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Volume 1 Number 1
PREMIER ISSUE
knowledge. deliver y. results.
how mot ivatin g.
Let us motivate you.
At Affinion Loyalty Group (ALG), we offer ways to drive profitable behaviors among your customers using any means possible:
points, miles, rewards, incentives, enhancements.
Our years of experience ensure we acknowledge, understand and anticipate marketplace and consumer trends, helping us
design programs to motivate your customers’ behavior. Some of the most recognizable brands have employed our services
to develop loyalty solutions to meet their profitability goals. We believe loyalty should be a business strategy with a positive
ROI. And our proven loyalty solutions repeatedly result in profitability for our clients.
DEPARTMENTS
4 Letter from the Editor
6 Contributors
LOYALTY FORUM
8 Your Voice
10 Q&A
12 Behind the Brand/People
Interview with Marti Beller
FEATURES
14 Customer Insulation
Doug Press – The Incentive Group
16 True Loyalty in Tough Times
Steve Yastrow – Yastrow & Company
(above) Steve Yastrow, Keynote Speaker, Loyalty Expo 2008
18 Loyalty: a “Symbiotic System”
E XPO IN RE VIEW
Not a Program
Paul Hebert – i2i
20 Comp CustomersTM
Susan Payton – Egg Marketing & Public Relations Phil Rubin – rDialogue
LOYALTY
in the NEWS
The Motivation Show
and Loyalty 360
Welcome to the first issue of Loyalty Management, a one of Announce Partnership
a kind, customer driven quarterly publication. Here at Loyalty Management,
we define a customer as every person your company touches—your end users,
your key accounts, all of your employees, partners and vendors. We are committed Plastic Jungle Appoints
Gary Briggs CEO
to creating a documented customer-centric forum for sharing ideas, concepts,
Former eBay Chief
and trends across all industries interested in proactively communicating with
Marketing Officer to lead
their customers and each other. gift card services company.
Supporting this, in our premier issue, we hear from Steve Yastrow, sharing 2020 Marketing to
Offer RewardStream’s
his ideas on building a “We” relationship, demonstrating the importance of Lifecycle Marketing
your brand approach. In addition, contributors from various backgrounds Platform as Core Loyalty
share their theories and strategies. Connie Chesner shares ideas on how to Technology
provide more relevant messages, while Paul Hebert explores the value in Licensing Agreement to
having a more consistent message across all business units. Be sure to check Provide Loyalty Marketers
out the closing section, which brings you the highlights and insights from the with Industry-Best Loyalty
first Loyalty Expo. and Incentive Solutions
We hope you enjoy this first issue! As always, your thoughts, questions, Loyalty 360 Announces
opinions and insights are welcomed. Two New Members to
Leadership Team
Sincerely,
Maritz Loyalty
Marketing Launches
Next-Generation
Technology Platform
Erin Raese
LoyaltyHQTM
Editor
Loyalty Management
Thanks Again Members
erinraese@loyaltymanagement.com
Rewarded with Gas
FuelLinks Joins Airlines,
Retailers, Other Thanks
Again Reward Partners
MANAGEMENT
Behind the counter: You’ll enjoy the benefits of an agency with more than 30 years of experience
developing and executing customer relationship marketing programs in the retail industry. Our team
members are thought leaders and sought-after speakers who are committed to using their expertise
to help retailers attract, retain and grow profitable customer relationships.
On the menu: Select the services you need from our full slate of offerings, including …
Strategic CRM consulting Customer research
Loyalty marketing program development Creative execution
Loyalty program alternatives Production services
Data analysis and data management ROI measurement
Five-star rating: CCG has developed, launched and managed dozens of CRM and loyalty marketing
efforts for top retailers in the U.S. and Canada. Let your store be the next to take advantage of our
complete, proven approach — and start on the road to fresh sales and revived profits today.
800.525.0313 • customer.com
Greg Sultan, SVP, Strategist • ext. 122 • greg.sultan@customer.com
Jack Williams CEO, eCommlink Loyalty 360 Team Laura Rusche, Director of Marketing;
Amanda Chasteen, Operations Associate Manager; Ashley
American Airlines AAdvantage: Able to earn miles from
Bankes, Sales Coordinator, and Annie Lerner, Marketing Intern
a large, diverse group of merchants. Multiple earn with one
burn allows me to continue my “equity” in the program for Kroger Plus Card: Love getting personalized coupons
years. The availability of seats for “burn” are limited at the based on our spending habits, gas rewards/ rewards for
last minute, or you have to use many more miles to get an everyday and essential spending.
“any time” seat, the reality is if played right you can save
CVS: Purchase prescriptions each month and don’t realize
considerable dollars on long flights.
how quickly the rewards add up / rewards for everyday and
Marriott Rewards: The earn here is not as broad as the essential spending.
AA program, yet at ten points per dollar spent, it can add
Other Favorites:
up. It is the upgrades to much better rooms, concierge floor
with free breakfast and snacks can really reduce your cost of American Express Card: Free flights and can accumulate
traveling, and not require travel out of the hotel. When I am miles from shopping online /being rewarded for loyalty and
in New York City or Washington, these advantages seem to usage in ways that matter to us.
be nice, and in the winter, really nice. Speedway: Purchase so many gallons, get some free/
The Kroger program for rewards that sends a check of rewards for everyday and essential spending.
$5.00 after each $500 spent in a Kroger unit. While not real Coach/Victoria Secret: Rewards for loyal customers /
sexy, or fancy, if you are spending this much often, then you special sales, coupons / rewards for being brand loyal.
have a real 5% savings on your food costs.
LaRosas: Local pizza place, pay for a Buddy Card (typically
a fundraiser), and you get all different types of rewards /
Caitlin Schar Director, Loyalty Management joining philanthorpy and everyday spending.
“Really Nice Restaurants,” Valued Member Program.
Hands down the BEST loyalty program created! Besides Sudhakar Boddu Principal at Computer Sciences
providing excellent food, atmosphere and service…the Corporation
instant and frequent rewards make this program easy
and valuable, which keeps me coming back again and I like the loyalty program which gives points (like airline
again. They understand who is trying to win whos loyalty. miles). That’s because of the recent Delta’s turn around.
Don’t make me sweat to earn your loyalty—reward me to Delta came out of its troubles, as its customers had invested
encourage mine! their time and money with them over the years and it also
became their collective responsibility to keep Delta moving.
