They've got my data: Now Barnes & Noble is trying to get my business.

I’m a former customer of the now defunct U.S. bookseller Borders and a past member of their Rewards Perks program. While I freely admit to moving a lot of my business to Amazon.com over the years, I was sorry to see Borders go.

Maybe it’s nostalgia, but every once in a while I like to walk into a book store, stroll the aisles, and leisurely look for a title or two I may have missed. Just like reading a physical book has a tactile advantage over an e-reader, I also think a physical store has a sensory advantage over a virtual storefront—which for me, unfortunately, ultimately gets trumped by the superior selection and lower prices of an Amazon.

But back to Border’s. When the pieces of the company were sold off, competitor Barnes & Nobel made an important purchase that went beyond the chain’s physical inventory—they bought Borders’ customer contact info and importantly, their purchase history, giving them the data they need to send out personally relevant communications.

The wooing has begun, as B & N is now attempting to turn me from a qualified prospect to a customer. They’ve sent me a few e-mails to date and while I think my scant recent personal history prevents them from sending truly relevant messages, I do appreciate their efforts.

From a communications perspective, I think they’ve made a smart progression from showing sympathy over the loss of Borders, to being transparent when revealing the use of my Borders’ customer data, to being justifiably “retail-y” as they seek my business. See the messaging sequence below:

October 1: Sympathy Over the Break-Up
Dear Borders Customer,
My name is William Lynch, CEO of Barnes & Noble, and I’m writing to you today on behalf of the entire B&N team to make you aware of important information regarding your Borders account. First of all let me say Barnes & Noble uniquely appreciates the importance bookstores play within local communities, and we’re very sorry your Borders store closed.

October 15: Honesty and Transparency
Dear Borders Customer,
As a reminder, on September 30, 2011 Barnes & Noble acquired the Borders customer list. The transferred personally identifiable information in the customer list includes customer e-mail addresses and purchase history. No credit card data was transferred. If you would like to opt out of having your customer data transferred, please go to www.bn.com/borders by November 2, 2011.

November 7: Asking me out on a first date.
Subject line: Let’s get to know each other, starting right now.
You’ll always be welcome here. Nothing says welcome like an extra 30% off your first purchase at Barnes & Noble.

November 26: Attempt at a second date.
Subject line: A convenient 40% off at the always convenient BN.com
Your nearest Barnes & Nobel is open 24/7—at BN.com. Take an Extra 40%off one item.

I think Barnes & Noble is in a tough spot and agree with many that they’ll be the next domino to fall in the radically changing book industry. That said, I do think they’re doing a good job trying to convert prized prospects—former Borders customers like me—to the B & N fold.

In fact, I recently used the 40% off coupon above to make my first purchase. Now the true test will be whether or not they can convert me into a regular customer.

This post is by writer/creative director Tom Rapsas who can be found here.

The end of advertising: the 2011 version.

As I scanned the rapidly moving traffic on my Twitter feed the other day, there was one tweet in particular that caught my eye. It was from the journalist David Carr who was quoting Adam Moss, the editor of New York magazine:

"I think the advertising business is in greater upheaval than the journalism business."

As an ad guy, I had to dwell on that one for a moment. When I think of industries in crisis due to the onset of the digital age, the newspaper business—which is bleeding customers to free online news sites—pops up neck and neck with travel agents. But after careful consideration, I realized that Moss had a point.

Putting aside for a moment the dismal state of the economy and its impact on ad spending, the upheaval in advertising has been going on for several years. First it was a move away from traditional advertising vehicles (TV, radio, print) to online media (e-mail, banners and Web sites). This set off the first wave of “advertising is dead” claims.

In 2005, with an article titled “Chaos Scenario”, and with a follow-up in 2007 called “Chaos Scenario 2.0”, Ad Age columnist Bob Garfield wrote about “a post-apocalyptic media world substantially devoid of brand advertising as we have long known it.” In 2009, IBM issued a white paper titled “The end of advertising as we know it” that discussed, “the shift in consumer attention from television to other media formats.”

