
realized everything just changed. My most recent
ah-ha moment was when one of our customers
issued a corporate edict that they were going
100% digital for their advertising.
What inspires you?
I was recently on a mission trip with my family
to our sister church in the Ngaramtony district of
Arusha, Tanzania. I was inspired by the people
and was in awe of the beauty of the Serengeti.
Who has had the most influence on
your life?
My parents, my wife and my children.
Which talent would you most like to
Fluency in kiSwahili.
If you were not doing what you do
today, how would you be spending your
Full-time volunteer work.
Which book(s) are you currently
Given the recent economic crisis, I am
revisiting the seminal works of FA Hayek’s, The
Road to Serfdom, Milton Friedman’s, Capitalism
and Freedom, and Adam Smith’s, The Wealth of
What’s your advice for a novice mobile
Put choice, convenience, and control in the
hands of your customer.
Mobile payments are
likely to begin with
tender such as gift
cards, loyalty cards and
Kevin’s mission work in Arusha, Tanzania
Ask the
Lately we’ve been hearing from many b2b customer-focused
marketers. These companies have instituted NPS and customer
referral programs. While these strategies are working, there’s a need
to take their customer relationship to the next level. Suggestions?
Business-to-business organizations have searched far and
wide for a solution to create measurable and lasting customer
loyalty—the kind of loyalty that results in sustainable profit
growth. Traditional approaches to customer loyalty measure-
ment fall short of addressing the two questions critical for the
success of any B2B organization: 1) Do your customers make
more money doing business with you? 2) Do you capture your
fair share?
Organizations that answer these questions definitively and
make continuous improvement are able to win with their cus-
tomers now and in the future. While it is good to have loyal
customers, it is better to have customers whose profits are
more positively impacted by doing business with you versus
your competitors. These customers continue to do more and
more business with you and have a vested interest in your fi-
nancial success. This goes beyond loyalty—it is the winning
This redefinition of what it means to win with customers is
made possible by a new business management system—Cus-
tomer Value Creation or CVC. It creates a direct link between a
company’s value proposition and the resulting impact on a cus-
tomer’s operating profit. CVC delivers four important break-
throughs that help organizations overcome the shortcomings
of traditional customer loyalty measurement systems:
16 Loyalty Management™ · LOYAL1Y3ô0.OPC
1. A rigorous quantitative assessment of your value proposi-
tion and the identification of components that contribute
measurable differential value.
2. A new financial metric called the Differential Value Propo-
sition or DVP that measures how much more money cus-
tomers make doing business with you—a true measure of
competitive advantage.
3. Software tools, Render™, that help organizations manage
customer data to sustain the effort and implement CVC in-
house without relying on costly consultants.
4. A prioritized list of opportunities to deliver financial value
to customers that creates new levels of accountability with
customers and organizational alignment with what mat-
ters to the customer.
The result is truly differentiated value propositions with
products, services, programs that deliver measurable value to
customers—more value than those of competitors. This is the
sign of a winner.
—Keith Pigues
Chief Marketing Officer, Ply Gem Industries
While it is good to have loyal customers, it is better to have
customers whose profits are more positively impacted by doing
business with you versus your competitors.
Driving up NPS scores and number
of customer referrals is a great goal.
To elevate these programs to the next level,
focus on the scores and referrals coming from
influencers and decision makers within your
customer accounts. How? Start by establish-
ing a Customer Advisory Council.
A Customer Advisory Council initiative is
made up of 20-30 decision makers from your
best accounts. Unlike other marketing or sales
activities that are focused on generating leads
Moving b2b relationships to the next
level requires a commitment both
to listen and to respond to customer feed-
back. As techniques that
collect valuable customer
information, NPS (Net
Promoter Scores) and
customer referral pro-
grams cover the listening
piece. But to truly ad-
vance customer relation-
ships we have found that
companies also need to
get the “respond” piece
right, and ensure they are
using the information col-
lected to spur action.
As a first step, many companies will seg-
ment customers into categories—such as
those that are loyal, those that may be at risk,
and those that are vulnerable or “trapped” in
or closing deals, Customer Advisory Councils
are focused on building and enhancing rela-
tionships at higher levels and securing market
insight necessary to keep your business ahead
of the competition.
The results: In addition to the insight, and
market direction, organizations who have im-
plemented Councils have seen, on average:
· ¹2-22% increuse in customer retention
· ¹0-2S% increuse in new sules
· S0-400% increuse in reíerences ut deci-
sion maker level
· ¹S-2S% increuse in NPS score ut decision
maker level
· Enhunced ulignment between Sules und
If moving up the value chain is the goal
within your customers, the Customer Advi-
sory Council is the ultimate B2B weapon.
the relationship. We use a series of ques-
tions to assign customers to these seg-
ments based on their anticipated behavior
(whether or not they intend
to continue doing business
with you) and their atti-
tude (how they like doing
business with you). We
have found this approach
has a stronger correlation
to business metrics such
as revenue, growth, and
profitability. It also pro-
vides a practical break-
down to understanding the
stability of your customer
base that allows for the
implementation of target-
ed action plans.
A structured closed loop process can
also be established to ensure that the right
—Sean Geehan
Founder, Geehan Group
Typical Optimal
Decision Maker
Final authority/signature
10% 30%
15% 35%
User 60% 30%
Purchasing 15% 5%
Councils are
focused on
building and
at higher
Moving b2b
relationships to the
next level requires
a commitment both
to listen and to
respond to customer
people from a company take
appropriate follow-up mea-
sures and communicate those
measures directly with cus-
tomers who have had issues or
represent upsell opportunities.
This process may include ‘hot
alerts’ which trigger immediate
intervention in the most seri-
ous cases. While every com-
pany will have a unique set of
follow-up triggers, they com-
monly include customers who
are at risk or who have provided
low ratings of experience areas
known to be highly influential in
determining customer loyalty. L
17 Loyalty Management™ · AUCUS1 20¹0
—Jennifer Batley
Strategic Account
Loyalty Reads
This Isn’t Rocket Surgery
by Richard D. Hanks
March 2010 | Duff Road Endeavors
What should I aim for?
Your end goal should be generating loyal customers. (There are lots of books and plenty of consultants itching to sell you “their special sauce”
to help you transform satisfied customers into loyal ones.) But I believe good old customer satisfaction should not be left on the side of the road,
sacrificed to the enticements of the goal of loyalty. Why? Because, as I mentioned in the Introduction, my experience has led me to conclude that
significantly more companies are failing due to poor execution than are failing due to poor strategy (including a zealous attachment to overanalyzing
For example, let’s say that in a seafood restaurant, the most loyal of all customers bites into a piece of greasy, under-cooked fish – suddenly her
loyalty evaporates. Larry Loyalty phones a reservations call center to book his next hotel room and is treated so rudely that he never calls again. And,
after getting your haircut at the same place for 12 years, you finally can’t take the excruciating wait any longer, so you go to a salon down the street.
Each of these real-life examples illustrates why I wrote this book – because I believe a concerted focus on executing the basics is the single most
important thing your business can do today. In simple terms, I think there is more bang for the buck in stopping customers from leaving you in the
first place, than in spending your life trying to make them fit some definition of loyalty. There is also more money to be made in customer retention
than in new customer acquisition.
That’s why the focus of this book is on real-time feedback, leading to local accountability, and continuously focusing on improving operations – so
that you can keep customers coming back long enough to allow them to become emotionally involved – to become loyal!
Loyalty Management™ · LOYAL1Y3ô0.OPC
SOCIALNOMICS: How Social Media Transforms the Way We Live and Do Business
by Erik Qualman
August 2009 | Wiley
Social media platforms like Facebook, YouTube, and Twitter are fundamentally changing the way businesses
and consumers behave, connecting hundreds of millions of people to each other via instant communication. This is
a massive socio-economic shift that is fundamentally changing the way consumers and companies communicate
and interact with each other.
Welcome to the world of Socialnomics—where consumers and the societies they create online have a profound
influence on our economy and the businesses that operate within it. Online word of mouth and the powerful influ-
ence of peer groups have already made many traditional marketing strategies obsolete. Today’s best businesses are
learning to profitably navigate this new landscape.
In Socialnomics, Erik Qualman offers a look at the impact of social media on business to reveal what the future
holds and how businesses can best take advantage of it. He explores how social media is changing the way busi-
nesses produce, market, and sell products; how it eliminates inefficient marketing tactics and middlemen; and how
businesses are connecting directly with their customers through popular social media platforms.
In Socialnomics, Qualman brilliantly prescribes that the key to social media success is
doing rather than deliberating. This is a must read for anyone trying to leverage the
social graph rather than be squashed by it. –Steve Kaufer, CEO, TripAdvisor
Loyalty Management™ · AUCUS1 20¹0
Star Customer Service Organization
by Leonardo Inghilleri and Micah Solomon
April 2010 | AMACOM
GETTING NAKED: A Business Fable About Shedding The Three Fears That
Sabotage Client Loyalty
by Patrick Lencioni
February 2010 | Jossey-Bass
In Getting Naked, Pat challenges service providers to be com-
pletely transparent and vulnerable with clients in
order to overcome the three fears that ultimately
sabotage client allegiance. Written for internal or
external consultants, financial advisors or any-
one serving long-term clients, Getting Naked will
provide powerful, actionable tools to help readers
overcome the three fears and gain a real, lasting
competitive advantage.
The Approach
At its core, naked service boils down to the abil-
ity of a service provider to be vulnerable, to embrace
uncommon levels of humility, selflessness and trans-
parency for the good of a client. Most of us live our lives
trying to avoid awkward and painful situations, which
is why it is no surprise that we are all susceptible to the
three fears that sabotage client loyalty which include:
· Fear of Losing the Business - Worrying about losing a client’s busi-
ness may cause service providers and consultants to avoid the very
things that ultimately engender trust and loyalty.
· Fear of Being Embarrassed - Rooted in pride, this fear can lead ser-
vice providers to withhold their best ideas from clients.
In this book, an acclaimed entrepreneur and cus-
tomer service systems designer, Micah Solomon, teams
up with an architect of the legendary Ritz-Carlton hospi-
tality experience, Leonardo Inghilleri, to explain the core
loyalty-building principles and techniques pioneered
at the highly successful companies they have worked
with or benchmarked—companies that include Oasis,
The Ritz-Carlton, Lexus, Netflix, CD Baby, and more.
Solomon and Inghilleri also explain exactly how to adapt
their extremely profitable system to any type or size
business -- at nearly any price point.
Exceptional Service, Exceptional Profit is brimming
with practical techniques that produce an unusual de-
gree of customer loyalty – the kind of loyalty that pays
huge dividends. “These techniques yield enormous
profits because truly loyal customers behave differently from aver-
age customers,” Micah Solomon explains. “Once a customer has
become loyal, she is nowhere near as sensitive to price competi-
tion, she’s more willing to forgive your errors, and she’s even likely
to volunteer to promote your brand. This all comes about because
loyal customers think of themselves as your allies; they want to help
you succeed.”
Here are three examples of the crucial principles
and techniques that are detailed in Exceptional Service, Exceptional Profit:
· How to guther und use dutu on customer preíerences -- in u meuningíul,
profitable way.
· How to ensure vou meet customers' 2¹st centurv expectutions íor time-
liness and quantity
· How to personulize vour online customers' experience - on everv puge oí
your website, and in every step of their e-commerce encounters
What you read here will
allow you to recalibrate
your business—on any
scale—to truly know your
customers and keep them
coming back for more.
-Horst H. Schulze, Founding President &
COO, The Ritz-Carlton Hotel Company
· Fear of Feeling Inferior - To avoid feeling irrelevant or
being overlooked, consultants try to achieve and pre-
serve a high level of importance in clients’ minds.
The Naked Service Provider
What does being naked look like in practice? Naked
service providers and consultants confront clients (kind-
ly) with difficult information and perspectives, even if the
client might not like hearing it. Naked consultants ask
potentially dumb questions, and make potentially dumb
suggestions, because if those questions or suggestions
ultimately help their client, it is worth the potential em-
barrassment. They also admit their weaknesses and
celebrate their mistakes. Even before landing a client,
a naked consultant will demonstrate vulnerability and
take risks. In fact, they’ll do no real selling at all, fore-
going that activity in order to find a way to help a client
even if they never actually become one.
Even beyond the world of clients, being naked has its benefits and ad-
vantages. When we can be vulnerable with the people we live and work
with on a daily basis, we build stronger relationships, demonstrate our
trust in them, and inspire them to improve by being vulnerable them-
selves. And that is certainly worth getting naked for.
20 Loyalty Management™ · LOYAL1Y3ô0.OPC
he innovation model inside many companies is broken. How could it not be when up to 90%
of new products fail within their first year?