2 & 3... Nothing compares! Truly, for me, any good As long as Delta was offering reasonable fares and service
program prioritizes ease of redemption and is quick to earn/ Delta frequent flyers never deserted Delta.
deliver value.
A: I think the process is the same in this environment as it would be in a better economy. To provide an environment in which people are encouraged
to excel, develop their skills and delivery, and offer excellent customer service—is a challenge that requires special leadership and focused management.
From the three secrets of the classic One Minute Manager (Ken Blanchard and Spencer Johnson):
One Minute Goal Setting (clear goals/expectations/accountability for each assoicate)
One Minute Praisings (frequent ecouragement—“Catching them doing things right”)
One Minute Reprimands (Immediate, Specific corrective feedback, followed by encouragement for them to improve)
When these steps are used often and repetitively they form the basis for achievement and help build a business relationship that can engender
loyalty. There is much that can be done beyond these basic steps, but without all three of these, associate development will be difficult.
—Gary Duke, Installation & Service Mgr @ ESS (Electronic Security Specialists
Write us at: Mailbag@LoyaltyManagement.com or plug-in to the Loyalty 360 social network at:
Twitter, LinkedIn and Facebook. Share your thoughts and start a discussion!
Marti Beller
The other side of Marti Beller,
the President of Affinion Loyalty Group
What do you consider your greatest achievement? Equally important would be empathy. I think it is
Professionally, I became President of ALG at 32 and many both an innate and a purposeful skill to try to understand
people would assume that I would list that among my someone else’s situation, problem or viewpoint. The ability
greatest accomplishments, but to loosely quote an old to put yourself in another person’s shoes sets the stage when
saying, “Getting there was the easy part, staying there… trying to find win-win outcomes.
now, that has been difficult.” I could easily point to one
Which talent would you most like to have? I would
of many product innovations we have made at ALG, or
like to be able to sing well. I love music. Music is a total
the culture that I have helped to create and foster; but
mood changer for me. So if I could have brought that to
when I consider what made that all possible I think it boils
life, versus just being a benefactor of it, that’s talent that I
down to the consistency of leadership that has resulted
would have loved to have.
from staying at one company for 15 years, weathering
the inevitable storms that come over that time period. What’s your personal motto? Things turn out best
Like many, I could have jumped at any point and left for those who make the best of the way things turn out.
any mistakes that were made behind for someone else to I believe you can look at most things either negatively
correct, but instead I feel they created a platform for the or opportunistically. It’s not a rose-colored glasses thing,
next level of professional growth. Over the past 15 years, because I think I’m very realistic. I just choose to believe
this industry has gone through significant changes, and there are opportunities in almost every situation, and
I’ve enjoyed making it through the hard times to savor that those doors of opportunity open all the time—but
the good ones. So, interestingly, I think it has been my many people miss them. Taking those opportunities and
commitment and loyalty to a company that I believe in so making the most out of every single one of them is a non-
much that brings me the most pride. negotiable for my life.
What are the qualities you most admire in a person? Which person has made the most impact in your
I admire people that are thoughtful regarding their life? My daughter, without question, has had the greatest
intentions. I fundamentally believe in win-win and I think impact on me. She made me realize that not all results
that there are too many times in life where people lose can be measured in a single day’s time. I became more
sight of that. Intent matters. People who are thoughtful, intentional around the legacy I would leave—both
self-aware and will push their creative minds to their limits, personally and professionally—because of her. It was always
regardless of where those limits are, receive my admiration. important to me, but she changed the way I approached
I believe that positive, thoughtful intent leads to positive it. I have an innate intensity, and for me, results matter.
results, even when momentary adversities arise. After having my daughter, I became acutely aware, and
Customer Insulation
by Doug Press – The Incentive Group
The warm and fuzzy Pink Panther is the branded mascot that most often comes to mind
when we mention the word Insulation. Thanks not to Inspector Clouseau (Peter Sellers) but to the Owens
Corning brand, this fiberglass form of insulation is the mental association we make at the mere mention of
the word. But in the world of Customer Loyalty, Insulation has a much more profound and economically
valuable meaning. It is the impenetrable marketing fabric we co-create and deftly weave around our
customers to protect and preserve the relationship that they enjoy with us and our brand.
Th e E n g ag e m ent Qua dr a nt
S
Is it your products? Are your products so unique o, what makes the best customer relationships?
enough that no competitor can offer a substitute? When the customer can’t think about you without
also thinking of themselves—“We” relationships.
Your services? Are your services really one-of-a-kind?
What happens when customers believe they are in a
What about your promotions and offers? “We” relationship with you? They are loyal to you and to
Are they special enough to bond customers to you? their relationship with you.
We live in a world of crowded store shelves and endless Notice what I wrote. They are loyal to you and to their
purchase choices. Your customers believe there is always relationship with you. I specifically did not say that they
another product, service or deal they can substitute for are loyal to your loyalty program, or loyal to your weekly
yours. You may believe your offerings are unique, but your coupon offers, or loyal to your frequent buyer program. I
customers may not agree. said they are loyal to you and to their relationship with you.
What do your customers think is unique about you? This distinction is very important. We often lull ourselves
What is it they “can’t get anywhere else?” into a belief that we have a loyal customer just because
the customer buys whenever we make them an offer. But
I spend a lot of my time helping companies differentiate this customer’s loyalty may be fleeting, and she may leave
themselves in their customers’ minds. What I see, time you as soon as a competitor makes her a better offer. I
and time again, is that when people feel passionate about call this “transactional loyalty,” when a customer is loyal
doing business with a company, when they say, “I can’t get to your promotional offers, but is not really loyal to you.
it anywhere else,” it is usually because they have a strong Transactional Loyalty is a fragile type of loyalty. And, it is
relationship with that company. Simply put, relationships the type of loyalty most companies are trying to cultivate.
are the best differentiators.
Customer loyalty has been around for some time—over 100 years according to some sources.
Starting with stamps given to customers who paid cash for purchases in the 1800’s to the more
formal programs such as Green Stamps and the well-known frequent flyer programs of today.
Some studies indicate that over 75% of consumers belong to a loyalty program of some kind.
A Jupiter report from 2003 showed that companies spent over $1 billion on loyalty programs.