But these commentaries, while pointing out the move from traditional media to digital, only hinted at what’s taking place in 2011. Today, the really big change involves the continuing evolution of social media and consumer review sites.

Some pretty big names in the world of marketing are again saying it’s the end of advertising, but their message has been tweaked a bit. The claim: the ever-rising influence of Facebook, Twitter and now Google Plus, and consumer review sites like Yelp, Angie’s List and Trip Advisor, have made advertising obsolete.

Here are a few notable, recent examples of those who’ve jumped on the 2011-version of “advertising is dead”:

• In May, at ad:tech San Francisco, Antonio Lucio, the global marketing chief of Visa, claimed that “recommendations are the new advertising”. Lucio and suggested that brands develop "an army of advocates" to promote their products via social media in lieu of traditional media.

• In June, writing in Forbes, the head of global agency Gyro, Rick Segal, extended the “advertising is dead” claim to B-to-B marketing. He stated that: “Death was inevitable when people began carrying their telecommunications and computing power with them.”

• In September, at the interactive OMMA Global conference, futurist Faith Popcorn got even more declarative. She said that with arrival of the “hyper-connected” consumer “advertising is so over. If the consumer believes you’re paying for their time, they don’t really believe in it.”

Add to this scenario several years of shrinking advertising budgets, and it’s easy to see how some might gravitate to an “advertising is dead” mindset. After all, it’s easier and cheaper to plow your limited marketing dollars into social media and gaming the consumer review sites than trying to target a market whose media choices are increasingly fragmented.

My take: advertising will survive—but it’s morphing into something new.

Traditional advertising—and I think that category now has to include e-mail and Web banners—will stick around. After all, social media alone is not right for every business, every target market and every marketing situation. But there’s no doubt that the way we reach customers is continuing to change, as we recalibrate the best ways to reach customers in a personally relevant and timely manner.

A good communications program is still about engagement, our ability to attract new customers and nurture relationships with our current customers through a compelling and strategically sound message. And when it comes to achieving these aims, there’s no one-size-fits-all solution. Especially with the ever-changing way customers digest their information.

A surprising recent study (albeit, by the US Postal Service) showed that direct mail was actually preferred over e-mail by the Gen X demographic. And social media burnout has been well-documented as well, with a groundswell of people choosing to shut down their Facebook and Twitter accounts—or at least interact with them a lot less frequently.

So in the future, I think that successful marketing campaigns will be as diverse as the audience you’re trying to reach. It’s as likely to include a personalized e-mail as a promo on Foursquare, a targeted mail piece as a video on YouTube. The key is in finding the right mix for your target market, and making sure that your communications are as compelling, timely and relevant as possible.

What do you think?

Amazon and the future of loyalty marketing: rewards now, not later.

I’ve long been a fan of Amazon and as proof carry an Amazon.com-branded Visa Rewards Card in my wallet. Sure, the interest rate is a few points higher than my primary credit card, but I’m a sucker for the points. I earn one for every dollar I spend and a whopping 3 points for every dollar spent on the Amazon Web site.

Over the past several years, the Amazon program worked like most others: you waited for your points to add up to a certain threshold, continually checking your balance online or on your monthly bill, and then ordered your reward. While there were a number of options, I always went for the $25 Amazon certificate available at 25,000 points.

But last month, something changed: while checking out, I noticed a small prompt about using my current point balance toward the payment of my order. Sure enough, I had earned 1693 points since my last cert was issued—and was able to apply a $16.93 credit to my purchase, right on the spot.

I mean, how convenient was that! No checking my points balance to see if I had reached the 25,000 point threshold, no ordering a certificate, no waiting 3-4 weeks for the cert to appear in the mail. I was able to get instant savings and in turn, instant gratification.

Now I can imagine this scares the bejesus out of some loyalty marketers because, having worked in hardcore points-based loyalty for several years, I know the philosophy. By forcing people to reach elevated point thresholds, you keep them as customers—because they have to stick around and make additional purchases to reach these thresholds, and are less likely to abandon their points for a competitor.

