Beruflich Dokumente
Kultur Dokumente
Volume 1 Number 4
The Balance
of Powers
in Payment
Cards and Influencing
Loyalty the Channel
Building Trust
Technology to Drive Loyal
Relationships
Can Do That,
But Can We?
What works with
today’s loyalty
technology
Optimizing
Human Capital
Assets in
Tough Times
2 Loyalty Management | Loyalty360.org
This Month in LOYALTY MANAGEMENT
DEPARTMENTS
0,11 Contributors
1
6 What’s on Loyalty360.org
8 Letter from the Editor
28 Should program structure
strategy include a co-branded
credit card or simply a tender
neutral only approach?
The Balance of Powers in Payment Cards
and Loyalty, pg28
LOYALTY FORUM
7 Your Voice
“Many clients are changing their internal focus from
Loyalty Program Management to flawless & effective
Program Execution. What is your team doing to ensure
ongoing flawless execution for your clients?”
14
As President and CEO of
in Tough Times
Performance Improvement Council
20
Optimizing Human Capital
Assets in Tough Times—a
whitepaper developed
by the Performance
Improvement Council, a
strategic industry group
within the Incentive
Marketing Association
TECHNOLOGY,
TRENDS & REWARDS
30 Technology Can Do That, But Can We?
What works with today’s loyalty
technology
Jake Sterling – Maritz
Loyalty Management
40
The role of the contact
Editorial & Production Team: center customer service
Erin Raese – Editor in Chief representative is a key
Caitlin Schar – Editorial Director
Victor Wilcox, Graphics Plus Inc. – Layout & Design
element in the success of
Graphics Plus Inc. – Print Production any loyalty program.
The Quality of Loyalty, pg40
Loyalty 360 team:
Mark Johnson – President and CEO
Laura Rusche – Director, Marketing Operations
BEST BUSINESS PRACTICES
Amanda Chasteen – Associate Manager, Marketing Operations
Thomas Scott – Sales Associate 40 The Quality of Loyalty
Jennifer Wickline – Marketing & Events Coordinator Jim Boring – Global Response
Julie Hellebusch – Controller
Kathleen Ninneman – Graphic Designer 42 Improving Customer Loyalty Starts With
Setting Your Priorities
Contacts:
Ivan Frank – ePrize, LLC
Article Submissions: Erin Raese (630) 235-8251
Advertising: Caitlin Schar (630) 850-7867
44 Creating a Loyal Relationship with
Your Channel
To subscribe to Loyalty Management visit Loyalty360.org. Paul Hebert – i2i and Heather K. Margolis
What’s on Loyalty360.org
LOYALT Y 360.org C AREER CENTER
H
company we are working closely with our operation team
ave clear objectives for each segment of clients and
to support qualified customer service in every of 130 stores
be able to evaluate the success in terms of increase
where Loyalty program is working now.
of value of the client, increase of frequency or amount
Elena Naumchik Head of Loyalty Department at purchase, or retention rate. We have to work with our
X5 Retail Group N.V. clients to do this in a consistent way.
I
focusing on flawless execution was destined find that most so-called Loyalty Programs are not
for disaster, the conversation here has moved to that at all, but instead concentrate on providing some
loyalty programs vs. the service-oriented customer reward or incentive to continue purchasing. In my mind,
experience.
This isn’t either/or. Effective customer retention such programs do not create loyalty. Loyalty is the result of
and loyalty comes from executing well on all aspects of the the customers’ acceptance of the inherent value of the brand
customer experience - loyalty programs, customer support, in their life-value structure. This is almost always the result
online/offline touchpoints, community, communications, of purposeful management of the customer experience
etc. But once you are pretty good all of them, you can at strategic “moments of truth” - the Flawless execution of
pick and choose where to excel. Part of the reason loyalty which [Loyalty Management] is potentially speaking. The
programs can be so powerful is they can touch every aspect most important distinction, I have found, however, is that
of the customer experience through differentiated service, Loyalty is an emotional human response and thereby cannot
recognition, and rewards. Get to “acceptable” across the be reached by merely satisfying customer needs. Satisfied
board, then get to “great” where it fits with your organization. customers are not necessarily loyal.
Michael Greenberg COO at Loyalty Lab Rudy Vidal Principal at Vidal Consulting Group
LOYALTY
Enjoy the read!
Volume 1 Number
September 2009
4
MANAGEMENT
Powered by Loyalty
360
The Balance
of Powers
Sincerely,
in Payment influenCingl
Cards and tHe CHanne
Loyalty Building Trustl
to Drive Loya
Relationships
Technology
Can Do That,
But Can We?
What works with
today’s loyalty
technology
Erin Raese
Optimizing
Human Capital
Editor-in-Chief
assets in
tOugH times Loyalty Management
erinraese@loyaltymanagement.com
Loyalty Management
is now a bi-monthly
publication.
Expect the next issue
in late October!
MANAGEMENT
Performance Improvement
Randy Fox Council (PIC)
JET’s Director of Business
The Performance Improvement
Development, Randy helps clients
Council, a professional organization
build profitable programs that
of performance marketing executives
engage and retain consumers. His
collectively focused on helping
expertise in sales, marketing, and
companies optimize their investment
operational management turns
in human capital through proven
Randy Fox client’s brand vision into reality. Performance and innovative reward and
Improvement Council
(PIC)
recognition solutions.