Loyalty is big business. Customer loyalty is the Human Resources can now focus on employee loyalty
holy grail of marketing. If a company has loyal customers and satisfaction and feel like they are contributing more
their cost of customer acquisition almost disappears, to the business than just making sure W-4 forms are
price sensitivity is reduced, customers’ tolerance for completed. Unfortunately—they don’t talk much. There is
mistakes increases and the company realizes higher profits. no connection between what the HR department is doing
Customer loyalty is good business. to drive loyalty and engagement with employees and what
Marketing is doing to drive loyalty with consumers. But
Because customer loyalty drives so many great business let’s really complicate this—Sales (sometimes Marketing)
benefits it’s no surprise that the industry continues to typically has the responsibility for driving sales within a
grow—more programs, more offers, more rewards, more distribution system—dealers, distributors, wholesalers,
points. But we’re not really getting all we can out of loyalty. etc. There are a variety of promotions and incentives
offered to distribution channels to drive sales. Sometimes
Service Profit Chain called “frequent buyer programs,” sometimes they are
hidden within “co-op” programs. By whatever form they
Way back in the dark ages (1997) an idea called the
are presented, they bear an eerie resemblance to loyalty
Service Profit Chain was proffered by some Harvard
programs—do “x” get “y,” hit a goal and be crowned a
academics—Heskett, Sasser, Jr. and Schlesinger—linking
“Gold” member.
customer loyalty to employee loyalty and customer
loyalty to profits and growth. Their basic premise was that
But alas, and a lack—they aren’t connected. In other
customer loyalty was driven by employee loyalty, customer
words…
satisfaction was driven by employee satisfaction and profit
was driven by customer loyalty. The typical representation
n HR runs employee loyalty programs
of this idea was a “chain of events” that led to profit.
n Marketing runs consumer loyalty programs
This revelation drove an increase in attention on employee
n Sales runs distribution loyalty programs
satisfaction and employee loyalty.
n Do
the consumers have a way
to interact and reward great
customer service? Does your
employee recognition program
include customer input?
No one runs the strategy that links to consumers must take into account
these initiatives together. Now is the that for a majority of businesses,
n Do
consumers have a way to
time to make that happen. consumers probably interact more
interact with each other? Can
with the distribution channel than the
one customer drive another
It’s a Symbiotic System— sponsoring companies themselves.
customer’s behavior? How
not a Program
are you leveraging the social
It’s the White Space
Loyalty is a system of initiatives that networking aspect of the new
connect to, and rely on each other to There is a lot of information and economy?
be successful. Individually, programs there are a lot of companies that provide
can work—and work well. When you loyalty program services from design n Do
non-customer facing
think of your programs in terms of and reward fulfillment through data employees understand the
a symbiotic system you can multiply analysis and business intelligence. loyalty program? Do they know
the affect of any one program to what their role may be in driving
create results that are greater than the loyalty?
individual results of each program.
“A true loyalty n Does
the distribution channel
By definition, symbiotic systems
are any interdependent or mutually strategy is symbiotic.” have a way to connect to
employees at the sponsoring
beneficial relationship between two company?
persons, groups, etc. A true loyalty
strategy is symbiotic. If you’re really There are also a lot of companies who n Are
the members of the
serious about loyalty with your can put together a great employee distribution channel consulted
customers—you then must also recognition program designed to on how the customer loyalty
be serious about loyalty with your increase engagement. Distribution program is designed and
employees and distribution partners. incentive programs are very common delivered?
One without the and can be implemented easily. Each
other is incomplete of these discrete pieces can be designed n D
o members of the distribution
Consumer and less effective. and implemented flawlessly—and channel have any way to
effectively. But it is less about the customize the consumer
The loyalty individual pieces than the white space program for their audience?
CHANNEL EMPLOYEE strategy is less a chain that is between them. (Within the scope and strategy
than a network, of the base program of course.)
with interactions Do yourself a favor and look for ways
between all audiences. Loyalty to connect the white space between n H
ow does the program pull
strategies must take advantage of your programs; take advantage of the in the channel members and
the fact that employees not only symbiotic nature of loyalty and enjoy a make them want to support the
deal with consumers but with the greater return on your program. L consumer program?
channel partners and vice versa. In
addition, loyalty programs targeted
Comp Customers, TM
T
here is a fundamental difference between metrics With these data in hand, there is a much better metric
that report on the business performance (i.e., how to focus on: Comp Customers.
are we doing?) versus metrics that enable you to
manage the business (what do we do?). Comp Customer metrics are similar to Comp Sales
metrics, but don’t confuse the two. Comp Sales measures
Take retailers, for example, who are struggling with comparable stores sales over prior periods; it measures
double digit sales declines over the critical Holiday changes in the total revenue. It does not reflect changes at
period. The metric they follow, along with investors, the transactional or customer levels.
is “comp sales,” or comparable same-store sales. For
loyalty programs, there are similar numbers for program
performance; metrics such as “total program spend,” “The value of loyalty programs rest in the
membership figures (growth, attrition, etc.) and now ability to track and manage customers.”
Net Promoter Scores (NPS).
NPS is the loyalty metric most in vogue these days and In contrast, Comp Customer metrics provide visibility
while it’s a good, high-level metric for measuring broad into how individual customers are spending compared to
customer “loyalty” (and significantly better than Customer a previous period. Comp Customer measurement provides
Satisfaction), it’s not effectively used as a management insights into which customers are trending up and which
tool. A promoter doesn’t necessarily equate with a valuable ones are trending down, and by how much. This allows
customer. Comp Sales can identify dips in sales by region marketers (and others in a company focused on driving
and by product, but that doesn’t give an indication of sales) to look at individuals and groups of customers (e.g.,
how to fix the problem, other than mass promotion (i.e., segments) in terms of spend and trend. With these insights,
discounting). they can then treat them differently in terms of messaging,
offers and timing of communications.
These days, most retailers have loyalty programs and
store-branded credit cards, giving them insight into So while many retailers struggle and default to mass
spending at a customer level. The value of loyalty programs promotion, there is a way for them to impact declines more
rest in the ability to track and manage customers. The profitably: with the right loyalty tools and Comp Customer
data yielded from programs, along with the ability to analysis on hand. The following real world scenario
relevantly communicate with customers is the power illustrates the value of using Comp Customer metrics to
that is increasingly overshadowing effectiveness (and guide marketing decisions and investments.
measurability) of other marketing activities.