But you know what—the times in the loyalty marketing game are changing, with a mix of established and newer companies leading the charge. For example, check out the following recent developments:

*Marriott announced Marriott Rewards® Instant Redemption which enables members to redeem points on the spot at participating US hotels—for “dinner, cocktails, massage, golf…even a room upgrade…with no certificates, no waiting.”

*Location-based marketer Foursquare inked a deal with American Express to enable its 10 million cardholders to redeem location-based deals by swiping their AmEx card—giving them access to instant membership rewards.

*Online retailer Soap.com (as reported by Internet Retailer) rolled out “a customer loyalty program with a new twist. Instead of launching a traditional customer loyalty program that lets shoppers gather points…they reward customers with instant product discounts.”

I say it’s only a matter of time before all the traditional points-based loyalty marketers, including the airline programs, jump on the instant rewards bandwagon—or find themselves left behind by the competition. Sure, there may be a place for the hard-earned mega-point reward, but you better give your customers the option of quick and instant rewards and recognition.

What do you think?

This post originally appeared on Loyalty Truth and was written by Tom Rapsas.

Why pharmaceutical companies are suddenly allergic to Facebook.

One of the primary reasons for a company to be on social media is to build relationships and engage customers in a dialogue. So why are a lot of big-time pharmaceutical companies about to walk away from their Facebook pages?

It seems that up to this point, Facebook gave pharma companies the ability to “turn off” commenting on their pages, a privilege they didn’t grant to other industries. This suited the risk-adverse pharma folks just fine as it gave them the ability to “block” comments they didn’t like.

But all that came to an end on Monday, August 15. You see, a few months ago Facebook sent an e-mail notifying all pharma page administrators that the social media site was changing the rules and that “pages that currently have commenting disabled will no longer have this entitlement after August 15th.”

As reported on Web site ClickZ, this poses a major problem in the US:

Pharma marketers are required to report adverse effects of their drugs, so if someone posts a comment about an adverse effect on a Facebook page, the company is responsible to report that to the Food and Drug Administration. Also, when they become aware of online conversations including incorrect or off-label information about their drugs and products, they need to notify the FDA.

Can anyone say big can of worms? It also means the pharma companies can no longer prevent those who have had adverse side effects from a drug from posting their comments online for all to see.

As pointed out in the Pharma Marketing Blog, all it takes is one disgruntled customer to cause havoc. The European drug company Sanofi-aventis chose to shut down its Facebook page after a string of negative comments from a cancer survivor who had permanent hair loss after taking the drug Taxotere.

So what’s next? As pointed out in the blog Pharma Exec, companies now have three choices:

1. Go dark and wait for the FDA to issue guidelines on how to report potential adverse events they may discover on their Facebook pages.
2. Go dark temporarily and build the infrastructure to cope with the real time flow of consumer commentary.
3. Continue on with Facebook, backed by the staff to monitor Facebook and other social networking sites.

A few major drug makers have already chosen options one and two. Over the weekend, the Washington Post reported that AstraZeneca and Johnson & Johnson, have decided to remove their Facebook pages as a consequence of the policy change. Other companies said they will monitor their pages more closely now that the changes have taken effect.

But my thinking is, as more and more consumers lean on the Web as their primary source for information, you’ve got to have the social media bases covered, including Facebook. After all, if someone has something bad to say about your product, if it doesn’t come out on Facebook, it’s bound to appear somewhere else. And it’s better to be in a venue where the playing field is level and you at least have the chance to respond.

What do you think?

Saucony: Building Loyalty without a Loyalty Program.

Saucony is a mid-sized running shoe company that’s battling for customers with athletic gear giants like Nike, Reebok and Adidas. So how do they compete? By making an emotional connection with first-time buyers, and then introducing them to an online community that helps turn them into loyal customers.

Now, no one develops a loyal customer base without having a great product—and Saucony does. Their constantly evolving product line generates consistently strong reviews from customer influencers like Runners World magazine. But what really sets Saucony apart, is its engaging and inventive advertising, specifically its Web and social media presence.