MANAGEMENT
email mobile website display ads direct mail call center point of sale
Tips to look for—avoid at all costs working with text messaging companies that are willing to take a list
of customers’ mobile numbers (or worse offering you such a list) to send text messages to. These folks
—Victor Varney, are spammers and you run the risk of having customers and the carriers coming after you for engaging
Chief Executive in “SPAM” texting. There are many very professional text messaging service providers who can help with
Officer & President – campaigns or short lived programs. Their expertise as marketing agencies with mobile technology can be
very effective running a short run program. But if your interests in a long term loyalty program, “persistent”
Vayulogic™ service that allows you to engage in text conversations with your customers over a longer period, look
for a text message service provider that can build both a data base that tracks all of your customer text
interactions and can plug into your back end loyalty program applications. Even more important is that
the text message service provider can provide you with assurances that your customer data and only you can send text messages to your
customers. There are some text messaging service providers that will claim your “opt in” customers as mobile numbers that they will sell
or share to other brands. Not something you or your “loyal” customers would be happy about.
Sandra L. Gudat
President and CEO
Customer Communications Group
You’ve been traveling a lot, how do you keep Which book(s) are you
energized? currently recommending?
To the greatest extent possible, I try to maintain my 1491.* It’s an absolutely
sleep, eat and exercise routine on the road. At the same fascinating book about life in the
time, I love it when I have a little bit of down time that Americas prior to Columbus. It’s
allows me to try out something in the area—like riding very well researched and presents
the rollercoaster at the Mall of America in Minneapolis, the most current thinking of
going to see Falling Water near Pittsburgh or taking a anthropologists—lots of surprises.
run in Golden Gate Park in San Francisco. For instance, some scientists
If you could invite any 4 people What are the qualities you What have been your biggest
(past or present) to dinner, most admire in a person? challenges in 2009?
who would they be and why? Integrity, empathy, perseverance Helping our clients stay focused
My great-grandparents—I never and a wicked, dry sense of humor. on building a loyal and profitable
knew them, yet they are responsible customer base when every particle
for my being on this planet. The of their being suggests they should
What can we expect from CCG
trouble would be narrowing it put everything on hold when sales
in 2010?
down from eight to four. are down.
We will continue to break new
ground in developing strategies
Which talent would you most and tactics that help our clients Word of advice for a novice
improve their relationships with
like to have? loyalty marketer:
their customers—my team and
I wish I could run fast! I so admire I are truly passionate about it Put yourself in your customer’s
those folks that seem to glide, (we’re real geeks about it, actually). place. She doesn’t think she
effortlessly along—I’m not one of Many times CCG is asked by is participating in a “loyalty
them. clients to assist them in “filling program”—that’s just not in her
out” their existing efforts—finding vernacular, so don’t call it that out in
overlooked opportunities or the field. From her perspective, she
What’s your latest hobby? tweaking existing ones with our
may be a member of your discount
unique view of best practices in
Texas Hold’em Poker. I love program or she’s carrying a “card-
the retail and financial services
playing and studying the game. industries. We pride ourselves thingy” so she can get rewards and
I’ve read Harrington on Hold ‘em in being ahead of the curve special perks. Have the humility to
Volumes I – III and Mike Caro’s Book in suggesting new ideas and think about everything from your
of Tells, and I play in a Fireman’s technologies to clients, and this will customer’s perspective, and the rest
Tournament every year. definitely continue in 2010. will fall into place. L
Loyalty Reads
Human Sigma:
Managing the Employee-Customer Encounter
by John H. Fleming and Jim Asplund
October 2007 | Gallup Press
RULE #1: E Pluribus Unum. Employee and customer experiences must be managed together—not as
separate entities.
RULE #2: Feelings Are Facts. Emotions drive and shape the employee-customer encounter.
RULE #3: Think Globally, Measure and Act Locally. The employee-customer encounter must be measured
and managed at the local level.
RULE #4: There Is One Number You Need to Know. Employee and customer engagement interact to drive
enhanced financial performance. And this interaction can be quantified and summarized with a
single performance metric.
RULE #5: If You Pray for Potatoes, You Better Grab a Hoe. This means that good intentions alone do not
constitute a plan of action. Sustainable improvement in the employee-customer encounter
requires disciplined local action coupled with a companywide commitment to changing how
employees are recruited, positioned in roles, rewarded and recognized, and importantly, how
they are managed.
Essential reading for today’s global business leaders, Human Sigma shows how sales and service
companies can flourish in the new global economy. It reveals a profoundly different method for managing
human systems for growth. Blending strategic analysis with hands-on, practical steps and advice, Human
Sigma will change how you view your work, your employees, and your customers forever.
Building Customer-Brand Relationships is themed around the four key elements marketing
communicators use in developing programs--audiences, brands, delivery, and content--but
provides an innovative approach to marketing communications in the “push-pull” marketplace that combines
traditional outbound communications (advertising, sales promotion, direct marketing, and PR) with the
inbound or “pull” media of Internet, mobile communications, social networks, and more. Its “customer-
centric” media planning approach covers media decision before dealing with creative development, and
emphasizes measurement and accountability. The text’s concepts have been used successfully around the
world, and can be adapted and adjusted to any type of product or service.
Linda Kaplan Thaler and Robin Koval have moved to the top of the advertising
industry by following a simple but powerful philosophy: it pays to be nice. Where so
many companies encourage a dog eat dog mentality, the Kaplan Thaler Group has
succeeded through chocolate and flowers. In The Power of Nice, through their own
experiences and the stories of other people and businesses, they demonstrate why,
contrary to conventional wisdom, nice people finish first.
