Loyalty Management, Evolve or Exit: Adapting Your Loyalty Program To The Ever-Changing Landscape Powered by Loyalty 360 - July 2009

LOYALTY
Volume 1 Number 3
July 2009 MANAGEMENT

Powered by Loyalty 360
Flawless
Program
Execution
Is the Art of
Client Service Dead?
EXPO 2009!
Highlights &
Reviews
A FREE MEAL?
The unfried chicken
calamity
Marketing
Automation
Marriage of Process
& Technology
Evolve or Exit: Adapting your loyalty program to the ever-changing landscape

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This Month in LOYALTY MANAGEMENT
J U LY 2 0 0 9 VOLUME 1 NUMBER 3 W W W. L O YA LT Y 3 6 0 . O R G
DEPARTMENTS FEATURES
6 What’s on Loyalty360.org
8 Letter from the Editor 22 Building Relationships—Are your customers
ready to bail on you, or are you already
10,12 Contributors bailing on them?
Jeff Anulewicz & Wayde Fleener – Carlson Marketing
LOYALTY FORUM
14 Your Voice
“What changes could an airline loyalty program make
to their program to get you to switch your allegiance?”
16 Q&A: Ask the Experts

“What factors should I consider as I look to open our
program to multi-tender transactions?”
24 Are the Best Things in Life Free? Some say no.
18 Behind the Brand/People Holly Daly & Nicole Nunn Walker – MetroSplash
Interview with Andy Wright, President, Systems Group
Brand Loyalty-U.S. – Carlson Marketing Worldwide
26 Navigating Today’s Stormy Loyalty Industry
20 Books And The Merchant Network Component
Loyalty Reads Andrew M. Cirmo – Consumer Benefit Services, Inc.
Page 59
28
LOYALTY
EXPO
2009
60 Expo Takeaways: “Keep it Real”
Evolve or Exit: Adapting your

Al McClain – RetailWire.com
62 Eye on the Future: loyalty program to the ever-changing landscape

Summaries from Loyalty Expo 2009 Kelly Passey – Access Development
Julie Sturgeon
32 Avoiding the “Rooster Syndrome”
68 The Loyalty Expo gets Social Kathy Lambert & Tom J. Salutz – DataCo
with Twitter
Bill Hanifin – Hanifin Loyalty, LLC 38 If You Build It, Will They Come? What it takes to
make your loyalty initiative successful.
70 Behind the Brand: Phil Rubin – rDialogue
Beverly Hollifield, AT&T
July 2009 | Loyalty Management 3

Building relationships, one person at a time.
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We have unparalleled experience launching and managing relationship marketing programs.
Our deep understanding of customer data translates into insight – and value – for you.
Our full suite of services, creativity, strategy, execution, end-to-end operational excellence
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When you’re looking for direction on how you can turn customer engagement
into organizational value, contact us.
Let our experience work for you. carlsonmarketing.com | 763.212.4520
4 July 2009 | Loyalty Management

This Month in LOYALTY MANAGEMENT
J U LY 2 0 0 9 VOLUME 1 NUMBER 3 W W W. L O YA LT Y 3 6 0 . O R G
TRENDS & REWARDS BEST BUSINESS PRACTICES

40 The New 4 P’s of Customer Engagement 46 The Mystery of the Missing Loyalty Effect
Summary of Whitepaper by Affinion Group Peter Gurney – The Cicerone Group
48
42 Is There a Loyalty Marketing
Generation Gap?
Bill Hanifin – Hanifin Loyalty
44 Loyalty Insights Study

Chris Cottle – Allegiance
Is the Art of Client

Loyalty Management
Editorial & Production Team:
Service Dead?
Chip Hall – Kobie Marketing
Erin Raese – Editor in Chief
Caitlin Schar – Editorial Director
Victor Wilcox, Graphics Plus Inc. – Layout & Design 50 Marketing Automation: Marriage of
Graphics Plus Inc. – Print Production Process and Technology Key to
Unlocking Customer Loyalty
Loyalty 360 team: Connie Hill – TFC, Inc.
Mark Johnson – President and CEO
Laura Rusche – Director, Marketing Operations 52 Reeling Them In:
Amanda Chasteen – Associate Manager, Marketing Operations How Orvis Nets More Sales
Thomas Scott – Sales Associate with a Co-Branded Credit Card
Jennifer Wickline – Marketing & Events Coordinator Partner Advisors & Bill Eyre –
Julie Hellebusch – Controller The Orvis Company
Contacts: 54 On front lines of loyalty, the mission is clear—

Know Your Customer
Article Submissions: Erin Raese (630) 235-8251
Acxiom – Featuring William Nipper and Janice Rudenauer
Advertising: Caitlin Schar (630) 850-7867
56 Program Success Story:

To subscribe to Loyalty Management visit Loyalty360.org. RocketBux Brings More Traffic,
Revenue Increases
Paul Willerton – RocketBux
We Want Your Feedback
57 Loyalty Program Profile:
As a “voice of the customer” focused publication we want to
Starbucks Card Rewards & Starbucks Gold
hear from you—our customers. What would you like to see
included in these pages? Share your thoughts on articles and
58 Job Openings
ideas for content. This is your platform.
We would like to hear from you.
Write us at: Mailbag@LoyaltyManagement.com

LOYALTY 360 ON THE WEB
What’s on Loyalty360.org
BLO G
State of the Industry

An interactive dialogue with seasoned
industry leaders in the loyalty, incentive/
reward, and engagement marketing space.
Hear from Bill Hanifin (Hanifin Loyalty),

Marti Beller (Affinion), Mark Johnson
(Loyalty360) and others. Join the discussion!
Bill Hanifin Marti Beller
Survey Results and LOYALT Y E XPO 20 09

Participation Opportunities More from Loyalty Expo 2009!
If you missed it in This Week in Loyalty… See who was there and what they had to say.
Epsilon: Survey Results Show
the Benefits of Permission-based
Email Marketing Transcend the
E-Commerce World
WHITEPAPER
Read Affinion Group’s whitepaper “The New
4 P’s of Customer Engagement Marketing”
in its entirety (for summary see pg. 38)
Schedule of upcoming
webinars and events.

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.
Visit us at www.affinionloyalty.com/loyalty or call 800.622.4863 to le n more about our loyalty

learn about
yalty our lo ar
marketing services and how we can help create loyalty between you and your customers.

FROM THE EDITOR
The New Customer

Heading home from the second Loyalty Expo, what
a difference six months can make! We learned how
technology has begun to reshape our lives again; from
iphonifying and gamification, to conference updates,
daily blogs and yes, tweeting. This technology is going to
significantly change how our marketing is done.
For those of you who’d like a quick lesson on tweeting, see

Bill Hanifin’s tips on page 68. In the spirit of grasping this new
technology, come follow Loyalty Management on Twitter.
While technology and social networking were hot topics, we also

spent a great deal of time learning about the *new* customer. The
Loyalty 360 economy fluctuations have changed us all. We’re still spending.
has announced
the first annual But our approach to spending has changed significantly—we’re
Engagement Expo more educated and a bit more frugal. This means, as marketers, our
to be held in Chicago messages need to change—simple, value focused messages and a
at the Sheraton
Chicago Hotel & Towers strong focus on getting back to the basics are imperative. Highlights
November 8–10 from our speakers are included in the Expo in Review section
beginning on page 59.
2010 Loyalty Expo to
be held on June 6 – 8 in
Orlando, FL at the Omni
Dove-tailing with these messages, inside are articles from Kobie
Champions Gate Marketing and TFC. Chip Hall from Kobie stresses the importance
of strong client services and Connie Hill from TFC tells us why
Loyalty Management automation is imperative as we move forward.
on Twitter
During the conference we lost a dear friend and one of the most
LOYALTY
knowledgeable and passionate loyalty supporters I’ve met, John
Volume 1 Number
3
MANAGEMENT 360
Dawson. In the last issue and at the conference John and his team
taught us about the retention imperative. In this issue they continue
Powered by Loyalty
July 2009
Flawless
Program to wake us up to the need for analytics, go and meet the rooster on
Execution
Is the Art of page 32.
EXPO ts20& 09!

Highligh
Reviews
We’re dedicating this issue to John and his family. We will miss him
A FREE MEAL? en
The unfried chick
greatly!
calamity
Marketing
Automation
Marriage of Proce
& Technology
ss
Sincerely,
g landscape
m to the ever-changin
Adapting your loyalty progra
EvoLv E oR Exit:
Loyalty Management
will now be a bi- Erin Raese
monthly publication. Editor-in-Chief
Expect the next issue Loyalty Management
in late August! erinraese@loyaltymanagement.com

LOYALTY
Contributors
MANAGEMENT
Jeff Anulewicz Wayde Fleener

Senior Planner, Mobile and Interactive Director, Decision Sciences. Wayde
Strategy. Jeff is responsible for ensures the right measurement and
developing and leading Carlson analytics are in place for Carlson
Marketing’s strategic mobile Marketing’s clients, and
initiatives in the U.S. Getting an early then uses the data to design
start in the interactive space, he programs that will drive maximum
spearheaded some of the earliest value. He has extensive experience
Jeff Anulewicz
online efforts at Ford Motor Company in decision making processes, and
and on behalf of several Fortune 500 loyalty marketing, and he leads one of
brands through his tenure at Carlson. the company’s largest accounts.
Andrew M. Cirmo Peter Gurney

Wayde Fleener Chief Operating Officer, Cbsi. Andrew Managing Director of The Cicerone
joined Cbsi in 2002 with over 25 years Group, a company specializing
of experience in the retail, direct in customer experience strategy,
marketing and loyalty industry. He measurement and management.
has a broad executive management Over the past 15 years Peter has
skill base and has held officer written and spoken widely on the
Andrew M. Cirmo level positions in two Fortune 500 service-profit link, and has worked
companies. with organizations in many industries
to create more profitable service
Chris Cottle strategies.
VP of Marketing, Allegiance. Chris
Cottle leads the brand strategy, Chip Hall
Peter Gurney public and analyst relations, events, Director of Client Services at Kobie
lead generation and marketing Marketing. Chip brings over 20
communications initiatives for years of experience and expertise
Allegiance. Chris has extensive in managing successful client
experience in technology brand relationships with specific focus on
building in both B-B and B-C markets, strategy, organic and incremental
Chris Cottle and is a regular contributor to portfolio growth, tailored marketing
loyalty, engagement and voice of the programs and promotions, and client
customer forums and publications. communications.
Holly Daly Bill Hanifin

Manager of Marketing Managing Director of Hanifin Loyalty,
Chip Hall
Communications at MetroSplash LLC. Bill is a recognized leader in the
Systems Group, Inc. Holly is areas of loyalty marketing, payment
responsible for brand management systems and technology with an
and integrated communications in impressive history of developing
both B2C and B2B communications. and implementing loyalty customer
Holly is known for her creativity strategies for leading organizations
Holly Daly and ingenuity for the using social around the world.
networking environments in an
integrated loyalty schema.
Bill Eyre If you would like to

Bill Hanifin Bill Eyre has been Director of contribute to a future issue of
Advertising at The Orvis Company
since 1998, and for the past five Loyalty Management please
years has also managed the Orvis
Rewards Visa program. Bill has held
contact Erin Raese at
creative and marketing management (630) 235-8251 or
Bill Eyre positions in the direct marketing ErinRaese@
field for 20 years, following
several years in the editorial and LoyaltyManagement.com.
photojournalism fields.
Deadline for the Nov./Dec.
issue is August 10th!

Michael, age 36
Combined his points for a

well-deserved golf experience
“I convertedmy credit
card points to my debit card.”
Cbsi provides more ways to build rewarding relationships.

www.consumerbenefit.com | 800.657.8167 | pr@consumerbenefit.com

LOYALTY
Contributors (continued)
MANAGEMENT
Connie Hill Phil Rubin

President and Founder of TFC Inc., CEO & President, rDialogue.
an innovative provider of marketing Phil has more than 20 years of
automation solutions, brings more strategic marketing experience
than twenty-five years experience with an emphasis on loyalty and
delivering strategy and execution relationship marketing, integrated
services to the marketing community. communications, partnership
development, promotions and
Connie Hill
Kathy Lambert program development.
Director of major client relationships
and marketing for DataCo. Kathy’s Janice Rudenauer
career has largely revolved around For more than 20 years, Janice has
applying technology solutions to specialized in linking data-driven
Phil Rubin solve both internal and external marketing with the brand experience
client issues. Kathy has well-rounded to deliver on the brand promise
experience in product management, across marketing, sales and customer
sales, telemarketing management service. Her expertise spans multiple
and business systems, implementing industries with leading roles on
the right strategic tools to help clients CRM strategy practice, relationship
Kathy Lambert sell more. marketing and online intelligence.
Janice currently serves as a marketing
Al McClain strategist at Acxiom.
Al McClain is CEO and founder
of RetailWire.com, the online Julie Sturgeon
community for the retailing and Julie is an independent journalist
Janice Rudenauer related industries. He has spent 30+ with 20 years of professional writing
years building businesses—both experience in business and trade
clients’ and his own—in the retailing publications.
industry.
Nicole Nunn Walker
William Nipper VP of Merchant and Member
Al McClain
Will has more than 26 years of Marketing at MetroSplash Systems
database marketing and market Group, Inc. Nicole has a rich
research experience, including 16 background in driving awareness
years with Acxiom Corporation. and demand generation for an
He currently serves as Acxiom’s impressive list of both B2B and B2C
industry strategist over the media, products and services. Nicole has
Julie Sturgeon
communications and travel industries, served in senior management roles in
advising clients on all aspects of marketing and business development
integrated multi-channel marketing. for organizations such as Texas
Instruments, CA and Amdocs.
Kelly Passey
William Nipper Executive Vice President of Incentive Paul Willerton
& Loyalty Services at Access VP Marketing for RocketBux.
Development. Kelly has over fifteen Paul is experienced in software
years of experience in the financial planning and architecture for
bankcard sector with specific focus mobile payments, triggered
on incentive and loyalty solutions messaging, location-based services,
Nicole Nunn Walker including seven years at VISA mobile barcodes and point-of-sale
managing Incentive Marketing redemption. He works with all-size
Services. brands for deploying strong mobile
strategies for retail and web.
Kelly Passey
Paul Willerton

Comarch Loyalty Management
The last puzzle piece

in Customer Relationship Management
Loyalty | Business Intelligence | Customer Experience
For more information visit: www.us.comarch.com

LOYALTY FORUM: Your Voice . . . Loyalty Programs
The following question was posted to the

Loyalty 360 social network…
A senior executive at a top US based airlines asked:

“What changes could an airline loyalty program
make to their program to get an individual (you)
to switch your allegiance?”
H aving been a member of a program for about 20

years I have seen a significant number of changes! I “It’s really the
recognition of status
am not as loyal to United as I once was because the program
became “devalued.” Here are some ideas that would win me
back:
• Make the program easier to understand.
• Make it easier to use upgrade coupons for First Class or and “soft benefits” that
other services.
• Waive the baggage and overweight charges for higher come with status that
truly frequent fliers
tiered members
• Make me feel like I am important to them again with little
perks or surprises. Some hotel programs do this very well.
Gerald Przybysz Operations and Marketing Executive appreciate the most.”
T his is about the difference between treating people
I
like a transaction and having a valuable relationship
with their customers. I fly to 48 states every year and ’d like to echo Mr. Williams comments above regarding
clients continue to ask me why I fly Southwest instead of an portability of equity & status migration. It seems to me
airline with 1st class seating. I always answer that I prefer that this would be a/the primary hurdle for any true frequent
the relationship I have with Southwest over that of an airline flier that has become vested with any one airline. If an airline
which offers a “no class” experience. You can’t buy my loyalty, can offer to port over status at minimum, that’s probably half
you have to earn it. the battle.
And of course, as anyone that has been on the program
Jeffrey Summers President at Restaurant Coaching development side for any length of time understands about
Solutions an airline’s “best customers”, although the miles (and “hard
rewards” from them) are certainly important, it’s really the
recognition of status and “soft benefits” that come with status
I believe the core issue is equity. It is not always the

changes that could be made to drive a person’s migration
from one air carrier program to another. I am an American
that truly frequent fliers appreciate the most. So, if an airline
can offer soft benefits that are innovative and truly superior
to their competitors for their top-tier customers at least,
Airlines AAdvantage person with many miles in my account I believe that’s the other half of the battle. Whether that’s
(actually way too many). The only way I would consider a priority coverage for cancelled flights and upgrades, separate
migration is to ensure that my current program equity is not Security lines for higher-tier members along with First/
lost, either in miles or level (plat or exec. plat) for example. Business passengers (BA, for one, has this I believe), and/or
With the travel today being more of a hardship than a the waiving of so many of these new and most annoying “a la
pleasure, my level is just as important as my miles, and carte” fees. Remove the annoyances that customers feel with
knowing that everything from upgrades to taking care of me your competitors.
in time of cancelled flight. After the minor question of does None of this is should be “groundbreaking news” to
this new airline fly where you want to go, the key element to anyone, but it I suspect it bears reinforcement.
switching my airline loyalty is equity migration.
George Dedes Direct Marketing./CRM/Loyalty
T. Jack Williams Chief Executive Officer at eCommLink Marketing Strategy

“Listen, this
isn’t about points,
upgrades, or other
tactical issues;
it’s about creating a
better experience.” I would echo Paul Allamby’s thoughts and add that the
bane of loyalty is commoditization. Regrettably that is
the result many loyalty programs (the airlines and otherwise)
have achieved.
W
No doubt the airlines survey their top customers and hold
ith all that an airline must do to stay competitive focus groups time and again to determine the “appropriate”
and in business, it is with sincere appreciation and mix for their loyalty programs. As reflected in the postings
amazement that they are able to maintain this level of here, the question often leads the respondent down a
service. path that produces a predictable response--more miles,
1st. Honor the competitor’s miles from making the upgrades, expedited service, etc. This has resulted in a focus
switch. on the program and not loyalty in general, with customers
2nd. “Pricebreaks” at different tier levels. (Why should I “shopping the market” for the best deal--commoditization.
switch to a higher fee/price structure?) As soon as the competition comes out with a better deal, the
3rd. Baggage “Free” if you fly with me on a regular basis, consumer jumps ship.
not tied to a mileage program reward/tier program. True long-term loyalty isn’t about programs and
4th. Make it easier to purchase on board products ie; perquisites; it’s about the customer experience from pre-
Hawaiin Airlines no cash allowed to purchase. How transaction through post-transaction. How many airlines
about prepaid “Snack and drink cards?” bother with post-experience follow through? And I’m not
5th. If you have “premium” seating charges, waive those talking about a boiler-plate thank you from the flight crew/
for certain tier level members. captain when arriving at the gate or an e-mailed customer
We complain because we think we want more (and we do) feedback survey. Does the customer feel appreciated prior,
and yet I wonder if the airlines themselves are beginning to during, and afterward? Did the experience exceed the
feel “maxed out?” customer’s expectations?
Leonard Buchholz Seminar Leader Southwest is one of the very few airlines that comes close
to getting it right. Consistently get your customer where
he wants to go, on-time, without drama. Inform him of any
L isten, this isn’t about points, upgrades, or other changes in a timely manner. Treat him with respect. And,
tactical issues; it’s about creating a better experience. proactively make amends for shortcomings. A friendly smile,
If American or United could deliver a reasonable, good humor, and empathy go a long way while costing
CONSISTENT AND RELIABLE experience, they’d keep more nothing.
clients. Southwest has invested more money in its employees So, my suggestion to your airline executive, would be for
and it shows. him/her to take off his airline executive and budget manager
Wake up guys—would you really trade mediocre service cap and put on his customer cap. Personally experience
for points? several flights (incognito if he is easily recognizable by
airline employees), from several different cities in the US and
Paul Allamby Brand-activist abroad, flying in different classes, on his airline and others.
Listen to unsolicited comments made by passengers in the
terminal, at the ticket counter, and on the plane. I suspect
H ere’s my suggestion. When a program member

reaches a certain point level, all flights booked become
“refundable”. (and p.s.: Paul Allamby is right on)
this experience will provide him with significant insight. The
proof will be in what he does with what he learns. Execution
is everything.
Ron Shevlin Senior Analyst at Aite Group Steven Glover International Association Executive L

