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VOLUME 11 NUMBER 2 | SECOND QUATER 2018

The
Priorities
Within
Firehouse
Subs ®

IN THIS ISSUE:

Loyalty is More Than a Pandora Steps Beyond Music Sling Stays True to its Promise and
Big Game for Ally Financial and Into Making Connections Helps People Cut the Cable Cord

PLUS: 2018 LOYALTY EXPO CONFERENCE REVIEW
It’s Back
The 2nd Annual Customer Expo
is coming to Nashville this October,
and we want to see you there.
Join us for three days of sessions, networking,
and the wealth of insight that has come
to define Loyalty360 conferences.

October 24-26, 2018
Nashville Airport Marriott Hotel

For more information, visit
CustomerExpo.com
In this Issue...
Q2 2018 | VOLUME 11 NUMBER 2 | LOYALTY360.ORG

FEATURES

10 18
The Priorities within Loyalty is More
Firehouse Subs Than a Big Game Conference
for Ally Financial
Fireshouse Subs Ally Preview

40
Chris Brosey | Loyalty360 Mark Johnson | Loyalty360

14 22
Pandora Steps Beyond Sling Stays True
Music and Into Making to its Promise and
Connections Helps People Cut
Pandora Sling the Cable Cord
Chris Brosey | Loyalty360 Mark Johnson | Loyalty360

LOYALTY FORUM: IN EVERY ISSUE

14 LOYALTY360 ON THE WEB 30 STATE OF THE INDUSTRY Loyalty Management Editorial
What’s New Simplicity in Loyalty Programs – & Production Team
Not as Simple as it Sounds Mark Johnson - Contributing Editor
15 FROM THE EDITORS Kate Baumgart Hogenson | Kobie Carly Stemmer - Contributing Editor
Chris Brosey - Content Manager
Loyalty360 Patrick Barney - Contributing Content
32 BEST PRACTICES Corey Brueggemeyer - Proofing
16 360 INSIGHTS Customer Loyalty that Stands the Shawn Cunningham - Design Director
A Challenging Environment Test of Time Elizabeth Shular - Design
Meg Tronquet & Laurie Meek | Lenati Crescent Printing Company - Print Production
Calls for Personalization
Mark Johnson | Loyalty360
34 TECHNOLOGY, TRENDS & REWARDS Contacts
18 FEATURED TECHNOLOGY Customers are not coming back? Article Submissions & Advertising:
Featured Technology & Services Try out 10 customer retention Loyalty360
strategies that actually work info@loyalty360.org
Comarch 513-800-0360
19 Q&A
Brand Vision
36 STATE OF THE INDUSTRY © 2018 Loyalty360, Inc. and/or its affiliates.
Moving from a loyalty program All Rights Reserved.
26 TECHNOLOGY, TRENDS & REWARDS
to a loyalty strategy Reproduction and distribution of this publication in any form
Layering Digital Promotions
Marlon Bowser | HTK without prior written permission is forbidden. The information
into Loyalty Programs contained herein has been obtained from sources believed to be
Gina Fleck | HelloWorld, A Merkle Company reliable. Loyalty360 disclaims all warranties as to the accuracy,
38 BEST PRACTICES completeness, or adequacy of such information. The opinions
shared are those of the contributing authors and not necessarily
Loyalty Programs In Question
28 BEST PRACTICES reflective of Loyalty360 and/or its affiliates. Loyalty360 shall
by Certain Industries have no liability for errors, omissions, or inadequacies in the
Increasing Foot Traffic and Sales
Louis Ramery & Martin White information contained herein or for interpretations thereof. The
Through Multi-Channel Loyalty opinions expressed herein are subject to change without notice.
East|West marketing group
Ann Olinger | Xenial

Loyalty Management™ | Q2 2018 | loyalty360.org 3
What’s New
LOYALTY360 ON THE WEB

ON LOYALTY360.ORG

Loyalty360 Member-Only Digital Roundtables
Loyalty360’s brand member digital round tables allow marketers the opportunity to meet regularly
outside of our conferences and events to discuss current trends, challenges, and opportunities. Each
presentation is led by a senior-level Loyalty360 brand member on a topic pertinent to their position
and organization – for example, employee engagement, loyalty program redesign and evolution, and
personalization. All Loyalty360 brand members are invited to attend the round table discussions and
ask questions of or give feedback to the presenter. We look forward to our upcoming meetings
featuring Red Lion Hotels Corporation, Caesars Entertainment, AARP, and MassMutual!

Executive Perspectives Papers & Webinars
As a market thought leader in loyalty and a trusted advisor for brands and marketers, Loyalty360
regularly asks open-ended questions to a wide spectrum of brands and senior-level marketers to help
determine what challenges and opportunities are top of mind today. These questions and interviews
are the essence of the articles found in Loyalty360’s print and online publication, Loyalty
Management. We then use these answers as the basis of our Executive Perspectives reports. We
hope the reports serve as a snapshot of the challenges in the market today and how they’re being
handled across a variety of industries. We believe that this voice-of-the-customer, market, and
member-driven approach creates a community of peers and offers a powerful, and honest
way to open the dialogue between organizations and their customers. This year, we have released
a number of reports focused on the topics on personalization, listening to customers, measurement,
the changing nature of customers, and disruption. Be sure to join us for one of our upcoming
Executive Perspectives webinars this summer and fall!

Loyalty Expo Networking Events
& Loyalty360 Top 10 Awards
During May’s Loyalty Expo, we held a number of new networking events
for our attendees, including a pre-conference trivia contest, our first
“Loyalty Luau”, and a late-night hypnotist show. Additionally, during the
conference, we recognized the winners of our first Loyalty360 Top 10
Awards at a special luncheon and awards ceremony. See page 40 for
a list of the winners of this year’s awards.

4 Loyalty Management™ | Q2 2018 | loyalty360.org
FROM THE EDITORS

“ Brands with any interest in
improving customer loyalty
should look to these four stories
for advice. Each featured brand
has contributed to its respective
community by providing service, “
support, and convenience.

Our features in this volume of Loyalty obsolete with the invention of CDs, music streaming technology, paying for a cable service
Management range from stories of social listening was revolutionized. Listeners no longer that came with hundreds of unused channels
commitment and technological innovation had to fast forward a cassette tape to listen to a or leaving the comfort of the home to go to a
to unique customer engagement styles and specific song or rewind the tape to listen to an movie rental store that had a limited selection
disruptive platforms. Common to all of them is album from the beginning. Instead, CD listeners just didn’t make any sense. Movie theaters
the sense that customer loyalty is fostered by could skip to any song they wanted with a few have been able to adapt to the disruption
involvement in specific communities. clicks of a button, and when they took the CD represented by Sling TV by offering enhanced
out of the player and put a new one in, that services, but rental stores have mostly become
These communities include members of a one started from the very beginning, not in the extinct, and cable’s relevance seems to be
city devastated by a hurricane, music lovers, middle! falling far behind.
football fans, and avid video streamers. Each
feature describes how the experience of one Pandora has made the CD revolution seem Sling enables viewers to take control of their
of these communities has been uplifted by a trite. In 2000, the company gave music lovers watching experience, usually from the warmth
brand’s actions. the ability to create their own personalized radio of the living room couch or the soft mattress in
stations. Using a “thumbs up, thumbs down” the bedroom. Instead of paying for hundreds of
Firehouse Subs (page 10) has tapped button, listeners could indicate which songs irrelevant channels, Sling viewers can choose
into consumer desire for brands to make they liked and which they didn’t. This feature is the specific movies and shows they want to
socially responsible commitments. This made possible by a data analytics technology watch for a subscription fee, much smaller than
desire has taken a strong grip on the popular the company calls the Music Genome Project, that charged by cable. In addition, Sling offers
consciousness in recent years. Devastating which enables experts to identify music lovers’ viewers the ability to pay for premium films and
hurricanes, massive heat waves, tsunamis, and preferences across a variety of metrics. Music shows that can be watched instantly, which is
other natural catastrophes have made people hasn’t been the same since. a big upgrade from driving to the rental store,
more aware of climate change and its effects. or ordering online and waiting a week for the
In the midst of these tragic occurrences, Fire- Ally Financial (page 18) created a unique DVDs to arrive. This disruption represents real
house has dedicated itself to philanthropic application to engage football fans during the value to the customer.
concerns. Super Bowl. The app featured a game that
emphasized the necessity of establishing a Brands with any interest in improving customer
In order to provide much needed equipment decent savings account. Players saw dollars loyalty should look to these four stories for
and resources to first responders and public falling from the top of their mobile screens, advice. Each featured brand has contributed to
safety organizations, the company has formed and they had to slide as many as possible into its respective community by providing service,
the Firehouse Subs Public Safety Foundation, piggy banks at the bottom. Due to real-life support, and convenience. This seems like a
a charity that has donated $35 million in grants prizes for game winners, 24,000 people on great way for brands to operate, especially
to fire departments, rescue organizations, and average played the game during each Super when customers have come to expect it.
schools in 46 states, Puerto Rico, and Canada. Bowl commercial. Given the small percentage
It has helped purchase defibrillators, thermal of voice that Ally Financial has in the financial
imagining cameras, extrication tools, and all sector, 24,000 users engaged per commercial Loyalty360
terrain vehicles for police departments and is an astonishing feat. Clearly, this company has info@loyalty360.org
EMT responders. More organizations should figured out a customer engagement strategy
follow Firehouse’s example. that competitors haven’t.

Pandora (page 14) has improved the way Sling Television (page 22) has contributed to
music lovers listen to music. In the late 80’s the disruption of the old video-viewing trifecta:
and early 90’s, when cassette tapes became cable, DVDs, and theaters. With the advent of

Loyalty Management™ | Q2 2018 | loyalty360.org 5
LOYALTY FORUM: 360 INSIGHTS

A Challenging Environment
Calls for Personalization
Mark Johnson
CEO/CMO
Loyalty360

In the current marketing environment, brands must employ Implementation of such technologies, however, will not happen
analytical skills that weren’t required just a couple years ago. Data overnight. Regardless of the brand or vertical, or even the overall
breaches and increased scrutiny around data access have led to level of sophistication, the most successful organizations realize that
the creation of complex regulations by which brands must abide. harnessing any personalization strategy resembles a journey that
In addition, customers have come to expect the personalized and happens over time. Fortunately, the Customer Expo in Nashville this
convenient experiences offered by leading businesses from every year will feature presentations from a variety of brands that have
organization and throughout every channel. Brands also need to managed this journey well.
collect rich customer data, derive actionable insights from it, and
leverage technology that allows for scale. They need to design Firehouse Subs, Loblaws, J. Lohr Vineyard & Wines, Lids, Herbalife,
and develop customer engagement strategies tailored to their Luxottica, and MassMutual all have intriguing stories to tell about
customer bases and make sure the importance and impact of the strategies they’ve designed and how they’ve implemented the
those programs are understood. The need for objective insights, processes surrounding those strategies. Many other organizations
best practices, and a community focused on customer loyalty will present their success stories as well. For this reason, I feel
grows day after day. confident in saying that the Nashville Expo, coming up in October,
will be an excellent one, and no brand seeking to improve its
In addition to individualized experiences and offers, customers customer engagement and loyalty should miss it.
have also begun to clamor for a return to the simple “corner
butcher store” mentality of earlier times. They want brands to
participate in their communities and foster social commitments.
To create this simplicity and meet the needs of customers, brands
realize they must understand their customers more effectively and
use personalization strategies and technology to get there.