Turning the well-known adage of “Nice Guys Finish Last” on its ear, The Power of
Nice shows that “nice” companies have lower employee turnover, lower recruitment
costs, and higher productivity. Nice people live longer, are healthier, and make more
money. In today’s interconnected world, companies and people with a reputation for
cooperation and fair play forge the kind of relationships that lead to bigger and better
opportunities, both in business and in life.
Kaplan Thaler and Koval illustrate the surprising power of nice with an array of real-life examples from the
business arena as well as from their personal lives. Most important, they present a plan of action covering
everything from creating a positive impression to sweetening the pot to turning enemies into allies.
Filled with inspiration and suggestions on how to supercharge your career and expand your reach in the
workplace, The Power of Nice will transform how you live and work.
“We shower our customers with attention. There’s no doubt in my mind that
our philosophy can be applied to selling just about anything—from aircraft
engines to beanbags.” —Jack Mitchell
The only way to stay in business is with customers, and Jack Mitchell knows
how to attract them, and how to keep them. He has a deceptively simple but winning
relationship approach to customer service—that a relationship is at the heart of every transaction. Jack’s
business philosophy is based on “hugs”—personal touches that impress and satisfy the customer, such as:
• Remembering the name of your customer’s dog The only way to stay in
• Calling a customer to make sure he’s satisfied after a purchase business is with customers,
• Having a “kids’ corner” with TV, books, and treats and Jack Mitchell knows
• Knowing your customers golf handicap
• Introducing customers to business contacts
how to attract them, and
• Letting your customer use your office to make a personal phone call how to keep them.
This is a proven theory—hugging works! Mitchells/Richards achieves among the highest margins in its
industry, as well as amazing customer loyalty. Complete with anecdotes that exemplify outstanding customer
service, Hug Your Customers shows how any business can adapt this hugging philosophy to attract great staff,
lower marketing costs, and maintain higher gross margins and long-term revenues. At a time when customer
service has become the difference between success and failure, Hug Your Customers shows how Jack’s one-of-
a-kind philosophy brings the results you’re looking for.
L
Leveraging Loyalty,
One Actionable Idea
at a Time
by Kory Schramm – ITAGroup
Today’s marketplace is saturated with products and services, enabling business customers to be armed
with the power of choice. The handshake promises of yesteryear have given way to meandering loyalties
built on price, convenience and personal service. Globalization, endless social media outlets and a
company’s own internal pressures have created an environment where clients are exposed to more,
expect more and are committed less. A monumental business challenge is before us: determining how
to retain and enhance existing customer business while acquiring new, long-term contacts.
R
eality is frightening. On one hand, customers who
have had no complaints with regard to their long-standing
product or service providers continue to explore alternative
options. On the other hand, statistics continue to demonstrate that
financial success remains heavily tied to a continued incremental
investment in products and services and the customer satisfaction
ratings that surround them.
While the situation seems challenging at best, it creates the op-
portunity to learn more about your customers, and define your
company’s value proposition. Establishing (and maintaining) cus-
tomer loyalty is not an easy task, nor an impossible one. Through
a well-designed performance improvement program, your key
business customers can serve as your most important brand ambas-
sadors. And, perhaps even more important, those critical customers
can be motivated to enhance their investment in your business.
businesses to offer solutions to a customer’s wants. Selling to needs, still create movement. But keep in mind; you could say the same
however, is the essence of a partnership and the seed of satisfaction, thing about falling.
innovation and admiration.
In order to repeatedly purchase your product or use your service,
B
Culture through People ut the Harvard Business Review paper also contends we
Considered as a cost of business, people costs can be the biggest need to learn and bond with others to feel fulfilled. Human
drag on the bottom line. But, as a resource, they can also have beings are motivated by a need to comprehend the world
the biggest positive impact. Members of the C-suite that get this and to figure out where we belong in it. Don’t worry; we are not
(and most do) are demanding more for less from anyone who talking existential quests for the meaning of life here. But most of
impacts this precious resource. Progressive business leaders are us do have a hunger to understand how things work, to demystify
continuously searching for effective ways to optimize their human what surrounds us, to make a meaningful contribution along the
resource investments. way and find a way to fit in.
While recruitment, hiring, training and benefits expenditures It’s that last need, our desire to bond, that’s the most interesting.
are all part of the aggregate people investment, compensation is It’s a survival reflex really. Most animals travel in herds or packs
the biggest and most visible component. But as companies tighten because there is safety in belonging. People look for assurance
their belts, freezing, sometimes slashing expenditures, many man- socially and professionally. We seek connections with customers,
agers feel their options are limited. With a shrinking compensation managers and coworkers for the same reasons animals do it in the
pool to draw from, many are left wondering: wild. People want to contribute to the success of a group and feel
• How can the organization motivate employees to reach goals part of that success. It elevates our role in the group and makes us
that are critical to the organization’s success? How can we more secure.