Q&A
LOYALTY FORUM: Q&A
Ask the Experts
Q: “My current loyalty program is contained to only

transactions made on my card product, what factors
should I consider as I look to open the program to
multi-tender transactions?”
A: When making the shift from a private tender approach to multi-tender, there are
several factors to consider. First, I favor multi-tender especially if your core consumer
offering is not financial services. The goal is to garner a relationship to the brand not just
a product or service. At the same time, a specific product or service such as a card product
is important to segments of customers. Therefore, it should not be diminished in a multi-
tender approach. Depending on your situation, the card product can be very important
to your customers and organization. So, as you move forward, keep in mind:
The business impacts of the shift. The card product typically provides financial
benefit through lower interchange, fee income and marketing support. Understanding —John Bartold,
the financial implications will be very important. The decision will hinge on your Vice President
organization’s goals. For many organizations, visibility and consumer insight is a primary Loyalty Solutions,
goal. The increased consumer insight gained through multi-tender will drive financial Epsilon
results across the organization including the card product.
The consumer facing challenges at point of sale. Private tender and multi-tender will compete for position
at the point of sale off-line and on-line. Do you promote multi-tender loyalty, the card product or both at point
of sale? Again, once the customer can be identified and understood, it becomes easier to target the right mix of
products and services to their needs.
Design the value proposition to support the card product. Consumers using the card product should be
recognized and rewarded. The card is a badge for the brand and it delivers financial benefit to the organization.
Therefore, the value proposition should be designed to encourage consumers to adopt and use the private
tender within the multi-tender effort.
Focus on customer segments and their relationship to the brand. A successful loyalty effort will draw the
attention. Everyone will want to use ‘loyalty’ as a way to drive their specific area. Single tender versus multi-
tender will be one of many competing, internal interests. Defuse the competitive pressure by demonstrating
how segments can be served through targeted mixes of product and services.
It may take a little time before you have the visibility and insight needed to achieve success. Be diligent
and stay focused. Serve the consumer and they will serve you.

A: Expanding a customer recognition and loyalty program to include multiple
payment options can make a lot of sense—after all, you want to engage with your
customers no matter how they choose to pay. But, you can also create a program
that accounts for the difference in payment habits.
For example, does a debit card customer have a different purchasing profile from a credit or
private label cardholder? Probably so—and that means different strategies. Customers segment
themselves by preferred payment type, so take advantage of the opportunity this presents you.
Never forget that the cost of accepting payment varies by type; your earnings models should
—Jake Sterling,
reflect this. The critical metric for the value of a merchant loyalty program is whether it’s creating
Vice President
value for the perceived “sunk” cost of payment acceptance. Work to determine what this value is for
your organization and how to measure it. Take a fresh look at your loyalty program objectives and
Payment Technology,
ensure you can measure its ROI. Finally, don’t leave the point of sale out of your program’s scope. Maritz Real-Time
It’s the last mile of loyalty; transform it into a point of engagement, so you can reconnect your Rewards
brand with your customers at the very moment they pay, however they pay.
A:
Customer Insights = Opportunity = Profitability. The
CCG has worked more robust understanding of all of your customers
with many clients to create and their spending habits results in better insights that
“multi-tender” programs. can be used to inform the entire organization (not just
Most recently we helped marketing). Many years ago we worked with a retailer
Talbots expand their Classic in Chapter 11. They had a very limited understanding of
Awards program, which had their customer which could be summed up as “female,
traditionally been a Talbot’s aged 25 to 55, pink collar, married with 2 kids.” After
Charge program, to all looking more closely at who was actually coming into their
forms of tender. There are —Sandra L. Gudat, stores it turned out that there were many important and
many compelling reasons President and CEO, diverse customer types shopping, including new college
for an organization to look graduates shopping for career-ware for the first time as
Customer
to expanding its programs well as upscale grandmothers who wanted to look hip. The
Communications
beyond their own credit composite that the retailer had been working from actually
Group
card, a few are: wasn’t representative of their most important segments
yet that was who they were targeting in their marketing,
360 View of the Customer. Programs that focus on only merchandising strategy, store locations and new product
one tender type, such as a proprietary or co-branded development. This disconnect between the real customers
cards miss out on collecting customer transaction and the management team nearly sunk the business.
behavior data when a customer pays with other forms of It’s easier than you think. Luckily, in this day and age there
payment such as cash. They also miss out on identifying are many options to help facilitate the capture and tracking
and understanding customers who will never carry the of all customer transactions. Data storage and access is
organization’s card. These customers often “fly under the practically a non-issue as there is a solution out there to fit
radar” and can account for a substantial amount of sales every pocketbook. Of course, organizations have used reverse
(and are often resentful that they are not included in append and other technologies in years past, which have
loyalty initiatives if they don’t carry your card). Programs become much more difficult and costly to utilize. However,
that focus on only one payment type result in data that everyday, there are new solutions going on the market to
is skewed to customers who can or want to become make it easier. For instance, one solution allows organizations
to swipe a customer’s driver’s license when opting into their
cardholders. This presents a very incomplete picture to
loyalty program thus eliminating the need for data entry.
those who depend on the customer insights generated by
The license can then be used in the future to track purchases,
the data collected by the loyalty program.
thus eliminating the need for a loyalty card. L
Q: Do you have a question for our panel of experts?

Write us at: Mailbag@LoyaltyManagement.com

LOYALTY FORUM: Behind the Brand/People
Andy Wright
President, Brand Loyalty – U.S.
Carlson Marketing Worldwide
Andy Wright joined Carlson Marketing Worldwide in
2005 and is responsible for Carlson Marketing’s global
Loyalty Marketing, Enterprise Engagement, Creative
and Interactive offerings. As a member of Carlson Marketing’s Executive Team,
Andy is known for his thought leadership and his ability to knit together the talent that
exists across Carlson’s global network that spans 21 countries. His team of experts is noted
for bringing cool, new ideas to clients that deliver results.
Which sports team is your favorite? How much Which talent would you most like to have?
time do you spend tracking your team? I would love to possess a true ”fine art” skill. I love just
When I was a kid growing up, I played rugby and about any form of visual art and have collected bits
enjoyed it more than soccer, unlike most Europeans. and pieces over the years. But I have always dreamed
So being from Wales, I follow two teams actually—the of having the skills to make my own work. My lack of
Ospreys, a club side and the Welsh national team. There skill hasn’t stopped me dabbling, even to the point of
is a quite an “underground” rugby-playing community creating some garden sculpture many years ago when I
in the U.S., certainly at college level, but not much to wanted a piece and couldn’t afford one. But the results
go and see. Even so, the U.S. national squad is getting would have been far better if I had true talent.
better and better; I saw them play against Munster, the
European champions, last year in Connecticut. Which person has made the most impact in
your life?
I track team news through RSS feeds (everybody
does these days from the club) and try to watch the big Without a doubt it would be my wife who has
games if possible. And then occasionally I will travel to influenced me the most over the years. She’s been my
see an international—wherever they may be. life partner for 18 years and we make all crucial life
decisions together.
“The way he taught was to let you make mistakes and then
help you figure out how to make the situation right. It really
opened my mind, helped me think “beyond the box.”
What do you consider your greatest
However, if you are looking at this from the business
achievement? context, it would be very hard to pick just one person.
I’m very happy with my career and some business I really believe I learn from everyone I meet.
milestones over the years do ring out, but ultimately But, if I absolutely had to pick one person, it would
my greatest achievement, jointly with my wonderful be a fellow named Roy Boss, who was the Managing
wife Liz, has to be my family. We have managed to raise Director of Brann Worldwide when I was there some
two great kids, Ellie (10) and Luc (7), and still manage to years ago in the UK. He really helped me transform from
retain our sense of fun in an environment where work is a senior manager into an executive with responsibility
all encompassing. for running a business. In addition to developing my
operational management skills, he also took the time

“This summer I will be riding in the Etape du Tour
in France—basically the Tour de France for amateurs.”
to come into my office regularly on an ad hoc basis and to—financial services, travel, retail -- and in newer
just debate business strategy, and kick around ideas. The sectors as well, packaged goods for one!
way he taught was to let you make mistakes and then
In addition, you will see us more involved end-
help you figure out how to make the situation right. It
to-end. While we were once considered more of a
really opened my mind, helped me think ”beyond the
loyalty operations agency, we are now experiencing
box.” I have never forgotten that. I still call him and he is
huge growth on the front end of our business: the
still a mentor to me even today.
strategic and conceptual parts of our business with
If you were not doing what you do today, how brand planning, analytics, and insight to drive more
communications and engagement. A strong loyalty
would you be spending your time?
program is as much about engaging the consumer with
If the question is really referring to what other activity great communications as it is about being able to bank
would I be doing, it would be very hard to imagine points. You will see a lot more digital, mobile (we’ve
something where I wasn’t able to use my brain or able to mobilized 25% of our client companies so far!) and
grow a business. That is very important to me. interactive activity from us this year and going forward
In terms of an activity outside of the business world, I as well.
would love to spend more time outdoors cycling, which
is my passion. In fact, this summer, I will be riding in the Word of advice for a novice loyalty marketer:
Etape du Tour in France—basically the Tour de France I would say “first of all, you have made the right
for amateurs. decision.”
What’s your customer loyalty philosophy? Assuming you’re a novice to marketing in general,
loyalty marketing is a great place to start your career
Before Carlson, I had been in the business of
because you’ll see every aspect of marketing in which
Relationship Marketing for many years. When I came to
you could ever possibly get involved. Everything! From
Carlson, I was really struck by the difference between
marketing strategy to database marketing and IT,
standard relationship marketing and loyalty. I had done
Relationship Marketing programs and been involved analytics, communications, rewards and measurement;
in everything from analytics to database marketing to you will gain an understanding of how everything fits
the creative side of the business over the years. But, it together.
was fascinating to see what loyalty marketing does for Even if you came from another branch of marketing
above and beyond standard Relationship Marketing— and haven’t been involved in loyalty before, as I did,
to the point where I think loyalty marketing will be a you’ll find this industry is a great place to be because it’s
fundamental principle of most marketers; some get it a great driver of growth in the future.
now, more will learn it in the future.
Pretend for a moment that you are thinking about a
The fact that loyalty programs involve a notable loyalty strategy for your clients. You’ve gone through
exchange of value really drives much more of an the steps of figuring out the financial implications;
emotional relationship between the brand and the determined the needs, wants and behaviors of your
customer. And from that you can build a much stronger audience; determined your communication strategy
connection and I think that’s fascinating. And that’s and figured out how to really deliver value back to
really why I got into this business. your client’s customers to build a relationship. If you’re
Relationships count. And we believe in the value of thinking in these terms, then you are truly engaging
building strong relationships. It’s loyalty marketing that customers in the brand and you’re right on. If your ideas
enables the development of enduring relationships are creating a value exchange that drives engagement
between a brand and its customers. So every day, with with the program that allows you to get your message
each interaction, our philosophy is to build valuable across, then that drives further value. Thinking about it
customer relationships for our clients. in those terms, you can see how loyalty marketing can
affect just about every industry you can imagine. And,
What can we expect from Carlson in 2010? thinking about that makes you realize that no industry
We’ll continue to grow! We’ll grow in the traditional is immune from building relationships with customers.
loyalty sectors that loyalty marketing has always played You have made the right decision. L

LOYALTY FORUM: Books
Loyalty Reads
COLLAPSE OF DISTINCTION:
Stand out and move up while your competition fails
By Scott McKain
April 2009 | Nelsonfree | http://collapseofdistinction.com
A cross country road trip or a flight across time zones today will teach
you a sobering lesson—the faster we move, the more everything begins
to be the same. From Starbucks in Singapore to McDonald’s in Memphis,
a sobering conformity has taken hold. Whether you’re buying a meal, an
insurance policy or even a new car, the customer experience has a scary
sameness that has buyers growing less impressed, and less loyal, than ever
before. A challenging economy makes it all the worse, as customers become
infinitely more discriminating about where and how they spend.
Scott McKain’s new book, COLLAPSE OF DISTINCTION: Stand out and move up while your competition
fails, takes a close look at this growing problem and offers cogent, practical advice for businesses searching
for ways to truly stand out from their competitors, especially in a challenging economy.
The book offers four key steps to truly differentiating your company from the pack: clarity, creativity,
communication and customer experience focus. Together, these four components provide a jumping off
point from just being different to being truly distinct.
McKain says an economic downturn is the perfect time to grab market share from your competitor and
COLLAPSE OF DISTINCTION provides a road map to do it.
ANSWERING THE ULTIMATE QUESTION:

How Net Promoter Can Transform Your Business
By Richard Owen and Laura L. Brooks, PhD
November 2008 | Jossey-Bass
Answering the Ultimate Question is a how-to manual for designing and

deploying a successful Net Promoter® program from authors Richard Owen
and Laura L. Brooks, PhD, or Satmetrix.
The book is a follow-up to Fred Reichheld’s 2006 best-seller, The Ultimate

Question, in which he introduced the Net Promoter® Score, the customer
loyalty metric co-developed by Reichheld and Satmetrix. Based on one
question—“how likely is it that you would recommend this company to a
friend or colleague?”—the Net Promoter Score enables organizations to
categorize customers into “Promoters” and “Detractors.”
The motivation for Answering the Ultimate Question was to identify the actions that organizations
have taken to deploy a successful Net Promoter program and create a practical guide on how to improve
customer loyalty and drive growth. Owen and Brooks spoke with more than eighty organizations that have
implemented Net Promoter programs to identify best practices.
Owen and Brooks combined their years of experience in the field with their research to develop the Net
Promoter Operating Model targeted at executives and practitioners who seek to implement a Net Promoter
program. The book introduces and explains the six elements of this model and shares a number of case
studies from companies including Experian, Intuit, LEGO, Symantec and Virgin Media.

WHY LOYALTY MATTERS
By Timothy Keiningham and Lerzan Aksoy
2009 | BenBella Books
In Why Loyalty Matters, prominent loyalty management experts TIMOTHY

KEININGHAM and LERZAN AKSOY draw from the most comprehensive study of loyalty
ever conducted, the landmark Ipsos Loyalty Study, to show why our loyalties, large
and small, are critical to our happiness as individuals and our success as a society.
Loyalty is essential to maintaining stable family and personal relationships,

influential businesses, and high-functioning communities. When loyalty dies, there’s
a chain reaction of negative consequences. CEOs worry more about shareholders
than the companies they serve. Businesses start to view workers as expendable.
Employees job hop and lose passion. Consumers buy what’s cheapest. Marriages
break up and loneliness increases. And children grow up without knowing the value
of service and citizenship.
In Why Loyalty Matters, readers learn:

n How to leverage 10 relationship building blocks to shape your interactions at
home and work
n How organizations can gauge and strengthen employees’ loyalty—and why
they should
n How to boost your company’s profits by finding and developing loyal
customers
n How to achieve career fulfillment through loyalty to your job and coworkers
n How to develop more loyalty in your friendships, family, and community
Throughout, the authors present practical ways to examine your loyalties across multiple areas that
have been scientifically proven to correlate to happiness, and offer strategies for changing how you relate
to others in your professional and personal life. The book culminates in a four-step process, called P2R2,
that gives readers tools to strengthen their loyalty bonds at work and at home. Why Loyalty Matters is the
definitive guide to understanding what loyalty is, why we need it, and how to unlock its power to achieve
more happiness and fulfillment.
CATALYST CODE:
The Strategies Behind the World’s Most
Dynamic Companies
By David S. Evans; Richard Schmalensee
May 2007 | Harvard Business School Press
Google has done it with search-based advertising, Sotheby’s did it more

than two centuries ago and Facebook is doing it with GenY.
They all cracked the catalyst code—and they couldn’t have done
it using traditional business strategies and tactics. These two-sided
businesses generate value, engagement and customer loyalty by creating
simultaneous and mutually beneficial relationships among the different
groups of customers they serve.
In a book that challenges conventional wisdom about pricing, product design,

organization, incentives and rewards, David Evans, Richard Schmalensee and Karen Webster provide the first
step-by-step framework for launching and sustaining these dynamic businesses. They examine the most
successful catalysts of all time, as well as many that tried and failed, and provide original insights into the
secrets of success. Catalyst Code draws lessons from early history, modern-day business, and the author’s
groundbreaking research into what really makes these companies tick.
L

FEATURES
Building
Relationships
Are your customers ready to bail on you,
or are you already bailing on them?
by Jeff Anulewicz & Wayde Fleener – Carlson Marketing

In these tough times, it’s easy to cut back on your customer loyalty
efforts and easy to stop spending money on building relationships with your
valuable customers. But, at what price does this come? If you’re ready to bail
on them, don’t you think they’re one step ahead and ready to bail on you?
R
elationships are tricky; they’re fickle and take time to Powerful, insight-rich communications reach
build. And, ultimately they require a great amount of
customers at an emotional level, driving deeper
trust. But, if you’ve invested anything at all, in building
dialogue to change behavior.
relationships with your customers, here are a few points to stay
ahead and keep from falling behind: Done right, loyalty marketing programs provide a powerful
communications channel for relevant and timely dialogue and
messaging designed to add to that customer information set.
Customer data is at the core of building They also provide a mechanism to reinforce the brand experience
relationships. to create and enhance the emotional component of loyalty. The
power of enabling the customer’s voice and then listening to it,
A sophisticated loyalty/relationship program typically
creates a strong relationship. And, with decreased noise, comes
offers one of the richest customer data sets a firm will hold. increased relevance. While data may be considered dull, it’s what
Organizations who adopt a relationship-based loyalty strategy enables the fun “stuff” in which customers can engage.
are building it on an understanding of fundamental strategic
questions about their customers. Who are they, what they are To maintain that relevancy, a brand needs to ensure the
worth, and what are their desired and actual behaviors? From this data which drives these communications decisions is diligently
information they can determine who to target and what tactical captured and maintained in order to evolve along with the
executions are required to drive an increase in the economic value consumer relationship. Using technology enables you to do it
they add to the business. A loyalty program not driven by data is at the right level. The inherent strengths of the mobile medium
usually driven by discounts. These programs don’t discriminate for instance; the concepts of consumer impulse and proximity,
between truly valuable customers and the occasional discount uniquely position it as the ultimate loyalty mechanism. This
shopper. A relationship-based loyalty program, on the other hand, allows brands to get closer than ever before to true 1to1®
will reward and build customer value. marketing and fulfill on the promise of right-time, right-place,
“The relationship you have with your customer is not about

the transaction. It’s about the interaction.”
From data to insight; loyalty marketing is the right-message. In the mobile world, trusted relationships are
fastest path. driven by relevance and value. Mobile’s ability to enable high
value, relevant offers—delivered in the correct context, at the
Loyalty marketing is the fastest path to the insight needed to correct time—is in the center of loyalty marketing’s sweet spot
“know” your customers, engage them in an ongoing dialogue and and drives the ultimate goal of interactivity. The relationship you
build an exchange that will help realize optimal value from every have with your customer is not about the transaction. It’s about
customer relationship. By recognizing and rewarding valuable the interaction.
customers, they will in turn exchange information that can be
used to create better products and services to more closely fit Now isn’t the time to bail; you need your customers
their needs and desires. It’s pretty basic. Listen and respond with more than ever.
content, information, access and tangible benefits relevant to your A loyalty program is the price you pay to know your customers
customers’ needs and wants. Yielding rich data-driven insight, and, the price you pay to connect. This is the best time to take
loyalty marketing will identify those behavioral and attitudinal your relationship to the next level. With integrity, commitment
elements that will inevitably drive engagement up or down. As and trust, the strength of your customer relationships will remain
Don Peppers says, “customers don’t want choices, loyalty schemes, strong. Now isn’t the time to bail; you need your customers more
than ever. L
newsletters—they simply want what they want.” The key element
is about providing relevant experiences.