Last month I wrote that the key to a great social media campaign is a big idea—and Saucony has one that starts with its general ad campaign, and is then layered into its Web and social media efforts. The campaign theme is “What is Strong” and in TV and Web spots, runners are challenged to define what strong means to them and encouraged to “Find Your Strong”.

The “strong” theme is featured prominently throughout the Saucony Web site. Runners are invited to “Create & Share Your Personal Strong” by entering the things that make them strong, including how they train and what inspires them. You can then share these thoughts via the Web site, Facebook or Twitter—and even have your strong statements made into a T-shirt.

Coolest of all, is the campaign’s interactive online gallery. You can choose to participate in, or just view, a clever and well-designed series of word portraits that show how other runners have answered the query “This is My Strong”. Call-outs include things like “6am Run”, “My Mom” and “My City-New Orleans”.

As expected, the Sacuony Web site is chock full of pages on the latest running shoes and apparel, as well as the technology behind it. But what’s compelling and differentiating here is the online community, where runners can gain inspiration from both elite and everyday runners.

The writing is great throughout, as well. For instance, the Community page greets you with language that runners (like me) just eat up: We all share a common love of running. A common pride in personal bests. A common disdain for potholes and cramping. A common interest in other runners. Welcome, runners all.

Great job, Saucony. And while I must admit to being a long-time Nike loyalist, I’ll be taking a very close look at Saucony the next time I go shoe shopping.

This post originally appeared on Loyalty Truth and was written by writer and creative director Tom Rapsas.

Your Social Media Strategy Needs Some Big Ideas.

I borrowed the headline above from a recent B-to-B article by Jeff Ernst, a principal analyst at Forrester Research. I think it perfectly underscores something I’ve been saying for a while now: It’s about the power of the idea, not the tactic. (My colleague, loyalty expert Bill Hanifin, has a similar mantra: Technology enables. Imagination wins.)

While most companies are now testing the social media waters with a presence on Facebook and Twitter, it’s best to have a strategic plan of attack before diving in. In the words of Ernst, “Starting with tools and tactics spells disaster. You need to start by understanding the social behaviors of your target audience and defining the big ideas that will attract and engage them.” But before discussing big ideas in social marketing…

First things first: you’ve got to show up.

To paraphrase Woody Allen, “90% of social marketing is just showing up”, and by that I mean being active on whatever social media tool you’re using. That means starting conversations, answering queries, and when necessary, defending your company or brand. To do this, you’ve got to set aside a small portion of your day to social media activities. (For me, its 20 minutes each morning.)

Next step: you need a big idea.

What’s a little more challenging is the next 10% of the equation—coming up with the big ideas that give your customers something to talk about. As Jillian Ney pointed out in a recent post on Social Media Today, “The motivation has been to collect fans and followers, which have resulted in many branded social spaces not actually providing any entertainment or value.”

In many ways, a great social media campaign has much in common with a great traditional ad campaign—the best ones are centered around a big idea. To achieve “big” status, your idea needs to have the power to inform, entertain and/or engage your customers, while getting them to take a desired action, whether it’s signing up for e-mail, retweeting a message or checking in with you on Foursquare.

Here are three social media ideas that I think work hard for their brands.

Why? They go beyond simply blasting messages into the social media space, and actually get people to interact with the brand. They also leverage ideas that are natural tie-ins to the image and essence of the brands being promoted.

Paula Deen and “the real women of Philadelphia”. A promotion for Philadelphia Cream Cheese, it invites customers to submit original recipes using Philadelphia brand products, with 16 finalists selected to join celebrity chef Deen in a live “Cook Off” where four grand prize winners will be chosen. While I’m not a big fan of celebrity endorsements, this one feels like a natural, since it’s easy to imagine the down-home Deen actually using Philadelphia Cream Cheese in her recipes. Importantly, the site has done a nice job of putting Paula’s ebullient personality to use through online videos and social media like a “live chat” on Twitter.