L
et’s start with “Smart Stores” which is Unlike Smart Stores, “Typical Stores” is resorting to the
facing comp sales declines of 15%. Let’s assume old mass marketing, spray and pray, discounting approach.
their performance is on par with their competitors. This approach yields the same offer and deep discount to
Everyone has a loyalty program and everyone is basically everyone, including those customers that are continuing
running the same program (just like real life!). to shop in spite of the downturn. While they might have
slightly higher sales at the end of the period, they will erode
Just like their competitors, they know that sales are down profitability by offering deeper discounts than necessary to
in Region A and B for products X, Y and Z. But unlike its customers that would have shopped anyway (i.e., dilution).
competitors, Smart Stores just developed Comp Customer
reporting. Using a proprietary customer segmentation
scheme, they divide customers into four key groups and
assign each customer to one of those four groups. “There is a way for retailers to impact declines
more profitably: with the right loyalty tools
Analysis of activity among those four segments shows that and Comp Customer analysis on hand.”
two out of four segments actually show increases, with one
segment performing significantly higher than the others.
Based on this knowledge and their ability to send email The real value of a loyalty program, and loyalty
to customers, Smart Stores decides to send different email marketing, comes in using the data and the program to
versions to each segment, messaged different based on how do better relationship marketing through better insights.
each segment is doing from a Comp Customer standpoint. The Comp Customer metric provides that window of
They smartly provide a richer offer to those customers with insight into how customers are behaving and who we
negative comps, knowing that it will take more to win want to target to behavior differently. In any market, but
them back. especially a tough economic market, it’s a vital tool in
prioritizing limited resources to drive customer behavior
To those customers in the best performing segments, at the greatest profit. L
they employ a message more focused on reasons to shop,
new merchandise and a more value-added offer, rather
than a deep discount. They even recognize and thank
these customers for continuing to patronize them and
reinforcing their core value proposition.
Dialing in on Relevance
by Connie Chesner – OTM Partners
To hit the mark, a message must be relevant to most valuable in effective communication. Understand
consumers. But what are the hallmarks of relevancy? how customers think about your category and then your
How can we be sure that our communication is on product, service or brand. How do they make decisions
target? And what are the associated benefits for your specific to your category? For instance, someone who
product, service or brand? values independence is driven by different motivations
in making financial decisions than someone who places
When a message truly connects with its intended a greater value on family security and work ethic. When
audience there are two principles at work. Relevancy is underlying motivations for the same action are different,
achieved when: uniform messaging will not be very effective.
n We think like our audience
By taking the time to truly understand your
n We talk like our audience.
customer’s motivational drivers via these conversations,
your efforts will be appreciated and rewarded. Engaging
How to get started: think and customers in a meaningful dialogue and then messaging
understand. back to them in terms they are familiar with, creates a
Learning how to think and talk like our audience sustainable point of differentiation. When customers
begins when you engage consumers in strategic know they have been heard, they will flock to your
conversations with two overarching strategies. First, brand.
determine who to talk to. You need a diverse group of
customers to ensure that the insights gleaned from your The idea is to know what to ask, how to ask it,
conversations are applicable across your markets. Next and then develop your marketing communications
use trained researchers to ask pointed questions and accordingly.
probe for information in areas of additional insight.
Leave bias out of the conversation by engaging outside Then talk in a familiar voice.
resources not entrenched on a day-to-day basis with Your customers likely do not think about your
your industry. During analysis, look for commonalities products, service or category in the same way that you
in thoughts and language across customer segments. do. The words and phrases they use will vary, sometimes
dramatically, from yours. For instance, most customers
In structuring your conversations you may end do not use phrases like “financial instrument,” “service
up asking questions similar to those that led to the area,” or “share of requirement.”
development of your products and services. In addition,
you’ll delve into customer psychology getting to the core Relevance comes when we actively seek to understand the
of what really makes them tick, even in areas of their customer’s language and adopt it in our communication.
lives which may seem only tangentially related to your It is about moving from corporate-speak to a tone and
products or services. These areas often prove to be the voice that customers can respect and relate to.
I
may have over 40 ties in my closet, but not all are U.S. now participates in upwards of 12 loyalty programs,
created equal. I am most loyal to the one my daughter but is the average household a very loyal household? Or,
gave me two years ago for Fathers’ Day—it’s 100% more likely, is this 12-program phenomenon an indicator
polyester, probably from K-Mart, and may have cost as that people are still looking for the right deal and haven’t
much as three dollars. However, there is an ‘emotional tie’ found it yet?
to that tie that does it for me.
In the marketplace, I like to define loyalty as the “If every program truly delivered
increased likelihood a consumer will engage or re-engage
with a brand or product upon an identified need. Put a real deal—‘loyalty fatigue’
simply, loyalty means new business, repeat business and
referrals—loyalty means revenue. If your loyalty program
simply wouldn’t exist.”
isn’t having an impact in these areas, it’s time to reassess
that emotional tie. Effective loyalty programs do have significant power
to influence purchasing behavior, with 80% of those
Loyalty methods vary widely and many venture into who participate in a loyalty program reporting that their
staggering complexity, yet too many of them disregard membership in the program impacts their purchasing
their fundamental purpose—to ‘emotionally’ connect decisions. In fact, 60% of consumers say they are spending
with the customer. Simply having a loyalty program isn’t 27% more than they did before joining their favorite
enough, it must offer the customer relevant value and loyalty program, and would spend less if a company were
make them feel special frequently enough to actually to discontinue.
create the ties that bind.
So, why the fatigue? Consumers keep adding yet another
Offering true value is important, because a customer program into their wallets—even as they are literally awash
never tires of getting a deal. They never stop wanting to in a flood of points, miles, beans, xyz-bucks and pennies
feel smart or special. Getting a good deal feels good and it on the dollar rewards all in the name of “Loyalty.” Put
never gets old—“deal fatigue” just doesn’t exist. simply, not every program delivers the deal it promises,
and customers are getting soured on that. If every program
Contrast that with “loyalty fatigue,” an increasing truly delivered a real deal—“loyalty fatigue” simply
buzzword in our industry. The average household in the wouldn’t exist.