FEATURES
Are the Best Things

in Life Free? Some say no.
An examination of the psychographics
that are motivated by “free.”
by Holly Daly & Nicole Nunn Walker – MetroSplash Systems Group
Free [free] –adjective

1. Provide without, or not subject to, a charge or payment: free parking; a free sample.
2. Given without consideration or a return or reward: a free offer of legal advice.
H
ow can we start a conversation about So what is the moral of this story? Since the 19th century
consumers being motivated by “free” without economist have used the term, “There is no free lunch” to warn
acknowledging Oprah’s free chicken giveaway? prospective investors of expecting easy money or windfall results
For those who live under a rock, Oprah Winfrey, the talk show from their efforts or lack thereof. Perhaps the adage should now
queen offered a coupon available exclusively through her Web state “There is a free lunch if you can redeem it.”
site, oprah.com for 24 hours on May 6th. The coupon offered
“two pieces of grilled chicken, two individual sides and a
biscuit” for free at participating KFC restaurants. The coupon “In reality, there is Free
was sought out so frequently that “Oprah Winfrey KFC
coupons” was the fifth most-searched item on Google Trends by
in the truest sense of
Wednesday afternoon, only hours after it had been posted. the word and then there
Stores across the country reported they were inundated is the accumulation to
with customers looking to redeem coupons for a “free chicken free, which is the tender
meal.” Some restaurants quickly sold out and told customers,
who have until May 19—excluding Mother’s Day, May 10— loyalty marketers use in
to use their coupons, to come back. More that 10 million
coupons were downloaded from the offer website and over 3
their negotiation with the
million Americans have already “tried” to redeem the internet consumer.”
coupon for their new “unfried” chicken. The redemption
demand became too overwhelming for KFC and their franchise
operators. So much so, that the President of KFC had to go The flaw in the Oprah and KFC free unfried chicken offer
is that it was truth in advertising. In other words, there was
on the Oprah show and extend the program by staggering
really an offer of “free” with no strings attached. Downloading
redemption dates among geographic regions and offering an
the coupon, redeeming the coupon and eating the meal
additional “Free Pepsi.” Stories of long-lines, sit-ins and angry
involved absolutely zero commitment from the consumer.
customers fueled the news for the days following.

Since the 19th century economist have used the term, “There is no free lunch”
to warn prospective investors of expecting easy money or windfall results
from their efforts or lack thereof. Perhaps the adage should now state
“There is a free lunch if you can redeem it.”
There was no purchase required, nor identification requested.

While there are several seasoned marketing departments
around the globe that offer sophisticated promotions that use
a “Free offer” as a negation technique with the consumer (for
example: Buy one, get one free), they all require something in
return from the customer. Which, by definition, changes the
connotation of “free.”
In the Oprah/ KFC example, they had to alter the original

offer to, “bring your downloaded coupon to a location near
you, provide your contact information and we will mail you a
voucher redeemable for not only the Unfried chicken meal but
a Pepsi soft drink as well.” This gives KFC the opportunity to
capture the motivated consumers data and continue to market by accumulation of wealth, and the accumulation can be
to them in the future. Presumably under this new redemption monetized with several different tokens: points, miles, rewards,
model, the demand will decrease significantly. fuel, discounts, cash back etc. The key is the process of “earning”
the accumulation of the reward. When the consumer feels like
In reality, there is “Free” in the truest sense of the word and they have “earned” the free token then it becomes a “Freemium”
then there is the “accumulation to free,” which is the tender in their mind (a premium reward for their loyal behavior).
loyalty marketers use in their negotiation with the consumer. Which are exactly the perception loyalty programs set out
There is plenty of “free” in loyalty programs, but there is always achieve.
a price associated with that “free.” The price comes in the
form of a frequency, a referral, an accumulation or a preferred
While no program should be designed around one set of
behavior. There is something very democratic about the “price of
demographics or psychographics, I do think there is something
free” barter exchanges hence, the beauty of free enterprise. No
to be learned from the free unfried chicken calamity. There is also
pun intended.
a consumer profile that has a deliberate desire to “earn” their
While it is debatable among our peers, we believe there is rewards in life and it is very doubtful that they downloaded
a psychographic profile that is immune or resistant to offers Oraph’s coupon (or even watch Oprah for that matter). Would
involving “free.” There is an extremely analytical personality that same individual have completed a survey for the coupon or
type (typically male) that fundamentally distrusts “free”; giving used a coupon that stated “buy one, get one free?” Perhaps. It
credence to the motto, “there is no free lunch” or “if it is too will be very telling if KFC uses this new rain check strategy to
good to be true it probably is.” With that said, we do have capture analytics about who redeems their free lunch and then
evidence that this same analytical profile is highly motivated comes back for more unfried chicken. L

FEATURES
Navigating Today’s Stormy

Loyalty Industry
And The Merchant Network Component
by Andrew M. Cirmo – Consumer Benefit Services, Inc.
We’re faced with a “perfect storm” of conditions in today’s struggling market, financial institutions
must apply a spirit of innovation to set up both short-term and longer-term solutions to restore
profitability to all programs. The pressure is on for current loyalty programs encompassing debit
or credit card transactions and even an enterprise wide solution covering a full range of retail
products. Maintaining and growing revenue, while controlling margins by improving portfolio
quality and lowering operating cost for all programs, presents a daunting task for financial
institutions and loyalty program providers.
L oyalty program providers owe it to their

clients and to themselves to apply that spirit of innovation
the loyalty industry was built on, as far back as the days of
adjustments too far in minimum reward redemption threshold,
or in overall point value per reward, will produce results opposite
those desired.
“trading stamps,” and to step up with both short term and long
term solutions. As experts in this arena, with knowledge of
downstream redemption percentages and
It’s time to look at all facets of programs, including the delicate
balance of points per dollar assigned, point valuation and other
case studies of account acquisition, activation
means of reducing ongoing costs and supplementing income. Yes, and overall program profitability, we must
even the seemingly obvious needs to be weighed and analyzed provide cost alternatives and cost containment
to determine the right course of action. We are beyond the easy alternatives. But, we must do so cautiously
fix to relieve pressure and to restore profit levels by adjusting and with an emphasis on managing the risks
customer reward pricing (point values) upward and adjusting
points per dollar earned downward. In fact, there is serious risk
of solely leveraging costs, without looking for
involved. While on paper it may seem that these quick fixes will ways to generate additional revenue.
improve margins by lowering costs, they may dilute the value
proposition to the customer and put entire programs at risk. Back in 1898, prior to the current credit and debit card
economy, the trading stamp business began in a small Milwaukee
The lynchpin of any program is a value proposition that offers department store named “Schuster’s”. By the mid 20th
the customer reasonably achievable point reward goals, while century, it had grown into a multibillion dollar industry. It was
providing the financial institution with a cost structure delivering a success because it leveraged a merchant network approach,
the necessary ROI. The value proposition, or the point levels where multiple retail locations participated in the overall cost
set per reward value, must be both recognizable and reasonably of the reward program in order to provide their customers with
achievable by the cardholder. The goal is to produce improved additional value for each purchase at a very low investment cost.
transaction frequency and size, thus improving overall activation In this type program literally “a rising tide lifts all ships”. The
and frequency with resulting retention and LTV. However, merchants participating realized increased customer loyalty,

“Innovation is not always something new, but many times an
updated version of a time tested solution.”
increased transaction frequency and volume per transaction. A merchant network is one option, but it may not be a
Best of all, by promoting these “stamps”, they created a value significant income generator for all financial institution card
proposition which supplemented their product margins and programs. However, the time has never been better to consider
created top of mind awareness for their participation in the this option. A merchant funded program will not be the sole
program. Customers realized the value of the stamps upon offset to point reward costs because the percentage of overall
redeeming them for a selection of gifts. Sound familiar? transactions, which would have to go through the merchant
network, would typically have to exceed 15% to do so. It is
I
rather one way to reduce overall point cost and create a number
nnovation is not always something new, but many
of tangible benefits for cardholders and financial institutions alike.
times an updated version of a time tested solution. The trading
stamps system is long since gone, but in 1999 Consumer Benefit
When deciding to add a merchant network program, consider
Services, Inc. (Cbsi) leveraged this great old idea and developed the size and type of the card portfolio, the geographic footprint
one of the first new generation merchant network programs for of the financial institution and the merchant network provider
financial institutions tied to the usage of a financial institutions’ itself (there are several to choose from with strong differentiated
core loyalty debit and credit card programs. They developed capabilities). Extensive research should be completed
and tested a program by which card users were rewarded with when selecting one to partner with to assure the depth and
bonus points per dollar by using their credit or debit cards at sophistication of their program. This research is important when
specified merchants both national in scope, web-based and at considering the scale and pertinence of the merchant network
hundreds of locally-based merchants (in the geographic footprint itself, the ability to add and manage a local merchant component,
of the financial institution). These points were funded by special and the technology to process data and to support, report and
purchase rebates provided by the merchant network participants. analyze the program.
“The financial institution could name a specific nonprofit

organization to which a portion of all merchant network purchase
rebates would be donated. The good will for the social consciousness
that this generates for the financial institution is priceless.”
Cardholders benefit from bonus reward points on purchases. We need to step up with smart innovation while maintaining
Financial institutions benefit from the top of wallet positioning the value of our programs. And merchant network funding
of their card, increased card usage and the generation of more programs are but one of many ways to supplement income,
reward points per transaction at no incremental cost, providing a differentiate and excite cardholders and add value. As a loyalty
lower overall point cost. Merchants gain a promotional vehicle to industry, we are still nascent in our use of the web to provide
draw new customers at a very low acquisition cost. our financial institutions’ customers with real time and exciting
relationship-based, one-on-one marketing opportunities designed
Cbsi worked closely with its merchants and with the financial for individual needs driven by sophisticated file segmentation
institution to develop special offers from the merchant network and transaction analysis profiling. The use of wireless device
targeted to their cardholders, thus further stimulating sales technology in personalized marketing, to stimulate usage and
for them, points for cardholders and obvious benefits to the loyalty, is another exciting opportunity, which we all need to be
ready to participate in.
financial institution. They also explored a nonprofit organization
element by which the financial institution could name a specific
As loyalty program marketers, it is not a good plan to ride out
nonprofit organization to which a portion of all merchant
the storm. We need to turn into the storm and sail aggressively. As
network purchase rebates would be donated. The good will for an industry, let’s look back at what has worked, be avid students
the social consciousness that this generates for the financial of current conditions and look forward to create what will be.
institution is priceless. Cbsi worked with nonprofit organizations Most of all we need to supply practical solutions for our clients.
to promote the financial institution’s card to their members We need to navigate today’s stormy financial industry conditions
to stimulate donations! Today, with charities hard pressed for using the compass of experience acquired over years of developing
donations, the timing couldn’t be better. This early merchant and supporting viable value propositions for the cardholder. As
network program served to differentiate, generate excitement and we follow the map of the successes and failures of the past we
to add a new income stream to enhance the value proposition of must be open to the uncharted waters of innovation, from pricing
the core program. to technology to advanced analytic-based targeting. L

FEATURES
Evolve or Exit:
Adapting your loyalty program
to the ever-changing landscape
by Kelly Passey – Access Development

In loyalty, as in everything,
change is the only constant. And, we
have all seen the pace of that change
accelerating as technology advances.
Consider the radio industry, which
took 38 years to become a 50MM
consumer industry. Television
took 13 years to reach the same
benchmark. The Internet? Four
years. And texting? It surpasses the
number of people on the earth daily.
D
espite the rapidly changing landscape,
the goal of the loyalty marketer remains the same: to
increase the likelihood a consumer will (re)engage with
a brand/product upon an identified need. To achieve this goal in
such an evolving marketplace, loyalty programs need to adapt
just as quickly.
Of course, evolution occurs naturally in the wild. It is far less

natural in business, requiring proactive data collection, analysis,
decision making, retooling and implementation. Apple, as an Data is the Key: “Time will tell if industry
example, has mastered adaptation to an evolving marketplace
as it moved from desktop to iPod to iPhone. But more often,
stakeholders are able to gain real
companies are reluctant to force evolution of our programs, and, advantages by leveraging transaction data.”
in the loyalty industry, the results are sobering. —Frank Andrews, First Annapolis
The Consequences of the Status Quo
A 2006 Colloquy study evaluated the “Best of the Worst” These results reflect a failure to acknowledge change in the
loyalty programs over a 16-year period. During this time: three fundamentals of a loyalty program: its financial demands,
the voice of the customers it serves, and the data that represents
• 24% disappeared, with no replacement plan that voice.
• 14% disappeared, intending to replace
However, the results do not reflect a lack of consumer interest
• 7% relaunched
in loyalty programs. In fact, loyalty membership grew by 25%
• 21% underwent “major modifications” from 2006 to 2008 across all program types. The financial
• 34% “evolved” services area alone saw an astounding 77% growth, with an
estimated 80% of all consumer cards (both credit and debit)
In the end, 45% of programs had to retool or exit. These now equipped with rewards programs.
failing plans had three things in common:
Yes, loyalty saturation exists. Nonetheless, consumers remain
• Costs: 85% of programs reported flat funding across more attracted to companies that offer loyalty programs, and
all customer segments—meaning the best and the worst 80% of loyalty members indicate the program impacts their
customers were earning and being recognized at the same purchasing decisions. So, what is our mission if we decide to
level. accept it?
• Conversation: 75% of programs reported having little to
no consumer dialogue built in to the program. If there is no 1) Cut through the noise by keeping the program simple
capture or analysis of the customer voice—how does one 2) Instill trust by delivering what is expected, and
know what works and what doesn’t? 3) Reward or recognize for everyday behavior—redemption
• Data: 82% did not appear to be collecting or using member for the right customers should be easy, encouraged and
information, usage or transactional data. embraced.
(continued on next page)

Evolve or Exit (continued)
“It is not just where the cardholders spend (dining and

shopping) and how they spend (brick-and-mortar)
that matters, we needed to know when they spend.”
TABLE 1
C
ollectively, no one works
toward failure of a program. We
all work hard to build and launch
successful rewards and loyalty
programs, and we can’t afford to be passive
in monitoring their results. Ongoing re-
evaluation is essential, as the noise in the
marketplace continues to increase and more
programs miss the mark with complexity or
weakened value propositions, ultimately
eroding consumer trust.
As further evidence of this, the average household

now belongs to 14 loyalty programs, yet participates
in only 6 of those programs at least once annually—
the fundamental definition of ‘loyalty’ has been muddied in
the consumer mind. We are compelled as loyalty marketers to AN EXAMPLE: INTERNAL DATA ANALYSIS
work harder to earn customer ‘share of the mind and wallet’
with programs that remain relevant by evolving along with our At Access Development, we have witnessed the impact of
members’ changing needs. using internal program data analysis and external data proof
statements to add greater value and relevance to one particular
How do we determine these needs? The booming CRM and banking client and its cardholders, thereby capturing greater
data analytics industries are more than willing to help answer spend with our merchant-funded rewards program.
these questions. The Aberdeen Group recently reported that
Data Analytics will capture a higher percentage of loyalty
Initially, we set out to simply understand the basics of
programs spending in 2009 than any other effort—and for good
the client’s cardholder spending patterns—namely, where
reason (see Table 1).
they spend, how they spend, and when they spend. We then
Yet, while data analysis has never been more important, reviewed transactional activity to determine which categories
budgets for these efforts have never been tighter. The good saw the greatest spending. This data informed our strategy as
news is, you can affordably and effectively retrieve much of the we added merchants to our network prior to launching the
needed data by thoroughly analyzing your existing program and program, to ensure relevant and meaningful merchant content
combining the results with existing external research. where cardholders were already spending.