To succeed, companies must develop fresh approaches to innovation and consumer engage-
ment frameworks; doing so can unearth actionable insights and strategies to drive greater in-
market success and brand differentiation.
The concept of transactional learning pushes the innovator to embrace new process models
and approaches. Transactional learning allows consumers to vote on marketing innovations with
their wallets instead of their opinions. Because it ventures beyond the safety of the focus group
facility, it offers the ultimate proof point – did the consumer buy?
In order to help clients learn from a transaction-based model, BrandJuice developed a propri-
etary system called Battle Testing®. The system generates reliable consumer insights and helps
ideas become stronger more quickly by allowing them to adapt. A byproduct of our process is en-
hanced confidence of teams driving major innovation or re-positioning work. These teams know
they are making the right decisions because they can measure the impact of strategy and execu-
The following excerpt from my book, Lessons from the Vinyl Sofa, the Street Smart Way to Win
at Innovation, offers a case study highlighting unique consumer engagement tactics from our cli-
ent, Clorox, to illustrate this methodology in practice.
Step Away from
the One-Way
by Peter Murane, BrandJuice Consulting
Loyalty Management™ · LOYAL1Y3ô0.OPC
Loyalty Management™ · AUCUS1 20¹0
continued on next page »
Two Ideas Go To Market
BrandJuice was hired by The
Clorox Company’s new venture team
to help develop a portfolio of new
consumer products and to bring the
best of those new products to mar-
ket in a more entrepreneurial fash-
ion. We focused on the creation of
new brands and our initial portfolio
of ideas included a small number of
ideas that Clorox had already cre-
ated as well as a dozen ideas that my
company brought to the table as part
of our pitch to win the business. At
the beginning, we had little intuition
as to which ideas were the strongest.
But we were about to find out.
Over the course of a three-year
engagement, we explored five new
product platforms in great detail,
eventually recommending that three
of the platforms be killed. We were
simply practicing the art of inno-
vation portfolio strategy – killing
weaker ideas as early as possible so
that the maximum amount of time
and money could be spent on the
most promising business opportuni-
In the end, we helped create two
important new businesses for the
company: GreenWorks, an all-natu-
ral line of cleaning products with an
iconic yellow daisy on the label and
a product line I’ll call “Macho” for
purposes of this book because it is in
the midst of its national rollout and
not yet public.
My company did the first year’s
footwork on GreenWorks, discov-
ering key consumer needs and de-
veloping the early positioning and
product line. The idea was so big it
was quickly transitioned from the
Clorox New Ventures Team to the
company’s Laundry Home Care op-
erating division for commercializa-
tion by a huge team of internal re-
sources. GreenWorks is projected by
some analysts to hit $300 million in
revenue in its first year, making it the
most successful Clorox new product
launch in decades.
On the Macho venture, my com-
pany acted as the General Manager
on the business from initial concept
creation up through extensive in-
market testing at major customers
like WAL-MART.
Not surprisingly, our first step
was not the focus group facility. In-
stead, we went out and watched con-
sumers clean their homes. We initial-
ly went to fifty different households
across the country and watched
consumers go through their cleaning
routines. We came during the week
and on Saturdays when many people
“deep clean” the house. We came
at different times of the day when
children were present and when
they were at school. We shot video,
took pictures and asked consumers
to tell us stories and draw pictures.
Some completed diaries for us. Oth-
ers made collages. We looked in con-
sumer closets, cabinets, garages and
car trunks to see what products were
close at-hand and what were in deep
After we talked to consumers
about their lives and watched them
clean we went shopping with them
to a range of retailers from grocery
to dollar stores. These in-home and
in-store observations yielded a range
of consumer insights that were piv-
otal in the development of our ideas.
For example, we learned that a
segment of consumers fears the job
of cleaning because of health con-
cerns. We learned that consumers
put cleaners in dozens of categories
of their own creation and that these
categories have no linkage to the “of-
ficial” category definitions provided
by IRI and Nielsen. We learned that
men and women approach cleaning
differently. They shop stores differ-
ently. They look for different per-
formance claims. They seek differ-
ent cues of effectiveness during the
cleaning process. They have differ-
ent underlying motivations around
why to clean. And, ironically, each
gender thinks it does a superior job.
These insights were developed
from fairly straightforward research
Transactional learning allows
consumers to vote on marketing
innovations with their wallets
instead of their opinions. Because
it ventures beyond the safety of
the focus group facility, it offers
the ultimate proof point—did the
consumer buy?
22 Loyalty Management™ · LOYAL1Y3ô0.OPC
Step Away From the One-Way Mirror (continued)
methodologies that put us in real
world consumer environments, re-
moving the safety of a one-way mirror.
All of the steps summarized below
were undertaken with the primary
goal of informing our intuition and
unearthing deep consumer insights:
· We ieciuiled hosl iesµondenls lo
help us set up “Girlfriend Groups”
in their homes. These are gather-
ings where one consumer invites
her friends to come talk about a
topic—in this case home care. This
research format told us a lot about
what was important in home care
and what wasn’t. Doing this work
in-home provided ample oppor-
tunities for show-and-tell so that
we could truly understand what
consumers were talking about.
The added dimension of speak-
ing to friends helped us contain
what I call the “bullshit” factor.
Consumers were literally kept
honest by their peers, creating an
amazing environment of candor. I
sometimes wonder if consumers
are telling the truth during focus
groups. With Girlfriend Groups I
never wonder.
· 1o deveIoµ lhe besl Iogo íoi one
of the new brands we were creat-
ing, we asked three graphic de-
signers to independently develop
rough logo concepts against our
creative brief. We took what we
felt were the best of their ideas,
mounted them on boards and
took them out to the Denver
Bronco stadium parking lot dur-
ing pre-game tailgate parties. We
gave tailgaters coupons for free
Kingsford Charcoal in exchange
for their time and opinions. They
gave us an earful (and a few beers
in some instances), and we quick-
ly learned which visual brand-
ing elements had the most power
to bring our idea to life. Equally
important, we learned which el-
ements were weak or polarizing
and not worth pursuing.
· 1o deveIoµ lhe besl bollIe íoi one
of our ideas we literally scoured
the world looking for stock bottle
options but struck out. So we cre-
ated a new bottle with Brand-
Juice industrial design resources
and a bottle manufacturing part-
ner. Each time we received a new
wooden bottle mold prototype we
went out on the pedestrian mall
adjacent to our building and in-
tercepted consumers to ask them
to hold the bottle in their hands
and give us their opinions. We
also put the prototype on store
shelves to make sure it would
stand-out and have appropriate
height and width dimensions.
· ¡alei, yhen ye had acluaI bol-
tles off of a unit cavity mold that
cost only $10,000 to manufac-
ture, we tested a range of fully-
rendered package designs. We
set up a booth at Mall of America
in Minneapolis under a fictitious
company name, and for a day we
stood there and intercepted about
a hundred consumers. Each was
asked to rank the different bot-
tle designs and to comment on a
paper positioning concept state-
ment we had developed. Just by
reading the body language of the
people who stopped by it was
easy to identify our best package
design execution and, critically,
to understand what made it the
best option. Knowing why our
best idea won was instrumental
in shaping our judgment for ad-
ditional decisions around adver-
tising strategy and in-store mer-
Undertaking work like this is not
easy. Getting your hands dirty is not
for the faint of heart, but it sure beats
failing at innovation because you
were unwilling to venture beyond
the safety of the one-way mirror.
Consumers were literally kept
honest by their peers, creating
an amazing environment of
candor. I sometimes wonder
if consumers are telling the
truth during focus groups.
With “Girlfriend Groups” I
never wonder.
Loyalty Management™ · LOYAL1Y3ô0.OPC
Integrated Mobile Marketing.

Gift and Loyalty Programs.

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Mocapay knows how to put your business
into consumers’ hands. Literally. Mocapay
is the only mobile experience platform for
innovative merchants.
24 Loyalty Management™ · LOYAL1Y3ô0.OPC
ccording to Aberdeen Group’s new research study,
Providing a 360° View of the Customer - Better Service -
Higher Sales, customers benefit from better service and
efficiency, and sellers derive improved loyalty and, inevi-
tably, more repeat business from established customers.
Moreover, access to data and two-way communications
form the basis of strategic actions being taken in pursuit
of a true 360° view of the customer. The results of the
study underscore the critical importance of data integra-
tion in building a 360° view of the customer and creat-
ing a more customer centric marketing organization. The
research goes on to say that integration of multiple data
sources will be impacted by the underlying technology in-
We hope today’s article will provide loyalty marketers
with insight on how to leverage existing sources of data
and evolve technology infrastructure to create a more
complete view of the customer, and spark a more produc-
tive dialogue with customers.
We begin by understanding that loyalty is a journey
that builds on customer experience. Once we understand
this, we have an opportunity to create excitement about
their brand, stimulate positive word of mouth and see in-
creased returns.
The 360° View:
Customer Understanding Puts
You Ahead of Your Customers
by Connie Hill, VeraCentra
The Direct Link Between Customer Experience
and Loyalty
Customer experience has been around for many
years, but lately customer experience is becoming more
tangible in terms of how customer experience impacts
profitability—and there is a direct link between customer
experience and loyalty.
Last year Forrester conducted a study entitled “Cus-
tomer Experience Boosts Revenue.” In this study, For-
rester identified a direct correlation between loyalty and
customer experience. By measuring three elements of
By measuring three elements of
loyalty behavior—willingness to
buy more, reluctance to switch
and likelihood to recommend—
Forrester found that a change
in customer experience rating
directly corresponded to a change
in customer loyalty.
Loyalty Management™ · AUCUST 2010
loyalty behavior—willingness to buy more, reluctance to
switch and likelihood to recommend—Forrester found
that a change in customer experience rating directly cor-
responded to a change in customer loyalty. For companies
that are unable to manage customer experience, loyalty
and revenues can suffer. In fact, Forrester summarizes the
impact as, “a modest improvement in customer experi-
ence can bring in $177 million to $311 million per year!
It’s no secret that today’s customers expect more from
the companies they interact with. The explosion of social
media and rapid growth of new communication channels
illustrates how customers expect to be deeply involved in
both the company and community dialogue that shapes
the products and services they use. They expect their
voices to be heard in order for their dollars to be received.
Yet, despite all the evidence of customer driven inter-
action, and the availability of powerful technologies for in-
teracting directly with customers—collecting and mining
information about them, and tailoring offerings accord-
ingly—we remain woefully unfocused on cultivating cus-
tomers, focusing on product marketing and transactions
instead. So why aren’t we more focused on delivering a
positive customer experience to create long term profit-
able customer relationships? The short answer is tradi-
tion—nearly 40 years of mass markets and mass media.
Most traditional businesses think in terms of transac-
tions more than in terms of customers. When businesses
do think about customers, they do so in terms of identify-
ing which ones will drive more product transactions. We
value revenues and rarely measure our customer value.
We push our product campaigns over and over to pros-
pects that really don’t care, when we should be dialoging
with customers, engaging them into relationships with our
brand. And think about how we define success– it’s a race
for market share when we should be racing for customer
Old traditions affect several aspects of our organiza-
tions- from processes to people, to structure, to technol-
ogy tools. And old habits are hard to break.
In fact, in a February 2010 Harvard Business Review
article, “Rethinking Marketing,” the authors state that
management needs to stop giving lip service to building
customer relationships and start the strategy shift from
transactions to relationships, creating the culture, struc-
ture and incentives necessary to execute on that strategy.
The article further states that no matter how daunting, the
shift is inevitable and will soon be the only way to serve
Breaking all those habits is no small hurdle. Companies
seriously considering this migration to a more customer
experience driven view of the world understand that it will
be transforming organizational change initiative.
An Integrated 360 Degree View of the
So how do we get over this hurdle, and sooner rather
than later? Is there one thing that’s low in investment,
quick to implement and would have an immediate impact
on loyalty, churn prevention and profitability? An inte-
grated 360 degree view of the customer.
As long as companies operate in functional silos with
separate systems, the customer experience will be frag-
mented and impossible to manage. It doesn’t matter the
industry, or what systems you use to collect customer
information, customer data can be found and integrated
into one data mart to yield a 360 view of the customer.
While this is a team effort, requiring cooperation from
others who have customer data, the customer marketer is
in the ideal position to take the lead on creating a 360 cus-
tomer view. After all, it is the customer marketer that is
charged with growing revenue by customer, and reducing
churn by managing a positive and consistent experience
for customers.
Integrating data into a single view is one small step
that empowers marketers to perform the activities neces-
sary to manage customer experience. Technology tools,
applied to a customer data mart, enable activities that
yield improved customer strategies and decision making.