Unfortunately, technological processes aren’t quite where
organizations want them to be. According to a recent study of
customer loyalty programs conducted at Loyalty360, 73 percent
of responding brands said that a lack of competitive benchmarks
hindered their ability to effectively implement personalization
strategies. In addition, 57 percent said that technology metrics
weren’t accurate enough, and another 42 percent said that
objective technology assessments weren’t strong enough.
Without successful technological processes such as these,
customers will receive, more often than not, irrelevant offers after
making purchases. Worse, sometimes customers will even leave
loyalty programs or organizations altogether because they offer
nothing of individual interest.

Good companies will survive this ebb and flow of customer
preferences. Great companies, however, will thrive on it, building
WE HERDED THE CATS.
new offerings for the current market while maintaining alignment
with the product, customer focus, and overall company mission.
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They will generate and implement new strategies and platforms
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desires. The most successful brands are those that are agile and CRM/Email Marketing from one provider.
enough to leverage the necessary technologies to capitalize All your actionable data in one place.
on opportunities.

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6 Loyalty Management™ | Q2 2018 | loyalty360.org
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Loyalty Management™ | Q2 2018 | loyalty360.org 7
LOYALTY FORUM: FEATURED TECHNOLOGY

What are Loyalty360 Analyst Reports?
Designed to help brands and marketers navigate vendors and providers

Featured
in the market that support customer loyalty, customer experience, and
Products, customer engagement strategies in any capacity. With a focus on
Advancements & objectivity, rigor, and transparency, the Analyst Reports help brands

Technology
Technologies narrow down to core competencies, strengths, and industry expertise.
If you are a vendor or provider interested in learning how Loyalty360’s
Analyst Reports can help you reach new prospective clients, please
contact Mark Johnson at markjohnson@loyalty360.org

& Services To view Analyst Reports please visit
loyalty360.org/resources/analyst-report

Virtual Incentives offers a prepaid loyalty Baesman Insights & Marketing offers marketing HapYak provides an SaaS platform for creating
platform that helps clients provide an array of services based on data-driven insights. Its team personalized interactive videos. The platform
online rewards to members. The platform, of former brand-side marketers helps clients features tools that users can employ to enhance
Virtual Incentives Now, enables clients to design and develop loyalty program strategies videos with interactive elements such as links,
manage, track, and deliver a customized suite and technologies. It also works with clients to quizzes, and chapters. These tools enable the
of incentives to consumers, employees, and implement the loyalty platforms they’ve created creation of training, lead generation, and
market research participants. Rewards are and offers ongoing program management ecommerce videos. The HapYak platform also
offered through MasterCard, Visa, Amazon, services. offers APIs and analytics.
eGiftCards, and Gift Card PASS.
To provide these solutions, Baesman conducts The platform’s key functionalities include fillable
VI Now offers a user-friendly interface which a four-phase study of its clients’ operating forms, clickable hotspots, in-video chapter
gives clients a flexible and agile loyalty platform environments. First, it works with its clients to menus, image overlays, in-video quizzing,
option. It delivers personalized rewards instantly evaluate the strengths, limitations, and playlist branching, text overlays, link overlays,
and securely and includes integrations with a opportunities of existing structures, technology, CTA buttons, and I-Frame widgets. The
variety of market research applications. It also and KPIs. Then, the company explores client platform also offers core reporting functions,
enables future scheduling to order and can data amassed from earlier years to come to a including what links viewers selected most
handle programs of nearly any size or better understanding of each client’s customer frequently, which chapters viewers most often
complexity. With it, clients can track customer base. Next, it designs a loyalty platform based selected, and how viewers answered quiz
purchase history and reward recipient on data analysis. In the final phase, it validates questions. Examples of how users have
information. that platform with a customized plan for employed these functions include adding
financial modeling, measurement, and in-video “buy now” buttons to existing videos,
The VI Now platform also includes several implementation. creating clickable branching menus that enable
standard reporting metrics. These metrics give viewers to skip to desired content, and offering
clients comprehensive details about how The company provides customer segmentation intermittent quizzes to gauge viewer learning.
rewards are delivered to members. A web- breakdowns that enable personalized offers. In
based dashboard enables clients to add addition, it offers its clients easy to use HapYak offers APIs so that clients can integrate
programs and deliver rewards with no IT dashboards customized from a library of the company’s platform into their existing
investment, and an independent administration metrics, including visualization of enrollment, structures. Add-on APIs enable clients to write
feature offers clients a way to organize program redemption, sales, and engagement by channel. custom JavaScript that resides on their
functions with minimal effort. Baesman offers persistent monitoring and webpages without interfering with their ability
optimization of KPIs as well. to control video behavior, design, look, and feel.
For ten years, Virtual Incentives has sought to HapYak also advises clients on how HTML
close a major gap in the customer loyalty Baesman believes that the best solutions come overlays can be performed.
industry. To this end, it has used technology and from a deep understanding of the client and its
incentives experience to build a simple, customer base. To design these solutions, HapYak believes that the creation of compelling
customizable platform that delivers the virtual Baesman searches for the opportunities that are videos requires an easy-to-use platform that
rewards that customers have come to expect. hidden within client data. It develops these can achieve new levels of interactivity and
Through this platform, clients of Virtual opportunities into marketing strategies, and insight. To this end, the company created a tool
Incentives have the capacity to provide millions delivers them rapidly across multiple channels. that works with any video player and which
of rewards to customers around the world. facilitates rapid video generation. The goal of
this product is to drive customer engagement
and deepen client monetization.

8 Loyalty Management™ | Q2 2018 | loyalty360.org
LOYALTY FORUM: Q&A

Brand Vision
Q: How does employee loyalty and/or
employee Engagement fit into the
customer loyalty discussion?

We’ve really been looking at ways to encourage employees For us, it all starts with our franchise owners. If we select the
to engage with the brand socially and spread the message right franchise owners they treat their internal guests (our
through individual social network pages. Our customers like team) like family and treat them as such. That in turn leads
following the brand on Twitter, not only through the corporate our internal guests to be able to take care of our external
twitter account, but also through my Twitter, the Twitter of our guests like family.
executives, and our captains. We have a few really engaging, Ali Rauch
popular captains on social media, and we’ve been utilizing Director of marketing
things like “Captain of the Week” to give those employees Chicken Salad Chick
the opportunities they’ve been asking for to engage with
our guests. We’ve even observed an increase in bookings
on certain captains’ ships after they engage with guests on
Twitter. Every employee we have has the potential to improve The very first thing that drives our business is team member
our company by spreading the Celebrity Cruise message, and engagement. We’re very proud of the fact that our turnover is
we take that opportunity very seriously. best-in-class in the industry, both manager and hourly team
member. It isn’t just because everyone else is falling away,
Lee Moreau we’ve made real progress. What makes a difference is we
Director of Loyalty have a clear vision about making everyone better for being
Celebrity Cruises here and everyone includes stockholders, team members, and
guests. We go out of our way to make sure team members
are well trained and that they feel like part of a family unit. We
live our B.U.R.G.E.R. values every day. We literally put them on
our sleeves!
Denny Marie Post
Our front-line employees, in particular, are really the
culmination of it all. What they do every day is what I market President and CEO
and sell because we’re only as good as our employees. That Red Robin
makes the service what it is. I don’t have a product. I don’t
have anything I can put in somebody’s hand. Everything we
do is based off of a group of highly-motivated and engaged
drivers and dockworkers, handling freight properly, getting it Culture is critical. The vast majority of GoDaddy’s
delivered on time and intact and becoming an integral part of employees joined us organically meaning we hired them on
our customers’ day to day operations. to GoDaddy. We’ve done a few acquisitions over time to
expand our product portfolio or to expand our geographic
reach in Europe, but the vast majority of employees have
Mike Rude
been hired directly.
Director, Freight
Solutions Marketing Steve Aldrich
FedEx Services Chief Product Officer
GoDaddy

Loyalty Management™ | Q2 2018 | loyalty360.org 9
FEATURES

THE PRIORITIES
WITHIN FIREHOUSE
SUBS ® By Chris Brosey | Loyalty360

When Hurricane Harvey made landfall in the
fall of 2017, evacuations were widespread
and the damage was horrifying. As the majority
of people fled from the affected areas, there
was one group of people driving towards
the chaos, firemen.

After facing massive floods in 2016, the Harris County
Emergency Services District 48 Fire Department
in Katy, Texas realized they didn’t have enough
budgetary funds for a rescue boat, one which was
desperately needed.

With nowhere to turn, a local Firehouse Subs®
business owner recommended to the department
that they write to the Firehouse Public Safety
Foundation®, a foundation which has granted more
than $33 million to provide equipment, training, and
support to hometown heroes across 46 states, Puerto
Rico, and Canada since its founding in the aftermath
of Hurricane Katrina in 2005.

10 Loyalty Management™ | Q2 2018 | loyalty360.org
“ Firehouse Subs made it a point to
include its philanthropic efforts
within its mainstream advertising.
Within a few weeks, HCESD 48 received rescue boats,
a transport trailer and personal water safety equipment

The story of HCESD 48 is one of many for the Foundation, as
they seemingly answer the bell each time a natural disaster
which was combined to be worth $ 22,372. The rescue strikes. For Chris and Robin Sorensen, founders of Firehouse
boats would later go on to save over 200 civilians who Subs, the Foundation is an extension of the service held belief
were stranded in flood waters after Hurricane Harvey hit. systems that formulated their first restaurant back in 1994.

From their early days as firefighters
to the days of handing out food after
Hurricane Katrina, Chris and Robin have
made public service a top priority.