T
hen, over a two-year period we watched
to see where members actually earned their
rewards. Out of hundreds of categories, we
saw a polarization occurring into two—dining and
shopping. The customer voice, through the data,
was telling us these are areas where they like to shop
and earn rewards. We saw 64%-75% of transactions
and 55%-74% of spend falling into these two
categories respectively.
Listening to that ‘customer voice,’ we again

mobilized our merchant acquisition efforts
accordingly. Over the next year of the program, we set aside less
relevant categories and increased dining and shopping locations
within this client’s footprint, delivering a 117% lift in dining
partners, and a 294% increase in shopping locations.
“This simple, affordable, three-

step exercise resulted in increased
cardholder engagement, with 22%
of cardholders active and engaged in
the rewards program and top earners
receiving up to 14% in merchant-
funded rewards.” This simple, affordable, three-step exercise resulted in
increased cardholder engagement, with 22% of cardholders
active and engaged in the rewards program and top earners
receiving up to 14% in merchant-funded rewards.
Meanwhile, we noted several online discount networks
launching in market. Analyzing both internal transactional data This amounted to hundreds—and in a few cases, thousands—
and external studies, we saw limited value in an extensive online of dollars in rewards a year. We evolved the program to maintain
strategy. Brick-and-mortar retail captures 95% of discretionary an affordable, relevant offering that was simple to use, delivered
consumer spending over online shopping, with 80% of that what was expected, rewarded for everyday behavior, AND had
spending occurring within a 20-mile radius of one’s home. We the intended impact on loyalty. In the end, creative data mining
added an online shopping component simply to enhance the both saves and makes money. Don’t let the complexities of data
perception of value, yet continued to focus program expansion analytics lure you away from the common-sense questions. Start
on brick-and-mortar locations within the region of our banking simply. Start at your next team meeting and ask these questions
client, based on the fundamental usage data. about your loyalty program:
It is not just where the cardholders spend (dining and • Would you sign up?
shopping) and how they spend (brick-and-mortar) that matters,
• Would you actively participate?
we needed to know when they spend. Again, we turned to usage
data to find that cardholder spending directly correlates with • Would you tell your friend about it?
when they have the most time and money—on payday and the • Would you tell family about it?
weekend. Clear spikes were seen around the 15th and 30th of • Would it reward you enough to change your existing
each month. We evolved our email marketing efforts accordingly behavior?
to coincide with these peaks in spending, customizing emails to
feature merchants within a 25-mile radius of the cardholder’s If the answer is no, it’s time to look to your program data, get
zip code. We then initiated weekly “thank you” emails on the your customer feedback and adapt your program. The customer
weekends to remind cardholders of the rewards they had earned. marketplace we serve is evolving—with or without us. L

FEATURES
Avoiding the
“Rooster Syndrome”
by Kathy Lambert & Tom J. Salutz – DataCo
The Rooster Syndrome [shorthand for

the Latin: cum hoc ergo propter hoc (“with
this, therefore because of this”) is an easy
trap for marketers to fall in to when they
explain why things happen the way they
did. Using a control group allows you to
avoid believing that the rooster’s crowing
causes the sun to rise.
As an eternal optimist, the headline of an article which
said, “Loyalty schemes likely to breed ‘WOM champions’”
seemed promising. Incentive and rewards programs are
powerful weapons in the marketers’ tool kit. Especially in
times when those rewards and programs may be providing
the main competitive differentiation or at least an important
element of the value proposition against an increasingly wary,
informed, frugal, and just plain jaded customer base. But, if
loyalty programs could be shown to “breed” Word Of Mouth
champions—rather than just identifying the likely WOM
champions—that would really be news.
Further in to the research summary the article stated that the

study had revealed “significant evidence of a direct correlation
between reward program activity and consumers’ positive WOM
endorsement activity.” And it included factoids along the lines of:
loyalty program members were 127% more likely to be WOM
champions than the normal population. But while the title said
the loyalty program was likely to “breed” these champions, the
article stopped short of saying that they were WOM champions
because of the program. Unfortunately, other recent articles have
not been as cautious as they should be. So it is time to quickly
discuss a couple of points the article’s title raises, because this is
not simply an issue of semantics or serendipity.
We believe that it has never been more important to determine

what is working—and how—in your marketing budget. You can
no longer settle for what appears to be working, or what your
“gut” says is working. You need to know in order to allocate your
resources as effectively as possible to maximize your results. And,
since it is possible to actually know what’s going on, there is no
excuse to operate blindly.

For most companies, the objective of reward, incentive and
“The statements made about the
loyalty program is to increase customer retention and revenue. performance of customers in any
But since these programs come in many different forms, the
statements made about the performance of customers in any particular loyalty program or scheme
particular loyalty program or scheme should be properly
measured against a control group to prove that the objective
should be properly measured against
is truly being met. Let’s look at some real world data where a control group to prove that the
misinterpreting it could create a significant problem for the
marketer.
objective is truly being met.”
Because there is a difference,

the program caused it: could be attributed to the mailing ($0 in Incremental Value).
How is that possible given the results? What happened?
Often loyalty program members are compared to non-
members to determine the value of the program against real As with many Rewards programs, the customers who
objectives. The point is—while not refuting the claim that responded to the offer in this case were most likely to already
the sales performance of the reward customers is greater be the client’s “best customers”. These customers have the
than non-rewards—that it is not sufficient to attribute those most to gain from a Rewards program because they intend to
differences in sales as being caused by the reward program. continue to spend. They are active buyers and the Rewards
It is a logical error to attribute cause and effect to statistical offer is just an opportunity to either save money now or
differences between a result and a prior fact. In fact, statistical accumulate points that will provide additional value in the
analysis does not provide a proof of cause. It only states that future. So the Rewards program did not generate incremental
some relationship exists between the two sets of data. In the sales; rather, the rewards program segmented the more loyal
example we began with it’s the loyalty program membership customers into the rewards program, and the non-loyals into
and the WOM champion. In the example below, we show the non-reward group.
a relationship between average spend and joining a rewards
program. In either instance, even when the differences are
great, it still doesn’t mean that the Reward program generated Predictive analytics and
the incremental sales or ‘bred’ WOM champions.
modeling are critical tools for
Let’s review the hypothetical results from a program we the marketer. And the use of
ran for one of our clients. Credit Card A sends a direct mail
campaign to active cardholders, encouraging enrollment in control groups will keep your
their Rewards program. From the active cardholders in good
standing, we created a mail target and a control group. As
measurements reliable, your
part of the campaign results, we analyzed spend activity for 4 vendors honest, and your
months subsequent to the mailing. Here’s a summary of results
which did not find any incremental sales from the rewards: CFO happy with the results.
Credit Card A - Test Failed In this example, the Reward program appeared to generate
Did Not
additional sales, but the control group showed that the
Post-Campaign Joined program was in fact ineffective. However, the only way you
Join Total
Behavior Rewards
Rewards would immediately know that the program was ineffective
would be through a comparison with the control group.
% of Total 10% 90% 100%
Otherwise, you might be inclined to actually increase the
Mail
Average
$1,000 $444 $500
funding to this effort, and then be left wondering what
Spend happened at the end of the year when the budget was gone and
% of Total N/A 100% 100% sales were flat.
No Mail
Average
N/A $500 $500 In our opening example, it is far more likely that the Loyalty
Spend
Incremental Value: $0 schemes that were described actually identified the WOM
champions in the customer base rather than bred them. Why
does it matter? Because it tells you as a marketer who is in
your loyalty program and—when added to some qualitative
We found that the Rewards customers spent more than research—it will suggest what to do about it. Conversely, it
twice as much ($1,000 versus $444) as those that didn’t enroll, may explain why adding more regular customers to the loyalty
and twice as much relative to the control group ($1,000 versus program may be unlikely to “breed” more WOM champions—
$500). However, in reality, there was no increase in sales that as was implied.
(continued on next page)

Avoiding the “Rooster Syndrome” (continued)
Yes Virginia, you really do

need a control group:
In the example we used, the client was able to set aside control As Mark Twain once said [to the chagrin of our ilk], “there are
groups, but for many Loyalty Marketers, that is simply not an liars, damn liars and statisticians.” We told you right from the
option. Unfortunately there is no shortcut. In fact, there is just beginning that we are optimists by nature. So we like to think
no other way to guarantee that you are measuring the right things that Mark meant that dictum as a friendly and cautious reminder
and actually achieving your goals. The control group is literally to be careful when interpreting the meaning of any statistical
the ruler you need to optimize your efforts. Without it, you might measure or relationship. Because—while it would be very easy
think that your loyalty program created advocates instead of just to fall into Mark’s continuum—you can stay out of trouble by
remembering the simple rule: measurements are important but
enrolling them. You might think you had generated incremental
you can not always draw a cause and effect from them. Or, as my
spending on the part of your customers instead of just identifying
mother used to say: “The road to hell is paved with unsupported
the ones who spend the most anyway. And, you might think that
conclusions drawn from measurements that ignore the fact that
by enrolling a lot of customers in the Rewards program that you statistical relationships do not guarantee cause, that averages can
had also identified the most easily incentivized to spend more. In be comforting but deceiving, and that not all customers behave
every case, the opposite or counter-intuitive was precisely the case. the same way. Consequently, identifying segments of customers
and targeting them appropriately is much better done utilizing
Predictive analytics and modeling are critical tools for control groups.”
the marketer. And the use of control groups will keep your
measurements reliable, your vendors honest, and your CFO Alright, alright, Mr. Twain. It just might have been more like
happy with the results. something about the rooster not causing the sun to rise… L
I’m beIng pulled In a mIllIon

dIfferent dIrectIons. except yours.
email mobile website display ads direct mail call center point of sale
connect wIth more people In more ways.

In a world where consumers are bombarded by marketing impressions, Acxiom
enables marketers to reach the right people with the right message across all key
marketing channels: email, mobile, website, display ads, as well as offline.
34 July
GLOBAL 2009 | Loyalty Management
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For more info, please contact bluefish@fairlanegroup.com

FEATURES
If You Build It,

Will They Come?
What it takes to make your loyalty
initiative successful.
by Phil Rubin – rDialogue
Many marketers share this expectation of loyalty programs: that if you establish a program, then
customers will join, and wonderful things will happen. Sales will go up and profits will soar. Your
company’s CEO and the board will rejoice. Ultimately, you’ll get promoted and live happily ever
after. We call this the “Field of Dreams Fallacy,” which is to say that simply building and launching
a loyalty program is not enough to ensure its success—even one with a great value proposition.
The reality is that customer marketing success is not really Regardless of how this statement is phrased, it’s not the place
about being good at loyalty programs as much as it is about being you want to be after years of loyalty investment.
really good at relationship marketing. Here’s why.
Why Aren’t More Programs Working?
The Common Refrain or Those Who Do Not Study The recent study from Aberdeen Research, referenced in “1to1
History are Doomed to Repeat It Weekly” on May 11, 2009, quantifies this anecdotal evidence,
Over the years as we talk with new clients and prospects we concluding that a majority of retailers, over two-thirds, are
hear them express dissatisfaction with their existing programs dissatisfied with their loyalty program performance. In our
typically as follows: experience, this is usually caused by two things:
1) A poorly designed program
“We built this program XX years ago, basically copied our
competitors’ program and …” 2) A poorly managed program
1. “…are unsure whether it’s working or not” The truth is that there is no silver bullet that ensures on-going
2. “…are now spending $YY million per year” success. It takes a continuous stream of hard and smart work
that extends long after the program launch. Successful loyalty
3. “…no longer sure if it’s as good as what our competition is
initiatives (loyalty programs, relationship marketing, etc) evolve
now offering.”
over time, as does the ability of a company to make the most use
of them.

Success is dictated by the discipline to properly build and their data and information are valuable, and therefore, expect a
then run a loyalty program; to ensure a company gains critical company to be smart about the data it collects. Customers expect
competencies in customer insights, measurement, and optimizing companies to know what they’ve bought, if they need service
customer profitability. Without continuous improvement of those related to a purchase, and how and how often they like to hear
processes, performance will diminish over time. from them.
Aberdeen reports a sizable disparity between best-in-class

Insights Can Improve Relevance of all Customer
retailers and the average and laggard ones, largely around, “the use
of customer data mining and analytics.” Interactions
When a company has customer insights it can, and must
be, more relevant to its customers in every way it serves them.
“Customers expect companies to know These types of customer insights are not only valuable for
marketing, but they are often even more valuable for other areas
what they’ve bought, if they need service of the business like customer service, operations and product/
related to a purchase, and how and how merchandising/store managers—from the products and services it
often they like to hear from them.” offers, to how it promotes, distributes and prices those goods and
services.
Information Exchange Feeds Customer The typical marketing metrics can be expanded to customer
Relationships metrics that measure how customers impact specific functional
areas and the business at large. The more a company can
The challenge of program design lies in using that information understand which customers are impacting its business, positively
to drive customer engagement—a requisite to building a customer or negatively, the better a company is able to manage these trends.
relationship. We need to answer this important question: “Can we (See “Comp Customers”, Loyalty Management, January 2009,
put forth a loyalty proposition that will motivate a customer to Volume 1, Number 1)*
opt-in to a relationship with our brand?”
Loyalty marketing shouldn’t be structured just as a
Customer engagement is the starting point in creating brand “department”, nor should it be a stand-alone program that
relevance, as engagement leads to data collection and, in turn, designed in a vacuum within a firm. From the beginning and
customer insights. These insights then can drive more relevant as long as you run your program, loyalty needs to be integrated
communication and ultimately put the brand in a position to into the entire organization. It’s vital to make sure everyone
drive incremental business from the customers. Therefore, the understands, has input and informs the loyalty program. True
most perfect loyalty proposition in the world, at its best, is a success comes when key organizational leaders are always
driver of relationship marketing. thinking, “How does/can/should (a new initiative) relate to our
customers and through our loyalty program?”
Loyalty marketing is really about giving customers a reason
to opt-in and identify themselves at every point of contact, Long term loyalty success comes when a company has customer
then using these data to drive communications through CRM insights that enable it to be more relevant to its customers,
functionality. Each point of contact creates data and customer and in turn, makes its customers more relevant and integral to
insights around what customers look like, who they are, how they the company’s business planning, operations, marketing and
behave and when, how often / how much they buy, whether they financials. Ultimately it’s what you do with the program (how you
refer, etc. use, adapt, and innovate it) that really makes a difference to your
top and bottom lines. L
Data Collection Also Raises Customer Expectations
*Available online at: http://www.loyalty360.org/loyaltymanagement.shtml
The flip side to collecting and using customer data through a
loyalty program is that it simultaneously raises the bar in terms
of what a company should do with that information. Customers
are increasingly smart about data and privacy. They know that

TRENDS & REWARDS
The New 4 P’s of

Customer Engagement
Summary of Whitepaper by Affinion Group
Customer engagement
has become an important
concept to businesses in
various industries recently;
so important that we
regard it as a prerequisite to
business success amid one
of the most challenging
economic environments in
recent history.
W ith consumer confidence sinking to

record lows and nearly every business rethinking its
value proposition, there is no better time to develop and deploy
What is Customer Engagement?
The term “customer engagement” is often invoked as a
catchphrase to mean any number of items from customer
a customer engagement strategy that will earn a sustainable
satisfaction to repeat purchase behavior. To keep customers
competitive advantage.
sincerely loyal, a company must involve them with its brand to
an extent that transcends the discrete, transactional interactions
We propose a framework for building emotional bond
customers have with a business, and elevates those interactions
through the new 4 P’s of Customer Engagement Marketing,
to mutually beneficial partnerships that are both resilient and
which build upon the traditional 4 P’ s of Marketing (Product,
profitable. This level of involvement is the true hallmark of
Price, Place, Promotion); the new 4 P’s include Perspective,
customer engagement.
Purpose, Proliferation, and Praise. The new 4 P’s are not
considered replacements for the traditional 4 P’s, rather, they
Achieving customer engagement requires ongoing, dedicated
supplement them adding an additional layer of factors that
effort. Every interaction with a customer represents an
accelerate and guarantee customer engagement. This forward-
opportunity to build engagement through repeated, positive
thinking approach will help solidify the brand’s position
encounters. Therefore, every consumer touch point should
in customers’ minds through an engagement strategy that
be carefully evaluated for its potential to build and nurture
ultimately meets or exceeds business objectives.
essential emotional connections.

Achieving Engagement: Proliferation
The New 4 P’s of Customer Engagement is built over time through a series of individual
positive encounters. By utilizing an array of communication
Engagement Marketing vehicles, a company can develop a clear, memorable message
While the business and financial benefits of customer at all touch points. Customers will naturally interact in the
engagement are quite clear, the process of connecting channels that best meet their needs; it’s up to the company
emotionally with customers may not be. True customer to meet them there by proliferating a consistent presence
engagement is not an ambiguous goal, but a measurable across each one. Proliferation requires a cross-channel
outcome with a definite ROI. Building this kind of communication strategy that allows customers to control how,
engagement is an ongoing process that requires a specific, when, and where they engage with a brand and products.
targeted strategy. The strategy we propose, the new 4 P’s In accommodating customers and the ways in which they
of Customer Engagement Marketing, can help develop a prefer to interact, a company improves the chances that its
comprehensive customer engagement strategy that addresses marketing message will be acted upon.
all of the major factors that drive engagement.
“Organizations must dedicate themselves to exploring the innate potential of each

customer touch point to spark an emotional bond that can grow over time.”
The traditional 4 P’s are familiar to every marketer as the Praise

foundation for all marketing strategies. As we enter a new Companies that are successful in creating customer
era of marketing where messages must be precisely targeted engagement understand that engagement is an ongoing
to create an emotional connection with increasingly savvy relationship that requires dedication by all parties. Praising
customers, we need to add a new layer to the traditional customers at key milestones gives them the needed motivation
marketing approach. This new layer, the new 4 P’s, consists of to continue interacting with a brand, with many companies
elements that complement the traditional marketing mix. The recognizing that rewards have become the most common form
elements of this new mix—Perspective, Purpose, Proliferation, of praise and implementing them as such. Praise, if executed
and Praise—work together to effectively connect with today’s appropriately with a long-term vision, can become a mutually
consumer and help outline a specific approach to developing beneficial proposition, where customer rewards become a
meaningful emotional connections with customers. profit center for an organization.
Perspective The Fifth P

Perspective requires a deep familiarity with internal data Layered upon the traditional marketing mix, the new 4 P’s
sources to closely analyze and understand customer and of Customer Engagement Marketing—Perspective, Purpose,
prospect behavior and to gain insight into their personal Proliferation, and Praise—will become necessary elements
preferences. While achieving perspective may seem simple, for any customer engagement strategy. Engagement prompts
it requires exploring the data well beneath the surface to interaction, innovation, and brand loyalty among customers
expose what truly motivates customers. Simple demographic that positively influence business objectives. We’ve discussed
segmentation is no longer enough. Perspective demands the new 4 P’s of Customer Engagement Marketing, but there
uncovering underlying motivations through expert is an underlying Fifth P that drives all the others: Profit.
segmentation and psychographic analysis to precisely target
the best responders. In its simplest form, customer engagement drives profit.
Customers will become more loyal to and spend more
Purpose money with a brand that they are emotionally engaged
with. Organizations must dedicate themselves to exploring
Purpose demands closely examining a company’s brand the innate potential of each customer touch point to spark
image and marketplace positioning, and knowing how it an emotional bond that can grow over time. The ways in
stands in the minds of customers. Honing a sense of purpose which the new 4 P’s of Customer Engagement Marketing are
is particularly important in today’s economy since customers implemented into an overall strategy are only limited by a
rely on brands they know and trust to bring them comfort company’s creativity. L
and reassurance in a turbulent environment. Companies
must present a stable image to consumers through all
available channels, and understand how their brand promise
best resonates with specific customer segments. To be To watch Marti Beller’s presentation of, “The New 4 P’s
effective, a brand must understand diverse viewpoints of
consumers and respond to them with a unique approach.
of Customer Engagement Marketing,” or to read the
A strong, clear brand drives engaged customers to form an whitepaper in its entirety, visit Loyalty360.org.
emotional attachment with the brand, and is the foundation
for a lasting relationship.

TRENDS & REWARDS
Is There a
Loyalty Marketing
Generation Gap?
by Bill Hanifin – Hanifin Loyalty
Meeting the Millennials where they are

sets the stage for engagement.