These activities include:
· Meusuring und monitoring lev customer metrics
· Predicting purchuse lilelihood or propensitv to deíect
· Anulvzing customer behuviors in order to creute rules
and triggers that automatically launch communica-
· Accessing dutu uvuiluble to personulize those commu-
· Shuring u common view oí their customers ucross the
Even more surprisingly, all this can be achieved with-
out ongoing IT Support. Integrating customer data, there-
fore, is the one step that takes time, but won’t break the
bank. More importantly, it will provide immediate value
through customer insight and associated high returns on
customer communications.
Calculating the Impact
This may be one small step, but the impact is great.
The recent aforementioned Aberdeen study offers evi-
To install the 360 view capability within your
organization, think in terms of combining process,
knowledge and technology tools.
continued on next page »
26 Loyalty Management™ · LOYAL1Y3ô0.OPC
dence to support the value of integrating customer data.
The April 2010 study revealed four key performance
criteria that distinguish the Best in Class from Industry
Average and Laggard organizations. Top performance
was defined in terms of achieving a 360 degree view of
the customer and reaping the appropriate business ben-
efits from that achievement—namely, better service and
higher sales from existing customers.
In the study companies were measured on their abil-
ity to deliver customer retention and improved customer
experience. Metrics were calculated for customer reten-
tion, customer satisfaction, net client value and efficiency.
These metrics are defined as:
· Customer retention equuls the percentuge oí uccounts
that remained customers since the last fiscal period
· Customer sutisíuction meusures the percentuge oí
customers formally reporting “better than average”
satisfaction with a company’s product or services
· Net client vulue meusures the customer's unnuul
spend, measured consistently as either revenue or
· Eííciencv meusured us the percentuge oí time spent
searching for and combining customer data from vari-
ous sources
Survey results demonstrated a significant gap be-
tween the top performers and the average and laggard
performers. Top performers maintained 91% customer
retention; the average and laggard performers retained
78% and 62% respectively. Top performers maintained
88% customer satisfaction, while the average and lag-
gard companies received 71% and 32% comparatively.
And when measuring efficiency, top performers only
spent 6% of their time searching for customer data, while
average performers and laggards spent 12% and 16% re-
spectively. However, the biggest gap was between the in-
crease in net customer value for the top performers (6%)
versus a value decrease in both average (2%) and laggard
performers (9%)!
Simply taking no action to create a 360 view is not an
option. In fact, the wait creates an even higher hurdle to
jump, because if your competitor is that top performer
and your performance lags your competitor has a huge
head start!
Connect the Dots: Process, Technology and
To install the 360 view capability within your organiza-
tion, think in terms of combining process, knowledge and
technology tools. Recognize, however, that all the right
tools, knowledge and process design skills aren’t always
available within an organization.
The first step in connecting the dots is to understand
where customer data resides, and know what is meaning-
ful to capture for future analysis, trigger setting and per-
sonalization. A data audit, or basic inventory of company
customer data, will provide the sources and contents of
all customer data located within an organization.
Technology tools then enable you to aggregate that
customer data into a single data repository or data mart
from which the key capabilities—analysis, segmentation
and measurement—can be achieved. Finally, knowledge
and skills to create standardized customer value measure,
or to help in behavior analysis or modeling, maybe found
internally with your CFO, or can be outsourced to a ser-
vice provider that specializes in combining analysis tools
and consulting.
As you work to establish this view and connect the
dots, you should bear the following questions in mind:
· Are we meusuring und trucling customer sutisíuc-
· Are we meusuring und trucling customer retention?
· Are we meusuring und trucling customer vulue?
· ¦s our customer dutu in one centrulized dutu murt?
· Whut's the gup between our ubilitv to creute u posi-
tive customer experience versus that of our competi-
Getting the Full Picture
The new consumer has changed the marketing dy-
namic—increasing defection and reducing loyalty—and
poor customer experience only accelerates the negative
impact on overall customer loyalty. Companies mired in
traditional business processes struggle to deliver positive
customer experiences because they lack customer cen-
tric focus and are therefore missing the deep customer
understanding necessary for developing customer strat-
egy and empowering people within their organization to
ensure personalized customer experience.
By embracing companywide change that focuses on
building a 360 degree view of every customer, compa-
nies have a significant opportunity to increase customer
satisfaction, customer retention, efficiency and customer
value. With only some effort and a diligent data audit, or-
ganizations that leverage process, technology tools and
people can create a 360 view of the customer and can
share that customer data across the organization to cre-
ate a personalized customer experience—connecting the
dots that complete the customer picture and improve
customer retention and loyalty.
Simply taking no action to create a 360 view is not
an option. In fact, the wait creates an even higher
hurdle to jump.
The 360° View: Customer Understanding Puts You Ahead of Your Customers (continued)
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It’s all possible.
And it starts here.
Deliver only what matters
the most: relevance
28 Loyalty Management™ · LOYAL1Y3ô0.OPC
n a recent trip to a conference at the Hard Rock Hotel
in Las Vegas, I found myself intrigued by an advertisement
for one of the hotel services. Although I had never heard of
Hart & Huntington, their claim of “offering a great customer
experience for both veterans of the tattoo community and
first time clients, as well as building [a] brand around high-
quality tattoo artwork” told me two things. First, Hart &
Huntington was a tattoo company and, second, they were
focused on providing a great customer experience. Knowing
that the principles of branding the customer experience can
be transferrable from one industry to another, I visited Hart
& Huntington to find what secrets might unfold.
After some brief confusion about my request to talk with
a manager about the company’s customer experience—and
after politely declining their offer of learning first hand by
getting a tattoo—I had the pleasure of chatting with Ronnie
“Mooch” Mendoza, Operations Manager for the Las Vegas H
& H location. We talked about what made the customer ex-
perience so exceptional in his store. Here is a summary of
that discussion and Mooch’s recommendations for creating a
great customer experience.
Hire the right people
When interviewing applicants for tattoo artists or recep-
tionists, Mooch assesses their skills and experience. How-
ever, most of his interview questions drill down on how cus-
tomer-focused the candidate is. If the candidate is unable to
demonstrate a commitment to customer service, Mooch will
not hire him/her. No exceptions.
Provide a personalized experience
From the time customers enter H & H, they receive prompt
and personalized attention. (As evidence, two people offered
me assistance within 30 seconds of entering the store!) They
can either choose their artist or someone will help them re-
view online images from each artist’s portfolio, allowing
them to determine which style they prefer. Once an artist is
chosen, the tattoo design and customer feedback process be-
gins. The artist will find out if the customer has had a tattoo
before and tailor the approach to the customer’s level of ex-
perience as they discuss the vision. Every step of the way, the
artist provides expertise and recommendations. At the end
of the discussion, the artist produces a template of what the
tattoo will look like. Final changes are made and, only when
the customer is completely satisfied with the design, will the
actual procedure begin. Finally, the store is designed with ut-
most consideration for customer comfort, from the cool room
temperature to options for partial or complete privacy.
Branding Secrets
by Nancy Porte, Vovici, Inc.
of a
Tattoo Artist
Loyalty Management™ · LOYAL1Y3ô0.OPC
Build the brand through the customer community
Mooch noted that many customers plan their trip to Las
Vegas around their plan to get a tattoo from H & H. They are
familiar with the business through either the A&E TV Series,
Inked (no longer in production, but you can view previously
taped episodes) or they have seen customer testimonials on
the H & H Message Board. A quick visit to the Message Board
reveals comments like “I had the best experience with H & H
this last Sunday thanks to Josh! I was in contact with him be-
fore traveling to Vegas and set up a good time to come in and
work out what I wanted to have done. He took my idea, gave
me some advice, drew it up, and did the tattoo in just a short
time. It was a great experience!! Highly recommend him if
you are in there!” and “The whole thing was a great experi-
ence - he put me at ease right away and kept me laughing the
whole time. The rest of the guys in the shop were really nice
too. Definitely recommend the shop.”
Hart & Huntington delivers on the brand promise. They
know that each interaction represents a “moment of truth”
that can enhance or erode their brand, heighten or undermine
customer loyalty, and positively or negatively affect company
revenue. Like customers in other industries, H & H clients
expect fast service, convenience and a quality outcome. The
ability to achieve customer satisfaction on a consistent basis
is powering Hart & Huntington’s strong reputation and in-
dustry leadership.
Although most of us work in industries very different from
a tattoo company, we are similar in our goals to provide supe-
rior and consistent customer service – not to mention achieve
industry domination! But before we can achieve greatness,
we must first understand our own business from the cus-
tomer’s perspective. Whether you use surveys, focus groups
or online community discussions, the exercise of finding out
how customers feel about doing business with you is invalu-
able. Once you understand how customers rank and rate
their interactions with you, you’ll have a clearer picture of
your customer experience branding. That knowledge will
provide the necessary focus for which interactions need
to be prioritized for improvement.
The next step is to customize each customer’s experi-
ence. H & H knows a lot about what their customers ex-
pect. Then they take it to the next level by interviewing
each customer about what image and style of tattoo they
want. With that information they match the customer
with the right artist who assists them through the pro-
cess. Is that very different for us in the software business?
Not really. We already know most of our customers expect
fast service with a quality solution. If a customer with
Product ABC contacts your service department, are they
immediately matched up with the Product ABC expert in
your department? Or do they go through a triage process
with a less qualified team? While it may be more efficient
for your business to provide a triage team, an opportunity
is missed to provide a superior experience by customizing
the interaction to the customer.
So, when you think of branding customer experience,
think of tattoos – indelible marks that possess deeper
meaning – and ask yourself these questions: Do you pri-
oritize customer focus as a key criteria when evaluating
a potential hire? Do you customize the experience to the
customer’s needs from beginning to end? Have you made
a positive, lasting impression? Do you have customers that
look forward to doing business with you and tell others
how great you are?
At the end of our discussion, Mooch proved his com-
mitment to customer satisfaction by giving me a tattoo
sticker and inviting me back if I changed my mind about
a real tattoo!
They know that each interaction represents a “moment of
truth” that can enhance or erode their brand, heighten or
undermine customer loyalty, and positively or negatively
affect company revenue.
Tattoo Artist
Loyalty Management™ · AUCUS1 20¹0
30 Loyalty Management™ · LOYAL1Y3ô0.OPC
CPG: A recession-
proof business?
by Andy Wright, Carlson Marketing
am sure most people are familiar with some of the consumer pack-
aged goods loyalty programs that have been running over the last few
years, of which perhaps MyCokeRewards™ is the most famous.
However, since a burst of loyalty experimentation by the sector some
10 years ago, these programs are the exception rather than the rule. All
that is about to change and I predict loyalty programs will become as
much the norm in packaged goods as they are in retail. As recent as last
year, two thirds of food manufacturers either have, or are planning to
introduce loyalty initiatives according to data from the Aberdeen Group.
So, why the sudden flurry of activity?
Firstly, the current recession has driven consumer loyalty for pack-
aged brands to a new low. Two recent notable surveys underline this.
Recently, comScore published the results of a March, 2010 study
on brand loyalty among consumer goods products, and showed a sig-
nificant decline in all categories. The study showed that consumers will
trade down in price during a recession. Over the past two years, alle-
giance to some brand categories such as health and beauty aids, aver-
aged a 15 percent drop in loyalty.
Retail partners are providing plenty of opportunities for the loyalty
switch; if consumers want to go cheaper, private label brands are a vi-
able option. Nielsen Research showed private label sales in the CPG cat-
egory are up substantially. In the US, private label brands account for
17.3% share of dollars and a 21.9% share of units by March 2010—up
2.1 and 1.9 points respectively from 2007. Once again, on the CPG scale,
share points are huge. Branded products, however, still drive the vast
majority of dollar (82.7%) and of unit (78.1%) sales.
Secondly, in addition to driving traffic to private labels, retailers have
made big advances in gathering consumer purchase data through their
own loyalty efforts. Whilst it is true that many retailers are providing this
data to their manufacturing ‘partners’ and at the same time have provid-
ed access for manufacturers to their own loyalty-based communications
channels, it does put all the cards in their own hands. Manufacturers are
realizing that they now need to gather their own customer data in order
to drive innovation, targeted communications and ultimately drive sales.
Thirdly, whilst early loyalty efforts were exciting, they were always
doomed to failure because the costs of infrastructure and one-to-one
communication were too high to make the effort pay off. Today, the huge
advances in all types of digital communication and the ubiquity of the
web have made the true promise of loyalty programs deliverable.
So where does a loyalty program fit with other marketing activity?