Loyalty Management™ | Q2 2018 | loyalty360.org 11
FEATURES

With Firehouse Subs, philanthropy and community involve- Their findings are what initiated the increased highlight
ment are not so much a business initiative as they are a by the brand on community involvement.
deep-rooted part of the brand’s identity. Don Fox, CEO of
Firehouse Subs, is the spearhead behind these beliefs. “They did a deep dive with their analytics and they came
back with qualitative and quantitative data that stated the
“The only reason why we created the foundation was highest correlating factor with sales was community involve-
because we were committed to our communities and are ment as measured through donations. That became the
philanthropic by nature. We were in a unique situation as first substantive way for us to measure the engagements.”
a brand where we had a cause that was so linked with our
brand identity. Being founded by firefighters was the entire For Firehouse Subs, the communities where
cultutre of the restaurant. Most brands would love to have restaurants had the highest levels of consumer
such a strong connection. However, it wasn’t commercial- sentiment were the ones with the top fundraising.
ized in any way, that wasn’t the reason why we did it.”
The in-restaurant fundraising platforms, which provide the basis
When you walk into a local Firehouse Subs restaurant, of the finances required for the foundation, are setup at every
you are inundated with pictures and equipment paying Firehouse Subs location. The programs include selling empty
homage to the local firehouses. The connection between pickle buckets for $2, a “round up” cash out system, where
each location and the local fire departments is felt from guests can round up their check to the nearest dollar for the
the moment you walk in to the minute you check out. foundation, and selling paper medallions that are hung up in
stores during October’s Public Safety Month.
Normally, paying homage to public service entities
within the community would be enough for most brands. These fundraising platforms allow the foundation to purchase
With Firehouse Subs however, they want first responders necessary public safety equipment for fire departments
to feel the impact of their brand and foundation. They in communities like Harris County, where hundreds of
understand the importance of community involvement lives were saved as a result of the contributions made by
and have stressed it as a brand for years but revamped the foundation.
it further three years ago.
Despite the work of the foundation never being done with
After speaking at a National Restaurant Association the intent to drive business; after discovering over time the
conference in 2015, Don Fox was approached by a Cornell crucial role it plays in customer loyalty and sales, Firehouse
professor about using Firehouse Subs’ data on philanthropy Subs made it a point to include its philanthropic efforts
and business results for a study they were conducting. within its mainstream advertising.

12 Loyalty Management™ | Q2 2018 | loyalty360.org
“We hesitated with this in the past as we felt maybe it was
a bit of chest pounding but you do reach a point where you
realize the more successful you are in business the more
successful the charity does. More lives are saved the more
successful we are. It is very symbiotic in nature. In the end,
data was one of the biggest things that got us to where
we are today.”

Perhaps, what has gone unnoticed in the midst of
the massive impact of the Foundation in the public
safety sector and disaster relief as a whole is the
growth, innovation, and success Firehouse Subs
has had throughout the last few years.

With more than 1,130 restaurants across the United States,
Puerto Rico, Canada, Mexico and non-traditional locations,

Firehouse Subs
provides afford-
able food while
uplifting the
public safety
entities within
each community.
Firehouse Subs has come a long way since its humble
beginnings in 1994. The unique steam method of heating
the meats and cheeses is not done by any other sandwich
brand, and customers flock to local Firehouse Subs
locations for that flavor. It is a rare,
yet powerful
combination
that continues to
grow and have


a lasting impact
throughout the
The menu includes roughly 20 different sandwich options, country.
multiple specialty subs and salads, which provides enough
variety to get customers to come back and similarity to
keep customers back.

For regular customers, the Firehouse Rewards point-based
loyalty program is a quick way to earn free sandwiches
and various meal upgrades. The rewards app can be
used to order ahead, return to a previous order, and find
nearby locations.

Firehouse Subs provides affordable food while uplifting
the public safety entities within each community. It is a
rare, yet powerful combination that continues to grow
and have a lasting impact throughout the country.

Loyalty Management™ | Q2 2018 | loyalty360.org 13
FEATURES

Steps beyond music and
into making connections
Chris Brosey
Loyalty360

14 Loyalty Management™ | Q2 2018 | loyalty360.org
There was a time, not too long ago in fact, The magic behind all of this is Pandora’s
when “burning” CDs was the only way to get a Music Genome Project, the self-proclaimed
personalized variety of music while on the go, in “most comprehensive analysis of music ever
the shower, working out, etc. Users would “burn” undertaken.” Susan Panico, SVP Strategic
various songs onto one CD (roughly around 12 Solutions at Pandora, discussed the project,
or so), and that would be the limit for the disk.

Users would then play the CDs ad nauseam until
the lyrics could be recited front and back. It was
“The Music Genome Project
common in those days for people to have entire is our secret sauce that
binders full of burned CDs, from which they makes us different from the
would continuously cycle through in an attempt
to avoid the radio or silence in general. competition. The engineering
behind Pandora all started with
Fortunately for everyone (except the couples who
are still creating mixtapes for each other), we no
the Music Genome Project.”
longer live in a time where we need to keep these
massive binders filled with CDs.
“We have actual human and data science
experts that analyze every song across
450 different attributes. When you look at
Today, we have voice, strings, percussion, these attributes
get scored.”
the gift that is
Pandora Music. The datasets Pandora accumulates for each
user allow the company to personalize the
music on each station towards the preferences
of the user. In times where individualized
Pandora, the music streaming consumer preferences continue to dominate
app founded in 2000, provides the strategies of major brands, this unique
each of its 75 million monthly approach behind Pandora hits the nail on
users with a separate, the head.
individualized radio station,
full of music that the user “When you talk to people who use Pandora,
prefers and without the they tend to talk about it as ‘my Pandora,’
music they do not. because their Pandora stations are going to be
very different from mine and yours even if they
With their unique “thumb up, thumb down” are listening to the same artist.”
feature, Pandora continuously builds a library for
you as you listen to each station. The unique nature of music lies in the emotional
connection between artist and listener. The
personalized process for Pandora taps into this
connection between both sides. Specifically,
the younger generations are where Pandora is
seeing this truly hit home.

Loyalty Management™ | Q2 2018 | loyalty360.org 15
FEATURES

“It seems that Gen Z and younger Millennials listening, skip or replay songs an unlimited
have become less loyal. In turn, what you number of times, listen with higher quality
need to do is give them experiences and audio, and listen with no ads.
content that meets them on a personal level.
“We did a lot of listening and research
We often talk about ‘show me you know me.’
with our consumers and I’d say most of our
There’s an expectation around how kids are
products are built off insight from consumer
growing up, how things that are delivered
behavior and feedback. We reacted to that
to them need to be a lot more personalized.
market shift and created Pandora Premium.”
Going beyond that functional loyalty and
Taking things further in the desire to connect
tapping into that emotional loyalty is what
listeners and artists, Pandora has also
most brands want to achieve.”
sponsored multiple free concerts the last
Not only does the data behind Pandora few years.
allow for unique, differentiated stations
Last year there was the fifth annual Sounds
catered towards individual users, but it
Like You event in New York, which featured
allows the brand to advertise into targeted
major artists like Post Malone and SZA. This
specialized segments.
year they have Backroads in Nashville, which
Similar to a CPG brand sending users features Lady Antebellum, Carly Pearce and
personalized emails regarding products that Morgan Evans. These are just two examples,
are related to what they normally purchase, as Pandora periodically sponsors concerts
Pandora is able to contact users about shows throughout the year.
or new singles of artists they know are
With everything that Pandora offers, it has
listened to by each user.
come a long way since its original days of
This symbiotic approach benefits both the simply being a streaming service. The brand
advertiser and user, as users are informed is aware of the powerful connection between
about music or events near them that they music and people, and continues to capitalize
are interested in and advertisers are engaging and expand upon it.
with a much more interested audience.
“Music is such a huge passion point
For its most loyal listeners, as both a business
strategy and way of giving back, the brand for people. It is a universal language
released its on-demand premium feature a and it creates different triggers and
little over a year ago. memories for people on an individual
level. It is something we take a lot of
The paid premium feature allows users to
search and play any song, create playlists
passion and pride in fueling with our
(on their own or powered by Pandora) listeners.”
download the music they want for offline

16 Loyalty Management™ | Q2 2018 | loyalty360.org
EVERY LI ST ENER O N
RA IS PLUG GED IN
PANDO
100 PERCENT.

“So, we know, not only from the registration
process, their email, geo, and age, but we can also
see these different behaviors. What devices they
are listening on, what time of day they are listening,
the type of music they listen to also tells us a lot
about their interests, ethnical backgrounds, etc.
We get probably over a billion signals of data on a
daily basis that allows us to create rich targeting
for advertisers and track that music early on.”

Loyalty Management™ | Q2 2018 | loyalty360.org 17
FEATURES

LOYALTY IS
MORE THAN A
BIG GAME FOR
ALLY FINANCIAL
Mark Johnson
Loyalty360

Forget the game. For 24,000 people, what happened between
the New England Patriots and Philadelphia Eagles was just a way
to pass the time between the truly important events of the day—
the commercials. And it wasn’t even that they cared that much
about Budweiser’s philanthropic efforts or that Alexa lost her voice.
Heck, they didn’t even watch the commercials when they came on.
They were too busy playing Ally Financial’s augmented reality game.

In an effort to get its customers to focus on saving their money,
Ally Financial created an augmented reality game that was activated
only during the Super Bowl commercials. The game within the Big
Game had virtual dollars falling from the sky, and users had to grab
them and slide them into a virtual piggy bank at the bottom of the
screen. Those who saved the most were rewarded for their efforts.

18 Loyalty Management™ | Q2 2018 | loyalty360.org
“There’s certainly this temptation, especially when we
launch new products and there’s all this pressure to
drive revenue and more and more customers, but for us
it’s less efficient to drive a bunch of unqualified traffic
to the top of the funnel than it is to drive a good quality
customer who we know we are going to be able to build
a relationship with.”

A total of 70,000 people downloaded the app, with 31,000 In many ways, she says, the bank has no choice but to
people submitting for prizes and 24,000 on average playing be a disruptor. It’s share of voice is only about 2 percent
during each commercial. It was enough to earn Ally the in the financial services category, which spends $4 billion
inaugural #Interception Award from Twitter for having the annually on advertising and marketing. Beyond that, its
most social chatter during the Super Bowl without running a focus isn’t the same as other banks—and hasn’t been
commercial. Which is fine, but not the overall objective. since its creation 10 years ago.

“The idea is to get people to reframe the way they’re thinking Ally started off as GMAC, the financing arm for the
about their money,” says Andrea Brimmer, Chief Marketing auto giant General Motors. It decided to rebuild and
and Public Relations Officer for Ally Financial. “Over 50 rebrand the institution at the height of the banking
percent of Americans couldn’t handle a surprise repair of crisis, putting a greater emphasis on the customer
$500 or more, and you’ve got almost the same percentage experience rather than on the bottom line.
with less than $1,000 in their savings account. I think that
people are living very high on the hog right now, and we’re “We launched at a horrendous time,” she says. “People were
getting into dangerous times. For us, it’s all about trying to get like, ‘What are you guys doing launching a bank right now?
people to think about this notion of money mindfulness again, Everybody hates banks and the economy is falling apart?’
and to be a little more savvy with what they’re thinking about.” But that was the whole premise of our brand: We are going
solve the customer pain points, and we are going to create
The bank began running its “real savings stories about real this relationship putting the customer at the center of
people” effort the week before the Super Bowl, noting that everything that we do.
“while brands are spending big money on the Big Game ads”
it’s placing its emphasis on savings.

Choosing the Super Bowl—where 30-second ads cost
$5 million—to launch the effort wasn’t an accident. In
fact, it fit right into the bank’s—and Brimmer’s—dis-
ruptor mentality.

“When I took this role as CMO, we put into place this strategy
that I call our disruptor strategy,” says Brimmer. “The idea is
that every other quarter or so, we go in the marketplace with
something that is very differentiated and engaging that gets
people who may not have known about our brand to interact
with our brand. We started with Splurge Alert, Ally Lucky
Penny, Hardest Working Dollar and now The Big Save.”