First, know your customer. Take a look at your This phenomenon disregards a fundamental factor to
loyalty program. What is the emotional tie? Have you loyalty—redeemers outspend non-redeemers three to one.
assumed that your customer must want points, simply It is not the existence of an incentive that will get customers
because you created a points-based program? What to bring you more business, it is the redemption of that
does your customer think is important? Yes, the answer incentive. A successful loyalty program both encourages
is different for everyone, but there are some universal redemption and drives revenue. In a very successful
favorites: We all like to save time. We all like to save program, redemption directly drives revenue.
money. We all like to feel smart. We all like a good deal.
Keep any rewards/loyalty program simple. Value
For example, a few years ago HSBC created a Cab your customers’ time. Don’t make them count points or
ride program in NYC to help customers get to the bank’s accrue miles for years. Save them money without requiring
branches. That one cab ride probably created more loyalty them to jump through hoops. Make them feel smart
than could any number of points or miles. The program because they got a great deal, not just because they finally
was personal, practical and memorable, and it earned figured out how your loyalty program works.
HSBC an emotional tie with its customers. HSBC got
to know their customers—and they offered them a good An easy-to-use program simply increases the redemption
deal. And, although this approach may seem pricey, if you factor, which in turn increases the power of your loyalty
consider loyalty for the buck, it surely compares more program. If you want repeat business, give repeat rewards.
favorably than your average banking loyalty program. If you want frequent business, give frequent rewards. If you
want customers to think of you first, then think of them
Next, deliver true value. Today’s consumer is savvy first, by valuing their time, money and intelligence with a
enough to know that just because you say it’s a deal, doesn’t practical program that promotes brand redemption—and
mean it is a deal. If you want real loyalty, deliver real, therefore, brand allegiance.
relevant value—and make sure redemption is frequent and
encouraged. Offer real value. Encourage redemption regardless of
your ‘currency’. Make it easy, and make it often. In this
A healthy loyalty program brings you “goodwill dollars” economy, it has never been more critical to refocus on these
when the customer is rewarded—you invest in an incentive, fundamentals and create that emotional tie—the one that
and the return comes in the form of repeat business, will bind your customer to you for years to come. L
referrals, or a larger purchase. Despite this fundamental
How Do I Value My
Rewards Program?
Let me count the ways…
by Sarah Phelps – First Annapolis Consulting
L
aunching and sustaining a rewards to its sponsor. Not only should the revenue over time
program requires investment, focus and above of the relationship be considered but also the cost of
all, patience. Once in market, the only way the replacing that customer in the event that they do attrite.
program is optimized is if the sponsor utilizes marketing In addition, the number of products carried by the
and other resources to call attention to the program and customer, or the number of incremental visits is also
remind current members and prospects of the benefits of important to include.
being a “loyal” patron of their business.
Another example, but perhaps the hardest to
Today’s environment has all program sponsors, financial quantify, is the marketing value of various forms of
institutions and retailers alike, evaluating each line item communications that the rewards program supports.
of expense in their business looking for ways to generate Each statement, e-mail and web visit supported by
savings that go straight to the bottom line. Certainly the rewards program would have to be replaced by
rewards program reserves and administrative expenses are another, less permissive, and often more costly, form of
not immune to such scrutiny and can be an easy target communication that equally impacts member awareness
for financial analysts. After all, it really is just returning a of the program and the sponsor’s value and brand.
portion of precious margin to customers…or is it?
This is not to say that opportunities do not exist
to reduce rewards program costs. There are several
“Financial analysts have a tendency to underestimate the value
strategies such as segmenting programs to target top
that an organization garners from a rewards program.” tier customers with the most compelling value. There is
also the potential for adjusting redemption options or
Financial analysts have a tendency to underestimate raising redemption costs. Adding a nominal membership
the value that an organization garners from a rewards fee is also an option to consider. The impact of any of
program. Financial institution sponsors will look at these changes however, needs to be closely monitored to
per card performance for rewards and non rewards quantify their impact on customer revenues.
customers, compare interchange revenues, net out
the rewards reserve rate, and call it a day. Retailers, At the end of the day, the value of a rewards program
on the other hand, sometimes limit their evaluations and of the customers participating in it should be
to average sales per ticket, net out in-store discounts carefully evaluated before employing any cost cutting
provided to rewards members and look no further. In measures. Those evaluating rewards program costs should
each case, the broader benefit of the rewards program is look to the items mentioned above and consider others
underestimated, potentially…grossly underestimated. that may be unique to their organization. One potential
challenge in all of this is the availability of behavioral
There are several additional elements of rewards data to support such an analysis. Those embarking on
program value to consider. Perhaps the most under a new program construct should carefully consider the
recognized with the greatest potential impact is customer data points that will be necessary to support continued
attrition. The length of a rewards customer relationship program analysis such that the program’s performance
as compared to a non-rewards customer can be eye can continually be measured. L
opening to skeptics of the value of rewards programs
Gift Cards in a
Down Economy
by Deb Merkin – Gift Card Partners
The Travel Industry of America (TIA) reports 2008 overall travel spend to be down 9% with
2009 dropping even further. So what does this mean for loyalty travel? The answer might
surprise you. Although there has been a decrease in travel demand across all travel sectors,
leisure, business and incentives, loyalty travel program members have remained committed to
their program and continue to value how far their points can take them.
I
n tough economic times program members searching various websites and making travel reservations
look to the value of their program to stretch their online. It is very American to “do it yourself ” and online
spending. Industry statistics show general purchase redemption tools provide that service. Loyalty programs
travel is down, however loyalty travel remains strong as can also reduce fulfillment costs by using online booking
members use their points to take that trip they may have tools which shift travel redemptions away from high
just purchased in good economic times. cost call centers. Call centers will still be required for
select programs and segments of the cardholder base but
As program members look to their travel programs to used appropriately online booking tools will increase the
provide even more value in today’s market it may be time program member’s engagement with the program as they
to ensure you’re getting the best value from your travel come online to shop itineraries and see how far their points
rewards. As the travel industry changes it’s vital to keep will take them.
abreast of those changes to deliver the expected customer
experience and value to your program members. Going beyond just the airline ticket many program
members are using points to take the sting out of their
Due to the complex nature of travel rewards historically entire vacation. Many programs are now flexible enough
many had to be fulfilled using a travel agent or concierge to allow travel rewards that include hotel stays and other
service. Also program members have been trained to pick components of vacation packages. While hotel stays have
up the phone if they wanted to book travel rewards. typically been in travel programs, they were traditionally
presented as a certificate based reward which provided
Using online self-booking redemption tools, like access to limited hotel brands and came with associated
Connexions Loyalty Travel Solutions’ Online Rewards “blackout dates.” With the advent of the modern online
Exchange (ORX) program, members have the ability booking tool program members have the ability to book
to select travel rewards at price points that meet both any hotel property in the travel provider’s reservation
their and the program’s requirements on a website that system thus greatly expanding the reward choice, usability
is available well beyond traditional call center hours. By and lowering the cost of delivery for the program not to
exceeding 60% of transactions online, the ORX platform mention eliminating the issue of managing certificate
helped CLTS clients save in excess of $3M in operating inventory. The same is true of rental car rewards.
costs in 2008 while improving customer satisfaction scores.