Coleman, “the original social networking site”. Coleman, the camping gear company, has done a great job of tying their brand into social networking, starting with their clever “original networking site” positioning. A Facebook page promotes their easy-to-build tents with a “Summer Time in no Time” giveaway. There’s a Twitter page that could be a little more active, but does address the occasional customer query, plus a YouTube channel and Twitter app that fittingly let you check out “creepy campfire stories”.

Fair Tweets from Ben & Jerry’s. Another big idea comes from ice-cream maker Ben & Jerry’s. We think of Ben & Jerry’s as a very socially conscious brand and they prove it with Fair Tweets, which uses Twitter in a way I haven’t seen before to promote Fair Trade, a global organization that works to get better deals for farmers. It works like this: You go to the Ben & Jerry’s Fair Tweet page, and being typing in a tweet. The site then “puts your unused Twitter characters to use”, by turning any leftover characters (from your 140 character cap) into a message about Fair Trade. 33 characters left? A 33-character message is tacked on to the end of your tweet. Very cool and an ingenious way to spread a public service message.

How about you. Have you seen or worked on any big social media ideas lately?

Atlantic City, Trump and a Casino Down on its Luck

A couple of years ago, I wrote a post about Atlantic City and its prolonged losing streak—and I’m sorry to report, things aren’t looking a whole lot better today. After a rocky 2009, revenues in AC fell again in 2010 by nearly 10%. And forecasters say that 2011 could be even worse.

In an attempt to rejuvenate the fading gambling mecca, NJ governor Chris Christie, citing the “complete incompetence and corruption in Atlantic City”, recently pushed through legislation that makes him the city’s de facto mayor. (Which led actual Atlantic City mayor Lorenzo Langford to complain “the state is treating Atlantic City like a pimp treats a prostitute.”)

One of Christie’s first moves was to spearhead the formation of an Atlantic City tourism district, which covers a large portion of the resort city. The state will take over responsibility for public safety, cleanliness and business development. Not a bad idea, given the seamy vibe that permeates AC once you set foot outside a casino.

With that backdrop, let me tell you about a recent trip I made to the Trump Marina casino and hotel.

First thing you should know about Trump Marina is that US billionaire Donald Trump is nowhere to be found. A few years ago, the three Trump casinos in Atlantic City were about to go broke, and he sold off all but 10% of the properties. So it’s really Trump in name only—and at Trump Marina, soon even that will be gone. Houston-based Landry’s Restaurants, owners of the Golden Nugget in Vegas, are buying the casino and will reportedly rebrand it with the Golden Nugget name.

My trip to the casino occurred during a recent boys’ night out to attend the Atlantic City Beer Fest, followed by some obligatory late night gambling. With my trusty Trump One player’s club loyalty card in hand, I hit the casino floor late on a Friday night into Saturday morning. The place was half-dead and I mean that literally, as half the casino floor was shut down due to a lack of business.

It’s not a bad place, actually a welcome break from the more glitzy and more crowded Borgata—and it wasn’t a bad night either, which for me means I walked out with the same amount of money I walked in with, while enjoying a few cold beverages on the house. (My buddy Jim fared a bit better clearing over $400 from a four-hour session at the poker tables.)

Now, I don’t expect much from my Trump One loyalty card while I’m at the place—I’m a lower tier member—but I do expect a little recognition and better customer experience when I go to the Web site, which I did a few days later to make sure my playing was being tracked. It was, but I felt a little less than welcome.

A few notes on my Web experience:

• I had trouble remembering my password—I had selected it late one night with a code word that probably made sense at the time, but was now totally lost to me. I sent a message asking for help, but received a canned e-mail reply telling me the only way I could retrieve my password was to go to the casino. No password reset function. No one to call.

• After 50 or so tries, I did remember the password to my Trump One account—let me tell you, it was pretty obscure—only to find little relevant information for me on the site. I click to view my “Statement”—it’s not there, I need to call to get the info. I click on “Rooms” and a blank screen appears.

• Even if I hadn’t hit the threshold to receive an offer or room reward, the site needs to engage me. Give me a few dollars off on my next stay. Offer me a free app if I eat at the restaurant. Tell me you can’t wait for me to come back. Show me some love!

