The Missing Ingredients

Have I become delusional...why do most loyalty programmes appear the same to me?! The application form, personalised loyalty card, points, upgrades, gift catalogues or air miles.......

To the extent that loyalty programmes quite often appear to have been created out of force of habit or as a matter of "hygiene"...which is a wicked waste of money and resources.

When is the last time you were blown away by a new feature, application or gizmo in this space? I believe the closest we have come to an inflection point has been the introduction and growth of coalition loyalty programmes with Nectar and Air Miles leading the pack. With the exception of the customers at the "top of the pyramid", loyalty programmes will increasingly be faced with the existential question "Are we really influencing customer choice?"

A couple of questions you may like to ask to determine those "missing ingredients" to wow your customers:
a. Show me the Rolls! : Is there a stage in the customer life-cycle, wherein she can say "Wow" - You need not give a Rolls Royce, perhaps offer her a day in a chauffeur driven Rolls!
b. What was that again ? : Can she explain one feature in your programme that makes it more distinctive than that of your competitor?
c. Dick & Jane : We've got separate shopping sections for men and women to address their differing needs and tastes...So why not different loyalty programmes?..My favorite subject - Segmentation...

A few thoughts on the missing ingredients, to tickle your grey cells!

i. Bespoke Loyalty Services : Can your customer design and customize the loyalty programe to meet their needs

ii. Family Rewards : Have’nt seen too many loyalty programmes that address the complete family or customer formed groups, with the exception of Air Miles and upromise

iii. Merge Loyalty Points : Could customers converge the loyalty points earned across programmes in a common exchange platform. Coalition loyalty but at the next level. You may notice redemption levels going through the roof, but thats where the opportunity lies for the brands.

Well, we could go on forever, but quite clearly a need for some introspection and fresh perspectives on user experience and customer life-cycle management!

Profitability v/s Delight!

In most consumer (B2C) industries, the definition of customer profitability is fairly straightforward. The more you buy, the more profit you generate for the seller and hence the more valuable you are....

In the case of airlines, the uber elite flying club class quite often deliver substantially higher gross margins to the airlines. Hence loyalty and relationship programmes quite often fall head over heels in flirting with the blue blooded chaps.

However the credit card industry offers a twist. Customer Value is not directly proportionate to the amount spent, but a blend of how much you revolve and pay. This leads to quite a few unusual scenarios...
........Jack, a top spender - non revolving, requesting for an annual fee waiver is politely denied as the he has accumulated tons of frequent flier miles and the card company know that he is "stuck" to the proposition
.......Jill, a medium spender but high revolver is often extended the courtesy of fee waivers and a bouquet of other treats as well!

Increasingly banks and financial institutions have commenced differentiated pricing and "service" strategies for their customer segments basis current and potential profitability. Quite justified from a business value perspective (and rather tough to implement), but what of the customer?

Am all for differentiated pricing, but have been debating this differentiated "service/gesture" approach for a while now. Would Jack be tipped over eventually and take his business elsewhere & what would be the brand impact of such tactics.

Would welcome your views?...

We're Fighting Back.....

Two events in the last one week that leads me to this post.

I. Came across an article detailing how local grocers and pharmacies had been building mobile number databases of their frequent customers and using the SMS as a medium to communicate offers. What's more they were in fact allowing multinationals to access their database for a fee!

II. We were comparing the services offered by the local grocer with those of the larger format hypermarkets. Well, I thought the local grocer beat the supermarket hands down (well at least in my opinion!), and here's how
a. The shopkeeper recognizes me ( four generations actually)
b. Knows precisely which brand, variant and size I need
c. Recommends new products
d. Stocks products exclusively for me
e. Delivers home in ten minutes
f. Extends credit
g. And keeps telling me that he is charging below MRP
And ...no he does not have a rewards programme!..well not yet at least!...So tell me again...how is the hypermarket better again?
What's more....I believe I purchase much more than I actually need at the supermarket and post the expenses for parking, pizzas, cold drinks and more...am not too sure if I saved or gained too much!

We then tried to superimpose some or all of these benefits into a Loyalty/Relationship/Rewards programme and realized that we were indeed in a very long and dark tunnel.

The local grocers are today armed with a slew of technologies and tools coupled with the personal touch that most large format retailers would find fairly tough to compete with. Mainframes at modern day large format retailers are pitted against the greying hairs of the local grocer.

I rather fancy the chances that David has in this game of loyalty! Its just not in the reward points...goes much beyond

(Incidentally why are loyalty programmes synonymous with reward programmes?)

The Smile Effect.....

There is a hypermarket that I visit quite often for the monthly grocery shopping. The staff is warm and helpful, the items well displayed...and hence a well rounded experience. I was pleasantly surprised when the firm's head of marketing pointed out that at the bottom of the bill was printed the amount the customer had saved on the transaction.

Great feature, but unfortunately during my dozen or so visits prior to my meeting, had'nt ever noticed it. Such a tremendous opportunity that was lost for building customer delight, wherein the cashier could have highlighted the savings and reinforced my conviction that I was in fact saving money vis a vis my local neighbourhood grocer.

And thus goes the fate of several innovations and initiatives across industries, which are not consistently reinforced across the channels. Quite similar is the challenge with loyalty programmes as well. I quite often notice that I am invited into loyalty programmes, asked for my loyalty card, but rarely explained the benefit received in that transaction.

It is quite often believed that loyalty programmes are not working out, for the simple reason that the stakeholders across the organization do not reiterate the benefit to the programme members.

All the advertising in the world is surpassed by a smiling cashier telling me how I benefited.....So the next time you're planning to invest a few million, might be worth your while to see if the customer facing personnel are spreading the word...