From my point of view, it certainly does not replace
mass consumer awareness advertising that is essen-
tial to many consumer brands. Nor does it replace
effective retail promotion. Done well, it does replace
existing CRM efforts with something much more ef-
fective. You have better targeting, you can focus pro-
motions on key individuals in the right way. The pro-
motion can sit on the loyalty site as a place to put it
even if you do mass work to let people know it’s there.
Here is how it works:
A new media channel
Building a loyalty program involves the creation of
a destination for customers to experience and engage
with the brand. This is always largely in the digital
space and if executed well is like creating a completely
new private media channel directly to the customer.
This is incredibly important in today’s splintered me-
dia universe, creating huge efficiencies. You can think
of ‘points’ pretty much as media expenditure—driving
your most important customers to your own market-
ing channel every day.
Partnership Funds
Once this loyalty ‘destination’ has momentum, it
has worth as a medium to other partner brands that
are only too happy to provide partnership funds to rid-
ing on these rails and engaging directly with the con-
sumer base. This not only provides more engagement
and stickiness for brand users, but also helps pay for
the cost of the program.
Reduction in promotional expenses
Promotional expenditure is also reduced as this
destination provides an effective portal for all pro-
motions, allowing them to persist longer and reduc-
ing costs as a result. For one client, in the first year of
loyalty program operation, we reduced promotional
expenditure by over a third and still grew share over
target growth rates.
Loyalty Management™ · LOYAL1Y3ô0.OPC
Loyalty Management™ · AUCUS1 20¹0
Tracking actual purchases
A key goal of CRM is to provide a dialogue and
gather data from customers in order to make future
communications more effective and drive the busi-
ness. However, all CRM activity within packaged
goods marketing today relies on reported consump-
tion data, which is notoriously inaccurate. A loyalty
program tracks actual purchase behavior and is there-
fore much more powerful for decision-making.
It has to be said that even with advances in com-
munication technology and operational effectiveness,
a loyalty initiative isn’t right for every CPG brand. It
does require a certain combination of purchase value
and frequency to get the economics right, but even
then it is instructive to understand that very small
monetary rewards if made in the right way with the
right brand/emotional appeal can move share mark-
edly. It is also worth noting that pulling together a
coalition of brands appealing to the same consumer
segments can bring a very effective value proposition
together to power loyalty economics.
Here’s an example: Pampers. Its “Gifts to Grow”
loyalty program was lacking the partner reward infra-
structure to continually attract customers and their
earning structure needed refinement. After all, diaper
customers are only in market for a finite period of time.
The program collected plenty of data and rewarded
consumers for sharing that data with them, but that
was it. Now we have the ability to offer bonuses on
products and define targeted trigger offers that move
behavior at appropriate times, to keep members at
vulnerable switch points in their relationship with
Pampers. By changing up some program elements,
Pampers was able to improve results on all fronts.
Active participation among consumers increased by
20%, the program rewards budget became more ef-
ficient by 10% and overall ROI improved by 12.5%.
Most importantly, Pampers customers had a reason
to stick with the brand that transcended price.
With lift, shelf space, and future growth at stake, a
loyalty approach isn’t really a question of “if” anymore,
it’s a question of “when.” The challenges are easy to
see for CPG brands right now. Consumers are price
sensitive, retail partners have the data, the direct con-
nection to consumers and will take advantage of that.
With continuing market and economic pressures,
now that the issues of cost of deployment have been
overcome, and now that there are effective ways of
gathering consumer purchase data and delivering
value in exchange, we are about to see major shift to-
wards loyalty programs across the whole sector. L
32 Loyalty Management™ · LOYAL1Y3ô0.OPC
really dislike carrying a lot of loyalty cards around in my wallet, and I hate those little
key chain cards even more.
Surprisingly my grocery stores have always been innovative enough to link my customer
loyalty card to my mobile device. When I am checking out, I simply key in my mobile phone
number and I instantly see the savings being deducted from all my items.
It has me wondering: why haven’t other retailers figured this out yet?
Cell phones are essentially universal at this point, and thus they are a simple replace-
ment for retail customers who, like me, would prefer to avoid a wallet or keychain over-
stuffed with loyalty program cards. Like a lot of big ideas, this innovation is equal parts
simple and completely brilliant.
Obviously there is no need to sell you, reader, on loyalty programs – you wouldn’t be
reading this if you didn’t already know they work, and that it is seven to ten times more
expensive to acquire a new customer than it is to keep an existing one.
Since customers who belong to a loyalty program visit twice as often and spend an aver-
age as four times a much as those that are not in the program, I think it’s time to figure out
what loyalty programs can do to mobilize their solutions and get with the times.
After all, there are 270 million mobile phones in the US, and 82 percent of Americans
admit to never leaving home without their phone. Mobile provides one of the easiest and
most direct ways to improve engagement with loyal customers. The loyalty industry can
leverage the mobile channel to extend its programs.
Here are some impactful ways to mobilize your loyalty program:
Provide a Mobile Entry
Retailers can increase participation in loyalty programs by offering a mobile entry meth-
od. All entries – and the metadata that comes with them – can be captured and program-
matically passed to existing loyalty platforms.
Even better, let customers text in to join, reply with my e-mail address to send them a
form to fill out later. Give them the savings on the spot but don’t “activate” the program for
future purchases until the customer finishes the registration online.
This eliminates customers taking up time at checkout filling out forms. As we all know,
anytime you can make something easier you will up the amount of user engagement.
Mobilize or Die
by Matthew Silk, Waterfall Mobile
Loyalty Management™ · LOYAL1Y3ô0.OPC 33 Loyalty Management™ · AUCUS1 20¹0
Start a Mobile Referral Program
By incorporating mobile solutions into existing loyalty pro-
grams, brands can incentivize loyal customers to refer friends via
mobile – and will reap the benefits of a broader program mem-
Alpine Meadows Ski Resort in Lake Tahoe, California recently
successfully launched a social media campaign with a referral
tie-in and experienced great results. Alpine had skiers texting in
to win a pair of weekday ski passes and encouraged visitors to
spread the word to friends. Each referral entry counted as an ad-
ditional entry for the original customer. In the end, 45 percent of
the entries came from referrals.
Provide Customers with Real-time Account Activity
Financial institutions could allow customers to register their
cell phone numbers and text in for the most up-to-date account
information even when they are on the go. For balance updates,
customers could text BAL to the bank’s short code. For recent
transactions, they could text TXNS.
SMS could also be used to alert clients when there are chang-
es to their accounts – for example when a home address, phone
number or email on an account has been changed. This immedi-
ately gives the customer an opportunity to contact the business
and let them know if they did not make the change – saving the
client a huge hassle.
Mobile can also be helpful when an account has been locked
out because someone has entered the wrong password the set
number of times. Instead of having to call the bank or the bank
needing to send a confirmation e-mail, a text message could be
sent with an unlock code and next steps. SMS could also be used
to notify an account holder when they have overdrawn an ac-
count, or when a large sum of money has been withdrawn.
Sale Reminders
Every couple of weeks my local grocery store has a big 8-hour
sale. They generally send out a mailer to advertise the sale. Inevi-
tably, the mailer comes mixed in with a bunch of other market-
ing offers, and many times I just recycle the entire stack without
looking at them.
But here’s the thing: I actually do like those 8-hour sales, and
want to know when it’s happening. As a loyal customer and part
of the loyalty program, it would be great if they sent me a text
message saying, “Reminder: our 8-hour sale starts today at noon.
Chicken $1.99/lb and many other great deals.”
How many additional people do you think my store could at-
tract if they sent out a text reminder the day of the sale?
Apparel and other types of retail stores also benefit greatly
from mobile. They should be texting store coupons to customers
regularly as a way of generating foot traffic. Stores should include
calls-to-action on print, TV and radio ads so customers can text
in to get a code delivered straight to their mobile phones.
Retailers are also seeing success with send-to-phone pro-
grams. Customers can select coupons online and choose to have
those specific codes sent directly to the phone. Or even better,
like my grocery store, customers can add the coupon to their loy-
alty program and it will automatically give the deal at check out
when customers use their phone.
Again, people never forget their phones – so mobile coupon
codes have a higher redemption rate then clipped coupons. As
Mobile Marketer has reported, mobile coupons enjoy a five to 15
percent conversion rate, as compared to less than one percent
for print coupons. Better still: mobile coupons are good for the
environment, and reduce printing, paper and distribution costs.
Appointment and Deadline Reminders
As we all know, a great way to build loyalty is to provide ex-
cellent customer service. Businesses should be using text mes-
sages to inform customers of upcoming deadlines or events. This
helps to minimize or prevent future incoming calls from custom-
ers about missed payment deadlines or appointments. A text
message is an easy and unobtrusive way to remind a client of
that deadline before it is missed.
Most of all, mobile provides a rich, real-time data set of customer
behavior – one that can help companies develop key insights into
their shoppers’ behavior and values. Retailers can also use mo-
bile to assess the success of loyalty programs themselves to find
out what’s working, what’s driving foot traffic, and what could
use some tinkering.
Once you’ve developed your mobile program and begin digi-
tally engaging with your customers, you can take it to the next
level and start consider location-based services (LBS), which
have been getting an enormous amount of attention lately.
Foursquare keeps growing in popularity with people eager to
“check-in” in hopes of becoming Mayor in the fictional game. Just
because people are checking in to a location doesn’t mean they
are actually engaging with the brand in a meaningful way. Instead
of having someone vying to become your fake mayor, it would be
smarter to have them text a special keyword of the day that can
give them points, deals or privileges in the program and will actu-
ally get people to walk through the doors and spend money. It’s a
simple way to reward them for their loyalty.
Obviously, the ability to target customers based on where
they are at that exact moment is a huge benefit for a brand. But,
for now, focus on the simple – and get your current program ex-
tended to utilize mobile and it clear advantages. And we’ll talk
more on LBS another time.
82 percent of Americans
admit to never leaving
home without their
phone. Mobile provides
one of the easiest and
most direct ways to
improve engagement
with loyal customers.
There’s a New Game in Town!
by Stephen Baer, The Game Agency
oyalty programs are designed to be easy as 1, 2, 3: spend, earn, redeem. But if so simple,
why do very few loyalty programs succeed in providing consumers a compelling reason to
increase their participation? In a world where companies are fighting for consumer atten-
tion and their communication are increasingly moving online, it’s time to enhance loyalty
programs with video game mechanics.
Today, gamers come in all shapes and sizes, ages and genders. According to the Pew Re-
search Center, more than half of all U.S. adults, from Baby Boomers to Generation Y, identify
themselves as active gamers. They play games at home, at school, in the office and on the
road. The growth in game play and expansion across demographics is due in part to them
being more elaborate, immersive and social than any other medium. In addition, a new trend
of playful competition has risen in the consumer society and everyone wants to raise his or
her social status.
Consider Farmville, a wildly popular Facebook game leveraging casual Role Playing Game
mechanics. The game employs a continuous reward mechanic to addict more than 66.5 mil-
lion monthly active users (a number larger than the population of France), to keep coming
back almost daily. Most loyalty programs have a similar template to games, but what makes
Farmville succeed where these loyalty programs do not? In the case of a credit card pro-
grams, dollars are spent and points are earned to get more stuff. In Farmville, players com-
plete tasks on their plot of land, and earn points to get more land, plants, and animals. It’s the
same concept of earning more to get more. On the surface, the same game mechanics are in
place, however, the difference is in the addictive qualities that continually brings people back
into the game. At its core, Farmville engages through easy fun vs. the difficulty of logging into
your credit card account, a task that is not associated with “fun”.
Today, gamers
come in all shapes
and sizes, ages and
genders. According
to the Pew
Research Center,
more than half of
all U.S. adults, from
Baby Boomers
to Generation Y,
identify themselves
as active gamers.
34 Loyalty Management™ · LOYAL1Y3ô0.OPC
The largest difference between a reward system like that of
Farmville and, say, American Express, is how participants are be-
ing rewarded. Constant rewards are key to an addictive experi-
ence. Games reward players every few minutes, hours or days
while most loyalty programs require a long term approach. Every
little task that is done in Farmville is advancing the player to their
next level upon which they can earn more space, animals, crops,
etc. Simple tasks like watering crops will grant players some
sense of accomplishment as they work towards that next level. In
the case of American Express, buying that fast food hamburger
doesn’t offer a sense of accomplishment when two points are
granted towards that 100,000 point trip. With that established,
there’s not much reason for checking into the rewards page un-
less you’re close to your goal. And in a rewards world where most
points are equal to a dollar spent, the average consumer waits
quite a while to reach 100,000 points.
Loyalty programs can benefit from taking a page out of Farm-
ville’s leveling system by rewarding members early and often.