T
he promise of social media to Loyalty Imagine you are standing on the crest of a ridge with the
Marketers should be clear. We’ve been advocates of entirety of loyalty marketing knowledge under your arm. Across
establishing two-way dialogue with program members a deep ravine on the next ridge is Generation Y, all 80 million
for the past 20 years, touting that only within the trusted of them. You can’t just walk over and engage them in what you
environment of a loyalty program will customers share their have to say as there is a river running swiftly through the bottom
preferences, aspirations, and concerns relating to your brand. of the ravine. You’ve got to build a bridge to reach the other side
or you will miss the opportunity to engage this massive consumer
Don Peppers and Martha Rogers coined the term “1 to 1” audience.
marketing in what seems an ice-age ago. While the concept was
right, execution was too costly for most companies to absorb. It
is one thing to craft promotions, offers, and communications by
segments, but to drive personalization to the individual account
level was not financially sustainable. “I am not telling you that Social Media
After the first wave of failed CRM installations, the ambitions is THE answer or the ONLY answer.
of “1 to 1” marketing were softened to a more practical “Mass
Customization”.
But, it is the best opportunity we
have ever had to fulfill the promises
With CRM’s legacy of unfulfilled potential, one would think
that Loyalty Marketers would be tearing apart the box labeled of 1 to 1 Marketing.”
“Social Media” like a child on Christmas morning to see what’s
inside.
I’m not sure it’s happening and here’s why:
Attending Card Forum & Expo in Marco Island this past

April, I heard a great keynote from Joshua Peirez, MasterCard
Worldwide. His topic was innovation and he took an informal
poll in the room of 200 bankers:
n Who’s on Twitter?—less than 5% raised their hand

n Who has a MySpace?—no one raised their hand
Social Media could be the bridge. Read carefully, as I am
n Who has a Facebook page?—25% said “yes” not telling you that Social Media is THE answer or the ONLY
n Who knows what a Kindle is?—10% positive response answer. But, it is the best opportunity we have ever had to fulfill
the promises of 1 to 1 Marketing. The technology allows business
Given the median age in the room, I was almost relieved with to tailor messages to small groups if not individuals and the
the MySpace answer, but noticed the uncomfortable murmuring Millennial Generation is the first ever to be so forthcoming with
that waved through the room upon the mention of Twitter and personal insights and opinions.
Facebook. Mr. Peirez had made his point that “we” in the banking
and card issuing industry need to understand, if not embrace, There is evidence of experimentation in the space, with
these new communications tools if we are to stay current in the AirMiles Canada adding a community to its web site. Its purpose
market. is clear as the landing page advises, “Now there’s a place where
you and other collectors can swap tips, experiences, and chat
Listening to other sessions, my suspicions that all things social about anything and everything Air Miles”.
media were regarded as distractions to be enjoyed by the younger
generation but not to be taken seriously by business, were And there are a few active Loyalty Marketers with a presence
reinforced. on Twitter. If you open your own account and wonder who you
should follow, you could start with @andrewkinnear, @barrykirk,
There was a fascinating panel of “Retail Loyalty Leaders” @Phil Rubin, @Kobie Marketing, @LoyaltyLab, @Loyalty 360
facilitated by my friend and colleague, Rick Ferguson, Editorial and don’t forget @billhanifin.
Director Colloquy. Executives from Best Buy,
One of Hanifin Loyalty’s rules for engaging Generation Y is this:
Macy’s, and Saks shared how it was their most loyalty n Don’t rationalize the need—you don’t have to like it or even
customers who continued to shop even after the economic fully understand it, you just have to do it.
downturn last fall, but made no mention of social media until
an attendee posed a question at the end of the session. Responses Meeting the Millennials where they are sets the stage for
from the panelists were general and non-committal, indicating engagement. How you present your brand from there is a topic
that social media was “interesting and deserved study” while not for another day. Follow me... L
citing any ongoing programs.

TRENDS & REWARDS
Loyalty Insights Study

Key findings from a
loyalty practitioner
joint industry survey
conducted by
Allegiance and Enterprise Feedback Management
Loyalty 360 (EFM)
The emergence of enterprise feedback
by Chris Cottle – Allegiance management (EFM) promises loyalty
practitioners a simpler way to realize
Allegiance and Loyalty 360 conducted a survey
of loyalty practitioners to understand the current adoption of greater return on their efforts through
loyalty, satisfaction, and engagement programs and enterprise new feedback technologies. Enterprise
feedback management (EFM) practices within organizations. feedback management (EFM) is the
These ‘listening’ programs involve surveying and voice-of-the- gathering and management of voice-
customer data gathering activities from various touch points of-the-customer or employee feedback
throughout the organization. These activities can be categorized collected through surveys, unsolicited
into three main groups:
comments, suggestions and complaints,
1. Data Gathering—Collecting data from multiple sources and text mining, etc. into a single software
events within the organization and the customer lifecycle, platform. By using fewer solutions and
including: vendors, and by gathering data into a
a. Operational data single platform, data analysis is easier
b. Market research
and more accurate, showing trends and
c. Ad-hoc survey
revealing opportunities not seen with
d. Post-transactional survey
separated data.
2. Understanding the Data—Seeing the data from a macro
view, including metrics and processes that help to drive
decisions, such as: Adoption of EFM Programs
a. Customer experience management The survey data reveals a pattern of adoption of tactical loyalty
b. Engagement / Net Promoter science measures and EFM programs that is summarized into three main groups:
c. CRM near-universal adoption, high adoption and low adoption.
3. Acting on the Data—Using data gathered from feedback to Near universal adoption shows that most respondents have
respond and take new actions to increase loyalty, including: heard of these programs and are participating in them, most
usually through internal resources. High adoption shows that
a. Product creation
most respondents have heard of these programs, and many are
b. Communication / positioning participating through a mix of internal and external sources. Low
c. Complaint management adoption reveals that many participants have not heard of these
d. Incentive / rewards programs and are not using them.

the employee purchase process such as price
structure, discount yield, lifetime value,
product experience, etc., but they fail to
factor the employee into these equations.
High employee engagement and loyalty not
only positively impacts customer loyalty,
but it also contributes to reduced costs of
advertising, recruiting, on-boarding, and
training, due to lower turnover resulting.
For more information about the employee-
to-customer loyalty connection, read the
paper The Spillover Effect by Dr. Gary
Rhoads, Allegiance co-founder.
Insight Summary from Allegiance and

Loyalty 360
Organizations of all sizes revealed in this survey that they utilize
multiple vendors to accomplish their loyalty programs—often
leading to potentially high duplication of effort and cost. By
bringing traditionally separated data, such as marketing surveys,
product quality surveys, contact center customer satisfaction
metrics, ad-hoc surveys and company-wide comments,
suggestions and complaints into a single system, the yield on
that data is much greater. Reducing disparate vendors and
separate processes into fewer tools and procedures simplifies the
workload and lowers costs.
Combine Loyalty Programs to Realize Greater Insights

• Combine complaint management and incentive/rewards
Loyalty Science Adoption programs to launch an effective customer recovery program
• Combine customer relationship management data with
The survey shows that adoption of a scientific ‘north star’ such feedback/survey data to create a more holistic view of the
as Engagement Index, Net Promoter Score, Human Sigma, customer and provide better service and loyalty offers
C-Sat score, etc. varies widely based on the size of the company.
• Combine post-transactional survey/feedback data with
Larger organizations have a much higher adoption of these
customer experience management processes to realize new
measures than smaller organizations.
and unique statistical experience metrics
These results also show that employee loyalty science measures • Combine customer engagement and employee engagement
lag behind customer science measures. This is unfortunate together to realize greater targeted departmental insight
because employee loyalty has a direct impact upon customer • Combine operational data with engagement science to
loyalty. Employees are often the first and last experience realize greater behavioral ROI information
customers have with a company. Therefore, to have an accurate • Combine unsolicited feedback (comments, suggestions,
view of the drivers of customer loyalty, companies should complaints) with solicited feedback (surveys) and
measure employee loyalty alongside customer loyalty. engagement science to create a comprehensive view of the
customer
Key Insight—Adoption of a Scientific Measure • Combine market research and complaint management
Only slightly more than half of the respondents in the survey together to establish an effective closed loop feedback process
claimed to use a scientific measure such as an Engagement • Combine engagement science and communications/brand
Index, C-Sat, Net Promoter Score. Great insights can be gained positioning to better capture the hearts and minds of
by using a scientifically-based score as part of your overall customers
program initiatives. Many larger organizations currently use
these scores as a part of their best practices. This helps to align About Allegiance, Inc.
Allegiance offers feedback management software to help organizations grow
the organization’s efforts and create a culture of higher adoption customer and employee loyalty and engagement. For more information, visit
and unified effort. www.allegiance.com.
About Loyalty 360 – The Loyalty Marketer’s Association
Key Insight—Don’t Forget the Employee Factor The mission of Loyalty 360 is to provide an unbiased, market driven, “voice of
the customer” focused clearinghouse and think-tank for all loyalty, incentive
Employees play a critical part in the success of every company. / reward, and engagement marketing opportunities, insights, and responses.
For more information, visit www.loyalty360.org.
Often today’s loyalty programs measure many factors close to
L

BEST BUSINESS PRACTICES
The Mystery of the

Missing Loyalty Effect
by Peter Gurney – The Cicerone Group
I
t would be nice if the link between customer loyalty and profit The second segment looked very different. This group consisted
were simple, clear and easy to prove. The theory is certainly of younger, low-income customers who typically held a single
attractive: Customers with high satisfaction and commitment free-checking account with a low average balance. However, they
levels form a bond with a company, and this bond leads to a bounced a lot of checks, which brought in significant revenue
variety of desirable behaviors. Loyal customers stay longer, spend from overdraft fees. Unlike the first segment, these customers had
more, complain less and make recommendations to their friends exceptionally low loyalty scores. In fact, they hated the bank. The
and family. If companies invest in loyalty, the theory goes, the
only reason they stayed was that the situation would be the same
rewards will come pouring in.
wherever they went.
In practice, however, this scenario doesn’t always play out as
predicted. The loyalty-profit connection can be complex and
muddled, as the following case demonstrates:
“Not all of the predicted
At a large retail bank (which we will call Bank Z) analysts from
the Finance Department teamed up with the Service Quality financial benefits of loyalty
Group to examine the relationship between customer loyalty
and profitability. The Finance analysts calculated profit at the
are included in the standard
individual household level. Service Quality managed a large profit formula, at least at
survey program and calculated household loyalty scores, which
were based on a combination of satisfaction, commitment, the level of the individual
advocacy and brand identification ratings.
customer or household.”
The teams linked the profit measures and loyalty scores, with
the expectation that they would discover a nice, upward-sloping
line showing that the least loyal customers made less money
for the bank than the most loyal customers. What they found, Taken together, the loyalty scores of these high-profit groups
instead, was a flat line. There was no difference in the average cancelled each other out. But, what about the low-profit
loyalty scores between low-profit and high-profit customers. customers? As it turns out, there were competing segments in that
group, as well. One segment consisted of customers who were
This finding caused considerable consternation. Bank Z spent highly dissatisfied with the bank. They had experienced errors
a great deal of money on programs to measure and improve or service problems, and consequently had begun shifting their
customer loyalty, and the loyalty metric was a key part of the business to competitors, resulting in lower profit levels. As one
executive incentive structure. If there was no return on these would expect, their loyalty scores were abysmal.
investments, what was the point of making them?
The second segment consisted of renters with modest but
Further analysis revealed there were at least three factors steady income. They did not have mortgages or equity loans,
confusing the results: kept fairly low account balances, used free checking, and never
had overdraft fees. In other words, they were stable, financially
1. Competing Segments. When examined more closely, it responsible people – and they made no money for the bank. They
was found that there were two large, distinct groups among the were also among the bank’s most “loyal” customers. And why not?
most profitable households. The first consisted of high-income, They were getting a valuable service for free.
older customers who had long tenure with the bank. These
customers generally used multiple products and services, and kept The existence of competing segments at the opposite ends of
large balances in their deposit accounts. Their loyalty scores, as the profit spectrum may in itself have been enough to flatten out
expected, were extremely high. the loyalty curve. But there were other factors at play, as well.

“The teams linked the profit measures and loyalty scores, with the
expectation that they would discover a nice, upward-sloping line showing
that the least loyal customers made less money for the bank than the most
loyal customers. What they found, instead, was a flat line.”
2. Imprecise Profit Calculations. Profit, as we all learned in 3. Financial Benefits Outside The Formula. Not all of
school, is calculated by subtracting cost from revenue. Companies the predicted financial benefits of loyalty are included in the
are usually pretty accurate when it comes to assigning revenue to standard profit formula, at least at the level of the individual
individual accounts. Banks, for example, know to the penny how customer or household. One example is retention – or its flip-
much someone has paid in fees and interest. side, attrition. At Bank Z, those who severed their relationship
with the company because of dissatisfaction or lack of loyalty
But costs, particularly in service businesses, can be more
were removed from the household profit figures altogether. The
difficult to assign to individual customers. This is important,
revenue lost from their defection would impact profitability at an
because according to some experts, loyal customers are cheaper
aggregate level, but as individual households they had effectively
to serve. By staying with the company longer they learn more
about its products and services, and they develop more realistic ceased to exist, and would not have been included in the loyalty-
expectations about what the company can do. As a consequence, profit analysis.
they become less reliant on support services and less likely to
complain. In addition, with time and knowledge they may Another supposed loyalty benefit is new account generation
migrate from high-cost to low-cost channel usage. In the case of from referrals. Analysis of customer survey data at Bank Z
banks, that means using ATMs and on-line banking instead of indicated a strong correlation between a customer’s satisfaction
relying on tellers and call agents. and the number of referrals given. Furthermore, about 40% of
new customers said they had joined the bank primarily because of
But, if loyal customers at Bank Z were cheaper to serve, that a referral from an existing customer. But, household-level profit
fact was not reflected in the profit calculations for individual calculations have no way of accounting for the value of bringing
households. The Finance Department ignored such details; in new business, and this benefit would, like retention, have been
they simply took an average cost-to-serve for all accounts and excluded from the loyalty-profit analysis.
applied it evenly, irrespective of the individual households’ actual
behaviors. Bank Z learned more than one lesson from this exercise. First,
it stopped treating loyalty as a one-size-fits-all proposition, and
Some of the cost details were, in fact, available at the
began looking at how best to leverage loyalty-driven behaviors
household level. But, the information was scattered about
within specific customer segments. Second, it started searching
in various databases and was controlled by Marketing,
Operations and other groups. It would simply have been too out and consolidating cost-to-serve data from across the
difficult for Finance to find and extract all the information organization (an effort that is still far from complete). And third,
needed to get a true picture of household service costs, so it designed a loyalty benefits calculator that incorporated a wider
they took a shortcut - and consequently masked any insight range of variables than the profit formula used by the analysts
about cost-related loyalty behaviors that might have been in Finance. Even with these changes the loyalty-profit picture
contained in the household profit data. remains fuzzy, but it’s getting clearer all the time. L

Is the Art of
by Chip Hall – Kobie Marketing
I
n the ever-advancing age of technology
we are more connected, more in touch, and more
accessible to our clients than at any time in the history
of modern communications. We can scour through our
plethora of e-mails, voice mails, tweets, Facebook updates,
and presentations from practically any location on the globe.
There is a common sense of pride and of accomplishment in
our ability to be responsive to our clients. We are executing
on all of our tasks, and taking advantage of all of the
latest tools at our disposal to provide what we perceive as
exceptional responsiveness and service to our clients. We are
dispensing with our workloads at increasing levels of speed
and proficiency. However, are we engaging our clients as
they wish to be engaged, and effectively positioning their
businesses for growth and profit?
Before the advent of the supermarket, the corner drug

store knew to prepare your root beer float every Friday when
you walked in the door, as well as to anticipate the needs of
your household by making recommendations based on the
preferences and buying trends of your spouse. That concept

“By focusing primarily on your client’s goals, your opportunities
for new business, additional product launches, and program
enhancements will increase exponentially.”
has gotten lost with the emergence of malls, where merchants uncovered the true motivation on why you were hired in the first
began relying on traffic volume to make sales and thus ignored place! Keeping the client’s goals in lock step with your own and
the personal touch. Today, retailers who have taken the steps to being proactive with your recommendations (not just relying on
know their customers, track their behaviors, and engage them meeting SLAs) will establish the foundation for a true partnership.
in relevant ways are the ones who are surviving and thriving in
today’s highly competitive economic environment. The Elite 8 is focusing
“According their entire organization
This personal engagement example is highly applicable to the on customer collaboration.
Client Services world today. According to Bain and Company,
80% of companies believe that they deliver a superior level of
to Bain and They are developing their
capabilities to satisfy
service, however only 8% of their customers agree! Client surveys
tell us with increasing frequency that companies have lost the
Company, 80% customers over and over.
They are establishing
client in the equation. Resources are increasingly constrained
across the entire business spectrum. What sets the 8% that of companies direct accountability for
the customer experience.
are delivering a superior level of service apart? If we are more
connected than ever, why are the vast majority of companies not believe that They are utilizing the
latest innovations to
receiving the service they expect? communicate the most
they deliver a recent trends, data,
The answer is elementary: The 8% that are and relevant news to
delivering on their client’s expectations have superior level of their clients at an ever-
engaged in the way the client expects! expanding level.
To begin, we must determine what is of utmost importance

service, however A key conclusion
to our individual clients in the relationship. It is imperative to
be intimately familiar with the client’s core business as related
only 8% of should have unfolded as
you digest the concepts
to their long term company objectives, target markets, growth
targets, and future opportunities that are on the horizon. their customers discussed. Executing for
your clients is critical.
Buoyed by this level of knowledge, you are able to bring tailored However, it is how you
marketing recommendations, with the goals of the client front agree!” are progressing in your
and center. By focusing primarily on your client’s goals, your relationship with your
opportunities for new business, additional product launches, and clients that will be the true
program enhancements will increase exponentially. measure of your success! Are you bringing new ideas to your
clients? Are you creating the level of trust that will facilitate areas
A common mistake in client services is to execute on of partnership that are not currently on the radar? Are you being
packaged recommendations, generic programs, promotions, invited to speaking engagements with your clients to discuss
etc., which are not tailored specifically to the client’s primary the success of your relationship model? Are you engaging your
objectives. In the loyalty business, this would encompass a one- customers in the way in which they wish to be engaged? If the
size fits all approach (Loyalty in a box with an on/off switch). answer to these questions is a resounding yes, then you are truly
The concept is there, but in the client’s perspective, you have not practicing the Art of Client Service! L

Marketing Automation:
Marriage of Process and Technology
Key to Unlocking Customer Loyalty
by Connie Hill – TFC, Inc.
W
hile marketers today seem to “To build meaningful strategies
recognize the importance of developing customer
loyalty through customer centric marketing for customer retention and
efforts, many marketers are at odds as to how to implement
and integrate strategies, processes and technologies that fuel loyalty, marketers need a
customer relationships. In fact, in the recent Routes to Revenue
research paper, the CMO Council cites that a surprising 76 centralized data repository.”
percent of senior marketers believe that they are not realizing
full revenue potential from their current customers. Moreover,
only 46.5 percent say they have insights into retention rates, Action 1:
customer profitability and lifetime value. In today’s economic Integrate Disparate Data Scattered
reality, marketers are motivated to retain existing relationships Throughout the Organization
and sustain customer loyalty. With so much opportunity on
the table, why aren’t more customer relationship and loyalty Relationship marketers need a comprehensive view of the
marketers embracing analytics and process automation? customer to develop meaningful strategies based on customer
interactions. A comprehensive view means capturing behavior
According to Forrester Research, organizational as well as data across multiple communication channels, including
data and technology- related issues prevent marketers from financial data, service data, campaign data and any relevant
stitching together a comprehensive view of the customer external data. As Forrester Research indicates, data collection
(Creating a Multi-Channel View of the Customer 2008). So challenges occur when companies are organized in functional
what action can loyalty and relationship marketers take? marketing silos, data is not shared. The problem relationship
marketers face is that customers today interact with companies
via multiple communication channels as they consider their
purchase or request service. To build meaningful strategies for
customer retention and loyalty, marketers need a centralized
data repository.
Data repositories or data marts can be automated with

routine extractions from original data sources, transforming
that data and reloading it into an organized data mart. Data
marts are unique to each business and are designed and
built based on marketing’s objectives and key performance
indicators. Marketers can look to their internal IT team to
help them build their data repository, or can consult outside
providers that also build and host data marts.
The value contained in the data mart lies in the ability to

slice and dice the information which yields the important
insights from which successful strategies are created. The key
to success is the marketer’s ability to analyze, calculate and
utilize customer information to drive profitable campaigns.