But it looks like I’ll have to wait for the new regime to get some personalized attention. A NY-based management company is now running the Trump casinos, and according to a company exec quoted in the press, they’re “focused on cutting costs, including marketing programs that were deemed to be too expensive…we were over-incentivizing our customers…it was not a sustainable model.”

Granted the house needs to make money, but cutting back on “incentivizing our customers” seems like the wrong way to go about it—and a good way to lose an ever decreasing pool of loyal customers that is opting to go to the more glamorous Borgata—or other, newer casinos that have popped up in Philly, Delaware and New York.

But my guess is now that the Trump Marina has been sold, the caretakers have packed their bags and are waiting for the new owners to arrive so they can turn over the keys. Soon the Trump Marina will be history—and the Golden Nugget will take its place.

It’ll be interesting to see if they bring new vim and vigor in the attempt to attract—and more importantly, retain—customers.

This post, by Tom Rapsas, originally appeared on Loyalty Truth, May 11, 2011.

Should Loyalty Redefined sell out?

I’m looking forward to seeing the new Morgan Spurlock movie Pom Wonderful® Presents: The Greatest Movie Ever Sold. Unfamiliar with Spurlock? He’s the raconteur behind the funny but frightening documentary Super Size Me, in which the protagonist ate nothing but McDonald’s fast food for a month—which caused him to become fat and physically ill.

This time out Spurlock demonstrates the ubiquity of branding messages in our lives, by literally selling out his new movie. In a series of filmed encounters, Spurlock urges brands to sponsor his movie for a price—and is able to entirely fund the film through product placement and sponsorships, including a cool $1 million from pomegranate juice maker Pom for a spot in the title.

This got me thinking: maybe Loyalty Redefined proprietor Upendra Namburi should sell out this blog site. With so many loyalty programs out there, the possibilities are limitless. Consider: Loyalty Redefined sponsored by Hyatt Gold Passport or American AAdvantage presents Loyalty Redefined or how about i-mint, Loyalty Redefined & You.

After all, we’ve sold out our sports stadiums—from Pizza Hut Park, home of US Major Soccer League’s FC Dallas to the silly KitKat Crescent, home ground of England footballers’ York City, to Easy Credit Stadium, the ridiculous sounding home of German pro soccer team FC Nürnberg.

What’s more, we’re now advertising in virtually every space known to man. This includes the walls and stalls of bathrooms, corporate logo tattoos that turn people into walking advertisements (in one case, for a 20% discount for life), and the latest innovation in advertising space sales—entire homes turned into billboards.

With that backdrop, why shouldn’t Loyalty Redefined sell out as well? I hereby declare myself Updendra’s agent. Bidding starts at US $100K. Any takers?

Creative Director and writer of this post, Tom Rapsas, will be accepting offers at tomrapsas@gmail.com

Did Social Media cost Pepsi the #2 Soft Drink Spot?

It was recently reported in the trade press that Pepsi had slipped to the #3 soft drink in U.S. sales, behind Coke and new #2 Diet Coke. But most interesting was the speculation behind the drop. In an Ad Age article titled “How Pepsi Blinked, Fell Behind Diet Coke”, it was hinted that Pepsi had put too many of its marketing eggs in the social media basket.

Some background: In 2010, the company launched the Pepsi Refresh Project. As I reported in a previous post: This Web-based initiative asks customers to submit ideas that they think will have a positive impact on the world, including everything from building community playgrounds to caring for wild cats. Consumers vote on ideas they think should be funded, and to date Pepsi has committed over $15 million to nearly 400 winning ideas.

The Refresh Project was backed by a big social media presence and its launch coincided with Pepsi’s move away from traditional advertising channels, including an ad boycott of the Super Bowl and other major marketing events. (By comparison, Coke is ubiquitous, sponsoring everything from the NCAA tourney to NASCAR to the hit TV show American Idol.)