Give consumers a reason to go back to the site regularly to check
on progress and to engage with your brand. Give members small
rewards (games, music, ringtones, etc.) along the way. And add
leader-boards among friends to your programs building competi-
tion and adding depth to your loyalty game campaign. A great ex-
ample of a successful reward program is McDonald’s monopoly:
“The McDonald’s Monopoly Game drives tremendous excite-
ment from our consumers and really has become a part of pop
culture that people love and anticipate each fall,” say Rick Wion,
Director of Social Media. He adds “each year we try to evolve the
program so that it stays relevant.” McDonald’s has done a great
job of reinforcing the notion of both smaller goals and big hope
with a combination of small prizes and big prizes with their An-
nual Monopoly game. With each piece earned, consumers are
either one third, or one half of the way to a reaching a major re-
ward. According to Game-Based Marketing, a book recently pub-
lished by John Wiley & Sons, McDonald’s Monopoly game gen-
erates nearly one hundred million dollars in incremental revenue
per year. The beauty of this campaign is that consumers barely
know they’re in the game. What’s a small soda here or some fries
there? It’s a lot of extra revenue in McDonald’s pocket, but more
importantly, it’s visual progress that is clearly noticeable when
that Marvin Gardens slot is filled and there are only two more
yellow pieces to go. And for all the consumer knows, that could
be on the next coffee they drink.
Let’s look at one more industry; Casinos. Casino loyalty pro-
grams are all about leveling up. Most casinos reward comp dol-
lars for every personal dollar spent on their floor. Entry-level pro-
grams are free, but getting to higher levels takes time and money.
Stretch goals aren’t a problem at casinos because consumers go
there to play games and have fun. However, while Casinos sell
fun, they sell it on a part time basis. Harrah’s has tried to turn their
fun into a full-time experience by offering a virtual casino on their
website. This strategy keeps their brand front and center, allow-
ing consumers to play slots and craps risk-free. The only problem
is, these online games don’t tie to their in casino rewards system.
Even though Harrah’s offers games on their website, they are
doing little to differentiate these games from other free-to-play
casino games on the web. By tying their loyalty reward system
to their website games, Harrah’s could accomplish three things:
· Cupture consumers on their website who would otherwise
play on hundreds of other free game websites
· Provide u reul-time rewurd svstem bused on smull uccom-
plishments in a virtual world
· Keep members enguged in their rewurds progrum und in turn
increase the frequency in which they return to their real world
Using games to drive consumer loyalty and engagement with
your brand is easy. You can start by adding game mechanics to
your loyalty programs in four simple steps:
1. Define what consumer behavior you need to drive. Don’t just
think about broad or bottom line objectives, but rather, focus
on easy-to-achieve activities that will have an overall impact
on your bottom line. For example: incentivize the sending of
product endorsements to friends. The more specific you can
be, the easier it is to build the right game mechanic.
2. Assign points to those behaviors. Think about how much
value each of the behaviors has to your business and assign
points to each action accordingly. Points should be weighed
relatively, so if opening a new account is ten times more valu-
able than clicking on an advertiser’s link, make sure the point
system reflects that reality.
3. Create a leader board to display points. Just like the Employee
of the Month plaques at restaurants, create a socially-net-
worked leader board that allows users to feel like they are ac-
complishing something relative to their friends and peers—A
little encouragement goes a long way.
4. Make “fun” the tool you use to drive your goal! Whether your
business is finance or funerary, making fun a principal objec-
tive will substantially increase consumer engagement and
drive consumers to remarkable new revenue opportunities.
As it stands, there are fundamental game mechanics in place
with today’s traditional loyalty programs. But these mechanics
need to evolve with the consumer mentality—which is becom-
ing accustomed to more frequent reward satisfaction through
popular casual games. The human desire for instant gratification
must be enhanced and celebrated if reward programs are going
to achieve the next echelon of adoption. Consumer motivation,
involvement and immediate rewards are the trifecta of success
for brand loyalty outreach. Existing brands must act on these
principles and implement new, engaging programs for their con-
sumers. If they don’t, they run the risk of losing market-share.
Don’t just think about broad or
bottom line objectives. Focus on
easy-to-achieve activities that will
have an overall impact on your
bottom line.
Loyalty Management™ · LOYAL1Y3ô0.OPC
Loyalty Management™ · AUCUS1 20¹0
36 Loyalty Management™ · LOYAL1Y3ô0.OPC
he greatest challenge facing loyalty programs is
to find the perfect reward mix: the combination of tried
and tested redemption options in order to whet the appe-
tite of every customer ensuring their engagement levels
are high, and to drive their loyalty whenever possible.
Customers have become aware of their right to behave
as an individual, so program segmentation is becoming
more challenging for the loyalty manager. Loyalty pro-
grams are being led in a common direction: a program
must afford the customer flexibility to use the program in
any way they wish.
The largest loyalty programs are those with the most
diverse customer base which require the most diverse re-
wards mix. Segments can be endless with demographics;
through behaviours such as travel redemption activities
to their product usage history. The loyalty program man-
ager’s challenge is to satisfy their customers’ needs within
these segments.
A loyalty program’s travel component is the most es-
tablished, but recently, non-air redemption options have
become progressively more common, and increasingly im-
portant to their success. While travel options remain a key
component, as do cash-based rewards such as fee waivers,
a broad and unique merchandise selection is where true
diversity can be found. With a mixture of global and local
brands, loyalty programs can offer their customers items
that are aspirational and unique in value.
A merchandise network can have its challenges. Send-
ing items across borders has complications from delivery
imports to tax implications, including individual market
logistics such as offering an electronic plug to fit the des-
tination country’s wall socket. Items must be presented in
The Flexible
by Ben Ashwell, Loylogic
the language the customer understands, and they must be
able to pay in their preferred currency. They must also be
able to receive it in a competitive timeframe. These are a
few components that are required by truly global, best-in-
class loyalty programs. This is not the time for a customer
to question the quality of the service of their program.
A merchandise rich program can provide widespread
benefits to program managers and the end customer alike:
Program benefits
· ¡iogiams can dehne lhe cosl µei miIe iedeemed
· Reyaids aie easy lo inlegiale, manage and scaIe
· Reyaids come al Ioy oi no hxed cosls
· 1hey Iessen demand on coie ieyaids (ßighls, holeI
rooms, fee waivers, etc.)
· Reyaids diive µiogiam membei gioylh
· ¡iogiams can sleei iedemµlions lo iecognise de-
ferred revenues
· Cuslomeis aie moie engaged
Customer benefits:
· Exlensive ieyaid seIeclion can aµµeaI lo muIliµIe
member profiles
· Reyaids can aµµeaI lo cuslomeis oí muIliµIe sµend
· Reyaids aie easiei lo use íoi giíls
However, keeping diverse customer options at the
forefront of the program dynamic does not stop with the
reward catalogue.
Customers need to be given the freedom of choice with
the ability to integrate their own reward aspirations with
their lifestyles. If they want to redeem an award sooner,
they should be able to do so. If they want to burn as many
Loyalty Management™ · AUCUS1 20¹0
points as they can, they should have this option.
Obtaining a reward with points plus a cash contri-
bution, allowing the customer to call the shots, is where
points plus cash payments is of paramount importance.
Customers need to be able to choose the construct of their
payments as small as 1 point, with the remainder in cash,
or the other way around. At the same time, the program
sponsor can manage costs and determine where the re-
ward is greatest; by increasing value on a greater contri-
bution of points, or a greater contribution of cash.
In 2008, in an online survey with more than 9,000
members from 60 frequent flyer programs worldwide
participating, one powerful message was heard: 94% of
frequent flyers want a flexible points-plus-cash payment
option when redeeming rewards. It is an essential com-
ponent of the flexible loyalty journey customers require.
There are a number of tools on the marketplace,
known as ‘Sliders’ which allow customers to split their
total purchase value by cash and points. However some
sliders have many more capabilities than others. The most
sophisticated generate dynamic per-point-values giv-
ing the customer flexibility to determine the value of the
points they input. This is done at unchanged costs to the
program sponsor. This enables program sponsors with a
powerful engagement differentiator, thereby providing a
feeling of intimacy with the program.
Advantages can also be felt throughout the redemption
journey. Credit card payments can be limited to selected
payment providers or partners by enhancing their busi-
ness. This can stimulate another section of the customer
loyalty journey through credit card spend, acquisition or
even activation.
We don’t just see the results in opinion surveys—the
statistics speak for themselves. Members who redeem
only their points go on to accrue or spend seven times
more than those who don’t redeem. For those redeem-
ing with cash and points, that statistic increases to eleven
times more, equating to 1.5 times as much additional ac-
crual from points and cash customers. These statistics
support accelerating accrual patterns and become even
more pronounced for customers with lower point bal-
It is not hard to see why. From a customer perspective,
reward flexibility presents a host of advantages. Custom-
ers don’t need to accumulate thousands of points to get
benefit from their points. In fact, with flexible points-
plus-cash payments, customers can get value from as little
as one point, which will present them with a discount on
the total buying price.
This drives an opportunity for earlier redemption,
leading to deeper engagement with the loyalty program
once they reach their ‘golden moment’—the point at
which they redeem—thus a dramatically improved affili-
ation with the loyalty program. The most frequent busi-
ness travelers and the highest spenders are no longer the
sole true beneficiaries.
In the current consumer world, customers need em-
powerment and customers need choice. The reward
programs that offer the greatest selection of redemption
options will offer rewards to the most segments of their
customer base, and will ultimately be the most success-
ful. The flexible redemption revolution has arrived, and
is here to stay.
How would fully flexible miles-plus-cash reward
payment increase the value of your FFP miles?
Would change my world
I would really like it
Not at all
Loylogic secured a
United States patent for
their dynamic slider in
Spring 2010, giving their
clients exclusive access
to the most flexible
points-plus-cash tool on
the market today.
38 Loyalty Management™ · LOYAL1Y3ô0.OPC
e live in an age when the consumer is lodged more
firmly than ever behind the wheel. While technology has
produced many new and innovative ways in which to market
to our customers, we have also witnessed a proliferation of
ways in which those same customers can choose not to be
marketed to. Welcome to the new Marketing Democracy.
I like to think of an organization’s marketing strategy as
a faucet, and the consumer’s hand is on the tap. Customers
control the amount of marketing they receive, plus how and
when they receive it, and are free to ignore the rest. Effec-
tive campaigning requires skilled, direct
marketing execution, and when the
customer is ready to ‘vote’ with their
hard-earned attention, you would be
wise to demonstrate a healthy respect
for their preferences.
Elections are held daily in the Mar-
keting Democracy, whether or not you
have claimed a position on the podium.
The reason? Consumers trust each
other far more than a product or brand,
and the digital age has allowed word to
spread faster and linger longer than ever. The slickest and
most expensive of ad campaigns can never erase the nega-
tive web chatter your product may have previously gener-
ated. For better or worse, consumer reviews, social network
forums and blogs now wield the weight of public opinion.
Prevailing requires that you enter the race, and exert a fa-
vorable influence wherever possible.
Cultivating advocates and supporters will help you win
elections in the Marketing Democracy, and your customers
can actively campaign on your behalf. Improving marketing
and services across all channels both makes your company
easier to transact with, generating more long-term business,
and enhances the customer experience for more positive
Four Ways to Win Elections in the
New Marketing Democracy
by Chris Marriott, Acxiom’s Digital Agency
Here are four critical success factors to consider when outlin-
ing your election tactics:
1. Recognize: Recognize your customers across all channels
through which they engage with you and treat them like an
old friend
2. Relevance: Provide offers and services that reflect what they
have done with you in the past, and what they are most likely
to need now
3. Execute: Insight without execution is pointless, so if you can’t
use what you learn in your ongoing marketing communica-
tions you are merely creating overhead
4. Incentivize: Design a campaign en-
couraging customers to work on your
brand’s behalf and create a benefit for
customers who display loyalty
The aforementioned concept of
loyalty is one that works both ways. In
hoping for fidelity from our customers,
let us repay them by recognizing them,
regardless of where and when they ap-
pear, and displaying sufficient insight to
extend timely, relevant offers.
Failure to treat every customer interaction as a unique oppor-
tunity to learn, understand and predict the nature of future com-
munications won’t profit us in the long run. Gathering information
about explicit and inferred customer preferences, their wants,
needs, motivations and attitudes, cross-channel behavior and
circle of social influence helps us create strategies to market to
them, and others like them.
Winners in the new Marketing Democracy era fuse insight
with media to create high-performing campaigns that are more
relevant at every interaction. By utilizing the real-time tools of
customer recognition, data insight, personalization and communi-
cation across multiple media channels you can better understand
your voters and how they research, shop, purchase and expand
their use of services. This helps you to identify your best prospects
and high value customers, and to focus resources more effectively.
