Friday, August 22, 2008

Why The Beatles Don't Issue Reward Points?

One of the highest grossers of this century, having sold millions of records across the world and a sprinkling of fan clubs with a maniacal following that has an etheral magic about it. Music lovers across generations continue to purchase and listen to their favourite tracks across analog & digital, from cds to mp3, audio cassettes to Blue Ray formats.

WalMart has proven (often considered obstinately) time and again that its EDLP platform continue to drive the customers back into stores. Apple products have a maniacal cult following across geographies and the adventure continues with the iphone.

So why is it that some of the leading brands do not issue reward points, but in fact charge a premium to facilitate entry into the inner circles.'s a contra view. Reward point issuing loyalty programmes is the bastion of those brands that stand a couple of rungs below the truly iconic brands. A true brand delivers value to its customer base. A true brand is respected for its contributions & innovations and prodded on when it faulters or misses a step.

Are loyalty programmes that missing ingredient in the econometric equation that mask the shortcomings and faults in the product / service range? Do loyalty points actually say thanks for your business, because we know you may have taken your business elsewhere? Now, is'nt that it in itself a constant confession of shortcomings! slightly radical...

The fact of the matter lies in the fact that several brands and businesses believe that reward programmes can truly camoflouge their faults. In these increasingly demanding times, its important to understand truly what drives value to your customers and to your businesses. In these days of rising fuel prices is forcing customers to shop online, should the business redirect its budgets in points to a more efficient delivery system.

Loyalty programme managers need to consistently prove the business value of their points and programme costs. Its not surprising to see presentations and statistics that proclaim that their loyalty customer base contribute to over 60% of spends and 70% of profits. When was the last cause and effect study undertaken? and how can one be convinced that the locational, pricing and merchandising range were in fact the driving factors and not perhaps reward points.

Time to tighten the belts and perhaps sing " I should have known better..."

Wednesday, August 13, 2008

The Fatal Attraction of Reward Points....

As marketers, we spend much of our time in researching our customers, their needs, segmenting and targeting them into clusters and finally blasting offers, coupons, freebies, incentives and even birthday cards as if there were no tomorrow.

Marketers have been challenged with quite often the ability to deliver a suitable value to customers at the right place at the right time with the right context. The introduction of bluetooth, gps, the Internet and a suite of other technologies, one would imagine the scale would have tipped in favour of the marketeer...but alas not, as the challenge is not in the channel as much as in "customer understanding"

It is rare to come across messaging which is considered to be in the domain of "consistent relevance" by consumers. So what is it that holding us back?

1. We do a lot of research but do we listen? : Research is conducted to test hypotheses, but often we do not read between the lines....

2. We talk but do we have a dialogue? : How much of our time is spent in having a dialogue with our customers outside the scope of research. ( A couple of years back when I was handling a children's product category, we commenced the practice of chat sessions & not focus groups with was an enriching and remarkable experience...try it out sometime)

3. We receive...but do we comprehend? : There's gigabytes of data churned out each day, but how much do we comprehend and turn into action.....

In the case of loyalty programmes, we have been so enamored by reward points, that its almost a fixation ( glen close revisited...)...The reasons as below:

a. Protect the brand...don't give back cash, but seek camaflogue behind reward points, thereby protecting the brand equity!
b. It's universal.....the common currency but in a different avatar
c. It's easy..this is the single unspoken truth.

Well quite often to the extent that several experts believe that reward points is but the foundation stone which meet the hygiene level of expectation, the rest is bonus.

Well... a different perspective...have a reward programme in which you can present value to your customer in their every interaction with your brand ( and even intent to interact!).

I'm a strong believer that there are several large segments of customers who would value services and benefits other than points..The hospitality segment has done this wonderfully well in tracking their customers preferences and extending them on the next visit.

Believe its time we spent a little more time in understanding how we can better add value back to our valued customers and question the precious marketing dollars we invest in points..........

Tuesday, August 12, 2008

When a loyalty program gives a once loyal customer the boot.

I used to be a member of the loyalty program Hilton HHonors (a name both my spell check and I aren’t too crazy about). I say “used to be a member”, because on two recent stays at Hilton brand hotels, I was told they had no record of my membership. I had ceased to exist.

Some back story: Between the years 2001 and 2005 I stayed at a particular Hilton Garden Inn all the time. I was a very loyal customer. In fact, over 4 years I racked up enough points in the HHonors program to treat my family to a free weekend stay in a very nice New York City hotel suite.

But by late-2005, I had moved on to another job, one that at the time required zero travel. The Hilton hotel stays stopped. And by about the end of 2006, something else had stopped as well—all incoming e-mail from the HHonors program.

Fast forward to 2007 and 2008, and I’m again traveling ad nauseam, to the tune of about 50-room nights a year. Only now, the bond between me and Hilton has been broken. So, when the choice is mine, I’m opting for hotels I really like (Shutters in L.A.), give me special perks (Lowes) or offer a loyalty program that has greeted me with open arms (Hyatt).

Funny thing, though. Twice in the past couple of months, I found myself again checking in to a Hilton brand hotel. The first time, I asked the desk clerk to credit my Hilton HHonors account. After all, I still had my account number and password. Even had my Hhonors member card. There was no record of my membership—nor was I invited to rejoin the program. I later checked online at the program Web site. Ditto, no record of my existence.

What happened? Had the database see me as a lost cause, an inactive customer not worth keeping in the system? Or had they simply misplaced my information? The fact is, for all Hilton knew, I was still a frequent traveler who had moved my share-of-wallet to another hotel chain—in another words, a traveler worth trying to win back. Which begs another question: At what point do you eliminate a once valuable and loyal customer from your database?

This former Hhonors member’s opinion: If a “best” customer disappears off your radar, you should be making every attempt to win him or her back. If you’re sending out cost-prohibitive print communications, a trigger based on a full year of inactivity might be understandable. But if your customer has opted in for e-mail—with its infinitesimally small distribution cost—you should keep pushing out communications as long as the once loyal customer’s inbox will accept them.

After all, you never know when a once loyal and valuable customer might resurface—and potentially become a best customer all over again.

Tom Rapsas, Associate Creative Director, MRM Worldwide,