retain our best people? The reward in forming relationships is primal. In short, we need
• How do we develop leaders for tomorrow? to feel needed. Most of us get frustrated, maybe a little uneasy,
• How do we share best practices and build on our cultural when we can’t. Good sales people and customer-facing employees
attributes? in particular have these traits at higher levels than say an accoun-
• How can we possibly do more for less? tant. But all employees…all people…take pleasure in knowing
P
erhaps no appeal has been as stirring as a recent ad in As Dr. Nelson says, “Creating energized employees and maximiz-
the Wall Street Journal placed by John Stumpf, President and ing a firm’s investment in its talent demands a new set of leadership
CEO of Wells Fargo. Entitled “The Value of Team Member priorities.” It requires leaders with the vision to build a culture of
Recognition,” Stumpf acknowledged the need to re-examine how recognition around the specific behaviors that a company requires
much companies spend on recognition events for employees, then if it is to thrive in bad and in good times.
praised the value of recognition for top team members: It may seem like second nature or common sense to have a
process in place to say “thank you” when someone is doing the
“This recognition energizes them. It inspires right thing. However, too few companies have formalized recogni-
them and their team members to want to tion practices in place to reinforce critical behaviors. Recognition
create an even better experience for our may often be seen as yet another people-related expense. However,
customers… We believe our profits actually in- elevating recognition so that it becomes a way of life is an in-
crease by rewarding and recognizing our best vestment in the right people and in the right behaviors…and a
performers…Competition to be recognized in- strategic imperative that will help a firm to weather lean economic
times and thrive in a good economy.
spires everyone to work harder and smarter…
our product is service delivered by caring,
energized, talented loyal team members.”
Look for upcoming white papers addressing additional elements pertaining to Employee Lifetime Value (ELTV),
based on the results of full study, which is available on the Forum’s website: www.performanceforum.org.
Which companies have stay or their desire to leave. tweaking programs based on
you seen incorporate these Now, these organizations are customer service reporting
theories? looking into an employee’s and surveying; using surveys
emotional and intellectual to identify points of weakness
Organizations where people
commitment. They see to further training and other
Mike Ryan are perceived as the primary
improvements in customer emphasis all absolutely
source of competitive
satisfaction and use that index apply across many initiative
advantage—knowledge and
When you’re speaking with as a hedge against lower platforms.
service based enterprises;
your clients, what do you prices. Some firm’s have some
worldwide companies with pretty sophisticated analytical What do you see as the
recommend as best practices
multiple business units have models that help them gauge next steps for these
for each of the principles?
an exasperated need to their elasticity in the face of organizations?
Recognition strategies should align behavior with a unified competitive offers.
revolve around the firm’s point Using web 2.0 tools and
brand. Examples include
of differentiation; that extra Accenture, Dell, McDonalds How are these companies techniques to expand the
level of value the organization applying the same principles impact of recognition.
and Southwest.
can provide. Companies to their consumer loyalty and Since recognition is all
How are organizations channel initiatives? about storytelling, many
that are brand focused see
measuring effectiveness/ organizations will be
the most success because Channel initiatives are more
results from these initiatives? integrating social networking-
the brand and expectation challenging, since the channel
is clearly defined and acted In a better economy many partner is not an employee. type tools into their own
upon by their employees in organizations would gauge However, the same concepts: platform. This promotes
every customer (internal as employee engagement on an giving recognition based knowledge share and best
well as external) interaction employee’s commitment to on customer feedback, practice adoption faster. L
Influencing
the Channel
Building Trust to Drive Loyal Relationships
by Rick Blabolil – Marketing Innovators
Today’s economic pressures have increased the complexity of the marketplace. Sales chan-
nels are shrinking and competitive challenges are weakening mature distribution channels.
For a marketer trying to deliver greater brand value, navigating today’s business environ-
ment demands a deep understanding of the relationship between your company and your
distribution channel, customer and market needs.
n Integrate branding, training and promotions n Engage your stakeholders across the enterprise
A technology-driven program site can integrate incentives, brand- There is already an element of trust built into the relationship
ing, promotions, training modules, knowledge-testing and more, channel partners have with the channel organization’s sales force.
to become a comprehensive performance management vehicle. In It is therefore critical to get the sales force charged up about the
addition to driving key behaviors, the program can prioritize pro- program and ensure their buy-in. This will require that they are
motions, build product knowledge and help your brand increase given enough information and training so that they can speak
share-of-mind by offering incentives for completing online training knowledgeably about the program. Engaging your sales force will
or education. promote the sincerity of both dealer and distributor commitment.
Retailers use various combinations of branded credit cards such as co-brand and private label,
and loyalty programs to attract, invigorate, and extend customer relationships. In theory, the
decision to introduce a payment card vs. a tender neutral loyalty program should revolve around
the value proposition available to the three key stakeholders: the consumer, the retailer, and the
financial institution. However, other factors will influence this decision including the retailer’s
brand strategy, the in-store operating environment, and the presence of competitive programs.