Loyalty Management™ | Q2 2018 | loyalty360.org 19
FEATURES

“People want to do business with brands that they have an emotional
connection with, and if you’re constantly optimizing for the fast sale,
you’re optimizing for the lowest common denominator and short-term
gain and that concerns me.”

“I can tell you, having been here from the start 10 years A number of the touchpoints it sends out have no sales
ago, we will literally sit in meetings and argue for two hours message in them at all, but are focused entirely on enhancing
about the stupidest things because we are arguing with engagement.
the customer hat on. It could be the smallest experience, and
we are sitting there trying to figure out the best way to It has a surprise-and-delight campaign where it randomly
give that best experience. selects members and gives them gift cards as a way of
saying thank you. It strategically sends out birthday
We’ve never wanted to walk away from those tenets in our e-cards five days ahead of its customers’ birthday that
marketing thinking either. There’s certainly this temptation, say, “We want to be the first to wish you a happy birthday.”
especially when we launch new products and there’s all this It sends “My Ally Updates” emails that offer informative
pressure to drive revenue and more and more customers, articles or quizzes.
but for us it’s less efficient to drive a bunch of unqualified
traffic to the top of the funnel than it is to drive a good “We’ve been very protective of keeping those pure,”
quality customer who we know we are going to be able to says Brimmer.
build a relationship with.”
What often gets lost in the proliferation of data and constant
“And that’s a big part of how we measure success—what kind of pressure to make money is that marketing is both an art and
balances did we bring? What was the funding on their account? a science, and the “art” portion—the customer engagement
Do they have multi-product relationships with us? I don’t get and satisfaction—is too hard to quantify financially, so it gets
credit for driving 100 million people to the storefront; I get credit shoved to the side.
for driving 25 million people and 80 percent opened an account
and brought the balances and relationship that we wanted.” “I do worry as an industry that we are becoming overly
reliant on data, and what that does is take out of the
In addition to the lengthy meetings debating customer equation the heart of marketing, which is the art part of it.
viewpoint, the bank also fights hard to keep in check the bal- It’s not all the science.”
ance between sales and engagement.

20 Loyalty
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loyalty360.org
“People want to do business with brands that they have an
emotional connection with; and if you’re constantly optimizing
for the fast sale, you’re optimizing for the lowest common “I have been in this business
denominator and short-term gain and that concerns me.”
for nearly 30 years now,
What makes it even more critical is how the changes
in technology and the customer actually makes it more and I would say the business
difficult to measure the effectiveness of data.
of marketing has changed
Yes, all of the data helps with segmentation and person-
alization, but the options customers have to receive more in the last three years
messaging are so numerous now that getting an accurate
report on effectiveness is a challenge. than it has in the 25 years
“I have been in this business for nearly 30 years now, previous to that because of
and I would say the business of marketing has changed
more in the last three years than it has in the 25 years
the reign of digital disruption
previous to that because of the reign of digital disruption
—virtual reality, augmented reality, customer shopping
—virtual reality, augmented
online, the customer having five different screens on at the same
time. Look around your own house if you have
reality, customer shopping
teenagers: they’re on the phone, their headsets are on,
the TV is on, their laptops are in front of them and they’re
online, the customer having
probably snapchatting like crazy.
five different screens on at
For us as marketers, trying to reach people in new and
differentiated ways is becoming more and more challenging.
the same time.”
Then you have to overlay trying to ascribe attribution to
that to understand what should be in your marketing stack—
what’s the most efficient dollar, what’s driving that action.
How do I know if the TV ad they saw drove the action or
the digital ad that I served got them to click and come to
our storefront? It’s very difficult to figure out attribution.”

The answer: shift your thinking. Disrupt the pattern.
Go for the emotion, let the customer know you
care and let loyalty grow from there.
“The way we measure [our marketing campaigns] is
through increased positive social sentiment, any spike we
see in increase of awareness and visits to the microsite,
and our ability to capture that customer information and
begin to market to them. That’s how we measure it, but
first and foremost, I look at these as creating inertia and
momentum for our brand in the marketplace that we
would not have otherwise been able to create.”

There’s no way of measuring it, but if a brand can get its
customers to pay attention to its augmented reality app
instead of the Super Bowl commercials, it’s already won
the loyalty game.

Loyalty Management™ | Q2 2018 | loyalty360.org 21
FEATURES

SLING STAYS TRUE
TO ITS PROMISE
AND HELPS PEOPLE

CUT THE
CABLE
CORD
Mark Johnson
Loyalty360

22 Loyalty Management™ | Q2
Q1 2018
2018 || loyalty360.org
loyalty360.org
Chris O’Brien is a writer for the San Jose As someone who is on the frontline of
Mercury News who writes about all of the technology, O’Brien is no doubt all-too-familiar
techy stuff that occurs in the area’s Silicon with the technological alternatives to cable and
Valley. He is also, by his own estimate, an satellite television that are popping up these
outlier. A member of the vanguard. It’s not that days, including—if not especially—Sling TV.
he’s a rebel without a cause or a Russian troll.
It’s just that he and his family did something
that would come across as radical—perhaps
even heretical—with a majority of Americans.

He cut the cord. He called his cable company
and broke off their lifetime relationship.

“Parting,” he said
in an article on
the newspaper’s
website detailing his
experience,1 “is not
sweet sorrow.”
1
mercurynews.com/2012/05/01/obrien-how-my-family-cut-cable-tv-service-and-lived-to-tell-the-tale
Loyalty
LoyaltyManagement™
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Q1 2018 | loyalty360.org 23
FEATURES

In February 2015, Charlie Ergen launched fighting back against the increased cost and
Sling TV, an online alternative that streams decreased options that are presented to
TV shows and movies over the Internet. It them by cable and satellite providers.
offers a healthy number of programs at a
That’s just opening the door for Sling TV.
fraction of the cost of other paid TV avenues,
and even provides a la carte options for
those who only want to pay for their favorites “I think we’re addressing a
instead of a package of channels. lot of the pain points that
What’s ironic is that Ergen launched and is
people have with traditional
currently chairman of Dish TV, and was the TV models, whether that’s
first person to launch a satellite into space to long-term contracts or useless
relay all of the network’s programs down to
homes across the country. So with Sling TV, channels or you need all of this
he created a business to compete against his equipment or, quite honestly,
other business.
an overall negative sentiment
Talk about being a disruptor. Or a genius. If people have with traditional
you can’t beat your competition, why not be paid TV,” says Colleen
your competition?
Sugarman, head of marketing
Besides that, the Chris O’Brien’s of the for Sling TV. “We’ve been able
world are quickly moving off the margins
and moving toward the mainstream. One of
to come in and address those
the largest segments in the paid television pain points with what we
industry isn’t new subscribers or binge consider to be a whole-
watchers, but the dissatisfied, frustrated
consumers who are cutting their cords and product solution.”

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loyalty360.org
Customers get the ability to “take control of The options allow for personalization, and
their TV experience,” she says, by selecting that came about by listening to all of the
from an option of 20 channels, 25 channels, frustration of cable and satellite users and
adding on genre-based “Extras” and adding acting on their pain.
on additional individual channels. They can
watch on a TV, computer, Smart TV, tablet or The company is on the forefront of a new,
phone, and can add or subtract DVR options. fast-paced and evolving industry, so it’s
Customers can also change services anytime forced to do regular competitive analysis and
online, which is ideal for families who are adjust quickly to changes. But, she says, it all
bored during the summer but suddenly find comes down to putting the customer first,
themselves with no time when school and and that’s just as easily done as said.
soccer season starts.
“What I love about my job is we are
listening to customers. We stay true to the
“The traditional paid TV model has brand promise of delivering what they want.
hundreds of channels, but consumers I also think that, based on what we hear,
equate that increasing their bill and we’re able to take feedback and quickly
their bill continuing to go up,” she make improvements to the app, and that’s
says. “We really want to be engaged consumer experience. And I think that, in
with the consumer in a different way, the end, we’re going to win.”
to allow them to customize their TV
programming.”

“We also have a brand promise to
consumers to try to make everything easy.
How do you have an experience that’s easy
to navigate? How do we allow for people to
come in and out of the service? I’ve managed
a lot of subscription-based services where
you would never allow consumers to have
easy online cancellation. We’re the opposite.
When we think about the marketing, we
always put the consumers in the center, and
we think about that brand promise of, ‘Hey,
we want to be new and different,’ and really
run from the old traditional model that, quite
honestly, people don’t like.”

What has made Sling TV so popular so
quickly is that they employ two of the
anchors to creating customer loyalty—
personalization and listening to the customer.

Loyalty Management™ | Q2 2018 | loyalty360.org 25
TECHNOLOGY, TRENDS & REWARDS

Short-term activations drive
acquisition, engagement and
retention for your loyalty program.

Gina Fleck
Director of Loyalty
at HelloWorld, A Merkle Company

W
hile there are over 3.8 billion loyalty program memberships in the US alone,
54% of them are inactive (2017 COLLOQUY Loyalty Census) – a trend that has
continued over the past few years. Despite this, many loyalty marketers have
continued to focus on program acquisition as their main measure of success, putting
Download free whitepapers and
large portions of budgets on things like media and awareness. And while those things are eBooks on loyalty and engagement:
still important, critical attention needs to be given to ongoing initiatives that will engage HelloWorld.com/Insights/whitepapers
members once they are in the funnel and reward them beyond purchase.
For more ideas on promotions,
In recent years, marketers have learned that the traditional “spend & get” format only
loyalty and overall engagement,
works to a certain point. Finding ways to reward beyond purchase and driving longer-term
visit www.HelloWorld.com.
engagement is key. 75% of consumers want to be rewarded beyond purchase (HelloWorld
2017 Loyalty Barometer Report). Layering short-term bursts of promotional activity on top
of ongoing loyalty programs is a proven way to motivate members to engage and drive
specific behaviors. Following is a quick primer on best practices for integrating promotions
into your loyalty experience.

26 Loyalty Management™ | Q2 2018 | loyalty360.org
Best Practices in Digital Engagement
Driving ongoing and active engagement with consumers is one of the toughest challenges for marketers right now, but
promotional overlays are a proven way to overcome it. If you take the time to define your goals, design your campaign,
create an awareness plan, and measure success, you can overcome these challenges and keep your consumers happy.

STEP 1: Plan

Start at the End When the Time Is Right
What behaviors do you want from While promotional overlays
your members that are measurable are effective any time, strategic
TH E FIRST LAYE R
and uncomplicated? Think about timeframes can amplify your results.
While understanding your
what’s important to your brand Some common timeframes to test are
brand’s goals are important,
and what might need an additional around your brand seasons, such as
push at this point in your loyalty back-to-school or holidays. considering what your
program’s current state, and be members think, do and feel
Maximize impact of your activation at any point within your brand
specific about what you’re trying by tying an overlay to a new product experience provides a strong
to achieve. Taking the time to
launch or brand campaign. foundation for the rest of
ensure you know how to define
success before launching the Conversely, leveraging historically your planning.
campaign will make measurement slow seasons can be a great time for
much simpler. testing. Execute an overlay during a
low season or purchase cycle.