Cultivating advocates
and supporters will help
you win elections in the
Marketing Democracy, and
your customers can actively
campaign on your behalf.
Loyalty Management™ · LOYAL1Y3ô0.OPC
The cowrie shell served as both ornamental
jewelry and money in China during the Shang
dynasty (approx. 1000 B.C.).
The tetradrachma, which depicted the
Athens Owl, first appeared in 165 B.C.
and was used widely for 75 years.
Modern U.S. currency only appears simple. In
addition to being watermarked, paper bills are
threaded with a fluorescent plastic security
strip that’s barely detectable.
Prepaid cards were designed by pioneers
like American Express Incentive Services to
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at the turn of the millennium.
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. And the change
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Our desire to find solutions beyond the obvious. And our commitment to creating real business results.
Visit InteliSpend.com for details.
Currency evolved.
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The mark, American Express, marks containing “American Express”, and abbreviations of such marks (i.e. Amex, AEIS, AE, etc.) are trademarks of an affiliate of
American Express Company and are used under limited license while American Express Incentive Services, LLC. and AEIS Canada, U.L.C. (“AEIS Companies”)
change their corporate names and rebrand. The AEIS Companies are now subsidiaries or affiliated companies of Maritz Holdings Inc. (formerly Maritz, Inc.) and
neither American Express Company nor its subsidiaries hold any ownership interest in AEIS Companies.
© 2010 InteliSpend Prepaid Solutions, LLC
IncentiveAd_070710.indd 1 7/7/10 4:43:12 PM
40 Loyalty Management™ · LOYAL1Y3ô0.OPC
Target Your
Social Media
by Sid Liebenson, Marketing Highway
here is no question that social media communications exert a strong influence on customer loyalty. People trust the opinions of
other people far more than they trust companies. Recommendations from absolute strangers online carry more weight than adver-
tising in swaying consumer purchase decisions. And the voice of the online consumer commentator grows louder every day as the
number of social media participants steadily increase.
Today, all marketers need to understand social media and how to engage with customers through social channels to build and
enhance loyalty. Understandably, many marketers have plunged into the social media waters just to test the currents. But is there a
better way than just diving in? Can social media activities be used tactically to move customers up the ladder of loyalty?
Nearly 20 years ago, Richard Cross introduced the “Five Degrees of Customer Bonding”:
· Awureness
· ¦dentitv
· Pelutionship
· Communitv
· Advocucv
The concept, as customers progress to a higher degree of binding, different methods of communication carry greater impact,
with direct, personalized messaging having greater influence past the Relationship stage. The continual collection and intelligent
deployment of customer data help push the customer towards Advocacy.
Loyalty Management™ · LOYAL1Y3ô0.OPC
Loyalty Management™ · AUCUS1 20¹0
Cross’ “Five Degrees” concept still makes
sense. But it was developed at a time when mar-
keters still controlled the brand conversation
and email was an emerging technology. How
does this construct hold up when social media
enter the picture? We decided to look at how
social media can fit into every phase of the cus-
tomer bonding process.
First, don’t think of the process as a linear
hierarchy. Even in the 1990s, it could be seen
as a loop. At that time, however, the loop meant
that the intelligence derived from dialogue with
Advocates could be used to better address
methods of establishing Awareness, Identity,
Relationship, and so on. With the overlay of so-
cial media, it also means that the Advocates can
help lead consumers through each phase.
Awareness. This is the stage when consum-
ers first become aware of a brand. Awareness is
built through advertising, promotion, and word
of mouth. Of these methods, it is word of mouth
that creates the most relevant awareness. As
social media is the online equivalent to word of
mouth, social media can be extremely effective.
Tapping into “social influencers” can help get
the word out about your brand. Connect with
bloggers who have credentials in your product
category and/or a strong following with your
target audience. Encourage customers to self-
identify through Fan or Group pages on Face-
book, YouTube, and other sites, and give them
a reason to pass along brand messages to their
Place a Wikipedia entry. Post photos and vid-
eos on content sharing sites. When any brand
is marketed, people will want to know more
about it—and they’ll go online. So make it a goal
to have your brand message where people are
likely to look. And encourage online dialogue.
Add “share with social networks” functionality
to emails, ads, and other brand communications.
Identity. A good job by the marketer at the
Awareness stage leads the consumer to the
Identity stage. This is when people not only
know the brand name, they understand and
agree with its promise and values. At this stage,
a brand is seen as appropriate, relevant, and worth consideration.
The marketer should address consumers not as a general popula-
tion, but as actual brand prospects.
Buyer advice is crucial at this
stage, especially if a purchase
represents significant cost or risk.
The more a brand is a “considered
purchase”, the greater the sway
of consumer ratings and reviews.
Marketers should facilitate and
promote product reviews on their
own Web sites and link consumers
to third party sites that compare
and rate brands within the product
category. Brands can even partici-
pate in conversations by address-
ing issues brought up in reviews.
Bloggers can be given prod-
uct to test and discuss. Marketers
can host Webinars and podcasts,
post product demonstrations, and
place sharing tools on their sites.
At the same time, marketers
should be listening to what’s be-
ing said about the brand in social
media. What are the product attri-
butes that are valued, and what is
found deficient? It’s possible that
a portion of the audience might
value one attribute, say product
design, while another audience
segment is highly enthused about
product efficacy. Messages that reinforce these different attributes
can be targeted to social media vehicles that reach the appropriate
audience segment.
Relationship. At this point, the consumer has had a brand expe-
rience. If the product performs as promised—i.e., lives up to expec-
tations derived from advertising, packaging, word of mouth (includ-
ing social media), and online research—the Relationship stage gets
off to a positive start. Give new customers the opportunity to share
their brand experience. Ask for feedback, reviews, etc.
Of course, not everyone will have a great brand experience, and
by asking for feedback, even the best product will garner some neg-
ative reviews. However, by monitoring the reviews you can often
address issues early and directly with less-than-satisfied custom-
ers, thus reversing the trajectory of the relationship.
should be
listening to
what’s being
said about
the brand in
social media.
What are
the product
that are
valued, and
what is found
continued on next page »
42 Loyalty Management™ · LOYAL1Y3ô0.OPC
Target Your Social Media Tactics for Stronger Customer Bonds (continued)
It makes sense to initiate direct contact with custom-
ers at this stage. Invite customers to follow or “friend”
your brand, or join your groups on social networks. Offer
incentives to get them to register with you and share con-
tact information (and product usage information as well),
and respond with something of value, like upgrades, help-
ful information, apps, or entertaining online experiences.
Enroll customers in frequency programs that reward them
for repeated purchases.
Be sure that your communications allow for two-way
dialogue. Capture additional demographic, behavioral,
and attitudinal data over time to move towards increas-
ingly personalized messaging. Expand the online relation-
ship off line, with direct mail and/or mobile marketing to
demonstrate customer appreciation...and be sure to link
these efforts with social media channels.
Community. At this stage, the brand becomes integral
to the consumer’s life and lifestyle. Consumers have a
definite preference for your brand and seek to join with
others who are similarly disposed.
Not every customer with whom you have a brand Re-
lationship will rise to Community status. Some customers
are just not that into your product category. While some
customers will care deeply about every detail of your wid-
get, others might be perfectly happy with yours, yet just
as likely to pick up a substitute. Even frequent customers
are not necessarily in your brand Community. Some trav-
elers will join Delta SkyMiles because they love the Delta
experience. Others are members because they fly to or
from Atlanta often and Delta offers more flights, but they
have no strong preference for the brand.
Customers that do reach Community status are very
engaged with the brand. Give them a chance to partici-
pate in discussion groups and forums, or to comment on
blogs. Invite them to customer-only pages on your Web
site. Provide “behind the scenes” information. Solicit their
ideas and comments on new or upgraded products. En-
courage them to upload photos and videos showing how
they use the brand. Give them opportunities to connect
with other strong brand enthusiasts through Webinars or
simple Q&A boards.
Exclusivity and recognition become more important
at this stage. Brand messaging should be increasingly rel-
evant and personal, as more and more consumer data are
collected and analyzed. Brand relationship activities can
move into the real world with events that bring customers
together, like conferences, rallies, or advanced product in-
struction (such as “driving schools” for high-performance
car owners). And, by documenting these events, activi-
ties can move back online with posts to proprietary brand
sites and photo/video sharing sites.
Advocacy. Now we’ve reached the gold standard of
customer bonding. These customers are so loyal and en-
thusiastic that they’ll gladly do your marketing for you.
Customers at this level need to feel enfranchised with
the brand at a very personal level. They may be given en-
try to an exclusive micro-site where they receive exclu-
sive customer services. They might have direct access to
brand representatives. Brand communications should go
beyond product-specific messaging to focus more on the
customer as an individual. In essence, when communicat-
ing with Advocates, you’re not talking to customers as
much as you’re talking with friends.
Invite Advocates to host groups and start groups of
their own through social media channels. Ask them to
blog on your site, a third-party site, or a site of their own.
Treat them as ultimate insiders with access to new prod-
uct previews, pre-release orders, or samples if possible.
Encourage them to share their thoughts through Twitter
and other social networks.
This group is eager to spread the word about why
they like your brand, which reinforces your efforts with
customers at the earlier phases of the bonding hierarchy.
Moreover, your Advocates comprise your best source
for authentic word of mouth. Give them a reason to refer
new potential customers, and you’re likely to get the most
qualified prospect list you’ve ever seen. You can even en-
list them in customer recruitment programs.
At every level of customer bonding the scale of rela-
tionship marketing increases, as the brand’s database of
customer information grows more robust. Similarly, at
every level there are actions marketers can take in social
media that can enrich these relationships. By adding tacti-
cally deployed social media efforts to a database-focused
loyalty program, marketers can enhance their success in
moving customers from Awareness to Advocacy.
When communicating with Advocates,
you’re not talking to customers as
much as you’re talking with friends.
Loyalty Management™ · LOYAL1Y3ô0.OPC
Loyalty Management™ · JULY/AUCUS1 20¹0
The Human Connection
is about the people who affect your business success:
employees, channel partners and customers.
Solving business challenges with people solutions
...referring someone to your brand.
...a trusted partner.
...a crucial measure of success.
...The Human Connection.
Loyalty is...
Sales Incentives
Employee Engagement
Channel Performance
Customer Loyalty
44 Loyalty Management™ · LOYAL1Y3ô0.OPC
onsumers are increasingly ignoring corporate marketing and rely instead on the experiences and recommenda-
tions of friends, family, co-workers, and online peers. The fundamental marketing challenge today is more strategic than
A Nielsen Global Online Consumer Survey found that recommendations from personal acquaintances and online con-
sumer reviews topped the trust list for more than 25,000 consumers from 50 countries. In fact, 90% of consumers surveyed
said they’d trust recommendations from people they know. But who are these trusted people?
Who Are Your Influencers?
Marketers, understandably, put a lot of energy into identifying their most influential customers—the customers who are
the first to try new products, have large social networks, and are most vociferous in talking up (or down) their experiences
online and offline. It seems obvious that these “hyperactive” customers would sit at the top of the list. The reality is that
these customers are not necessarily any more influential in swaying the purchase behaviour of their networks than those
with smaller networks and softer voices. In fact, it is a different subset of customers that truly serves as the “everyday influ-
encers,” with much greater impact on peer purchase behaviour. These ‘influencers’ are already in your customer base—you
just need to pinpoint them and start nurturing your relationship with them.
The reality is that it’s not easy to identify the true influencers for specific customers, never mind figuring out how to
connect with these influencers once you’ve identified them. Typical market segmentation tools are irrelevant as influencers
don’t conform to standard behavioural characteristics or demographics.
In addition, it’s been found that the people with the largest networks and loudest voices are not necessarily the most in-
fluential. For example, a large European mobile operator found that only 20% of so-called “Alpha” users (a highly connected
person that acts as a hub for their social network) were truly influential in driving purchase behaviour. At the same time,
the customers who were actually the most influential rarely showed up among the most connected individuals.
Influencers Hold the
Key to Capitalising
Their Followers
Influencer identification increases
marketing ROI by five times
by Ran Shaul, Pursway
Loyalty Management™ · LOYAL1Y3ô0.OPC
A Needle In A Haystack
Firstly, no one said it was going to be easy but even needles can be found if
you use the right tool. When looking for influencers, rocket science is particu-
larly useful!
Traditional CRM programs view each consumer in isolation, failing to cap-
ture the social sphere that affects their behaviour. A new approach, Influencer
Marketing Management (IMM), is beginning to emerge:
Step One - Focus on the Influencer
Accurately identifying purchase influencers is the foundation of the
approach. Within your customer base is a group of some 7–15% that serve
as opinion leaders. Each of these opinion leaders typically influences pur-
chase behaviour of 3-10 followers—which means that identifying and suc-
ceeding with the influencers can affect your entire business.