F
irst Annapolis conducted a review of the approach in developing the right combination of payment and
top 100 merchants, by sales, to determine the commonalities loyalty programs is to think of what can be offered to each of the
among retailers that fell within the same categories in terms three key stakeholders: the retailer, the financial institution and,
of combination of reward programs and payment cards offered to most importantly, the consumer.
consumers. What was found is very little consistency among the
retailers in each group. For purposes of this review, we defined a
loyalty program as one in which the customer enrolls and accrues
The Retailer
value, in one form or another. The way in which a loyalty or payment card program will influence
Perhaps the greatest surprise is the comparison of how many of a customer’s purchase behavior over other potential drivers is at
the top 100 have no program versus how few use a combination of the foundation of the right design. Merchants selling large ticket
all three (e.g., co-brand, private label and tender neutral loyalty). items or with high average transaction values stand to benefit
The types of organizations that fall into these two groups are also from a payment card program that provides the customer with a
surprising. For example, the two preeminent names in home financing vehicle. If these same merchants are in vertical markets
improvement (Lowe’s and The Home Depot) have opted with staunch competitors and little other means to differentiate,
against a loyalty program while two of the front-runners a tender neutral loyalty program that facilitates a return of
of office supplies (Staples and Office Max) have loyalty special value to key customers may be a critical component
programs as well as both private label and co-brand credit of the overall business strategy. Moreover, the
cards. There is some consistency among certain vertical extent to which customer loyalty is “on-brand”
markets; the two leading wholesale or consistent with the broader retail and
clubs and booksellers have similar marketing strategy, is also key.
programs in that both use a
co-brand credit card and tender
neutral loyalty. However, there is
a fair amount of inconsistency in
some categories as well; grocery is
represented in the co-brand/tender
neutral, tender neutral only, and no
program categories.
The question then becomes what
factors into a retailer’s decision when it
determines which program structure
to embrace? Should the strategy
include a co-branded credit card
or simply a tender neutral only
approach? Is it strictly about the
business deal the retailer can strike
with the financial institution or
is there more to it? One potential
The Financial Institution However, not all retailers are created equal in terms of their ability
The retail card sector tends to offer an attractive option for issuers to deliver value. Influencing factors include available margins
and offering loyalty programs in parallel with the payment card to fund rewards, frequency of visit (to drive relevancy), and the
has the potential to drive increased account acquisition and relative position of the retailer as compared to its competitors.
purchase volume relative The perspectives of these
D
airy Queen recently announced an RFID sticker moment of purchase, increasing transaction frequency and sales,
that customers can attach to a phone or wallet to receive and credit card issuers can use the same technology to increase
targeted promotional offers in store. Burger King has their customer’s loyalty at a lower cost. For both retailers and
introduced an iPhone application that allows users to place credit card issuers, POS loyalty programs allow them to gather
orders automatically. Whole Foods is making more than 2,000 valuable information about their customers.
recipes available to its customers via an app for both iPhone and The best POS loyalty programs identify customers through
iPod users. Text messaging, social networking, and smart phones their credit, debit or loyalty card and track purchasing behavior
are opening up new avenues for reaching and creating loyal in order to deliver targeted promotions. These behaviors can
customers. include spend, number of visits, and time lapsed since the last
Technology is moving at light speed, but are we moving along visit. Retailer promotions can be set up to drive frequency,
with it? Consider the following: increase average ticket, reward their best customers, cross sell,
•L ess than 10 percent of credit cards in the US have RFID market new products or deliver targeted messaging. This targeted
chips in them and retailers have been slow to adopt the approach ensures the right customer gets the right offer. For card
technology. issuers, promotions are linked to their specific card. Beyond the
• 7 7 percent of the entire mobile market do not own an iPhone targeted delivery, the beauty of POS loyalty is that the customer
• 4 0 percent of the US population do not use text messaging doesn’t need to remember to bring a coupon, direct mail piece
• 5 1 percent of Americans do NOT participate in social net- or a print out of an email to receive their offer—they just show
working sites such as Facebook or Twitter up and buy.
Graphics Plus
Delivers Results
gp can help you communicate
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www.gpdelivers.com | 1-630-968-9073
Automating
Marketing
Self-Service Technology
Awaits Those Smart Enough
to Experiment
M
by Scott Couvillon – Dukky anagers of incentive programs aren’t
the only marketers hanging their heads, wringing their
hands and trying to find something positive in the
confidence indicators and revenue reports they await like a make
or break report card in the 6th grade. And who could blame them?
Marketers are facing a convergence of realities ranging from a
recession and surging unemployment to increased use of online,
social platforms streamlining word of mouth and a general aversion
to traditional marketing tactics.
As an account director in advertising agencies both traditional
and non, I always encouraged clients to earmark a portion of
the budget for “R&D”. Today, the need to try new technologies
is even more imperative as the results of traditional efforts are so
clearly lagging or un-measurable. To simply default to the best of
the traditional strategies makes your fate certain—and it won’t be
pretty. Real innovations with specific application to the loyalty and
incentive industry are coming available. The question is, are you
willing to experiment?
N
ow, onto… Dukky [www.Dukky.com], a direct Many marketers are hibernating as they did in 2001—shut-
response company, is introducing new marketing ting down body function to preserve life at the core. Very few
programs designed to leverage technology to initiate are heeding the advice of pundits to gain share as others retreat.
relationships between brands and individuals. About the time This is a mistake. In your cube, this afternoon, you can balance
of the Loyalty Expo in Florida, Dukky launched a pay-for- self-preservation with calculated risk to move a few slots up
placement direct mail platform that, in this example, allowed the hatchet list through experimentation, and a new breed of
marketers to put up to 40 personalized gift cards into the hands resources is making that easier. You do not need to be a database
of HR professionals, offering them the opportunity to truly manager, list expert, webmaster, social network maven or tweet-
experience the program portfolio rather than simply hear about freak to do these things, resources such as those mentioned
it. Online tools allow for activation, measuring purchase intent above, can enable you to broaden your arsenal while learning
or interest, and even specific feedback so analytics can learn what is right for your situation. This can all be accomplished
something from those who are not interested. A dashboard lets without exposing yourself to the financial risks that often ac-
company traditional channels. So go, get started today. L
The rewards revolution continues to progress, improve and evolve. Loyalty marketers
are embracing the most recent advancements in product-level rewards and are introducing
next-generation technological, analytical and marketing innovations to improve the delivery
of relevant rewards to consumers. What are considered relevant rewards? Simply put, relevant
rewards are offers that are pertinent and meaningful to customer purchasing decisions.