STEP 2: Design & Promote

Create Your Activation Have an Awareness Plan
Once you’ve determined your Consider Gamification How will you get the word out?
goals, a promotional overlay can be Gamification is using game concepts While you don’t need a large media
designed to motivate those specific and mechanics to engage users and buy, particularly if you are targeting
behaviors. These activations layer change behavior. Weave elements existing program members, it’s
easily onto your existing loyalty that make games compelling into critical to have a plan that allows
program without interrupting the promotional overlays to move users you to “promote the promotion.”
program’s framework. toward your objectives, like brand Leverage your email database,
awareness or education. Common social channels, and program site or
Acquisition - sweepstakes spark
mechanics include: app. For larger initiatives, consider
attention with aspirational prizes
point-of-sale assets like standees,
Engagement - instant win or collect • • Leaderboards/Scoreboards
posters, or shelf displays to engage
and win games drive frequency • • Levels/Tiers members while in store. Paid media
Retention - punchcards and • • Progress Bars can also allow you to reach new
limited-time offers reward • • Badges/Trophies consumers beyond point-of-sale,
ongoing program commitment whether through ads, promoted
• • Challenges/Unexpected Rewards posts, or influencer campaigns.

STEP 3: Measure

Measure Success
The steps you took in the planning and measure success based on run it again to drive even more
phase should come in handy as those. Then, look more broadly – results. If the data shows something
you measure. Are the appropriate it’s possible that the campaign also could have worked better, make sure
metrics being tracked? Are they mpacted other program performance future marketing plans optimize it.
accessible? Is the reporting measures that you didn’t foresee. Promotional overlays shouldn’t be
cadence agreed upon? For shorter a one-time thing or conducted the
term campaigns, one report at the Learn, Rinse, and Repeat same way every time. Test and learn
end might be sufficient, but larger Once the campaign is over and you’ve different tactics to build a dossier
initiatives might require weekly or measured its performance, take things of verified activations that drive
daily insights. Remember to keep one step further to understand what specific results for your audience,
focus on the specific goals was learned. If the campaign worked, and build on it over time.
determined for the campaign, determine how and when you can

Loyalty Management™ | Q2 2018 | loyalty360.org 27
BEST PRACTICES

Increasing Foot Traffic and Sales

Through Multi-Channel Loyalty

Ann Olinger
Sr. Manager, Product Experience
Analytics Suite

Already a leader in its region for brick-and-mortar hockey equipment
sales, B&R Sports wanted to offer customers an online shopping
experience while growing its retail footprint. With ecommerce slated B&R Sports
to launch in August 2018, B&R has already seen an increase in brick- By the Numbers
and-mortar foot traffic and sales after implementing a multi-channel
engagement program that incorporates loyalty & rewards, email
marketing, and social media. This multi-channel approach keeps the
B&R Sports brand top of mind and improves customer retention and
repeat business. 10 Stores in 3 cities
Located in “Hockey Alley”:
Detroit, Grand Rapids,
Characteristics of Multi-Channel Loyalty and Chicago
The B&R Sports multi-channel engagement and loyalty
program has some unique characteristics, and some that
are common in the industry:

Tap to save a coupon to Google Pay 80%
Best email open rate
keeps the brand top of mind
With one tap, customers can save emailed coupons to Google Pay.
“When customers with one of our coupons in Google Pay pass
by one of our stores, they get a notification that there’s a coupon
waiting for them to use. It keeps us top of mind,” says John Merola,
Director of Digital Marketing and Ecommerce, B&R Sports. “When 23
Number of online
they come into the store, rather than having to dig through their
review sites B&R Sports
email inbox to find the coupon, they can pull up Google Pay on their will consolidate into a
phone to use it. I find that customers love this convenience.” single dashboard

28 Loyalty Management™ | Q2 2018 | loyalty360.org
When customers with one of our coupons in Google Pay
pass by one of our stores, they get a notification that there’s
a coupon waiting for them to use. It keeps us top of mind.”
– John Merola, Director of Digital Marketing and Ecommerce, B&R Sports.

Tools that are simple for marketers Guiding Principles For Developing
Managing the company’s two Chicago stores
as well as the ecommerce and digital marketing
Multi-channel Loyalty
Based on the experience of B&R Sports and other
initiatives for the entire brand, John Merola stays
Xenial retail customers, there are several guiding
very busy. “I only have time for simple when it
principles for developing a multi-channel engagement
comes to marketing and the tools I use. An analytics
and loyalty program:
program with built-in email marketing helps us
capture a snapshot of our marketing without having
to dig very far,” he says. “I like opening a simple
Facts are a marketer’s friend
“Email—our entire multi-channel approach,
dashboard with graphs and numbers that let us
really—is working for us,” says Merola. “We are
compare today’s trends with yesterday or one week
selling more hockey gear, and I know this from
ago, or see whether our marketing efforts brought
my dashboard.”
in new or returning customers. And I don’t need
a business analyst or database expert to get this
information. It’s at my fingertips.”
Make rewards meaningful
B&R Sports customers earn 1 point per dollar
they spend. 250 points=$10 to spend on any item.
Metrics lead to better
“Customers are truly excited when we tangibly show
targeting – and success
our appreciation for their patronage,” says Merola.
“A quick glance at a line graph lets me see whether
or not an email promotion worked,” says Merola. “And
I can measure a campaign’s success based on actual
Keep on growing
Next, Merola hopes to implement tools that
sales because email marketing is integrated with our
will help him understand customer demographics
POS. This lets me see metrics such as numbers (and
(such as age, number of children, and median income)
spend) of new versus returning customers. That’s
and zip codes. This kind of information will help him
powerful for a marketer.”
refine marketing efforts such as geo-fencing his online
ads and streamlining direct mail costs when opening
Adaptable
a new location. It can even guide company leaders
Using native functionality, Merola can
regarding the best place to open a new store. Merola
customize each email with coupons or offers coded
is also considering a tool that will give him insight
uniquely to the recipient. He says, “My system tracks
into online customer reviews alongside those of his
usage so I can measure effectiveness.”
closest competitors. “It comes back to simplicity,” says
Merola. “I’ll consolidate reviews from 23 different
online sites into a single dashboard, and I can’t wait.”

Ann Olinger is passionate about building products that
intersect analytics, technology, and intuitive design.
She currently manages the Analytics product suite,
which helps thousands of merchant locations across
the U.S. and abroad grow their businesses, for Xenial,
A Global Payments Company.

Loyalty Management™ | Q2 2018 | loyalty360.org 29
STATE OF THE INDUSTRY

Simplicity in Loyalty Programs
– Not as Simple as it Sounds
Kate Baumgart Hogenson
Strategic Marketing Consultant, Loyalty and Customer Experience
Kobie

During a loyalty program design session, you will almost always hear the phrase “the program has to be simple.” Marketers firmly
believe that consumers want a simple program. But many of the biggest, most popular, and most engaging loyalty programs are
anything but simple. How can that be?

It turns out that program complexity exists for very good reasons:

1. Customer needs vary
There is behavioral research that shows that members are more likely to feel loyal to a brand and are more likely to make their next
purchase from that brand when they perceive themselves to be 80 percent of the way to a reward rather than only 20 percent of the
way to a reward.1 The problem is that a single person buys at a different rate than someone shopping for a family, an occasional first
class traveler flies less often than a road warrior, the marathoner buys running shoes more often than the 5k runner. How can you
make all types of profitable members on your base feel like they are 80 percent of the way to a reward?
One way is to add a greater selection of rewards that offer each group a reward within reach. In an earlier time, offering a choice of
rewards led to ever expanding and complex reward charts, such as the major hotel chain with separate rewards for the Level 2 hotel
in Des Moines and the Level 5 hotel in Hong Kong. Many marketers still shy away from the “reward catalog” approach as being far
too complex.

May need multiple value propositions which are each simple on their own

Motivated by Streamlined order process

Habit Automated reorders
Program
Motivated by Benefits Recognition
for reaching
Early access

Status a performance
goal
Invitations to
exclusive events

Motivated by Member Pricing

Price Only Buy 1, Get 1 offers

Fortunately, user experience design has dramatically improved so that the complexity can work in the background. For example, Hilton
introduced a sliding scale that enabled every member to pay for any hotel with a mix of points and dollars – in effect creating infinite
choices that would have been far too complex to explain in a reward chart. Hilton more than doubled program engagement measures,
because now almost every member is 80 percent of the way to a reward. Increased member engagement has driven revenue and
profit for them.
The interface delivers simplicity for the customer, even if the work behind it was complex to set up.

30 Loyalty Management™ | Q2 2018 | loyalty360.org
2. The same customer has changing needs 5. Multiple brand programs require cooperation
When members first join a program, they tend to focus on to combat complexity
the core value exchange proposition – if I do this, I’ll get that Many companies struggle with the day-to-day management of a
incentive. That’s one relatively simple message and many multi-brand program. Each brand wants to own the customer and
programs stop there. However, there is research indicating that have top placement at all touchpoints – they often argue for separate
incentive-only approaches do not build long term brand equity.2 programs which really is not simple for the customer.
As customers experience multiple interactions with a program,
they come to value the benefits that make it easier to do The companies who do a good job of managing multi-brand
business with the company such as profiles that short-cut programs reduce complexity by focusing on the end-to-end
re-orders or express lanes for frequent travelers. Or they value experience for the member – presenting cross-sell opportunities at
recognition benefits such as early access to new products or the right times and making the handoffs seamless. Most critically,
exclusive invitations to special events. they recognize when the program needs to be center stage for the
member – show the member that they need one more purchase
for that next reward and then show them that they have a choice of
brands that will get them there.
3. Programs need to stay fresh by adding
new enhancements Let’s face it – what marketers REALLY mean when they say they
When The Wise Marketer recently asked a broad selection want a simple program is that they want the program to be simple
of program members what drove them to disengage from a for them.
program, there were about the same number of members who The best programs make it easy to do business with the brand
said “Program was boring / had nothing new overtime” as the across a broad range of customers with different needs. They
number of members who said “Program rules were confusing show the member one specific value proposition at each specific
or unclear.”3 That’s a stunning result. point in time. The member experience makes sense, feels easy and
non-intrusive. Making it simple and easy for the customer is often
Simplicity can become boring and might ultimately be as detrimental anything but simple and easy behind the scenes.
to member engagement as the confusion of complex program rules.
The true guiding principle that marketers need to embrace is
“avoid one-size-fits-all solutions.” It will likely take more work for
The lesson is that a static program can become a dead program.
the marketer, but that work will yield more engaging experiences
The most popular and beloved hotel programs evolved over the
for the customer and ultimately, a more profitable and sustainable
past 30 years to address an increasing variety of travelers and to
loyalty program.
embrace evolving trends. Hotel programs tend to be the most
complex programs in market, but the best brands do a stellar job
of presenting only the value proposition needed at each point
in time – how many nights you need to reach the next tier, what
you need to do to skip the line and go straight to your room, and
what you earned on your most recent stay. Research referenced:

1.“Illusionary Progress in Loyalty Programs: Magnitudes, Reward Distances, and
Step-Size Ambiguity,” Rajesh Bagchi and Xingbo Li. Journal of Consumer Research,
Vol. 37, No. 5 (February 2011), pp. 888-901 published by: Oxford University Press.
4. Financial margins create the need for a Stable URL: http://www.jstor.org/stable/10.1086/656392
variety of incentives 2.“Models for the Financial-Performance Effects of Marketing,” Dominique M.
If you have very different margins by product line, you may Hanssens and Marnik G. Dekimpe, (2017), Handbook of Marketing Decision
be willing to give very different incentives. A simple approach Models, B. Wierenga and R. van der Lans (editors).
would be to set program earning based on only the lowest
3.“From Transient to Resolute: How Deep does Loyalty Go?” The 2018 Maritz
payout products. However, that doesn’t create an incentive to | Wise Market Loyalty Landscape
buy that higher margin item you really want to sell.