“How do you really know if your
Action 2: marketing program worked
Turn Insight into Strategies
that Drive Profit if a customer responded
to a campaign by using a
Analysis of customer data can be used to understand
customers at various levels of profitability; data can be mined
communication channel different
for customer behaviors that lead to attrition and analysis can than what was planned?”
be done to understand behaviors of the most loyal customers.
Relationship marketing can soar to new heights with this

type of analysis based on meaningful data. For example,
marketers that understand the customer by profit level can
calibrate service or product offers commensurate with the
customer’s value to the company. In addition, understanding
profitability can help to set pricing or establish bundled offers.
Loyalty and retention programs designed to target profitable
customers outperform standard campaigns in terms of ROI
in three primary ways: achieve premium price levels, reduce
cost per customer contact, and gain greater response and Action 4:
conversion rates. Close the Loop, Measure, Report and
Analysis provides a dramatic benefit to programs that are
Continuously Improve
designed to reduce churn. Relationship marketers can model
Marketers, including relationship marketers, are accountable
and track customer behaviors to predict only those customers
that are likely to defect, and then build programs designed for demonstrating contribution to revenues and profits.
specifically for retention. Analysis at this level not only creates Proving the contribution to the top line and the bottom
efficiency to reduce communication costs, but also prevents line is a unique challenge for relationship marketers because
the mistakes made by messaging customers who have not customers interact across multiple channels. How do you
yet crossed over to potential defection. Similarly, the reverse really know if your marketing program worked if a customer
strategy can be deployed to reward customers when behaviors responded to a campaign by using a communication channel
indicate loyalty. different than what was planned? As customers interact in
multiple channels, the data collection process continues to
The bottom line for marketers is to analyze data to feed your data mart so relationship marketers can pinpoint
determine where to apply, increase or drop resources as it customer behaviors and create closed loop metrics.
applies to program effectiveness and results.
At the onset, it’s important to define success criteria and
Action 3: key performance measures to ensure the right data is captured
Manage the Complexity of for meaningful metrics and reporting. Thinking ahead
Relevant Communication allows the cumbersome process of response collection and
performance reporting collected from multiple sources and
To build relationships with customers, marketers must departments to be fully automated. Performance reporting
ensure that communications are relevant. Managing the specific to relationship marketers can be displayed and
right communication, to the right customer in the right updated daily via a published dashboard. Drill down analysis
channel at the right time is a complex task without the help of what performed and why is the key tool marketers can use
of automation. This is where single platform, multi-channel to continuously improve program ROI.
delivery systems deliver efficiency and value. Most platforms
have built-in asset management systems for content and There’s no doubt relationship marketers have unique challenges
creative management, and the ability to deploy via templates to perform the job of customer retention and creating loyalty.
to easily deliver personalization and relevant content in
Gaining a comprehensive view of customers when data is
customer preferred channels.
scattered throughout the organization, analyzing that customer
data to develop high performing strategies, managing a myriad
Timing is an essential strategy for relationship marketers.
of content and creative delivered through multiple channels,
Over contact customers, and marketers can potentially damage
a company’s reputation. But, contact your customer at just the and proving campaign effectiveness is definitely a full plate.
right time, and build lasting trust. Many of today’s platforms Successful relationship marketers recognize that customer
contain trigger or event based marketing capabilities, such as potential to deliver revenues and profitability should not be
pre-set business rules to thank customers for a purchase, remind overlooked, whether we are experiencing good economic times
them of service needs, or invite them back to your website. or challenging times. Marketing automation processes and
Effectively used, trigger campaigns meet both profit and technologies work together to help relationship marketers
customer experience objectives. manage and conquer the challenge. L

Reeling Them In:

How Orvis Nets More
Sales with a Co-Branded
Credit Card
by Partner Advisors & Bill Eyre – The Orvis Company
To differentiate itself and gain competitive advantage in a crowded market for credit
card offers, Orvis created a co-branded credit card that is delivering on its promise.
The results have not only provided more value to the customer and improved the
customer experience, but have also deepened customer loyalty and significantly
improved Orvis’ financial performance.
BACKGROUND SOLUTION: A CO-BRANDED CREDIT CARD

For more than 150 years, the Orvis brand has stood for In March 2007, Orvis seized the opportunity to drive increased
outdoor traditions, quality, and customer satisfaction. In 1856, revenue and improved member engagement by re-launching the
Charles Orvis founded the Orvis Company in Manchester, Co-Branded Orvis Rewards Visa Card with a greatly enhanced
Vermont, offering the finest fly fishing equipment, and priding value proposition to the customer. The revamped program—
himself on customer satisfaction and service. Today, along with implemented and managed by Orvis and Partner Advisors—offers
its world famous fly-fishing gear, Orvis offers distinctive clothing, members the ability to earn rewards more quickly and to enjoy
home furnishings, gifts, and dog products, as well as a variety of free shipping on all purchases made with the Orvis card. With
sporting services from fly fishing schools to endorsed lodges and such innovative features as enabling members to “bank” their
guides to international sporting travel. Fifteen years ago, Orvis points and redeem them for products and services in all consumer
launched the Orvis Rewards Visa Card—a card designed to build sales channels, the improved program was designed to meet the
loyalty, provide more value to the customer, and for altruistic tough expectations of today’s consumer who is looking to stretch
reasons. With each new card account opened Orvis donates $5, their dollars further. As a result, today Orvis relies on the Co-
plus 5% of overall company pre-tax profit to protecting wildlife Branded Orvis Reward Visa Card as an integral component of its
habitat worldwide, every year. customer relationship and retention strategy.
OPPORTUNITY ORVIS CO-BRAND CARD RESULTS

While the Orvis Rewards Visa Card has been giving back to its Card holders’ spend at Orvis increased 33% (net) during the
customers and to conservation programs for more than a decade, 12 months after they became a card holder compared to the prior
Orvis challenged itself to differentiate its card-based loyalty 12 months. This improvement was achieved throughout the
program to deepen customer relationships and to capture greater current tough economic environment, while average customer
wallet share. The vision of the new Orvis Rewards Visa Card spend was declining 11%. Further results include:
needed to maintain its philanthropic efforts with conservation n Improved new account acquisition by 140%
programs while, at the same time, enable its members to earn free during the first year
shipping and bonus points, and get special offers when they shop.
Specifically, Orvis needed a solution to help: n New account approval rate exceeded 85+%
n Drive incremental sales and improve loyalty n 45% higher frequency of orders
n Generate more orders in stores, by phone and on the Web
n Decrease attrition
n Differentiate from the competition

“Partner Advisors played a key role in bringing Orvis and
Chase together to enhance the customer experience with a
best-of-breed program,” said Eyre. “The Partner Advisors team
collectively have a breadth and depth of credit card experience
second to none. They are in this to ensure a succesful program,
and achieve results as an extension of our team.”
PROGRAM HOOKS collectively have a breadth and depth of credit card experience
second to none. They are in this to ensure a succesful program,
n Free standard shipping on all Orvis orders, which has proven
and achieve results as an extension of our team.”
to be a motivator for today’s catalog and Internet shopper
n Enhanced user experience and value, which means more In an economic time when every dollar matters, Orvis is now
customers shop using the card able to offer its customers an innovative credit card with great
n Instant credit approval on orvis.com, allowing customer to rewards benefits that will keep them coming back. Specifically,
use and earn benefits with immediate purchase Partner Advisors helped Orvis through skillful structuring,
management, and execution of the program by:
n Increased customer points earned from three to five points
for every dollar spent at Orvis, and one point per dollar spent n Helping to redefine and redesign the Orvis card program and
elsewhere value proposition
n Points convert to rewards dollars stored in an easy-to-access n Developing and optimizing new channels
virtual rewards bank. Cardholders easily redeem their rewards n Structuring a profitable long-term model for Orvis
for Orvis products and services online, in stores and by
n Managing the overall program from start to finish
phone.
WHAT’S NEXT?
ORVIS HIRED A GUIDE
Orvis is planning for continued program growth in all its
One of the hallmarks of the Orvis brand experience is to
channels—including catalogs, Website, and retail stores. Future
enjoy the sage advice and services of one of its more than 200
card initiatives include:
endorsed fishing guides, who are renowned experts in teaching
people how to tie flies, read the water, and catch more fish. In n Launching an email campaign to tell card holders how much
Partner Advisors, Orvis found an expert guide of its own to help they have in their rewards bank that can be redeemed for
navigate the unfamiliar waters of co-branded credit cards. Bill products and services
Eyre, director of Advertising and manager of the Orvis Rewards n Testing double points promotions in key spending categories
Visa program at Orvis, hired Partner Advisors to provide Orvis like gas and groceries, designed to get the Orvis card “top of
access to core-competency in the credit card industry, drawing wallet”
on Partner Advisors’ extensive expertise on both the issuer and
partner side. “Coming from an advertising background, I didn’t n Creating a more tailored approach to the customer whereby
have experience with the nuances of how a credit card program the customer is identified as an Orvis Rewards Visa Card
should work,” said Eyre. “I’ve been very pleased with how Partner holder when they call, allowing Orvis to accelerate specific
Advisors aligned us with Chase to create such a strong co-branded benefits and/or special offers to the customer
card program. From the beginning, they partnered with me to n Optimizing cardholder spend behavior to make the customer
drive marketing planning and implementation, to ensure its relationship as profitable as possible for all constituents of the
success day in and day out. They continue, to this day, to have an partnership L
active hand in managing the program.”
For more information about the Orvis Rewards Visa Program visit:
“Partner Advisors played a key role in bringing Orvis and http://www.orvis.com/visa
Chase together to enhance the customer experience with a
best-of-breed program,” said Eyre. “The Partner Advisors team

On front lines of loyalty,

the mission is clear—
Know Your Customer
Before you can talk ‘loyalty,’ you must understand
who you’re talking to and what they value.
by Acxiom – Featuring William Nipper and Janice Rudenauer
Companies today are constantly pressured to do more The building blocks:

with less and cannot afford to waste time and money on Insight and relevant action
ineffective marketing. Amid the doom and gloom of the
recession, companies are striving to retain their current “The fuel of customer loyalty is insight, which is inherent
customer base to survive. How well a company knows its in the data,” said Rudenauer. “Trying to develop ongoing
customers and understands their needs will determine interactions with customers without insight is like flying
how successful it is at weathering the storm. blind—the outcome won’t be pleasant.” Merely accumulating
data from customer interactions doesn’t guarantee your
communications will be relevant. Analytic insight is needed
The roots of loyalty: to provide the building blocks for a dynamic and strategic
Relationships and individuals roadmap for sustained customer engagement.
“The business definition of loyalty is retaining customers in
a profitable way by understanding and meeting their needs,” A limited understanding of the business-to-consumer
said Janice Rudenauer, marketing strategist with Acxiom® relationship manifests itself in the interactions between
Corporation’s global consulting group. “Those needs can be companies and customers. Irrelevant communications often
met through a variety of initiatives such as offering incentives, stem from companies taking more of a product focus instead
investing in a higher level of customer service, or through of a customer focus. “People are so inundated with offers
simple recognition for their business. Whatever the need, these days,” said Nipper. “If companies don’t have a relevant
companies should have a clear picture of who their customers and targeted message, they get lost in the shuffle. To tailor the
are, an understanding of what drives them, and a complete view message, companies need to know what their customers want,
of the kind of relationship they currently have with them.” what they don’t want, and the company needs to demonstrate
that understanding through its interactions with them.
For loyalty to exist, there has to be a dialogue between the
business and consumer. A relationship is created by combining “Analytics help you derive value from your data and decide
ongoing value delivery, a satisfactory experience and perceived which individuals are likely to be most interested in, and
familiarity (knowing your customer). Take away any one of profitable to, your business,” said Nipper. “Analytics take into
those elements and your loyalty ship runs out of fuel before it account the history of the customer’s interactions with the
even leaves the dock. company. Combining the insight gathered creates a clear picture
“Knowing your customer means more than just identifying

a broad demographic and tagging it as your target,” said Will
Nipper, an industry strategist at Acxiom. “Companies need to
have an educated relationship with each consumer. It’s critical
that they know exactly what that customer is interested in
and understand what the customer has indicated they like and
dislike.”
Companies should keep in mind that relationships are

established with individuals during the first engagement.
Companies that inform, learn from and build upon that first
engagement are on their way to establishing loyalty.

of how to proceed in your relationship with that customer.
Once the optimal message is determined, companies must be
able to execute.”
When a company has established a clear picture of its

customer portfolio, it must demonstrate that knowledge
through relevant communications that drive a holistic
experience across channels, through marketing, customer service
and sales. Technology plays a big role in execution and can be a
boon if a company has it or a barrier if it doesn’t.
“The advantage goes to companies that have the necessary

prowess and infrastructure that allow them to take advantage
of actionable insight,” said Nipper. “Businesses must have the
tools to constantly update customer information and keep
track of interactions and any feedback from the customer. Any
communications sent today should be based on yesterday’s
interactions.”
Looking to build loyalty?

“For loyalty to exist, there has to be a dialogue
between the business and consumer.”
Here are some tips from
the experts:
“If companies believe that their programs are hit and miss,
chances are they’re operating without a clear picture of all Janice Rudenauer
customer interactions or they don’t have the ability to gather
Acxiom Marketing Strategist
insight from those interactions,” said Nipper. “If companies
are serious about forming a loyal relationship with customers,
Do your homework: Analyze your customer portfolio to find
they need the tools to pull the data together, analyze it, derive
out who your best customers are and reach out to them in a
knowledge from it, execute on that knowledge, and then
channel-agnostic way, leveraging preferences as applicable.
measure the results and do it all again.”
The key is knowing where to focus your efforts based on
customer insight.
Nurturing the relationship:
Communication and change Communication is key: If the recession has your customers
spooked, talk them back from the ledge. Bring them good
“Knowing your customer isn’t a one-time deal, and loyalty
information and reassurance in a relevant way . . . then target
is not built overnight,” said Rudenauer. “That’s why having a
relevant offers as applicable to make their decisions easier
strategic roadmap is so important because you work your way
and more timely.
there over time, picking your engagement points as you go. In
today’s volatile environment, companies can’t take anything for
Seize the opportunity: Meeting needs in a down economy
granted. Everything is moving so fast—if a company doesn’t
presents a huge opportunity for companies to build loyalty.
look at transactional data to understand what’s going on in ‘real
Companies that proceed with confidence and keep their
time,’ any success is going to be short-lived. Your best customers
efforts focused on the customer will survive and thrive in the
six months ago likely aren’t the same best customers today;
downturn.
current dynamics in the financial services realm are changing
everything.” Because loyalty is built over time, through thick
and thin, companies have got to stay in touch with their Will Nipper
customers over the long haul. Acxiom industry strategist
“Frequent, relevant communications based on the Know your customer: Know what they want, what they
customer’s preferences increase the engagement level,” said bought in the past, what they are interested in, and if they
Nipper. “Constantly analyzing data from touch points with have any life events coming up. Be a value to them.
the customer enables companies to plan the next series of
communications. For example, based on analytics, a company Don’t skimp on analytics: Budgets are stretched thin these
can pick which products or promotions are most relevant and days and are likely shrinking. That increases the need to
in which sequence they should be presented to keep a customer target those dollars in the best way possible. Analytics can
highly engaged over time.” both save you money and make you money down the road.
Keeping customers engaged over time is the foundation for Customer vs. product focus: Focus on how the individual
effective loyalty management. Companies that enjoy a devoted is performing instead of how the product is performing.
customer base are the ones that take the time to know what Let a customer-centric view influence your campaigns and
their customers value and connect with them through deep communications.
consumer insight. L

P R O G R A M S U CC E S S S TO RY
RocketBux
Brings More Traffic,
Revenue Increases
by Paul Willerton – RocketBux
W hen Kerri Stewart opened her Dutch Bros.

Coffee franchise in Junction City, OR in February, 2008,
she had hopes as high as any new business owner. Dutch Bros.
Kerri Stewart’s Dutch Bros. Coffee stand in Junction
is a successful chain of drive through coffee stands that is rapidly City, OR opened its doors into the jaws of a rapidly
expanding beyond 170 locations. shrinking economy. Every dollar counts,
and RocketBux has made a
Stewart’s chosen town of Junction City, however, was difference. After its first month,
about to go through unprecedented change. The Stewart’s results were as
local economy was based heavily on vibrant RV sales. follows:
Almost immediately, high gas prices and a slowing
overall economy started to impact Stewart’s traffic. “It Week 1: $1 off a large hot drink.
Conversion rate: 16%
seemed like every day there were businesses closing,
Revenue increase: 31%
and every week we noticed a slowdown in our traffic.”
says Stewart. “I decided to get proactive. I need people Week 2: $1 off a large hot drink.
to show up here and we need to sell coffee.” Stewart Conversion rate: 16%
turned to RocketBux. Revenue increase: 39%
Week 3: Any 16oz. drink for $2.00

RocketBux’s technology is centered on text
Conversion rate: 19%
messages that it sends on behalf of its clients, Revenue increase: 34%
generally advertisers or businesses with direct
marketing campaigns. Customers either opt to Week 4: Any 16oz. drink for $2.00
receive the text messages by providing their Conversion rate: 20%
mobile numbers to an advertiser or they send Revenue increase: 38%
a text message to a specified number in an
advertisement, which triggers the immediate
receipt of a coupon-bearing text message.1
“Because they are saving, customers
Within a week, the Junction City stand had signed up
over 500 mobile rewards customers. In a town of only
often purchase other items like pastries.
4,500, she has since been able to grow her list to over RocketBux is so easy, it’s like I hit a
1,000 members. “They love it!” she says, “I can add
button and make more money.”
a local touch to a text message that makes our —Kerri Stewart
customers feel special. Unique. And they are.” In
Dutch Bros. franchise owner
the toughest economy in generations, Stewart is
optimistic. “These are hard times. We need to use the
RocketBux user
most powerful tools we can. I know that when I use
RocketBux, I get results. Immediately. More cars show
1
“ Rocketing through the recession: As people look for more ways to save, they’re opening
up and the register rings more.” That speaks volumes.
up to new ideas—and a Bend startup is reaping the benefits” By Andrew Moore /
“When we use RocketBux, we get results. Immediately.” L The Bulletin. http://www.bendbulletin.com/apps/pbcs.dll/article?AID=/20090319/
BIZ0102/903190365; Published: March 19. 2009; Accessed May 8, 2009.