Step Two - Focus on Transactions
Focus on transaction data since that is where real influence happens
(this is where the rocket science comes in). Analysing millions of transac-
tions to uncover patterns of influence is not easy, but it is possible with the
right approach and the right algorithms. Analysing purchase histories can
uncover patterns that reveal meaningful social connections. For instance,
two people shopping at the same time in the same store could be a coin-
cidence, but if the same two people also shop at the same time in a differ-
ent town, you start accumulating evidence for a social connection between
them. Once you find enough similar patterns, you can be confident that
there is a real social connection between the two shoppers. The next step is
to identify who is the influencer and who is the follower which can be de-
termined by overlaying behavioural data to the social connections. Crunch
enough data with this approach and you can determine influence patterns
with extremely high conviction (>99.95%).
Step Three – Focus on the Story, not the payoff
When marketing to the influencers, it is important to remember that
the more meaningful payoff is in their ability to influence others, not the
amount they shell out of their own pockets. What motivates influencers
to tell a good story is related to their emotional connection to the brand.
Things like price breaks or free products aren’t effective and may backfire,
as the followers will expect similar incentives. Programs that create posi-
tive emotional experiences—such as ”be the first to know”, high touch per-
sonal contact, and early access to new products and services are far more
effective in turning influencers into advocates.
Step Four – Measure what Counts
Turning Influencer Marketing from an aspiration into a measurable
marketing discipline requires a focus on the metrics that the CMO can take
to the boardroom. Counting tweets and “followers” may be an interesting
exercise, but what really matters is whether targeting the influencers moves
the needle when it comes to top-line and bottom-line business results.
A single influential customer has the ability to reach almost as many
impressions as traditional marketing outlets, but with greater trust
and targeted relevancy. Marketers not tapping into this resource are
missing a chance to add to their tool boxes, expand their reach, and
improve relevance.
Source : Defining Influence as a Strategic Marketing Metric, Forrester Research, Inc., December 2009.
Once you have this insight focusing
on the right customers with the right
marketing activities and tracking the
right metrics will achieve game-chang-
ing results far beyond the incremental
improvements possible with the best of
Particular issues can be identified
such as churn rates, as was the case for
Cellcom Networks. “We were able to use
social network technology to increase
churn prediction and consequently pre-
vention by a factor of 10. We expect to
be able to use the technology in most key
areas of marketing activity.” Explains
Adi Cohen, VP marketing, Cellcom Net-
Targeting customer apathy is anoth-
er key area, as Aswyn Saktoe-Veenenbos,
VP Marketing Database Intelligence,
T-Mobile Netherlands explains. “Con-
sumers are flooded with marketing
messages and are increasingly tuning
out of vendor communication. Tapping
into the power of social influence gives
us a whole new way to interact with our
customers…It enables us to reach an au-
dience that was otherwise difficult to
communicate with, let alone get them
to act.”
Companies typically realise between
5x to 10x improvement in marketing ROI
as they’re able to magnify the reach and
effectiveness of customer acquisition,
cross-sell, and retention efforts follow-
ing investment in IMM. By identifying,
understanding, and cultivating the ener-
gy of its advocates, companies can har-
ness the power of viral marketing, reach
customers and prospects that might not
otherwise be reached, and strengthen
long-term customer loyalty.
For more information, please read
Ran’s ebook: http://resources.pursway.
com/eBook-TheInf luencerMarketin-
gRevolution.html?source=loyalty L
Loyalty Management™ · AUCUS1 20¹0
46 Loyalty Management™ · LOYAL1Y3ô0.OPC
ow many spam messages, unwanted emails or irrelevant
advertisements do consumers receive each day? Surely what-
ever number it is, that number is one too many.
Unfortunately for most, it has become a monotonous part
of life to tune out television commercials, toss out half of our
mail, and immediately empty out spam folders each morning.
Why should people have to accept this as a part of a routine?
To give you a rough estimate as to how many marketing
messages consumers receive, on average customers receive
3,000 each day, the majority of which are actively ignored. Ob-
viously, marketers need to better address why this is happen-
ing, what can be changed, and how to better serve customers.
Now is especially not the time to be teetering on a fine line
with customers. As consumers are being forced to make strict
choices as to which brands and products they use, marketers
need to continue to increase loyalty and bring in revenue. After
all, without customer support, CMO’s would be without jobs
and without profit. A 2009 study by the CMO Council found
that 63 percent of consumers have considered abandoning a
brand altogether, simply based on the amount of junk or spam
Developing Relationships
and Direct Content—How
to Better Serve Consumers
they’ve received from the company. Surely this is support that
most companies cannot afford to lose.
To find out how to best serve consumer needs, InfoPrint
Solutions and the CMO Council have teamed up to conduct
a poll, discovering what marketing methods have worked best
thus far.
As a result of the Relevancy Report, 91 percent found that
email messages are both irrelevant and frustrating to receive.
This was an eye-opening discovery for the CMO Council, who
originally determined emailing as a cost-saving, direct option
to reach customers. Almost half of this percentage also said
they’d stop subscribing to that brand based on these irrelevant
So where’s the balance between the ongoing battle of mar-
keter versus consumer? Is there a way to compromise and sup-
port the needs of both parties? Has slick marketing jargon such
as “targeting” or “capturing” an audience completely turned
off consumers? And is this jargon necessary for a marketer to
by Sandra Zoratti and Lee Gallagher, InfoPrint Solutions
Loyalty Management™ · LOYAL1Y3ô0.OPC
Loyalty Management™ · AUCUS1 20¹0
All of these are valid questions, and ones that don’t necessarily
have straight forward answers. Everyone has their own opinion as
to what works and what doesn’t overall, but there are options to
come to a common ground.
With precision marketing, marketers can deliver direct mar-
keting messages that are both relevant and preferred by the cus-
tomer. In the end, it should all come full circle – the customer data
drives relevancy, relevancy drives brand loyalty, and loyalty drives
So what exactly does this process entail? There are five essen-
tial steps one must take to successfully connect with a consumer.
By abiding by these rules, marketers
should be able to deliver direct market-
ing messages that are useful, and in the
end both the customer and the company
will win.
Step 1: Identify the Issue
By first identifying the issue at hand and
the problem that the consumer is having
with the messaging, marketers can then
identify what they need address. Once
you’re clear as to what this is, you can
move forward in the process.
Step 2: Leveraging What is Al-
ready There
Instead of starting from scratch, market-
ers should utilize the tools they already
have. By first developing a customer seg-
ment with the desired level of engage-
ment, marketers can then find custom-
ers whose previous behavior indicates
similar interests to this new group. Moving forward, this group
can be divided into a target group, and then into a control group.
Step 3: Determine the Best Message
The next step in the precision marketing process is to synchronize
all of the messages to determine what the best message is for the
channel. In a test case with Best Western International Inc., Info-
Print and the CMO Council were able to demonstrate why this step
is important and how it works. First, the active rewards members
were examined and 100,000 were identified as comparable cus-
tomers to Best Western’s high-value customers. In other words,
those who were more likely to apply for a cobranded Master Card
or engage in the “More Rewards, Faster” summer promotion. Half
of this group was targeted with personalized messaging through
monthly loyalty statements. These statements were leveraged as
promotional documents, letting loyalty program members know
that they could accumulate points faster during this promotional
Step 4: Measure the Results
After the test campaign has been put in place, the results must be
measured based on a wide range of criteria and bottom-line mea-
sures. For example, the test case with Best Western proved to be a
success, as there was a 39 percent increase in the number of stays
and a 30 percent increase in revenue. These measurements are a
sure sign that audience targeted for this campaign was relevant
and interested in what Best Western had to offer.
Step 5: Refine and Repeat
Once marketers have gone through each of these four steps to
connect with a consumer, they must
then reassess the results and produce
the same or different results, depending
on what the outcome was in the test. It
is also essential to understand why the
results occurred the way they did. For
example working with a different hotel
chain may result in a completely differ-
ent outcome, depending on that chain’s
customers and needs.
The key to this process is to have a
strategy in place so that a successful
communications channel can be created.
In the case of Best Western, for example,
both personalized and targeted promo-
tional messaging resulted in a success-
ful campaign in which revenue and cus-
tomer engagement increased. A lesson
to be learned for marketers out there
is that there are ways to generate rev-
enue through existing customers. There
is a lot of potential for revenue increase by simply creating more
meaningful relationships with those who already are loyal to a par-
ticular brand or company.
When it comes down to it, consumers know that with the tech-
nology and opportunities available today, there are ways to avoid
irrelevant, mass-messaging. Marketers need to take that extra
step to show their consumers they care, and that they do want
to provide the best and most relevant recommendations for them.
By looking at consumer purchasing history and recognizing which
companies that consumer has done business with in the past, mar-
keters can determine what messages and promotions are relevant.
Marketers must realize that they can’t win without their cus-
tomers, and if they aren’t able to address those customers’ needs,
their business will quickly go out the window with the other 3,000
messages. So here is the bottom line – get to know who you’re do-
ing business with, and they will continue their business with you.
Marketers must realize
that they can’t win
without their customers,
and if they aren’t
able to address those
customers’ needs, their
business will quickly go
out the window with the
other 3,000 messages.
Director, Loyalty & Retention Marketing
Service industries traditionally have focused most
marketing dollars on customer acquisition. It’s great
to see Sprint so committed to its customer! How have
you been able to make customer loyalty a priority?
We know that driving customer loyalty has to start with meeting
basic customer needs. So we’ve made customer service, billing, and
the network major priorities. We also realize the importance of de-
veloping a trusting relationship with the customer as only then can
you hope for the customer to be loyal to you and eventually, be an
advocate. Part of our commitment to the customer was the launch
of our Sprint Premier loyalty program which has gone a long way in
driving customer satisfaction and loyalty with our highest value and
longest tenured customers.
Share how this change in focus (toward customer
retention) has changed your organization?
Over the last couple of years, we have had a company focus on
improving the customer experience. That focus has been paying
off in higher customer satisfaction overall. We’re also learning that
we don’t have to trade off customer acquisition against customer
retention. Retaining customers and trying to get them to become
loyal advocates is a great acquisition strategy and we’re gradually
changing the dynamics so that our employees understand that.
We’ve been hearing great things
about the new Sprint customer
loyalty initiatives. Loyalty
Management takes a closer look
at the woman behind the brand–
Melinda Parks, Director, Loyalty
and Retention Marketing. Melinda
is responsible for all marketing
and communications to Sprint’s
consumer customers including new
customer expectation setting, life-
cycle management, direct marketing
communications, loyalty program
innovation and retention. Melinda
has held previous marketing roles in
field marketing, channel marketing
and marketing integration. Prior
to her marketing role at Sprint,
Melinda held senior manager roles
in finance operations and financial
planning and analysis. She has been
at the company for nearly 13 years!
Loyalty Management™ · LOYAL1Y3ô0.OPC
How many reward programs are you
a member of? How many do you use
regularly? Which is your favorite and why?
I’m a member of 10 or so loyalty reward programs. I
regularly use 4-5 of them. My favorites are my
· Credit curd with Disnev rewurds becuuse ¦ love to
· Southwest becuuse vou eurn something tungible
pretty quickly; and
· Kohl's becuuse ¦ love their discounts und the
simplicity of it, it’s good on everything in the store
just like they advertise.
When you look back, what was your favorite
‘job’ experience and
The one I’m doing right now.
I love this work because it is as
much big picture as you can get
in a big company. It combines
customer insights, strategy,
financial feasibility, marketing
development and operational
Who has
had the
in your
My par-
ents are fan-
tastic – they
allowed me
to be inde-
pendent and
learn to make
my own decisions, which is critical in my role. (They
might argue I was born a little independent...) As a
youth and teen my piano teacher had significant influ-
ence, she helped me see the possibilities in life beyond
the small town where I grew up. I’ve also had three or
four really influential bosses who helped me push be-
yond what I could have imagined before.
What inspires you?
The Cinderella story, I love to root for the under dog.
Which talent would you most like to have?
I would love to have creative talent to be able to do more
of the creative development, telling the story with pictures
and words. I have great managers and partners I work with
that really help me out in that area.
What are the qualities you most admire in a
I’m from a small town in central Kansas, I really admire
simple honesty and hard work. I love working with leaders
who can see the big picture and think strategically, but can
also roll up their sleeves and do the work when necessary.
Which book(s) are you currently recommending?
The one I’ve
found most use-
ful in my career is
Hardball for Wom-
en by Pat Heim
and Susan Galant.