The most important recent evolution in travel
Using a travel reward strategy of shifting to an online redemption has been the introduction of dynamic points
delivery has many positive features for both the loyalty plus cash, where even when the customer is penalized for a
program and its members. Travel is one of the web’s most partial redemption, programs are experiencing up to 70%
prevalent products and consumers are very in tune with voluntary utilization of points + cash. Additionally, this
O
nline self-booking redemption program web site. Rotating specials and last minute deals,
also provides program members the option to especially in today’s economy will drive traffic to a program
use points + cash to buy down part, or all, of site. The key here is speed to market and consistency of the
their desired travel itinerary. This leads to accelerating the message. Members need to know that on designed times to
redemption of a traditionally high value reward and creates check their program site for the latest offer.
more engagement with the program. Rather than waiting
15 to 24 months or longer to get a “free” airline ticket many Adding ancillary travel components to the redemption
program members are opting to use the points and cash mix also benefits programs. Components such as
model to get their reward now and using split pays to do destination activities and events can be booked in the same
so. Satisfied they can get the high value reward when they travel redemption itinerary creating a complete solution
want, program members start earning for the next reward for the program member. Gone are the days of booking
sooner. There are a variety of pricing models available for a reward ticket and then searching for companion tickets
program managers allowing for the cost per point to be at another source. Not only is this a better customer
managed to meet the program’s economic model. experience but it drives additional card spend for the
ancillary products.
As online redemption tools evolve to make the
redemption process easier, access to travel reward inventory The future of travel rewards continues to evolve with
at competitive rates is going to be a key ingredient for a new tools and creative applications all designed to reduce
successful program. Just having a delivery tool won’t make delivery costs and improve member experience. The ability
you competitive. For many programs travel rewards are to shop and redeem for cruise and packaged vacation
a key enticement and the reward cost, even if in points, inventory are two of the rewards on the horizon for online
needs to be on par with the large online travel agencies fulfillment. Working with the right travel provider is the
(OTA) in the market place. Unlike merchandise travel key to getting the most benefit from your travel rewards. L
rewards don’t have the option of using a different model
The Rewards
Revolution
is Here!
by James C. Purdy – Bridge2Solutions
The new rewards revolution has begun in earnest, evolving from the convergence of online
consumers with new robust technology such as sophisticated web services and services oriented architecture, reward
programs now provide real-time online catalogs offering millions of choices—all branded and easily managed for
the program sponsor’s specific needs. With it, the sales incentive, employee recognition and consumer loyalty
program marketplace has a new spark of life—emanating from the power of personalized choice and selection that
the rewards side of the performance equation can now offer. Technology has brought speed and vast selection to
our everyday lives and redemption options in point programs have now caught up.
P
articipants and programs have changed all categories of point programs—mostly avoiding dollar-
over the years, from the stamp programs of 100 denominated media—equating the earnings currency to
years ago, to the online breadth and depth of the redemption currency. If you earn in points, you redeem
rewards today—in between and still valid are emblematic in points.
jewelry, logoed merchandise, BOGOs, plaques, trophies,
premiums, plateaus, catalogs, gift certificates, debit cards, What about results? Our collective vision to
gift cards and of course cash discounts or cash back. bring the widest breadth of rewards to the marketplace
Participants have become more savvy and consumerism in a real-time environment started less than five years
has made them more impatient—when they know they ago—while we knew we had a good reward solution, we
have earnings, they demand their rewards. Bank loyalty didn’t know the extent of the results that vast selection
programs currently offer various reward options for different and real-time inventory could bring to a rewards program.
portfolios. Personal preference has become imperative as we The excitement and changing environment of a real-
all have grown accustomed to searching online for the exact time “living” rewards catalog drives many more visits to
item that we want– cardholders want experiential rewards, the catalog URL by the participating audience—which
events, various activities and tours, online travel planning translates into 5-10 times more brand “hits” per month for
and seemingly limitless merchandise choices. the sponsoring company. “Adding such an extensive catalog
with ease of navigation increases the value of any rewards
Having millions of reward options already accessible program,” said Michael Ruege, Executive Vice President of
online then opens up future opportunities for accessing USMotivation, headquartered in Atlanta, GA. “Participants
desired redemption options. My company, Bridge2 are visiting their program sites much more often because
Solutions, offers bridge technology necessary to present they have such a wide variety of reward options and
millions of rewards, in easy-to-browse user interfaces, for choices. Rewards range from books and CDs all the way up
those companies operating point accrual systems/programs. to individual travel and high-end electronics. Choice is the
The white label plug and play ability along with real time catalog’s biggest attraction and our program sites create a
rewards pricing, availability and accessibility has been made customer experience that is personalized-there’s something
possible through advances in web services technology. for everyone.”