LOYALTY PROGRAM PROFILE:

Starbucks Card Rewards
& Starbucks Gold
It took a while, but Starbucks finally found a way to reward the regulars; and there many of us out there. As I would wait
in line for my daily latte, I often marveled that the staff was so good at remembering my name and my drink, and took
special attention to recognize me as their regular. The customer service from my friendly barista was never taken for
granted. Yet, if I was ever away from my regular shop, I felt a bit neglected by Starbucks. That has changed. Starbucks is
now offering rewards that keep me coming back for more.
ENROLLMENT EXPERIENCE – 2 OPTIONS

Starbucks Card Rewards – Purchase a Starbucks gift card Starbucks Gold – The Starbuck’s Gold card as $25 annual
online or in-store, then visit Starbucks.com to register your membership fee, can also be purchased either online or at
card. There you can manage your balance, reload your card POS. Again, you need to visit Starbucks.com to register your
and sign up for your AT&T Wi-Fi access. By registering your personal information to receive full reward benefits. This card
card, Starbucks has a record on file. Should your card ever can also be preloaded to carry a balance.
be lost or stolen, Starbucks will freeze your funds and issue a
new card – protecting you from loosing your balance.
PROGRAM BASICS
Starbucks Card Rewards Starbucks Gold Membership
n Free drink extras like syrup, soymilk or whipped cream. n 1 0% off most in store purchases
n Free refills on drip coffee. These are unlimited and apply n A free drink when you join at Starbucks
to any size drink.
n Friends and Family discount days/coupons
n Free Tall beverage with 1 lb. whole bean coffee purchase
n S pecial “surprise offers,” i.e. free drink on your birthday
n Free AT&T Wi-Fi Access (2 hour daily session)
n Free AT&T Wi-Fi Access (2 hour daily session)
To receive your benefits, at least part of your purchase must be
Although you can load $ value and register your Starbucks Gold
made with your registered Starbucks card.
card, the benefits are separate and DO NOT OVERLAP (except Free
Wi-Fi) those of the Starbucks Card Rewards. You must choose one
or the other. Decide what works best for you!
OUTSIDE THE PROGRAM

Starbucks offers the option of customizing your card. For just You can set your Starbucks Card to reload automatically when
$4 you can create your very own unique card. It is easy and the balance falls below a designated amount or on a set
done on-line. Many options are available. Mine has my name schedule, so rewards are always accessible.
and favorite drink with all my personal preferences printed
Starbucks also has a co-branded credit card, the Starbucks
right on the card.
Card Duetto Visa®.
Overall take RECOMMENDATION

Friendly service and a warm familiar place go a long way
Starbucks Card Rewards: There is no reason not to!
in a time when true “Cheers” style customer service
may have been long forgotten. Starbucks Gold: Depends on what you buy
Starbucks has done this well and now has sweetened the deal, and how often. Where is your break even
giving me another reason to get my daily fix! on that $25 annual fee?
Each issue we’ll be sending our secret shopper out to experience a particular brand first hand. Our shopper will sign up for the
loyalty program, if one is available, and interact with the company at least 3 times, then share their experience with all of us.
Your suggestions for the next brand review are welcomed: email your suggestions to mailbag@loyaltymanagement.com.
*Visit www.starbucks.com/card for full program rules, participating locations and AT&T WiFi information. L

Job Openings
Sales Executive / Loyalty Industry Independent Sales Contractors
Consumer Benefit Services, Inc. Connexions Loyalty Travel Solutions
We are currently searching for a seasoned Sales Position Overview:

Executive with a successful and proven track record Connexions Loyalty Travel Solutions, an industry
selling loyalty reward programs to the financial leader in individual incentive travel and travel
industry. Our candidate must have direct executive reward fulfillment, is looking for independent sales
sales experience including loyalty program contractors to sell our Distinctive Departures travel
development and high level contacts in the incentives.
financial industry. We want a sales executive who
is a creative self starter who possesses excellent These are key sales positions within strategic
organizational and communication skills. The territories nationwide. Contractors will be
position will require periods of significant travel home-based and must have the ability work
and offers a strong compensation package. independently.
If you are interested in this exciting and rewarding These positions require an outgoing and energetic
position please forward your cover letter and personality with the skills and desire to develop
resume to: hr@pointsynch.com and close business for individual incentive travel
products needed and used by businesses across
a wide spectrum of industries. As an independent
sales contractor you will be responsible for lead
development and revenue targets.
Candidates will have excellent closing skills, a

client service focus and a desire to earn based on
production. An existing clientele and relationships
FIND MORE AT... with incentive buyers is a plus. Products include

pre-packaged and custom designed incentive
travel awards which can be delivered both online
and via call center agents.
Loyalty 360 Career Center Distinctive Departures Incentives products

• Jewel Collection Hotel Stays
Do you have an opening to fill in the loyalty • Distinctive Departures Custom Packages
industry? Or maybe you are looking for a fresh • Distinctive Departures Classic Packages
challenge. • Getaway Points Loyalty Program
Loyalty 360 is connecting top talent in the loyalty, • Distinctive Departures Travel Gift Card
incentive/reward, and engagement marketplace
like never before! To learn more about Connexions please visit:
WWW.CLTSLOYALTY.COM
Looking for a job?
Submit your resume to our resume bank. For more information please contact:
John Miller
Looking to hire? Director New Business Development
Post job opportunities on our site. (952) 914-6539
jmiller@cltsloyalty.com
VISIT: www.Loyalty360.org/career-center.shtml

LOYALTY
EXPO
2009
FROM THE EXPO
Expo Takeaways:
“Keep it Real”
by Al McClain – RetailWire.com
Some marketers are more in love with putting

together programs and setting rules than they
are in really connecting with their customers.

LOYALTY EXPO 2009
S “The Loyalty
o here’s the thing about loyalty—it’s whatever
the individual shopper/consumer wants it to be,
not a marketer’s program. One person is loyal
due to personalized service, another likes the one free
after ten purchases deal, while someone else wants to
accumulate points, etc. The problem seems to be that
Expo was a well
at least some marketers are more in love with putting
together programs and setting rules than they are in run conference
with many great
really connecting with their customers.
Citibank and American Airlines have a program, for
presentations
example, where one can earn 20,000 Aadvantage® miles
for doing the following: Open a checking account with at
least $1,000 by 6-30-09. Make one direct deposit or pay
two electronic bills or make five qualifying non PIN-based
purchase transactions with their debit card per month for
twelve consecutive months. Oh, and you have to remember
and significant
to register for the program using a special code and once it’s
all over it takes up to 120 days from completing all the activity
to receive the miles.
networking
Meanwhile, speaker after speaker at this week’s Loyalty
Expo advised marketers to “simplify”, “connect with consumers
opportunities
” and “keep it real”. With the above example, we can see why
that advice is necessary. BrandMIND noted that households
have an average of 14 loyalty cards yet a Colloquy presenter
with clients,
said that only 6.2 of those 14 memberships are active. In
other words, consumers have a lot of loyalty cards and partners and
prospects.”
can’t keep up with them all. Yet, here’s the program that
started it all in 1981 making consumers jump through nearly
impossible hoops to claim their award.
For the 80 million 12 to 31 year olds classified as Millenials,

programs like the above example make even less sense. —Bob Fetter, Pluris
Panelists at a session on “Building Engagement with
Millenials” said that this group is very connected with friends
and family, relying heavily on word-of-mouth for everything.
Millennials want instant gratification—they prefer instant
cash back (who doesn’t) versus mileage rewards that take a
long time to accumulate. Traditional media with this group
is less effective, and they have the ability to opt-out of • Keep loyalty programs and special offers simple enough
everything, so marketers need to find reasons to keep them that harried consumers can figure them out easily and
engaged with their brands. If a brand doesn’t deliver, they quickly.
can tarnish it pretty quickly, via social networks and W-O-M.
Panelists felt that marketers should take away complexity • Don’t try to trick consumers with onerous rules and
because, although this group can scan information more regulations—you’ll get trashed via social media.
rapidly than previous generations, they are better at
“scanning” than really reading in-depth. • Personalize offers enough so that shoppers will know you
are on the same page with them, but not so much that
My overall impression is that consumers, if left to their own they think you are snooping on them or trying to be their
devices, would really prefer to just have better prices than “friend”.
wade through piles of special offers and loyalty program rules.
(Can anyone say Wal-Mart or Southwest Airlines?) But, since • Think about what you offer from the perspective of
there can be only one low price leader for any given type of consumers who are going through tough times more
business, everybody else needs to think about what else will often than not, and are continuously bombarded by
work best and perhaps try the following tips: “deals” from marketers of all sizes and stripes. L

FROM THE EXPO
Eye on
the Future
by Julie Sturgeon
“There is no magic bullet, no simple solution

to loyalty. We have to satisfy customer needs
and wants at a sustainable profit. It’s the last
part marketers forget.”
The Loyalty 360 Expo in Hollywood, Florida, offered yet another chance for our association to
show the industry how far we’ve come in one scant year. We’ve partnered with the International
Marketing Association, the Motivation Show, the Petroleum Convenience Alliance for Technology
Standards, and the National Restaurant Association. We’ve just rolled out an innovative best
practices database on the newly launched website. Look for us to roll out councils, offer more
webinar series and focus on innovations in the time of economic uncertainty.
In short, our goal is to find the answer to today’s says, we think that correlations are the cause, which means
vital questions on how to retain loyalty, how to engage we buy into myths such as customers become more
consumers and how to measure effectively. profitable the longer they stay with the company. (Wrong.
Buyers fall into either profitable, break-even or unprofitable
But we can’t drag the baggage of our past along on this buckets. You simply want to encourage the profitables to
journey if we intend to get to our destination, as Timothy stay, not everyone in a blanket statement.) Or we believe
Keiningham, global chief strategy officer and executive loyal customers pay higher prices. (Just the opposite: they are
vice president of IPSOS Loyalty , made clear in his keynote quite price sensitive because they’ve learned how we tick.)
address. “We see with our brains, not our eyes, so we accept
the myths in this industry,” he told the audience of 300-plus. “There is no magic bullet, no simple solution to loyalty,”
“That’s a problem.” Keiningham said. “We have to satisfy customer needs and
wants at a sustainable profit. It’s the last part marketers
Unfortunately, our brains are wired to see things consistent forget.”
with our normal world—we do not see things we think are
impossible. And as marketers, there’s a second twist: Our Here’s a glimpse of how other loyalty marketing players are
brains see patterns in everything. As a result, Keiningham using what we know today to reshape our future. L

LOYALTY EXPO 2009
“There
were many
L O Y A LT Y E X P O S U M M A R Y
Census Talk 2009:

Sizing Up the U.S. Loyalty Marketing Industry improvements
Rick Ferguson, editorial director of Colloquy, knows a few
disheartening facts about the loyalty marketing industry. this year...The
In a nutshell, we’ve reached saturation, with the average
household enrolled in approximately 14 programs. Yet the content was
strong and very
average consumer carries only three or four of those cards in
their wallets.
Additionally, the engagement numbers his company is

seeing are flat. “There’s a lot of signing up and walking away relevant for
going on,” Ferguson said. “It’s loyalty marketing’s dirty little
secret: a lot of these programs are a waste of money.” the times, the
So, if you’re not a member of the card-carrying set, do
you push the envelope or get out of the game? Ferguson location was
recommended that participants who attended his
session survive by stop expecting a revolution and begin easily accessible
to many airports
concentrating on the four Cs of the current evolution:
Convergence: When different technologies like

telephone, video and computers merged, the world
welcomed broadband. In marketing, this convergence will be and the venue
partnerships, as airlines and Citi have begun to demonstrate.
The idea is to reward people for behavior across an entire allowed for easy
networking.”
network of partners as opposed to limiting them to one
brand. For marketers, it means critical mass, which is why
Citi teamed up with Expedia to use points toward travel in
2008, and even in the midst of a financial industry meltdown
forged forward with a similar plan with Amazon.
—Adam Bashe,
Coalition: Air Miles was revolutionary, and its position Destination Maternity
has proven strong enough to bear repeating in the U.K.,
Germany, Australia, New Zealand and Brazil. So far, the
United States hasn’t had a successful attempt at a coalition.
“But I’ll stake a body part that it will happen here in three to
five years,” he said. “At that point, you’ll either need to join or “Now, how do you get them involved in your business
compete. Get your plans together for that direction now.” model?” he added. Ask Club Lego, which let its members
design a kit that proved to be the biggest seller in the
Cooperation: When it comes to word-of-mouth company’s history.
advertising, Colloquy has found that 71 percent of the U.S.
population is willing to recommend any given company, Cause marketing: No, we’re not just talking about going
but whether their actions meet their attitude is uncertain. green. Customers are demanding companies to do business
Fifty-eight percent of the population is a connector who in socially responsible ways, like American Express’ Members
has the ability to recommend the product to folks in their Project that let participants vote on where to donate non-
real-life and social networks but aren’t necessarily into profit dollars. Likewise, Air Miles suggests ways its members
your brand. The sweet spot—that interaction between can burn points in green ways.
advocate and connector—Ferguson calls a champion. The
best news: 55 percent of loyalty members are champions, “We have the ability to put the right products on the
“so your database has a ton of people who like you and shelves to hit our profitability numbers,” Ferguson said. “All
talk about you. we have to do is focus on the things that matter. L

FROM THE EXPO
“I had a great time at the

expo and found the sessions
L O Y A LT Y E X P O S U M M A R Y helpful and insightful. I was
Gamification of Loyalty: particularly impressed with
Driving Deeper Customer Engagement the Gamification of Loyalty.”
Through the Power of Play
A large chunk of our society evolves around games: —Adriana-Vethencourt,

American Idol is clearly one, and some viewers swear the
TV series Lost is as well. But when you define “game” as
Office Depot
a structured experience with rules and goals that is fun,
suddenly all of life is eligible for this label. Leader boards give players status to compare. It’s
basically the YouTube “most watched video” hits
And, as Barry Kirk and Tim Crank of Maritz advocate, that announcement, but in loyalty, that might translate to a
includes loyalty marketing programs. lifetime point accumulation recognition.
“Games tap into competition, status, flow, play, reward, Exchanges make the games social. When you let
achievement and mastery—primal psychological needs,” people interact—think sending gifts on Facebook or
Kirk told his audience. And that’s exactly why they could retweeting on Twitter—they’ll play longer
be the big ticket to solving pervasive challenges in the
loyalty marketing arena, such as commoditized programs, Customization, such as avatars, cement folks to your
the public’s growing attention scarcity and social media’s program. The more time they invest in creating their
message that everything needs to be interactive and stamp, the higher the exit barrier. PetSociety gamers
immersive. did exactly this when they discovered players had
made a point to collect the different color dog poos in
Kirk offers three steps to take immediately: the competition. Now, there’s an added goal: to earn
golden and rainbow poo. “We have as much data on
1. See yourself as a game designer: Call it a loyalty program how people use loyalty as gaming companies do,” Kirk
if you insist, but the goal is still to tap into the same pointed out. “Why not use it to fit the program to the
power engagement triggers. The real transformation players?”
happens when you throw in the fun.
Feedback shows where you stand relative to a
2. Focus on your player. As a game designer, your role is to personal goal in addition to the big picture.
be an advocate for the player. Yes, it’s a radical shift for
folks who traditionally think in terms of price per point. Randomness plays on the popularity of slots.
Psychologists will tell you that variable reinforcement
3. Master these game mechanics: is the most powerful carrot. Take, for instance, Charter
cable company’s loyalty program. Participants know
Points, or even more precisely, scores. Coca-Cola has how to collect points (yawn) but they have no idea
turned its bottle caps into tokens; YouTube encourages when the window to redeem them will open and
participants to strive for hits and ratings. Anything you close. The suspense means they open every email just
can do to create experience points to go with the spend in case. It also helps with a program’s liability if you
points is golden. control when people can redeem, Kirk said.
Tiers to let people know where they are relative to Spectators are a given. Face it, without an audience
the game. Think of American Express’s card color Facebook wouldn’t exist.
progression, or Yahoo Answers passing out gifts built on
interaction levels. Bosses, as the last great Herculean task before
completing a level or game, intrigues the best of us. If
Collecting, because if you put it in a set, the human you fail, it’s human nature to work to get that second
brain feels compelled to gather the entire thing. Think (third, fourth and fifth) crack at it. And when you do
Boy Scout badges, Burger King Star Trek glasses, and conquer the obstacle, the emotions are very positive.
McDonald’s Monopoly cards. According to Kirk, if you
bundle behaviors you currently aren’t getting with “It’s all about looking at your existing programs to see
actions the public is comfortable with, they’ll strive for it. where game tactics fit,” Kirk encouraged. L

LOYALTY EXPO 2009
“Had a great
iPhonifying Loyalty—Micro Offers
and Mobile Interaction:
time at Loyalty
Leveraging Today’s Mobile Technologies to
Move Product, Reduce Inventory and Increase
Communication
It’s official: On May 21, 2009, Vatican City launched www.