Again, behavioral research can help inform how to show the
complexity. If a customer is buying that low margin product,
show them the number of points they’ll earn for that item.
If they are looking at the overall program, don’t bother them
with a chart that says they will earn 7 points on category A, 10
points on category B, and 13 on Category C; keep it simple and
tell them they’ll earn an average of 10 points per $1.

Loyalty Management™ | Q2 2018 | loyalty360.org 31
BEST PRACTICES

CUSTOMER LOYALTY
THAT STANDS THE
TEST OF TIME
Meg Tronquet Laurie Meek
Manager at Lenati specializing in customer Manager with Lenati with over twelve years
loyalty and marketing strategy driven by of experience in client service, including
data and customer insights. loyalty program strategy & design.

Consumer shopping habits and loyalty programs In just 20 years, consumers have more choices than ever
have transformed since they first burst onto the before. It’s no wonder that their expectations for brands are also
shifting. In this modern landscape, it is imperative companies
scene in the 1990’s. No longer a simple punch card adapt to maintain relevancy, or risk going the way of Blockbuster.
approach, loyalty has morphed into a sophisticated Successful companies don’t merely adapt – they transform.
mechanism for collecting customer data to enable
personalized marketing and a one-on-one customer Transformation begins when brands create a one-on-one
relationship. relationship with their customers. Loyalty programs act as
a direct link to consumers which allows brands to maintain
Let’s take a look at how loyalty has changed in the last twenty a pulse on customer habits and preferences. Keeping pace
years to illustrate the point. In 1998, Jennifer would meet with customers enables brands to anticipate shoppers’
her boyfriend at the local Blockbuster to pick out the newest needs, craft meaningful experiences and innovate products
release to watch on a Friday night. and services. As companies transform, traditional retail is
massively disrupted.
As a Blockbuster loyalty program member, Jennifer earned
points with each rental which she could redeem for a free rental. By thinking ahead, brands can build strong emotional
Fast forward 20 years and Jennifer flips back and forth between connections with their customers that engender lasting
her streaming subscriptions—Amazon Prime, Netflix, and Hulu— loyalty. The three key steps needed to make this change are:
in search of Friday night’s feature, which is personalized to know (1) know your customer, (2) take action on customer insights,
what she likes and anticipate what she wants to watch next. and (3) leverage technology to build the right experiences.

32 Loyalty Management™ | Q2 2018 | loyalty360.org
“ By thinking ahead, brands can build strong
emotional connections with their customers
that engender lasting loyalty. “

STEP 1: KNOW YOUR CUSTOMER
1.
Build significant utility into the member experience.
Example: The Hilton Honors app is highly functional and
Before building a loyalty program, you must know who your enables guests to check in, choose their room, request
customer is and what they value. Most loyalty programs aim complimentary items, and use a digital room key.
to gather customer data that will be used for personalized
marketing. Having a single view of your customer is critical

2.
Reframe loyalty-as-a-service. Example: While Amazon
to building long-term loyalty.
doesn’t have a traditional loyalty program, Prime acts as
a “service model” – members unlock access to several
A holistic customer view enables brands to understand customer complementary services in addition to free shipping.
communication preferences, spending habits, and CLV. This in-
formation, in turn, gives brands the ability to anticipate customer
needs, build a marketing engine to support a lifelong relationship,

3.
Double-down on strategic assets and competitive
and create true customer loyalty. advantages to create benefits that are hard to replicate.
Example: Nike+ leverages its reach and resources to
STEP 2: ACTION ON CUSTOMER INSIGHTS provide coaching and workouts to its Run Club members.

Once a brand has insights into its customer base, it can begin

4.
Don’t wait to invest in technology – the next gen will be
to take action on it. It should ideate and use design thinking to
here very soon. Example: Domino’s Pizza has invested
determine what is most relevant to its high value customers
heavily in technology and now has a premium customer
and how to personalize their experiences. Ease pain points by experience delivered through the app.
designing complimentary services, products or offerings – make
it both fun, easy, and meaningful so customers keep coming back.
Loyalty is about more than making repeat purchases; it’s about No brand wants to find itself a fond memory of a bygone
creating an emotional connection with your customers. era; Blockbuster is a hallmark of the 1990’s as it served
a customer need by connecting customers to Hollywood.
STEP 3: LEVERAGE TECHNOLOGY TO BUILD However, because it failed to adapt to changes in tech-
nology and shifts in consumer behavior, it is just a memory.
THE RIGHT EXPERIENCES
While following the above steps may not enable brands
Lastly, it’s important to leverage the right technology to deliver
to fully predict customer behavior, doing so will help them
the ideal customer experience. A brand should make sure its
identify critical questions as they consider the longevity of
customer experience is fleshed out in detail and that the experi-
their offerings and how they will maintain customer attention.
ence has a place with its technology vendor to bring its vision to
life and to evolve that vision over time. This process often takes
longer than planned, so start early!
Stay tuned for a comprehensive white paper which
While predicting the future is difficult, a brand can prepare to delves more deeply into these topics.
stay ahead of the competition and anticipate its customer’s
wants and needs. Brands should consider the following as they
“future-proof” their loyalty strategy:

Loyalty Management™ | Q2 2018 | loyalty360.org 33
TECHNOLOGY, TRENDS & REWARDS

CUSTOMERS ARE NOT
COMING BACK? TRY OUT
10 C STOMER
RETENTION
STRATEGIES
THAT ACTUALLY WORK
Long-term success of your company depends on your clients, there is no
doubt about it. While you may focus on reaching out to more and more new
customers, do you actually care about what your current clients do and think?
If so, you should definitely become acquainted with customer retention.

But you can be
100% sure that they
will tell their friends or
What is customer retention? In short – You have probably asked yourself that share bad review in
it is how well you manage and keep question. The customer bought my social media. With one
your customers and actually encourage product and the money is banked – it is
them to constantly come back and buy time to convince someone else. In reality
lost client you can lose
your products or services. Believe it or the existing customer has already bought plenty more.
not, retaining customers costs less than and used your product and if they are happy
acquiring new ones and generates more enough maybe they will recommend it to
profit. According to Bain&Company, their friends. They are already educated
increasing customer retention rates by on your product and company, the trust
only 5 percent increases profits by has been established, and you have the
25 to 95 percent1. client’s details in the database, ergo – you Actually, most clients leave because they
know what they like and want. Instead of are unhappy with the way a company
So, it is a game definitely worth playing. repeating the process of getting a complete treated them. Unfortunately in most cases
In this article, we will present customer stranger to this point, it is more profitable you will not know what happened: they
retention techniques on keeping your to invest in clients you already have. After have probably been disappointed in the past
clients close and boosting your customer all, they are the walking adverts. Make a so it is easier for them to just switch to the
retention rates. But first… customer happy and you can be sure that at competition than file complaints and tell
least a few other people will learn about it. you what went wrong.

…why should you bother Customer retention gives you quality insight If you want to succeed in the long-term,
on how satisfied your customers are, not you must follow these customer retention
with your current customers?
only with your product/service, but more management rules in order to boost client
importantly – with your customer service. retention rates in your company.

34 Loyalty Management™ | Q2 2018 | loyalty360.org
10 CUSTOMER RETENTION STRATEGIES
TO INTRODUCE TO YOUR COMPANY
1. KEEP THE HIGHEST STANDARD 4. APPRECIATE YOUR CLIENTS 8. KEEP YOUR WEBSITE, MOBILE
OF CUSTOMER SERVICE APP AND PURCHASING PROCESS
If your clients are happy with your products,
People are more effected by negative events share something nice about your company CUSTOMER-FRIENDLY
than positive ones. In practice, that means or simply come back for more – show them The easier your shopping process is, the
your clients are willing to dwell on anything some love. Acquire a proactive approach. It better. Clients need to understand how your
negative connected to your company and can be something as simple as a discount website/application works, and the payment
comment on it, both in real life and in social code, better promotions for the most loyal process needs to give them plenty of options
media. The value of very good customer customers, or “thank you” messages. Make to choose from. Simplify processes as much
service cannot be underestimated. Even an effort and appreciation will be mutual. as possible, run tests with focus groups,
if the client is not happy with the product, introduce more language options, and make
their attitude towards the company can 5. CLEARLY DEFINE AND SET the content understandable for every client.
remain highly positive if they are approached CUSTOMER EXPECTATIONS The worst you can do is make your customers
by an apologetic staff, who is willing to do feel stupid!
anything to keep the customer satisfied. You need to show clients what they can
Eventually, the negative event can be turned expect of you in a very early stage of your
9. BECOME THE CUSTOMER’S
into a positive experience. Having said relationship. A little trick: set the expectations
that, you need to remember that customer lower, and surprise the client with a quicker
SOURCE OF KNOW-HOW
satisfaction can be achieved by exceptional reaction. Also, in worst case scenario, you will Be an expert in your business and educate
employees. Appreciate your staff, because have more time to deliver on your promises. your customers, so in case of problems, they
their positive approach to their job and Simple example: in an automatic response for know to turn to you for answers and help. Use
customer service will result in how clients customer inquiries, promise a response in positive testimonials about your products,
see your company. Anyone who represents 24 hours. If the client gets the response after maybe start a blog with insightful posts.
your business and has a direct contact an hour or two, they will feel amazed by the Sell not only product/services but also the
with customers, needs to have a positive fast reaction. Still, you give your team enough knowledge.
and professional attitude. The customer time to get things done, even if someone gets
service team needs tools for handling client sick and their duties have to be passed to 10. CUSTOMER-MANAGEMENT
communication as fast as possible and someone else. Remember to always stick to
PLATFORMS
without asking loads of questions. Clients your word and meet the deadlines you have
have to know that the company recognizes set for yourself. The more customers you get, the more
them, knows their shopping history, and complicated it gets to handle them all in a
quickly solve any problems they might have. 6. USE SOCIAL MEDIA professional manner. Consider introducing
Remember that sometimes treating someone the customer-management tools to your
as unimportant may lose you not only this Nothing boosts customer retention company to both help your employees and
client, but potential future profit and maybe a rate quite like a good social media presence. provide the clients with high-quality service.
reputation (you never know when unsatisfied Your clients are probably on social media Appropriate platforms will manage your client
customers decide to share their story and right now, so use that opportunity. Depending data base, send automatic messages, suggest
“warn” others). on the type of your business, start official promotions, and remind you of payments.
accounts on Facebook, Twitter, Instagram, Customer retention plans will be more
LinkedIn, YouTube, Snapchat and wherever
2. BUILD AND CONSTANTLY professionally manageable and give you
else you can think of. Check what channels more time to focus on different tasks.
MAINTAIN A RELATIONSHIP your customers are interested in and
WITH THE CUSTOMER communicate with them via those platforms.
Use the customer service to build trust and Not only will you be able to reach your
in time, create a relationship with clients. If customers, but also learn their opinion about
a certain customer trusts you, even if you your company and encourage them to share Customer retention
make a mistake, they will be willing to forgive and become brand ambassadors. Don’t forget
about both mobile and desktop versions, management leads to loyalty
you. Instead of complaining, simply admit
that it sometimes happens even to the best adjust the language, graphic design and don’t
be afraid to be direct and personal. Marketers usually distinguish between two
companies. After first purchase, you receive terms: customer retention and customer loyalty.
a lot of information about a client. Use them We already know that customer retention is
to keep in touch, send discount codes, special 7. COLLECT FEEDBACK
defined as the ability to retain a customer for
promotions or small gifts. These promotions a specified period of time and is presented
Don’t be afraid to ask customers what they
help customers remember your company, as a number/percentage of customers that
really think about your company. Catching
gives them a reason to come back, and helps are still active, while customer loyalty allows
mistakes early on gives you room for
them to forget about the competition around businesses to measure how often a particular
improvement. You can avoid negative public
your brand. Lastly, this could lead to those customer uses products and services. Similarity
feedback by asking questions on a personal
customers recommending your company to and dependency between those two terms is
level. You can reach out to clients via surveys
friends around them. or short messages. Ask yourself questions, easily noticeable, as it is not possible to create
“Do they like your products, what would they customer loyalty without having an effective
3. PERSONALIZATION IS KEY change?” Genuine customer feedback is worth retention strategy first. Having a comprehensive
more than expensive set of customer data is a great opportunity
No one likes to be treated as part of the market research, to run the predictive analytics. This makes it
crowd. Each customer is different and and will make possible to identify trends in customer behavior
requires a unique approach. Nowadays your clients feel that can help to effectively reduce their churn
clients demand a customized shopping important and and later run a successful loyalty program.
experience. Personalized messages and able to make a
discounts can make a difference between change. 1.
https://hbswk.hbs.edu/archive/the-economics-of-e-loyalty
more business with a particular client and
losing them forever.
Loyalty Management™ | Q2 2018 | loyalty360.org 35
STATE OF THE INDUSTRY