We are helping to revolutionize rewards redemption for
T
he engagement of the to Montreal, green appliances, or 20
participant in a point rewards DVD’s—let them make the decision
program directly corresponds and select their personal choice of
to the reaching of business goals rewards priced in the earnings medium
wrapped by the program. Additionally, of the program.
in the last year alone, we’ve fulfilled
over 40,000 different SKU’s proving In summary, the rewards revolution
that participants truly are individual is here—enabling sponsoring
and desire very different rewards. companies to embrace more attractive
The capability to offer this kind of choices for today’s target audiences.
selection only comes with the latest Considering the latest global economic
of technology advancements, after environment, it is more important than
all, offering more than 6 million ever to attract and retain customers
items doesn’t mean walking into a with the assistance of offering valid,
huge warehouse filled to the top with enticing, timely rewards for points
merchandise with no labels or signage! earned, while making the selection
Technology is enabling us to offer process entertaining, and desired
vast selection in an easy to navigate, items simple to locate and quickly
searchable interface that mirrors delivered. If the point earners are
leading online retail experiences. redeeming more, then they will in turn
want to earn more in the sponsoring
The last couple of years have had company’s program. So, in the last
the equivalent impact on the rewards part of the first decade of the third
marketplace as the previous 10 millennium—technology and creativity
had on the same market. Rewards are in sync for point earning and
selection and redemption have now point redemption activities—creating
caught up with the earnings and excellent opportunities to maximize
reporting technology of consumer the effectiveness of rewards programs.
loyalty, employee recognition and Not too long ago, many of us were
sales incentive programs. There is predicting that the TV remote would
no more need to espouse “awards become what the mobile phone has
neutrality” when millions of award become—the access technology of the
choices may now be presented in easy real world to the online world. Today,
to navigate online catalogs for all types and in the near future, technology
of programs. The customer-participants will take revolutionary jumps in the
have let us know that this is a different U.S. and abroad and as biometric and
world—they want to earn points, they mobile devices edge out the plastic card
want to burn points and most of all market for identification, information
they want rewards that make sense to and payments—I guarantee that
them, whether a redemption is for a rewards programs will evolve
cappuccino machine, a 10mp camera, accordingly. My TV remote told me so
tickets to a theater production, an … where the heck is it anyway? L
iPod, zip-lining in Costa Rica, a flight
The simple fact is that fuel rewards are working right Understanding Fuel Rewards
now for a wide range of retailers including grocery and
convenience stores, automobile dealerships and on-line Understanding fuel-based rewards means understanding
retailers, among others. They have used this program to the consumers’ attitude toward their fuel purchases. Buying
attract new customers, build consumer loyalty and drive gas isn’t gratifying and no matter what the price, consumers
incremental sales and higher profits. And the program is always feel like they are paying too much for a gallon of
broadly applicable to all retailers and service providers of gas. Fuel-based reward programs exploit this sentiment
every type and size. From the local dry cleaner and the and the high perceived value of gasoline. In fact, today’s
hair salon to your favorite restaurant, your accountant shopper would rather get a dollar of free gas than an actual
and all of the larger category killer retail chains. These dollar, because they perceive more value in the gasoline
diverse businesses can leverage innovative fuel-based than in the currency.
rewards programs to remodel their retail marketing and
customer loyalty schemes and to drive same-store sales Fuel-based rewards put this powerful consumer
and increase profits. perception to work for retailers, manufacturers and fuel
redemption locations.
And over time, fuel-based rewards will evolve from a
closed network, retailer-centric model, to a broad based Most fuel rewards programs are relatively simple:
community reward market where consumers will no longer consumers shop at a given retail outlet, where point of sale
decide “what” they buy, but “where” they buy it. And with tags and other marketing and advertising vehicles are used
community fuel-based rewards consumers will cross over to identify participating products or qualifying purchase
retail channels and retail brands to accumulate rewards, requirements. Shoppers receive a Free Gas voucher or
using free gas as the common currency. As a result, market electronically issued fuel reward at checkout when they
share will shift away from retailers who do not offer fuel meet pre-established purchase requirements, then redeem
rewards to those that do. the reward at a participating fuel station. From the
consumers perspective this program more than exceeds
To understand how we can get from here to there, let’s the test for program understanding and ease of use by
take a closer look at how this increasingly popular form of providing instant gratification with instantly issued rewards
retail promotion is being used today. that are available in real-time for immediate redemption.
!"#$%&%$'()*+,)$-./#0,1
Contact us for a demo of our web based Loyalty Dashboard at 800-416-2090x12
or e-mail us at info@incentivegroup.com
399 Knollwood Road White Plains, NY 10603 January 2009 | Loyalty Management 35
www.incentivegroup.com
BEST BUSINESS PRACTICES
Successful Hires
Can Executive Search Firms, Recruiters
& Headhunters Really Help?
by Amy DeBerg-Ferwerda – R&P Group
Statistics like this challenge us to evaluate our hiring practices and to look at our department and
company statistics to determine how we compare. With an economic mandate to accomplish more with
fewer resources, how can we ensure that we spend our resources efficiently and prevent costly mis-hires.
The cost of a mis-hire for a $100,000 employee is quoted anywhere from $50,000 to $1 million.
The question for today is “Can Executive Search Firms As Terry Petra has been know to say, “It’s not the what
really help increase the percentage of successful hires?” It we do, it’s the how.”
certainly seems the loyalty industry believes that recruiters
have value. Indeed the largest firms in our industry retain What do they do? Recruiters have “helped” companies
executive search firms for every job above a certain level. But achieve successful hires by simply sending a resume of
do we track the success of our hires? Can recruiters help? someone with whom they have never spoken. On the other
end of the spectrum, search firms interview hundreds of
Let’s first define a successful hire. potential candidates to present a select few top candidates.
Your recruiter may help create your Job Description,
uccessful Hire = Person hired quickly meshes into
S
Candidate Scorecard, Interview Questions both oral
the company culture and achieves all first year
and written, and may even be with you for the Face-to-
business goals at or above standard
Face Interviews. There are long lists of services the most
successful firms provide.
So how would an executive recruiter help ensure
successful hires? How do they do it? Do you need a quick fix, someone
ASAP? If so, a recruiter can still help in several ways. A
What are recruiters? To begin to answer this question recruiting firm can assign a full-time, dedicated team to call
let’s first look all the types of recruiters. Personally, I am Industry people everyday, all day, until they have people
okay with being called anything from headhunter to who meet your requirements. The level of work on the
executive search professional. This is because no matter what recruiter’s part can be anything from a brief scan of the
you call me or any of my peers, there is one bottom-line person’s resume to see that it matches your Job Description
fact—the mission of an executive recruiter is to help to hours of conversations to find the potential candidates
our clients realize successful hires. That is what you who are interested in and excited about your company and
pay us to do—to help you do. The most successful hires are the opportunity. They may even require that the candidates
based on partnership that allows the recruiter to be excited achieve at least a certain score on the candidate scorecard
about the opportunity and to offer a chance to interview for and that the candidates complete written interviews and
such opportunity to only the very best people. provide references and specific salary information.
Brad Smart, President of Smart & Associates, Inc. and author of Topgrading: How Leading Companies Win by Hiring, Coaching and Keeping the Best People.