C
ompanies such as Catalina Marketing have more than 25 specific customer groups to steer them toward cross-promotion,
years of experience in delivering consumer-driven offers complimentary or new product purchases at department or SKU
and rewards in the retail space. Catalina’s clients include level.
brands such as Safeway, Walgreens, A&P and Kroger among
others. More than likely you have been exposed to a certain level of
relevant rewards as they are often delivered on the back of grocery, Motivate Customer Behavior
pharmacy or large merchandiser receipts. Typically, relevant While identifying customers and tracking their spending remains
rewards are delivered to consumers based on what is, or is not, in an ongoing and tedious task, attempting to motivate customer
their shopping basket. Relevant rewards can also be triggered based purchasing behavior is the payoff. The essence of operating a
upon historical purchase activity. loyalty program is to be able to motivate customer behavior. There’s
CVS ExtraCare® is a proprietary rewards program which pro- tremendous opportunity to change behavior by targeting customers
vides offers to cardholders based on the purchase of select products
in multiple ways. For example, you can target customer groups that
or historical buying activity. For example, discount coupons for
never purchase complimentary products, i.e. customer that purchase
specific products you purchased in the past may be printed on
baby food, but never purchase diapers. Or, the historical profile of
your receipt if that particular product is not contained within your
the customer may show that they did not purchase a product from
basket for the current transaction.
The Catalina and CVS examples are merely the tip of the a specific department in the past three months. Further, you can
iceberg. Once you understand who your customers are, what they apply a promotion to a customer group which has never purchased
do and do not purchase and the frequency of their visits, there are a particular item. This will allow you to include participation from
a number of ways to increase profitability. Before doing so, it is your vendors, suppliers or manufacturers to offset a portion of the
crucial to have the proper loyalty program technology in place to cost of the relevant reward while introducing new customers to
support your effort. In addition, there are two fundamental loyalty their brand.
program principles which should be considered prior to attempt-
ing to introduce relevant rewards as a means to change customer
Delivery of Relevant rewards
purchasing behavior.
Relevant rewards are routinely delivered once the customer is
identified and prior to the transaction being closed. The POS
1. Identify Customers
(point-of-sale) system identifies the customer and connects to
In order to reward customers on a product or SKU (stock keeping the loyalty host and applies all relevant loyalty promotions to
unit) level, there must be a means to uniquely identify each the transaction based on a variety of business rules established in
customer. Customers can be identified through a number of vehicles advance. The host marries the business rules up against the basket
including a payment instrument, loyalty card, driver’s license or
contents, and may consider; the time between product-specific
phone number. Customers will willingly participate and identify
purchases or appropriate vendor/manufacturer offers available.
themselves if they truly understand the value they’ll receive in return,
Then, single or multiple reward offers can be delivered back to
i.e. attractive redemption items or instant product-level rewards.
the customer in the form of bonus points, instant discounts or
coupons (depending on the program currency).
2. Track Spending Loyalty programs are most notably utilized as a tool to reward
Once customers are familiar with the program and embrace being profitable purchasing behavior. Being able to offer your customer’s
identified, all purchase activity can be tracked and analyzed. relevant rewards will only improve the depth, success and longevity
During this step, proper promotions can be initiated to target of your program.
Question #1
instant gratification
keep our program fresh on a quarterly basis. We have
established a baseline reward structure where as anyone
experience that
participating in the program that visits our stores can earn
rewards in our program. With our product-level bonus
E
verybody is saying now is the time
to engage consumers. Reports dem-
onstrate that reducing marketing
spending in today’s economy results in
lost customers. You need your customers
to know you are viable in the marketplace,
and spur them into spending their precious
dollars with you. But, how do you reach
consumers with clear, compelling mes-
sages? How do you turn your marketing
dollars into consumer loyalty?
1 Ad-ology study, May 13, 2009 2 Beta Research study by Adweek 3 DM News study, May 2009 4 DM News and Pitney Bowes survey 5 Vertis Customer Focus Study, Retail 2008
The Quality
of Loyalty
by Jim Boring – Global Response
Shakespeare could have been speaking of loyalty as well as mercy in The Merchant of
Venice. Any good merchant of the time would have understood how customer loyalty
cannot be forced or cajoled but must have as its source a genuine and free association with
a particular brand. What is it that enables a brand to develop customers that consistently
and faithfully prefer it even when they have readily available options? That question is at
the heart of every company whose brand competes for customers. And it is the question
that begins the discussion of the development of any loyalty program.
Loyalty programs do not instill who feel unappreciated. Which is why both the design and the
loyalty; they reward it. administration of loyalty programs must take care not to create
counter-productive hassles or obstacles that will annoy and alienate
If a customer continues to do business with a brand because of its
the intended customers. It is not only the reward that should be
loyalty program then the program has become the focal point of
satisfying but also the conditions surrounding the reward.
the customer’s loyalty, not the brand. Yet the rewarding of loyalty,
above and beyond the benefits of product purchases, becomes an Anticipating the reward is part of the reward itself. Building
inextricable part of the aura of the brand. points or other qualifying prerequisites engages the customer
The custom of rewarding customers with a little extra goes back emotionally and builds a pleasant tension that looks forward to
a long way. The thirteenth bread roll in “a baker’s dozen,” is an old its release in earning the reward. That anticipation should not be
custom. In New Orleans the something added is called “lagniappe.” diminished or quashed by indifferent customer service.