MOVING FROM
Lately, we’ve seen more and more brands facing up to the
fact that traditional loyalty programs simply don’t work in
most industries.

A LOYALTY They fail to create lasting loyalty, largely because they

PROGRAM TO
don’t capitalize on customer data to create ongoing,
emotional value for their members. And a loyalty program
that doesn’t add value for its members long-term won’t

A LOYALTY create value for a business, either.

STRATEGY So, what does the future
look like? Will loyalty
programs cease to exist?
Marlon Bowser
CEO
HTK
Not quite.
Traditional, transaction-based programs may be on
their way out, but there is still a place for engagement-
based programs, which reward customers for their loyal
behaviour, beyond purchases.

The key is that these programs sit within a wider loyalty
strategy. This strategy places the focus on creating value
and positive experiences for the customer across their
entire journey - not just at the moment they swipe their
card or redeem a reward. And that leads to emotionally
loyal customers, who purchase frequently, refer more
friends and are willing to try new products and services.

The loyalty program, then, becomes a means to an
end rather than an end in itself - one component in the
customer experience machine, where profitable loyalty is
the end goal.

So how do you make this shift: from an isolated loyalty
program to an integrated strategy, with a business-wide
impact on customer experience?

36 Loyalty Management™ | Q2 2018 | loyalty360.org
Here are four things to consider:
1. Prioritise data to integrate, adjust and tweak all of the For this, its good to have a platform that
moving parts. And for many businesses can act as a central “brain” for your loyalty
Loyalty programs are particularly adept that will mean bringing the loyalty and CX efforts, processing, analysing and
at capturing customer data - which is program (and its associated tech) back actioning data across multiple systems.
good news, because it’s data that fuels in house as much as possible. This enables each system to deliver a
a better customer experience. The personalised experience based on the
trouble with traditional programs is that If your loyalty program has been
most up-to-date information - whether
they typically haven’t been very good managed or implemented by an agency,
at point of sale in-store, through a mobile
at using the information they collect, this might sound daunting. Fortunately,
app or on the web.
beyond fairly simple things like product SaaS (software-as-a-service) platforms
recommendations. offer a good solution. Cloud-based
loyalty software should come with plenty 4. Measure the right things
But the foundation of good customer of features and integrations “off-the- That you should measure the impact
experience is understanding your shelf”, meaning you won’t end up with of your efforts goes without saying, but
customers - both on a large scale and complicated, implementation. That makes when looking at a wider loyalty strategy,
on a one-to-one basis. And for this, it much easier for your internal teams there are some special things to consider.
data is essential. So, when moving to to manage.
an experience-focused loyalty strategy, First, make sure your KPIs aren’t too
the first and most important thing to And it’s becoming increasingly narrow; instead, look at the impact of
consider is what you know about your essential for teams to have a hands- your loyalty and CX initiatives across
customers and how you can use that to on approach to loyalty. To ensure your business functions.
your advantage - and theirs. customer experience is running at peak
performance, you’ll need to be able to That could be an increase in referred
Start by asking questions like: Where adapt the mechanics that drive it. customers, an uptick in the number of
could the right data help us make the product categories members purchase
customer’s experience faster, easier As customer needs change, business from, even a reduction in calls to your
or more connected? What data do goals shift, or simply as you learn more support center - exactly what you
we need to make their journey more about what drives loyalty among your measure will depend on your business
personalised? base, you’ll want to optimise and tweak goals and the mechanics you’ve put
your loyalty approach - without having to in place. Ultimately, though, it means
You’ll probably come up with a long list go through a full program overhaul. requiring your efforts to show some kind
of potential use cases, so prioritise one or
of financial impact.
two based on your marketing objectives.
For example, if one of your objectives is 3. Get the (tech) basics right
Because emotional loyalty is the goal,
to increase the average basket size of a As marketers, we’re bombarded with it’s also a good idea to keep tabs on the
key customer segment, focus on ways calls to adopt the latest and greatest in state of your customers’ relationship
that better use of data could make your tech - and when it comes to the customer with your brand. Measuring things like
upselling efforts more relevant. experience, technology does have a key their overall value and sentiment towards
Then, do an audit of the data you role to play. your business will be a good indicator
currently have - is it accurate and up- As people become accustomed to new of whether your efforts are making a
to-date? Do you have what you need to channels and devices, they’ll increasingly difference.
implement the use cases you’ve chosen expect the brands they buy from to Finally, beware of relying too heavily on
to focus on? interact with them there - and provide a vanity metrics. Things like the number
If there’s essential customer data you’re good experience while doing it. But before of customers enrolled in your loyalty
missing, think about how you can collect you dive straight into augmented reality program are good to monitor, but they
this through your loyalty program - or the like, it’s important to get the basics won’t necessarily tell you whether your
whether through implicit behavioural right. Seamless, connected customer loyalty strategy is having an impact on
data, or by incentivising members to experiences - the kind that drive emotional your bottom line.
share their interests, preferences or loyalty - depend on the right data, working
other information. across channels in real-time.
Customer expectations are changing fast,
That means joining up all the touchpoints and the loyalty program as we know it
2. Take ownership and channels where customers currently is fading out. It’s critical that customer-
When loyalty is a business-wide focus, interact with you - and getting data centric businesses begin to see loyalty as
rather than an isolated program, it’s flowing smoothly between them, so you a core revenue-driving function, rather
important that your team has the ability can shape the customer experience on than a siloed solution to customer churn.
the fly.

Loyalty Management™ | Q2 2018 | loyalty360.org 37
BEST PRACTICES

LOYALTY PROGRAMS
IN QUESTION BY
CERTAIN INDUSTRIES
Louis R. Ramery CEO,
east|west marketing group

Lou is CEO and co-owner of east|west marketing group,
a New York based marketing services firm. Established in
1983, e|wmg is recognized for highly creative, personalized
and exceptional client service committed to delivering
insightful, customer-centric, creatively driven and results-
focused marketing solutions across multichannel platforms.

Martin Whitehead of Customer
Marketing, east|west marketing group

Martin leads the CRM and Loyalty Marketing practice at
east|west marketing group, which encompasses a full-service
consulting group, program management, marketing operations
and multi-channel creative design and execution.

It’s surprising during this age of “big data” that some
companies are questioning the value of their loyalty
programs. In a time where customer data is easier to
collect, cheaper to store and one of the top things on all
executives’ minds, it seems odd to begin questioning
whether a loyalty program is a prudent way to invest
coveted marketing resources.

Some retailers are still struggling to recognize the returns they
expected following the growth of loyalty throughout that sector
several years ago, and the demise of the Plenti coalition program
has started a conversation about the financial worthiness of
certain loyalty programs. The airline and financial services loyalty
schemes are continuing to grow and lead the loyalty world with
new innovations, and the retail sector should continue to press
forward and create better solutions to deepen the engagement
with their customers.

Just because the retail world lacks the main ingredient
that the travel programs have enjoyed since their
inception – cheap program rewards – there’s no reason
why more retailers can’t recognize more success
through loyalty marketing.

38 Loyalty Management™ | Q2 2018 | loyalty360.org
While it’s always wise to keep a close eye on the health of your Poor member segmentation is the biggest culprit, but there are many
program, there is no reason to question the value of a well-crafted other bad behaviors that are draining budgets. Poor management of
loyalty strategy. Programs like Neiman Marcus InCircle, Tesco offer strategies, over-investing in technology platforms, and not creating
Clubcard, My Best Buy and CVS Extra Care are continuing to lead a dialogue with members are issues seen throughout various industries.
the way for retailers, and the last few years have seen a number of
new and redesigned programs entering the marketplace. It’s not fair to just point the finger at the retail sector. Insurance
companies, the leisure entertainment world, and the utility sector are
The 7Rewards program from 7-Eleven was the first program to even less successful in creating loyal relationships with their customers.
tackle the convenience store category in the U.S. and a few of the Only a few of the leading companies in those industries have attempted
leading grocery store program enhancements are signaling that low to climb the customer relationship mountain and it’s sad to see them
margin businesses can benefit from loyalty programs too. In fact, a sitting on the sidelines. Today’s competitive environment certainly can’t
recent loyalty study shows that retail programs have now passed the be working in their favor so there must be other factors at play.
travel industry participation levels.
A well-designed loyalty strategy is guaranteed to generate revenue
There are now over 1.5 million Americans belonging to some and drive profitability. Nobody will argue with that, and we believe it’s
sort of retail loyalty scheme, and that number is expected to important to regularly check the health of any loyalty program to
grow as Millennials get more involved. ensure it’s producing the originally intended results.