pope2you.net to reach out to Catholics around the world Expo. Met a lot
of great people,
via Facebook, YouTube and iPhones. In his public relations
announcement, the Pope told 20,000 listeners in St. Peter’s
Square, “to use the technology in a positive way to build
up bonds of friendship and solidarity that contribute to a
better world.”
Consumers certainly haven’t waited for this blessing. Don

looking forward
Hughes, CIO of Kobie Marketing, says 1.6 billion people are
connected to the Internet today, while 140 million smart
phones will be in use by 2013. At least 65 percent of mobile
to building
partnerships
web browsing takes place on an iPhone, the device that now
accounts for 32 percent of AT&T’s business.
for Dukky.”
Even more damning for ordinary phones: 72 percent of
iPhone users told surveyors in December 2008 that they are
very satisfied with their smart choice, while 52 percent at
Blackberry (RIM) rate echo that sentiment. Other cell phones
have fallen into the 30 percent ratings category, and Nokia,
which clocked in at only 32 percent on the very satisfied —Mike Paine, Dukky
scale, lost 10 percent of market share in the last quarter.
“With the advent of the iPhone we’re seeing a seismic shift

in the market” said Hughes. “We saw a huge opportunity
to integrate that experience into our customer’s loyalty The sky is the limit on how companies can use this tool.
experience and so we developed iPhone and WAP Already, the iRewardsCard application allows users to
applications that integrate into Kobie’s Alchemy loyalty store their loyalty program bar codes on one iPhone and
platform. It has been an overwhelming success from our simply scan the appropriate one at the point of sale. This
clients perspective.” means they carry all of the cards virtually and constantly.
Companies are also experimenting with models that push
The medium’s user profile only makes the story better. information about products and offers to the screen when
The average smart phone user is 35 years old, works more the user takes a photo of a UPC. Surveys, point auctions
than 50 hours a week, and has double the average U.S. on rewards, and sweepstakes games are a snap to do on a
household income. Fifty-four percent are college educated, mobile platform as well.
61 percent have kids, and 53 percent say they don’t have
enough “me” time compared to 40 percent as the national The only thing that’s failed so far: GPS tracking inside
average. Best of all, 24 percent of smart phone users make specific stores. According to Hughes, the accuracy is still too
purchases with it today, and 81 percent use their smart weak to be effective as an in-store GPS.
phones while shopping.
Convinced this is the next frontier? Then your assignment
Kobie’s studies even show that 94 percent of customers is to plot a way to “earn attention” via the right content
will complete a loyalty profile over mobile versus the 47 and the right distribution because customer intimacy—
percent who follow through on the web. What’s more, the knowing what the consumer wants and being relevant with
idea of registering and not returning is a foreign concept to your message—rules this medium. And Hughes assured
smart phone users. After all, they have it at their fingertips to his audience that armed with the right loyalty platform
tinker with when they are bored at the airport, the doctor’s architecture; the technology actually takes no more than two
office, or between seminar sessions at a conference. to four weeks to implement. L

FROM THE EXPO
L O Y A LT Y E X P O S U M M A R Y L O Y A LT Y E X P O S U M M A R Y
Going from 0 – 120 MPH Wake Up and Smell the Loyalty:

in 18 Months: How Loyalty Metrics Could Have Prevented
How Sainsbury, UK is Using Granular Customer Starbucks from Burning the Brand (and Other
Data to Shape the Shopping Experience, Build Predictive Loyalty Applications)
Customer Intimacy & Drive Customer Loyalty in
One of the World’s Toughest Markets Certainly the famous coffee company out of Seattle isn’t
the only company to hit hard times. General Motors and The
Putting the infrastructure together to build the Nectar Gap have also run into problems with brand identification
coalition in the U.K. wasn’t easy, and Mike Blyth, president of and the loyalty that fosters.
LMG USA (Groupe Aeroplan) will be the first to admit that.
Simply connecting earners and burners alone presents a But when the executive vice president of client services at
challenge, since everyone thinks their points are worth more Brand Keys, Leigh Benatar, needs an example of how loyalty
than the next guy’s, he laughed. models can provide the information CEOs need to steer a
company, it doesn’t get much better than Starbucks.
Yet grocer Sainsbury did just that , pulling together
16 earners and 30 burners that now have 50 percent of For starters, coffee is a category Brand Keys has watched
households in the United Kingdom participating. Together
for 12 years now. Its researchers know that four areas drive
they collect information on 3 billion transactions—and this
customers: location/value, quality, service/surroundings,
is in a country where the gross domestic product is far lower
and variety/selection, with quality and service weighing
than the United States.
in more heavily. So in 2006, Starbucks was sitting pretty
The marketers’ challenge, of course, is keeping the ahead of Dunkin Donuts and Krispy Kreme. After all, it
program fresh. So far they’ve done this by adding a credit brought the European coffee experience with its hand-
card, a music store, an insurance program and a wine and ground beans aroma.
film club. The public expects innovation, not just “me, too”
add-ons everybody else has. In 2007, the Nectar coalition But by 2007, sales slipped and research indicated it was
added an emotional aspect, calling its rewards, “treats you because of the long lines. Corporate axed the hand-grinding,
deserve,” and pumping up the fact these prizes are all about killed the sofa and stopped the newspapers in an effort to fix
thrilling experiences. It’s given out more than $1 billion GBP the problem. In essence, they took out the theatre of coffee—
in rewards value to date. an area loyalty metrics could have warned him mattered to
his customers. Starbucks consumers began rating other coffee
From a database side, the challenge is even greater.
competitors above this once cherished brand.
For starters, Sainsbury opted for speed on the report
runs, coming in at 2 minutes, 32 seconds, a time that
Oh, the brand tried to introduce new blends and coupons,
fundamentally changes the business. Now the consumer
package goods brands can access information themselves but these attempts addressed the lesser categories and thus
without waiting—and everyone from the sales department didn’t have the impact CEO Howard Schultz wanted. “They
to public relations is helping themselves to the facts, figures used brand marketing but not brand strategy,” Benatar noted.
and patterns stored here to improve their game. They’re
accessing tings like spend per customer, daily sales, which By 2008 the service/surroundings category shot up in
stores stock their products, repeat purchasing patterns, cross- both importance and consumer expectations—a normal
shopping, and even how their product high loyalty buyers phenomenon in Benatar’s experience, with product and
rank compared to category loyal buyers. service expectations increasing an average off 24 percent
annually across the board. So Starbucks continued to fall
You can even see which pop singer album more Kit Kat from grace, with stock prices plunging and many stores
Senses bar buyers have purchased. (Psst, the answer is
shutting their doors. By 2009, even McDonald’s has surpassed
Mariah Carey.)
Starbucks in coffee satisfaction surveys.
“A very well thought out service agreement between the
Brand Keys’ predictive model also shows premium media
players is crucial,” Blyth warned. On the other hand, the work
is worth it, as every piece of data helps determine how to touch points in the same way, helping executives to fine-tune
communicate with target customers. That makes NextGen their marketing channels for the right audience to boost sales.
tools, and NexGen digital content and management crucial. “The idea is to anticipate various audience segments’ needs,
“If you don’t think through the process, you just have data,” wants and expectations. Then you can identify the true value
Blyth added. L proposition that drives behavior,” he wrapped up. L

LOYALTY EXPO 2009
Economic Downturns:
Is Loyalty Dead?
As a marketer, John Bartold ignored economic data. Now,

“Thanks for
as the vice president of loyalty solutions at Irving, Texas-
based Epsilon, he is slicing and dicing the 2009 recession.
everything you
did at the EXPO.
Most loyalty markers know a recession is defined as two
or more quarters of negative GDP. We’ve seen 11 recessions
since World War II, with the expansionary period afterwards
substantially longer than the recession. “It’s like the ocean.
The tide will come back,” Bartold told attendees gathered
Sunday morning.
I thought it was
“The market will turn around
when real wages increase, which
an outstanding
is happening now. Retailers
will start to see an upsurge in
meeting, and
personal spending, so get ready.
We will fight for every customer.” I am looking
Yet, while holiday retail sails were down but not dismal,
gift card sales plummeted because of folks’ perception the
forward to the
companies might not be around to redeem them. It’s just
one tidbit that signals to Bartold and his co-presenter, senior
vice president and Epsilon’s loyalty sector lead Todd Nelson,
next event.”
that this time, the game is changing. Some predict loyalty
marketing could be dead. —Chip Hall, Kobie Marketing
Bartold and Nelson assure the opposite is true.
Certainly, enrollment rates and activity levels on the

consumer side are down, and because 80 percent of a loyalty
program’s cost is awards, CFOs are itching to cut down on “It’s about best processes more than best practices,”
that part of the budget. Bartold understands that reality, but Bartold said. “Finding out her birthday and sending a card is a
said savvy companies will put half of the savings from such tactic. Everybody does it. It’s more import to understand how
changes into infrastructure and future loyalty analysis. you identify the innovation, not how you copy innovation.”
“The market will turn around when real wages increase, Finally, 66 percent of Americans say they intend to spend
which is happening now. Retailers will start to see an upsurge
more or the same as always in this recession—do you know
in personal spending, so get ready. We will fight for every
who they are in your loyalty program? Once you find them,
customer,” he warned.
drive them to redeem their rewards. After all, there is no
Indeed, in 2000 the marketing model heavily emphasized value until there is consumption. One of Epsilon’s clients
economy and emotion. Today dialogue and continuity is saw flat sales until its consumers began redeeming their $10
king, Nelson added. Simply putting a name on an email certificates at the company’s urging. Most spent far more
doesn’t equal “personal” any longer—today returning guests since the $10 didn’t cover the whole shopping trip, and
at a hotel chain want the check-in staff to recognize their boosted sales for the entire period.
status and treat them like they know the score. That takes
more precise internal data gathering for starters, and a “A recession is a stress test to clean out garbage and force
revamped way to measure results. us to grow,” Nelson summed up. L

FROM THE EXPO
The Loyalty Expo gets

Social with Twitter
by Bill Hanifin – Hanifin Loyalty, LLC
Whether using mobile

handsets or social media
for communications with
loyalty program members,
the discussion of new
communications platforms
and channels was a hot topic
at Loyalty Expo 2009.

LOYALTY EXPO 2009
A
ttending recent conferences around different
vertical markets, I had been struck by the
stark contrast in conference style and
“Kudos to
structure. At one banking event, there was almost
palpable embarrassment in the air when attendees
were asked to raise hands acknowledging their use
of Twitter. At another more digital-friendly event,
interest in the keynote speaker was validated by
the sea of attendees tweeting and texting on their
Mark Johnson,
mobile devices during the presentation.
Erin Raese & the
Loyalty 360 crew
Given these contrasts, the suggestion to engage an
experiment with Twitter at Loyalty Expo 2009 seemed to
make sense. After all, if we are to lead innovation in loyalty
for putting on
marketing for the next generation, how can we do so without
being familiar with the tools of the trade?
a great event
The use of Twitter was designed to enable real-time
communications with fellow attendees opting-in as
“Followers” while listening to chosen colleagues and
competitors participants were “Following”. The effort was
complemented by the texting program sponsored by
Vayulogic and allowed conference participants two new ways
in Florida.
to keep abreast of schedule changes, provide evaluations on
presentations, and facilitate networking. Met great folks;
In all, about 40 people were seen posting updates using
the “hashtag” LE360 to designate the event. Hashtags are
a Twitter convention used to make comments (Tweets)
learned a lot!”
searchable when used in the message. Over 100 messages
were bantered about and there were probably 10 power-users —Mark Frisk,
of the micro-blogging tool posting during the 3 day event.
Thinking Like a Customer
Given the size of the event, adoption of Twitter could
have been much higher. Reluctance to participate is partly
due to misunderstanding of the tool and its implications for
corporate users. A pre-conference Twitter webinar (Twebinar) research are top on the list, then Twitter and a Facebook Fan
was held to answer many of these questions and I have done page might serve the purpose. For more established brands,
my best to put social media tools in perspective in a recent building a community (we used to call this a forum) might
post on my blog Loyalty Truth. be the right venue to encourage candid comments from
preferred customers. If brand building and awareness are the
During the Social Media Roundtable on Day 2 of the event, goals, then a corporate blog might be the foundation of an
value was at the center of our discussions. A common concern evolving social media strategy that would include Twitter and
was how smaller brands would use social media as opposed other tools.
to corporate brands to differentiate in crowded markets. The
answers seem to lie in understanding corporate objectives for Concerns were express in our Roundtable about the time
social media campaigns. investment needed to “do social media right”. The choice of
who sits at the keyboard to execute blog posts and Tweets
There are many examples of large corporate brands was a related issue and most in the group acknowledged that
(Comcast, JetBlue, Zappos) using social media, Twitter the value of executive time should be weighed against the
specifically, to meet customer service needs, offer promotions, risk of unapproved voices speaking out about the brand.
and to listen to what consumers are saying about their
brand. For smaller organizations, the same tool could be a The fact that consumers continue to be empowered, first
channel for promotion, public relations, brand awareness, and with the information generally available on the internet and
networking. now with tools to share this information at increasing velocity
should be the focus of our energies. Whether Twitter survives
Another recurring question asked “If you had to choose just and becomes the Google of its category remains to be seen.
one or two tools, what would they be?” Again, the answer is Less in doubt is that micro-blogging and other forms of social
found in defining objectives. If customer service and primary media are here to stay. L

FROM THE EXPO: Behind the Brand
Beverly Hollifield
AT&T
Panelist at the 2009 Loyalty Expo! Beverly is responsible for the
strategic development and management of the AT&T Select Business Rewards
program, the AT&T Universal Business Rewards credit card and third party offers for the AT&T
small business customer base. She spearheaded the introduction of numerous exciting enhancements to the
small business loyalty program to include partner points, a mobile application and an online community.
What do you consider your greatest Where do you go to keep up to date on the
achievement? latest trends in your business?
While I am extremely proud of my company and my An avid reader of books, I also read numerous
accomplishments in the areas of bringing new products publications related to loyalty and attend conferences
to market and bringing loyalty initiatives to our customer, and seminars related to loyalty and the customer
my greatest pride would be my children and seeing the experience.
amazing young adults they are today.
What words or phrases do you most over use?
Which talent would you most like to have?
“Wonderful”—A word I feel expresses appreciation
The talent I would like most to have would be to be able and has the power to make people feel good about
to sing. My fellow church members would probably really themselves and what they are doing. Wishing someone
appreciate it if I had this talent as well. a wonderful day will hopefully make the day just that.
Which person has made the most impact in What can we expect from AT&T Select Business
your life? Rewards in 2010?
My great grandmother is the person who had the most The AT&T Select Business Rewards program is currently
impact on my life. She was a woman before her time, in the southeast. As we continue to see the critical
the epitome of a “steel magnolia”. She taught me that a impact of loyalty initiatives, especially in this economic
woman could be and achieve anything as long as she downturn, our strategy will be to expand its current
stayed true to herself, her faith, stayed committed to boundaries. At the same time, new enhancements will
whatever endeavor she undertakes and maintains the be made to the current program to keep it exciting and
highest integrity. relevant to our current member base.
Which book(s) are you currently recommending? What have been your biggest challenges in
I am an avid reader. Team of Rival about Abraham Lincoln’s 2009?
rise to the presidency would be my first recommendation.
As with everyone, the economic downturn and its
It is amazing how little politics have changed over the last
impact on our small business customers is our biggest
100 years. My second recommendation would be Outliers
by Malcom Gladwell. Interesting and entertaining at the challenge. Our focus has been to find ways to provide
same time about how successful people arrive at the top services and benefits that would ease the pain of the
of their field. current environment for them.
If you were not doing what you do today, how Word of advice for a novice loyalty marketer:
would you be spending your time? Loyalty Programs should work to strengthen your
I would work with children who have been abused, relationship with your customers, recognizing them
emotionally and physically, pursuing with the greatest for what they are already doing with your company.
passion improvements in their rights and the systems These programs, in no way, replace your commitment
that protect them. to deliver best in class products and customer service.
Never loose focus on “what brought you to the dance.”
L

Thank you to the 2009
Loyalty Expo Sponsors
The show was a great success!
Media Sponsors: Colloquy | PayBefore | The Nilson Report | RetailWire.com
We are looking forward to seeing you all again next year at the
Omni ChampionsGate in Orlando, Florida, June 6th–8th.
Visit LoyaltyExpo.com for details.

LOYALTY
Prsrt Std
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8190-A Beechmont Avenue #332, CAROL STREAM, IL
Cincinnati, OH 45255
Permit No. 475
SAVE THE DATE:
engagementEXP ™
NOVEMBER 8 - 10, 2009

Sheraton Chicago Hotel & Towers
Chicago, IL
The Engagement Expo will take a deeper look at the best practices of engagement and
experience management, focusing on brand, client and product perspectives.
We will address the various areas of engagement such as word-of-mouth,
experiential marketing, social media, interactive media and
technologies, forums and communities, as well as traditional media —
and how to leverage these as part of your marketing communication mix.
FOR MORE INFORMATION, CHECK OUT: Engagement Expo sponsored by
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LOYALTY

July 2009 MANAGEMENT

Evolve or Exit: Adapting your loyalty program to the ever-changing landscape

A more strategic, data driven approach can help

Bring this approach to life with comprehensive

To start working on your relationships, stop by

Ready to learn more now? Visit maritz.com or

16 Q&A: Ask the Experts

Evolve or Exit: Adapting your

62 Eye on the Future: loyalty program to the ever-changing landscape

July 2009 | Loyalty Management 3

Let our experience work for you. carlsonmarketing.com | 763.212.4520

4 July 2009 | Loyalty Management

TRENDS & REWARDS BEST BUSINESS PRACTICES

44 Loyalty Insights Study

Is the Art of Client

Contacts: 54 On front lines of loyalty, the mission is clear—

56 Program Success Story:

July 2009 | Loyalty Management 5

State of the Industry

Hear from Bill Hanifin (Hanifin Loyalty),

Survey Results and LOYALT Y E XPO 20 09

6 July 2009 | Loyalty Management

Visit us at www.affinionloyalty.com/loyalty or call 800.622.4863 to le n more about our loyalty

July 2009 | Loyalty Management 7

The New Customer

For those of you who’d like a quick lesson on tweeting, see

While technology and social networking were hot topics, we also

EXPO ts20& 09!

8 July 2009 | Loyalty Management

Jeff Anulewicz Wayde Fleener

Andrew M. Cirmo Peter Gurney

Holly Daly Bill Hanifin

Bill Eyre If you would like to

10 July 2009 | Loyalty Management

Combined his points for a

Cbsi provides more ways to build rewarding relationships.

July 2009 | Loyalty Management 11

Connie Hill Phil Rubin

12 July 2009 | Loyalty Management

The last puzzle piece

For more information visit: www.us.comarch.com

July 2009 | Loyalty Management 13

The following question was posted to the

A senior executive at a top US based airlines asked:

H aving been a member of a program for about 20

I believe the core issue is equity. It is not always the

14 July 2009 | Loyalty Management

H ere’s my suggestion. When a program member

July 2009 | Loyalty Management 15

Ask the Experts

Q: “My current loyalty program is contained to only

16 July 2009 | Loyalty Management

Q: Do you have a question for our panel of experts?

July 2009 | Loyalty Management 17

18 July 2009 | Loyalty Management

July 2009 | Loyalty Management 19

ANSWERING THE ULTIMATE QUESTION:

Answering the Ultimate Question is a how-to manual for designing and

The book is a follow-up to Fred Reichheld’s 2006 best-seller, The Ultimate

20 July 2009 | Loyalty Management

In Why Loyalty Matters, prominent loyalty management experts TIMOTHY

Loyalty is essential to maintaining stable family and personal relationships,

62 Eye on the Future: loyalty program to the ever-changing landscape

Q: “My current loyalty program is contained to only

“The relationship you have with your customer is not about

“The financial institution could name a specific nonprofit

“It is not just where the cardholders spend (dining and

“Organizations must dedicate themselves to exploring the innate potential of each