That French word is derived from the Spanish, which in turn comes The role of the contact center customer service representative is a
to us from the still older tradition and language of Quechuan key element in the success of any loyalty program. Inquiries regard-
merchants high in the Andes. The practice and the intent is ing qualification or other aspects of the loyalty program must be
worldwide—a little something extra to keep you coming back. handled in the spirit of the program. Which means that selection
The rewards of loyalty programs are tokens of appreciation. And and training of customer service representatives is a critical part of
customers who feel appreciated tend to be more loyal than those loyalty program planning and implementation.
W
endy Shooster-Leuchter is Co-CEO of assimilated the AE culture completely and express it naturally
Global Response, a contact center that handles loyalty when he or she talks to our customers. We do everything we can
programs for leading retailers. “Loyalty programs are an to bring that about—site visits, product displays in the contact
important aspect of many of the brands we represent. Customers center, careful recruiting and selection, and especially training that
respond to them; they become engaged with the process of earning includes culture and brand identification. All this is necessary to
rewards and tracking that progression. What is critical to the build loyalty and to implement our loyalty programs.”
interaction with customers calling about a brand loyalty program is Mark Twain said that “lagniappe” was a word worth travel-
the tone and energy in the customer service representative’s voice. ing to New Orleans to get. He might have said the same about
Any perception on the part of the caller that the customer service a well-conceived, well-managed loyalty program. A program that
rep is bored or annoyed or indifferent has a domino effect on the is implemented with style, grace and in a manner reflecting the
caller’s enthusiasm, interest and loyalty.” customers it serves will instill loyalty naturally and effectively. L
Craig Morrison is Customer
Contact Quality Supervisor for
American Eagle Direct. We asked “What is critical is the tone and energy in the
about the purpose and management
of American Eagle loyalty programs.
customer service representative’s voice.
“My area of responsibility is for Any perception on the part of the caller that
the online channel of our business,
but from a customer’s perspective
the customer service rep is bored or annoyed
American Eagle needs to provide the or indifferent has a domino effect on the caller’s
same kind of experience regardless
of why, how and where they interact
enthusiasm, interest and loyalty.”
with us,” Morrison said. “We are a
friendly, kind of laid-back company. Those are qualities that attract
our customers and that they expect in any interaction with us.
That is not to say they don’t expect the highest level of service and
competence—they do, but they want it delivered in a manner that
they associate with American Eagle.”
No matter how well designed a loyalty program may be, no
matter how generous and accommodating its requirements—all of
it will be wasted unless the customer service representative delivers
the “lagniappe” with a smile in her voice, her email or online chat
with the customer.
“We have a progression of accomplishment at Global Response,”
Wendy Shooster-Leuchter said, “Our best customer service repre-
sentatives earn the title, Brand Care Specialist. They understand
just how important their job is, and how their primary responsibil-
ity is to engage the customer in keeping with the culture, style and
manner of the brand they represent.”
The idea of brand care shifts the focus of service to a higher
level—it puts the interaction with the customer in the context of
the brand experience and heightens the responsibility from that
of handling an administrative task to that of representing a major
brand name.
“The contact center representative is American Eagle,” Craig
Morrison says, “On the direct side of our business where I have
responsibility, the contact center rep is probably the only live
person the customer will talk to. That means the rep must have
Improving Customer
Loyalty Starts With
Setting Your Priorities
by Ivan Frank – ePrize, LLC
T
he loyalty solution marketplace has never • Competitive differentiation: resting on existing loyalty while
been more plentiful. But, although today’s loyalty tools are key competitors advance
stronger and sharper, it can be difficult to ensure that your • Investment losses: ending existing efforts prematurely
loyalty initiatives are solving the right problems. When setting out • Organizational willingness to make improvements: inability to
on a loyalty endeavor, establishing priorities is the most important achieve internal buy-in for improvement.
thing to get right. In fact, not doing so can lead to poor allocation The process for establishing your loyalty priorities starts with:
of your investments: 1) understanding your current approach to loyalty; 2) scoring and
• Not solving for the fundamental issue at hand: making a large evaluating five key components of loyalty; and 3) prioritizing your
investment new platforms instead of tweaking an internal opportunities for improvement based on the gap between your
process current state and desired business strategy.
See the whitepaper “Improving Customer Loyalty Starts with Setting Your Priorities” published at www.eprize.com/white-papers
for a deep dive into prioritizing your loyalty strategy.