I also found Habit,
95% of the Be-
haviors Market-
ers Ignore by Neal
Martin to be very
useful as we think
about driving to
What can we
expect from
Sprint into
We just cel-
ebrated the one
year anniversary
of our loyalty pro-
gram, Sprint Pre-
mier, in 2010 by
announcing new benefits to the members. Going forward
we’ll continue to evaluate our loyalty efforts, starting first
with meeting basic needs and forming trusting relationships
with our customers.
What is your advice for a novice loyalty
Recognize quickly that “loyalty” is much bigger than a loy-
alty program, it’s an overall experience. L
49 Loyalty Management™ · AUCUS1 20¹0
We don’t have to trade off customer
acquisition against customer retention.
Retaining customers and trying to get
them to become loyal advocates is a
great acquisition strategy.
Melinda hiking in Colorado
50 Loyalty Management™ · LOYAL1Y3ô0.OPC
2010 DMA Digital Marketing Days
June 14-16, New York, NY
The 2010 DMA Digital Marketing Days event was filled
with a variety of great sessions that focused on the
turbulent, dynamic and exciting times for the direct
marketing world. Two sessions really stood out above
the pack:
As keynote speaker Crista Caroni, the CMO of
Xerox, pointed out: “The future of marketing will
resemble the past.” She explained (rightfully so) that
the goal of every merchant should be a hastened return
to the corner bread or shoe store where (to paraphrase
Cheers), “Everybody knows your name.” Today, it is not
as much about knowing your name, but your attitudes,
interests, preferences, opinions and being able to craft
this information into actionable insight to create a
dialogue the end user wants to partake in and that can
create sustainable behavioral change.
Carone explained how Xerox is engaging its
constituencies. “It is always about making the best
product available for the best audience, yet to do that
you need to listen, understand and be honest with your
We live in exciting times. The next new technology
could be upon us tomorrow. So whether it is direct/
digital or “i-direct,” we need to realize that the
marketing communication mix is becoming more
complex, data-focused and dynamic. While was
applicable yesterday may change completely tomorrow,
the end goal is the same: Creating loyal, engaged brand
champions. And, by “ceding” them some control in
the communication and the interaction, they will pay a
premium for your products and services and in doing so
will create a “digitally direct” interactive marketing that
is good for all involved.
DMA Retail Marketing Conference 2010
May 24-27, Orlando, FL
The marketing industry is in transition. That is the message
that was trumpeted by the superb lineup at the DMA
Retail Marketing Conference. Throughout the show it was
apparent that the DMA understands the challenges of this
transition and is committed
to making their offering as
detailed and comprehensive
as possible.
Attendees were
cautioned repeatedly during
the show, “Do not waste
the customer’s time.” Banal
marketing strategies no
longer work. Communicating
effectively requires creating
a brand language that will
give the consumer a call to action, a reason to engage, a
reason to give you the rich behavioral data needed to create
the engaged and actionable dialogue you require. Anything
less would be mendacious. Though there is a focus on price
and efficiency, consumers will and do pay for value; they
want to make their lives easier and products that help them
accomplish that will command a premium of mind share,
actionable market intelligence and profits.
The market is changing and the DMA is focused on
helping their customers understand this evolution and
making sure they are using their long-standing emotional
commitment to their customer to help to define and expand
the definition of, and therefore the importance of, direct
What We’re Hearing
Loyalty Management’s review of relevant
conferences in the marketplace
by Mark Johnson, Loyalty 360
requires creating
a brand language
that will give the
consumer a call
to action.
Loyalty Management™ · AUCUS1 20¹0
Gartner Customer 360 Summit 2010
June 28-30, Los Angeles, CA
The main theme of the Gartner Customer Summit 360 was
convergence, which encompassed the rapid and volatile
dynamic in the market and the ability to deal effectively with
the challenge this fast-paced change. One quote in particular
that references research from Bain and Company paraphrases
the focus of this conference: “80% of all brands believe their
customers are engaging in the customer experience with the
brand, while only 8% of the customers believe so.” That’s right.
A whopping 72% difference—or a 10x magnitude—which
clearly illustrates the paradox of this ever-changing marketing
world we live in.
Not only do brands want and need assistance in navigating
the turbulence they are faced with—but, they all seem to
be asking for a pause. No one appears to be suffering from
a paucity of consumer data, but are rather inundated from
a mountain of data. And brands need to figure out how to
make this plethora of data actionable in order to create the
effective CRM programs that drive sustainable behavioral
change, increase the share of wallet and therefore ROI! Most
importantly brands need to engage with the customer to help
lessen the engagement divide referenced by Bain.
So what can we discern from this? I walked away from
the Summit convinced that while change (especially in this
challenging economic environment) is going to be ever present,
brands need to be flexible and they must be encouraged and
supported by senior executives to try new media.
Aberdeen Retail Leadership Summit
June 17-18, New York, NY
Aberdeen is one of the most strategic and tactical full
service research and consultancies in the business. Their
depth and breadth of contact, research based on “Voice
of the Customer,” and stark realization that the retail
industry is changing made this an extremely interesting
event. Aberdeen’s keen insight into how retailers can
deliver more effective marketing/loyalty/engagement
communication was showcased at the Summit.
The key messages of the show centered on the ability
to deal with change and how to leverage myriad data
touch points and media channels to effectively listen
and engage your audience. The primary areas of focus
1. The Five Step Turnaround Guide for Retailers: Retail
Revival in 2010 and Beyond
2. Strategic Customer Strategies, Integration and Big
Picture Retailing
3. De-Coding Cross - Channel Profitability
4. In-Store Marketing and Maximizing Customer
I am sure this conference will prove a great source
of insight for additional Aberdeen studies. Their
commitment to having their finger on the pulse of the
retail space bodes well for the retailers who tap into their
unique thought leadership.
80% of all brands believe their customers
are engaging in the customer experience
with the brand, while only 8% of the
customers believe so.
-Bain and Company, Gartner Customer 360 Summit
Barnes & Noble
loyalty program profile
Two Thumbs Up!
52 Loyalty Management™ · LOYAL1Y3ô0.OPC
ell, it’s summertime and while many Americans head to the
beach, family reunions, theme parks and road trips—I head to the
bookstore for my summer reading material. Summer has always
been a time to catch up on the bestsellers list as well as recom-
mendations from friends.
With a Barnes & Noble Membership card, membership ben-
efits include discounts on Hardcover Bestsellers—40% off B&N’s
10 fiction bestsellers and 10 non-fiction bestsellers based on
store sales; 20% off all Adult Hardcover books; and 10% on al-
most* everything else. Yes, there are exceptions for free shipping,
primarily electronics and 3rd party purchases including used or
out of print books. A nice plus—Membership discounts are avail-
able for used and 3rd party bestsellers. An annual Membership
costs $25.00; Once purchased, discounts are available immedi-
ately online.
Armed with my membership card, the first place for shopping
is the website—bn.com—easy login, then a search for discounts
on Today’s Offers under the Member banner. Today’s offer is
Free shipping on 2 items offered (with no minimum purchase!)—
a summer tote bag or 3 CDs.
The website shows the list price and the Member discount
automatically—a nice reinforcement of the savings benefit be-
fore checkout. There’s a “Community Section” containing blogs,
book clubs, and reading recommendations for a variety of interest
You can also scoop up discounts in retail stores. On a recent
trip to B&N, I chatted up the B&N Membership with a sales as-
sociate who reiterated the breadth of the discounts, ”everything
in the store except Gift cards”; “CDs?” I inquired. “Sure, all CDs,
magazines, calendars, and bookmarks.”
Friendly and helpful, she pointed out the magazine rack ex-
tending over a wide wall and encouraged me to peruse the Em-
ployee Recommended Reading section with personalized reviews
accompanying the display books.
A special sale table had “Buy 2 and get the 3rd FREE”—the ca-
veat being the free selection is on equal or lesser value. And, upon
checkout, 10% additional as a Member, my total purchase earned
a $7.70 member savings. My membership is well on its way to a
satisfied break-even!
The sales associate mentioned that I’d receive a 10% discount
on beverages and snacks in the Starbucks Café situated in the
store, with purchases in hand, a Latte was next—another $.42
My summer reading list is now turning from a list to a stack…
and summer’s almost over!
The website shows the list price
and the Member discount
automatically—a nice
reinforcement of the savings
benefit before checkout.
Loyalty Management™ · JULY/AUCUS1 20¹0
As the landscape for financial products and services
continues to evolve, an increasingly competitive market
requires businesses to work harder than ever to attract
customers and establish brand loyalty. Even more
important is translating loyalty into profits. Doing so
requires a brand new approach.
In the face of these challenges, Dell Services delivers
Enterprise Loyalty Solutions, including product
management, consumer and commercial relationship
pricing, and industry-leading incentive programs. From
strategic advisor to implementation partner, we provide
solutions that help you build trust and inspire loyalty
among your customers. Dell Services leverages best
practice loyalty programs that align next generation
strategies with your organization's goals. Where would
you like to go? The possibilities are wide open.
For more information about our Enterprise Loyalty Solutions and
Services, contact Sean Breen at 949.679.1835 or sean_breen@dell.com.
Visit us at dell.com/services.
Applications Business Process Consulting Infrastructure Support
© 2010 Dell Inc. All Rights Reserved.
Don’t Battle The Marketing Democracy, Join It!
Whether you’re acquiring new customers or creating more profitable
and loyal relationships, Acxiom can help improve your marketing ROI
and brand experience:
Manage your audience.
Personalize the
customer experience.
high-touch, high-tech, high-impact: building holistic relationships
that engender customer & employee loyalty
2010 EXPO
loyalty expo 2010 in review
56 Loyalty Management™ · LOYAL1Y3ô0.OPC
ing one of the most important (but often
overlooked) aspects of loyalty programs—
the human aspect. On Sunday, Barry Kirk
of Maritz facilitated a workshop on The
Neuroscience of Engagement. “Consum-
ers are human beings first” says Kirk. “And
human beings are much more irrational
that we want to believe—yet most loyalty
programs are designed around rational
decisions.” Kirk demonstrated how loyalty
marketers can be much more eective
when they incorporate aspects neurosci-
ence and behavioral economics into their
The focus on “people” continued with
Jeanne Bliss’ keynote address Monday
morning as she energized the crowd with
examples and insights on The Five Deci-
sions of Beloved and Prosperous Com-
panies. Bliss used real life examples to
describe the five decisions common to
companies that customers and employ-
ees call “beloved”. She described how or-
ganizations achieve prosperity (financial
and human spirit) by putting the customer
on the strategic agenda. This approach is
detailed in her book “I LOVE YOU MORE
THAN MY DOG” Five Decisions That Drive
Extreme Customer Loyalty in Good Times
and Bad. Bliss was followed by Michael
Hemsey from Kobie Marketing and Judy
Cathey-Christi of Hampton Hotels div-
ing deeper into the specifics of customer
experience. And Morley Ivers of Recycle
Bank demonstrated how his organization
has instituted these strate-
gies at great success.
If brown is the new
black, then engagement is
the new loyalty. Engage-
ment was a central theme
in several of the break-
out sessions, including
that of Robert Passiko,
Brand Keys, and Jim Har-
ris, WSJ Oce Media Net-
work. Passiko and Harris
showed how customer en-
gagement increases brand equity which
in turn leads to loyalty and profits. Their
session demonstrated how they were able
to measure and evaluate the eectiveness
of various marketing touch-points to de-
termine the optimal mix for driving en-
If brown is the
new black, then
engagement is
the new loyalty.
loyalty expo 2010 in review
57 Loyalty Management™ · AUCUS1 20¹0
sion on Nurturing Loyalty Through Social Media.
The panelists represented brands who are on the
leading edge of social media marketing. Where
traditional loyalty programs only reward cus-
tomers for purchases, MyCokeRewards, Grou-
pon, and Tasti D-Lite are using social media as a
means to rewards customers for other behaviors
such referrals, recommendations, checking-in
and other posts by linking their loyalty programs
to Facebook, Twitter and FourSquare (to name
a few).
Once again Loyalty Expo brought together
the industry leaders in the field loyalty and en-
gagement. It was a great opportunity to hear
how colleagues and clients are evolving and
adapting their programs to utilize mobile, social
media and other techniques. I was pleasantly sur-
prised at how much I came away with—in terms
of insights and connections.
-Tim Crank, Young America
loyalty expo 2010 in review
59 Loyalty Management™ · AUCUS1 20¹0
It was a great opportunity to hear how colleagues &
clients are evolving and adapting
their programs to utilize mobile,
social media and other techniques.
I was pleasantly surprised
at how much I came away
with—in terms of insights
and connections.
Once again Loyalty Expo brought together the
industry leaders
in the field of loyalty & engagement.
-Tim Crank, Young America
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