1
“Good info
on the current
issues, future
trends, and
different
segments.”
—Loyalty Expo 2008 attendee
“With so many
good sessions,
it was difficult
to get into the
exhibit hall!”
—Loyalty Expo 2008 attendee
Mobile Marketing
and Loyalty:
Is it Right for You?
Mobile marketing is affordable, fast to implement,
and gets an increased response.
Go anywhere, the mall, school, work, and you’ll see a good average of three cents per recipient. Studies show that 80%
amount of people using cell phones. They’ve become our of recipients of mobile coupons respond within one hour of
security blankets. We don’t leave home without them. We receiving the text.
use them to make calls, send messages, check email, surf the Passey and Ayeni also offered a variety of ideas to use in
web…it only makes sense that loyalty programs would get mobile marketing. Coupons are just one example. Companies
the idea to use them sooner or later. can also offer suggestions (a la Amazon) of other products a
Mobile couponing, while still relatively new in the U.S., has subscriber would be interested in, inform subscribers of new
been huge in Asia for years. The concept is this: text a specific store locations opening, and create advocates by offering a
code to a number to receive text coupons and offers to your discount for each person a subscriber refers to the service.
cell phone. It’s convenient and you never forget the coupons, In their presentation, they gave Dunkin’ Donuts in Boston
like you do with their paper counterparts. as a case study. The company sent out a text coupon for 99
At the 2008 Loyalty Expo, Kelly Passey of Access cent lattes and saw a 90% response rate and 20% increase in
Development and Ola Ayeni of M-Dialog spoke about this sales as a result.
up-and-coming tool for the loyalty industry. They stressed While building awareness will be the biggest channel for
three key points: mobile marketing in the next few years, the benefits greatly
1. It has to be easy for the customer outweigh the challenges. Mobile marketing is affordable, fast
2. It should have the largest reach to implement, and gets an increased response. As a last bit
of advice, Passey and Ayeni urged attendees to add mobile
3. It should be simple and cheap marketing to their current marketing campaign rather than
SMS text messages, which the majority of phones can rely upon it solely. L
receive, are the cheapest to send coupons through, at an
Tech Talk:
Better Serving
Your Customers
with Technology
With millions of people using social networking sites like
Facebook, LinkedIn and Twitter, it’s no wonder major
brands are connecting with consumers on these sites.
“Including topics
of interest to
merchants and
issuers added
interesting value
to the mix of
participants…”
—Loyalty Expo 2008 attendee
Attrition 101:
How to Keep the Customers You Have
Today in the loyalty industry, we’re seeing a shift from trying Dawson said that while most marketing budgets dedicate
to get new customers to working to keep the ones we’ve got. only about 21% to customer retention, that number should
The economy is tight, and bringing new customers on board be closer to 50%. He recommends these steps to keeping a
is tough. It is easier, however, to keep current customers. customer loyal to your brand:
Studies show that securing a new customer can cost at least 1. Drive engagement. Encourage customers to want to be
five times more than keeping a current customer happy, so a part of your brand.
why wouldn’t you want to keep your customers?
2. Watch for continued relevance. Don’t assume what
you started doing to get your customers’ attention will
“Most marketing budgets dedicate work forever.
only about 21% to customer 3. Maintain quality and frequency of communication.
retention—that number should If you send emails or direct mail, give your customers a
reason to want to read it. And don’t bombard them with
be closer to 50%.” mail.
4. Liven up your program. Add new offers, new rewards,
At the 2008 Loyalty Expo, John Dawson of DataCo spoke and new business partners to keep your customers
about attrition and keeping current customers. He honed in excited.
on the importance of studying your company’s demographics.
So think about your current marketing strategy. Does it
What are your customers doing? When and why are they
focus on attaining new customers? If so, you should consider
leaving? What can you do to prevent further attrition?
shifting gears and refocusing on keeping the customers you
Sometimes the reasons for attrition are simple. Customer have. Keeping your current customers will help you grow
service isn’t up to par. Prices aren’t competitive. Service isn’t your business and increase sales in the long run. L
quality. These are things that are pretty easy to fix. But what
about loyalty to your brand? Are your clients ready to stick
with you no matter what? Do you give them a reason to?
“Loved the
amount of
time that was
allowed for
networking...”
—Loyalty Expo 2008 attendee
Marketing to Millennials
Recently Bill Hanfin, Managing Director of Customer Growth Online rewards and loyalty programs are working
LLC spoke at the Loyalty Expo 2008 about marketing to with Millennials. Programs like AceBucks, the largest
Millennials. According to Hanfin, Millennials refers to the “underground” currency for Facebook, and urTurn Rewards
generation born between 1977 and 1996, and make up 77 to are keeping Millennials loyal to brands.
80 million of the US’s population. They’re the most ethnically
and racially diverse generation in US history, and are what
Hanfin calls the super-sized “me” generation. “According to studies, 62% of teens
As far as technology is concerned, Millennials are totally are apathetic to advertising...”
immersed in it. They own computers, cell phones, and
portable music or video devices, and they use websites Hanfin ended the presentation with a few key suggestions:
as their primary source for news. This generation is n Meet them where they are
always plugged in, and heavily use text messaging, social
networking and blogs to communicate. – Sell less, share more
In order to market to this segment, said Hanfin, businesses n Fulfill the promise of data
have to understand that there is not just a shift in behavior – “1 to 1” marketing may finally be affordable
with Millennials, but rather they are a wholly different
– Social networking opens the door
consumer.
n Don’t try to rationalize the need
According to studies, 62% of teens are apathetic to
advertising. 42% make purchasing decisions based on – They think differently than we do…you don’t have to
recommendations of friends. Millennials are four times more “get it”
likely to use online banking than download music, and 1.5 n Don’t forget everything you learned
times more likely to use credit cards than Boomers. How,
– Remain attentive to profitability & marketing ROI
then, do you reach them?
– Be attentive to traditional financial models L
Most businesses recognize the need for change in the
approach to a customer strategy for this generation, but have
yet to embrace it.
We hear you.
We have had a fantastic response to Loyalty Expo. Your questions,
comments and suggestions are all very much appreciated and provide great value as
we get ready for our spring show. We hope you will join us May 31st through June 2nd
at the Westin Diplomat in Hollywood, Florida. Register for Loyalty Expo 2009!
Visit www.loyaltyexpo.com for more information. Thanks for the feedback!