Creating Profitable
Customer Loyalty
by Timothy Keiningham – Ipsos Loyalty & Lerzan Aksoy – Fordham University
T
here is no doubt that customer loyalty is finds that this is often a very large percentage of loyal custom-
important. Loyal customers stay with us for years, ers—frequently more than 50%. As a result, when a company
devote a larger share of their wallet to the company, and misprices its product, many of its loyal customers buy in large
recommend the company to their friends. And customer loyalty quantities, making them not only unprofitable but also some of
can help to drive firm profitability. But it doesn’t always do so. the firm’s largest customers in the process. In a traditional sense
Unfortunately, most companies do not distinguish between the they would be defined as “loyal” customers but they certainly do
right kind of customer loyalty that’s really worth pursuing and not benefit the bottom line.
the wrong kind. So what is the solution? The target audience for any company
We conducted an in-depth investigation into companies’ com- should be customers who are not only loyal in both attitude
monly held beliefs about customer loyalty and arrived at some and action, but also profitable. Research consistently finds that
surprising conclusions. Most managers assume that loyalty equals profitable customers tend to make up only around 20% of a
profitability. As a result, firms blindly chase loyalty based upon company’s customers. Break-even customers represent around
B
focus only on the way the customer feels toward the brand or
company. But our research shows that simply gauging how cus- ut a focus on Profitable Loyals doesn’t just
tomers feel about a company is a poor indicator of how they will spontaneously happen. It requires the successful
behave toward the company in the future. If data about purchas- integration of all areas of management—accounting,
ing behaviors are added to the picture, it can help a company finance, marketing, operations, and human resources—in
identify not just who are the truly loyal customers, but also the profitably addressing the needs of customers.
ones which are profitable. Accounting needs to do a better job of analyzing the prof-
There will always be a group of customers whose loyalty is itability of customers. Managers need this information to
driven largely by expectations of great deals. Loyal customers effectively run their businesses. They need to know who their
clearly know when they are getting a good deal since they are profitable customers are, and what behaviors are associated with
active consumers of the product. The problem is that our research profitability. Paradoxically, one of the most commonly used
CUSTOMER EKG
The dotted line below illustrates emotional peaks and valleys that can occur in a
customer relationship. The solid line demonstrates how greetings can maximize
high points through affirmation & celebration and minimize low points through
accountability & incentives.
Enthusiastically
Recommends
Feels
Responds to Appreciated
Incentive Accepts
Apology
A recent independent national consumer
Impressed by
attitudinal study completed by Hallmark
Loyalty
Product/Service
Business Expressions underscores the
benefits of developing a customer
Acquisition Retention Win Back engagement strategy that uses emotional
drivers as part of the marketing mix.
The study revealed businesses using
Apathy
O
ver time, these experiences receptive mindset for any promotional or greeting card after a purchase
begin to look like an EKG, transactional message that is to follow. strengthens their relationship
plotting the highs and lows of A word of caution—while it can be with that business
the consumer’s relationship with the tempting to jump quickly to the transac-
business. Companies, through their sales, tional or promotional message, or even
marketing and customer service efforts, combine them with the emotional message, n 50% of consumers who receive
have the ability to maximize the highs and it is vital that the balance between emo- business greeting cards
minimize the lows by employing a strategy tional connection and selling be preserved. are more likely to do future
that creates an emotional connection which Companies cannot afford to risk even the business with the sender
helps foster engagement and build loyalty appearance of insincerity.
across all phases of the customer lifecycle.
Successful companies endure because n 45% of consumers receiving
Brands that are strategic about using
they understand engagement and advocacy
emotion during all phases of the customer business greeting cards will
requires more than just customer satisfac-
lifecycle create mutually beneficial relation- say something positive about
tion. They know establishing a relationship
ships with their customers and even out the
with customers which reinforces the con- that business to others
peaks and valleys inherent in any business
relationship. sumer’s emotional drivers—feelings of self
It is important to establish and con- esteem, contentment, recognition and The study also showed that greeting cards
tinually reinforce an authentic emotional appreciation by a business—can turn a can ratchet up the trust factor between
connection between you and your cus- one-time buyer into a long-term advocate, businesses and their customers. Employing
tomer with every touchpoint. The essence a true brand ambassador who not only marketing tactics that drive trust helps
of that connection is this: “We understand, supports the organization, but also recom-
to establish a relevant connection with
appreciate and recognize your value to our mends it to others. By positively engaging
customers. L
company and intend to make every effort consumers you can drive behavior and
to please you.” This approach encourages a create long-term ROI for your business.
RECOMMENDATION
In reviewing other available credit card programs, we give Ultimate Rewards
The ability to easily earn additional points, the fact that points don’t expire, the cash value and most exciting,
the large and current merchandise selection, make this program stand out!
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.
* You will earn 1 point for each $1 of net purchases. You will earn an additional 1 point for each $1 of eligible airfare net purchases made online through the program booking tool. You
do not earn points on balance transfers, cash advances, cash-like charges such as travelers checks, foreign currency, and money orders, any checks that are used to access your account,
overdraft advances, interest, unauthorized or fraudulent charges, or fees of any kind, including fees for products that protect or insure the balances of your account.
L
engagementEXP ™
new
d at
es
ore
!
or m
NOVEMBER 18 & 19, 2009 f
r m ation
Sheraton Chicago Hotel & Towers info gister,
re
Chicago, IL • engagementexpo.com or to k out:
chec p o.com
e ntex
The Engagement Expo will take a deeper look at the best
n g a gem
practices of engagement and experience management, e
focusing on brand, client and product perspectives.
We will bring a strong list of speakers, sponsors, and exhibitors
to address the various areas of engagement such
as word-of-mouth, experiential marketing, Brought to you by:
social media, interactive media and tech-
nologies, forums and communities, as well
as traditional media — and how to leverage these as part
of your marketing communication mix.
If you're interested in sponsoring at this conference, please contact Mark Johnson at markjohnson@loyalty360.org