For many retailers, it’s the loyalty program that is providing There’s no reason to accept poor results from a loyalty
valuable customer data. Then, the data is used to drive personalized program or, worse yet, not even know what the program is
offers and recognition throughout the shopper experience. The pro- doing for your business. CEOs should ask their heads of
grams are also an excellent way to treat customers differently based loyalty these four simple questions:
on value to the corporation or behavioral patterns, and these loyalty
elements should be exploited by corporate leaders. 1. Is the loyalty program changing the behavior of the
core customer group?
The old measures of loyalty program performance need to be 2. Do we know the financial impact on the business – the
thrown out and replaced by better indicators that reflect the new value of the loyalty currency and the cost of the benefits?
era of data-driven marketing. Many programs still don’t adequately
invest in reporting. Don’t fool yourself by thinking that counting new 3. Do we measure and report on the right elements
of the program?
enrollments and other simple program metrics are enough to keep
up with program performance. 4. Have we recognized the value of the loyalty technology
platform?
There are a number of changes across the marketing suite
of which smart loyalty managers are taking advantage to If the answer to any of those is no, then the business should
improve the results of their programs: stop and question how the loyalty program is being managed.

• Integrated analytics and reporting modules that are
directly attached to the core loyalty technology engines

• Better use of program-related data to feed marketing
strategy and change how CMOs relate to their
customers

• Alternative program funding sources to reduce the
cost of loyalty operations, especially in businesses with
challenging margin rates.

• Partnerships and alliances that reduce program costs
and expand marketing opportunities

• More use of digital channels and mobile applications
to better engage members

• Connecting social media initiatives to loyalty
programs to provide real value

The list goes on and it’s exciting to see how some companies are
recognizing new ways to increase the ROI on their loyalty invest-
ments. That said, it’s also discouraging to see so many programs
missing the mark and wasting precious resources that could be
driving better results.

Loyalty Management™ | Q2 2018 | loyalty360.org 39
Conference Review

2018
May 15-17 | Caribe Royale | Orlando, Florida

About the Loyalty Expo
With customer loyalty now being recognized as the key
to business success, brands who excel in the effort were
recognized at the fifth annual Loyalty Expo at the Caribe
Royale Resort in Orlando, Florida in May.

The Loyalty Expo is a true voice of the customer-driven, best
practice-focused customer loyalty and reward conference.
Through a robust slate of best-in-class speakers and interactive
discussions, actionable case studies, and proven world-class
technology suppliers, the conference covers the latest theories,
best practices, relevant case studies, emerging trends, and
strategies that drive measurable behavioral change and
quantifiable results.

“We had more than 100 brands submit entries and this year’s
winners demonstrated excellence in customer-centricity,” said
Loyalty360 CEO and CMO Mark Johnson. “The awards recognize
brands that are truly working to build stronger and deeper
relationships with their customers. The categories represent key
tenets of a brand’s interactions with its customers.”

loyaltyexpo.com

Jim Lyski,
EVP, CMO,
CarMax

40 Loyalty
40 Loyalty Management™
Management™ | Q2
| Q2 2018
2018 | loyalty360.org
| loyalty360.org
Conference Review

Employee Engagement

WINNER

2018 Frank Neumann
Sr. Director of Consumer
Lifecycle Management
& Loyalty, Vans

Vans is more than a footwear company. It’s a promoter
of the action sports lifestyle, youth culture and creative
self-expression. It just happens to do this through its
footwear, apparel and accessories brand.

It’s also a family, which it proved with its new employee
engagement strategy, which takes a page from its
member loyalty program by offering an employee
incentive program designed to encourage store teams
to tell the loyalty story from the moment a customer
walks through the door through checkout. It offers
incentives such as monthly giveaways and an annual
prize in which the highest performing store in each
region receives a personalized gift designed by the
company’s founder.

More importantly, store associates are empowered to
identify and reward the most loyal consumers in one-on-
one personalized interactions. Store managers have full
authority to identify deserving consumers and celebrate
them by “surprising and delighting” with a prize.

Finalists: GameStop, IHG, Caesars Entertainment

Loyalty Management™ | Q2 2018 | loyalty360.org 41
Conference Review

Technology & Trends

WINNER

2018

Ally Financial doesn’t have any brick-and-mortar locations but is on the
list of the 25 largest financial institutions in the United States because of
its emphasis on the customer—and its creativity.

This year, for example, it pushed an emphasis on savings to its customer
by creating a first-of-its-kind, real-time Augmented Reality game that
helped it “hijack” the Super Bowl. Customers downloaded Ally’s “The Big
Save” AR game and—during the highly popular commercials—dragged
virtual dollars into a piggy bank on their phone screen.

The goal was to increase awareness about the need for personal
savings during a time when brands were spending millions of dollars
on advertising. More than 600,000 people played the game,
spending an average of 54 minutes each. It was so popular, it won
Twitter’s Interception Award for most talked-about brand during the
Super Bowl that didn’t run a commercial.

Finalists: Best Buy Canada, Balance Grille, Adore Me

Megan Audette
Marketing Manager, Strategy,
Ally Financial

42 Loyalty Management™ | Q2 2018 | loyalty360.org
Conference Review

Customer Analytics & Data

WINNER

2018

When the My FedEx Rewards program was launched three years
ago, it performed, below expectations. FedEx tinkered with it for
a couple of years trying to get it right, but last year completely
reinvented the program. It utilized Customer Driven Design
principles in which customer empathy tools (research, feedback
and internal analytics/data), were at the core.

The new program eschewed points in favor of more personalized
rewards, with benefits steered toward incentives that members
can then invest back
into their business; such as curated content,
electronic and physical gift cards, digitally downloadable rewards
and merchandise.

And what a difference it has made. In less than a year, the My FedEx
Reward program went from an underperforming, one-size-fits-all
treatment to a holistic marketing engine, powered by sophisticated
analytics and technology, and has resulted in instant benefits-both
in terms of program growth and customer engagement.

Finalists: Adore Me, Sleep Number, USA Today

Michelle Proctor
Director of Marketing,
FedEx Services

Loyalty Management™ | Q2 2018 | loyalty360.org 43
Conference Review

Program Partnership

WINNER

2018

To emphasize its dedication to its customers, American Family
Insurance created DreamKeep Rewards, a program that forges
partnerships with local businesses such as spas, zoos, restaurants,
and more to provide memorable experiences for its members.

Customers earn points for completing dozens of activities—simple
things such as being a designated driver, checking the tire pressure
in their vehicles, replacing a washing machine hose, organizing a
neighborhood watch meeting, and many more. In return, participants
receive a variety of rewards, including experiences at businesses
within their own city.

As the first pure loyalty program in the insurance sector, this program
has demonstrated the best of loyalty practices and challenged the
norms of a decade worth of loyalty programming that previously
saturated whole sectors and missed the mark with consumers.

Finalists: Caesars Entertainment, SCENE, Shangri-La Hotels

Mark Rothwell
AVP Brand & Consumer,
Direct, & Loyalty Marketing,
American Family Insurance

44 Loyalty Management™ | Q2 2018 | loyalty360.org
Conference Review

Loyalty/Reward Program Design

WINNER

2018

The Minneapolis Institute of Art has operated for the benefit of the
general public since 1883. It doesn’t charge an admission fee, which is
great for enhancing the cultural experiences of the people of Minneapolis
and showing off the museum’s 90,000 pieces of art. However, this makes
operating a challenge from a financial perspective.

As a result, it relies heavily on membership, as do many nonprofit
organizations. However, rather than operating with the traditional annual
renewal model of membership, the institute created a “pay what you can”
membership model that rewards philanthropy, participation and visitation.
Rather than membership expiration, benefits simply regress to their
foundational free level on the anniversary of their most recent gift.

The one-of-a-kind program leads the nonprofit arts sector in a shifting
philanthropic environment. As a trailblazer in the non-profit loyalty program
sector, MiA is redefining the traditional
view of loyalty program enrollment
and its related incentives.

Finalists: FedEx, Cooper’s Hawk Winery & Restaurants, Galderma

Eric Bruce
Head of Visitor Experience,
Minneapolis Institute of Art

Loyalty Management™ | Q2 2018 | loyalty360.org 45
Conference Review

Allie Porter
Digital Marketing
Creative Campaign
Specialist,
Domino’s

WINNER

2018

Domino’s Piece of the Pie loyalty program is among the best known
and best performing loyalty programs in the QSR vertical, and it has
created a strong following among pizza fans that typically don’t see
loyalty as a strong factor when deciding between a few top brands.
However, even with more than 15 digital channels to earn points in
the program, a large segment of customers were left out: those who
chose to order over the phone or in-person.

As a result, the program fell short. Domino’s realized this, so despite
the challenges, it developed an offline earning enhancement. To
drive awareness it created a Domino’s Earn Anywhere program
enhancement and campaign.

The Earn Anywhere campaign consisted of traditional media,
digital channel promotion, in-store measures including employee
training, and perhaps most interestingly, a mobile game that had the
potential to reward players with loyalty points toward free pizza.

Finalists: IHG, SCENE, Celebrity Cruises

Sarah DePotter
Loyalty Program Leader,
Domino’s

46 Loyalty Management™ | Q2 2018 | loyalty360.org
Conference Review

360-Degree
360-Degree WINNER Award - Brand
Award - Vendor WINNER

2018
2018

To top off a successful Loyalty360 Award
Optimove is the science-first Relationship campaign, FedEx was named the platinum
Marketing Hub, used by over 300 customer- winner of the brand 360 Degree Award winner
centric businesses to drive measurable growth during the 2018 Loyalty Expo. The My FedEx
by scaling customer engagement. Optimove Reward program has made amazing strides over
is used by leading brands of all sizes, including the last year. We look forward to the continued
Stitch Fix, Glossier, B&H, Sweaty Betty, Freshly, success of the program.
AdoreMe and many others.

Finalists: IHG, SCENE, Caesars Entertainment
Finalists: Lenati, TLC Marketing, Brierley + Partners

Saurabh Kohli Michelle Proctor
New Business Manager, Director of Marketing,
Optimove FedEx Services

2018

Loyalty360, the association for
customer loyalty, held the first-ever
edition of the Loyalty360 Top 10,
the latest in its stable of industry-
defining awards.

The awards recognized the top tier
of Loyalty360 members across six
categories, granting the distinction
to 10 of the industry’s leading brands,
agencies, individuals, programs,
and technologies.

Loyalty Management™ | Q2 2018 | loyalty360.org 47
7695 Beechmont Ave.
Cincinnati, OH 45255

SPECIAL
OFFER

Loyalty360 Members have special access to
Customer Expo networking events, sessions, and more!
Receive a 6-month Loyalty360 Individual Membership
with any full conference pass purchase.

Use the code L360MBR at checkout.

CustomerExpo.com

Code cannot be combined with other offers or applied to existing registrations. Valid until October 1, 2018.

513.800.0360 | loyalty360.org | @loyalty360