In the Ad Age article, John Sicher, editor and publisher of Beverage Digest, expressed his concern about Pepsi’s marketing efforts saying, "In the cola wars, the Refresh Project by itself isn't enough to market Pepsi's cola brands." Sicher believes that in addition to Refresh, the company needs “more product-oriented advertising and marketing. I think that the 2010 results are probably a wake-up call for Pepsi."

In an Ad Age editorial, Rance Crain chimed in "there's also the danger that consumers could conceivably tire of causes or decide that Pepsi, a marketer long known for its ability to amuse and entertain, is taking itself too seriously. After all, we're talking about fizzy soda water here."

Julie Rohem, the ex-marketing chief of Wal-Mart, also expressed her doubts about Refresh in a recent blog post: “the message had nearly nothing to do with the product or the sale of that product. It was altruistic and admirable but it did not engage people with the drink itself—only the endeavors that the campaign supported. Pepsi at the end of the day is a mass brand and that means appealing to the masses on the product first.”

So was the Pepsi Refresh Project a mistake? A qualified yes—if the company really thought it could abandon its more traditional advertising efforts for one that pitched good vibes instead of good taste. A message of corporate benevolence is all well and good, but it feels like the company forgot the primary goal of any marketing department: move the product.

That said, Pepsi should also be commended for doing something a lot of bottom line-focused companies have ignored in recent years—giving back to the community. Handing cash to initiatives like “supporting the rescue and care of injured and orphaned wildlife ” and “getting the lowest income students in our community into college” is truly a noble endeavor.

It’s enough to make this bleeding-heart chug a cold bottle of Pepsi or two. If only I drank cola.

This post by Tom Rapsas originally appeared on Loyalty Truth, March 31, 2011.

Advertising is Changing. Are You Changing With It?

The customer has escaped. We can no longer control the process of how and where they get information. ~Marjorie Kalter

There’s a sea change taking place in the way we communicate with customers, and these changes are rewriting the definition of advertising as we know it. In fact, I believe that as marketers we now two choices: swim with the tide or have the new communications wave roll over us.

The truth is that the effectiveness of old-fashioned “push” advertising, whether it’s a TV spot, print ad or e-mail, is waning. More and more customers, especially in the under-40 demographics, are ignoring traditional advertising altogether, and turning exclusively to the Web and social networking tools for product and service information and recommendations.

Some have labeled this change “Advertising 2.0”, but one of the movement’s philosophical godfathers, Edward Boches, simply calls it “the evolution of advertising”. Boches is the long-time creative leader at Boston-based ad agency Mullen, which in the past couple of years has transformed itself from a traditional ad agency into “a firm that blends digital, social, media, creative, mobile and direct response”.

I’ve been looking at some recent slide presentations and blog posts from Boches, and he has a number of compelling insights about the changes taking place in the industry. Here are a few choice ones:

• Customers don’t want to watch and read and consume. They want to participate, share and respond.

• Once we were in the business of telling stories. Now we are in the business of getting others to tell stories for us.

• User experience and engagement are the new art and copy.

Boches also sees changes in the future of traditional advertising, believing that as brands become less dependent on advertising and messages, they will focus on ways to become more relevant and useful. Think of it as advertising that does less selling and more connecting.

A prime example currently in the marketplace is the Pepsi Refresh Project. This Web-based initiative asks customers to submit ideas that they think will have a positive impact on the world, including everything from building community playgrounds to caring for wild cats. Consumers vote on ideas they think should be funded, and to date Pepsi has committed over $15 million to nearly 400 winning ideas. Does the site sell Pepsi? I suppose so, but in a very indirect way.

Will this advertising change effect loyalty marketing? It already is.

In loyalty marketing, it’s time to think about going beyond the everyday communications of postcards, e-mail and statement inserts. It’s time for a full-throttled commitment to an idea I first began talking about in 2002: starting a dialog with customers. (Not that I can take credit for the concept, it was the brainchild of Frequency Marketing’s visionary founder Rick Barlow.)

This means communicating with your customer base when and where it works best for them, via the social media channels where they congregate—which these days is sure to include Facebook and Twitter, and possibly Foursquare. It also means opening up the lines of communication via your company Web site and blog.

There are also marketing opportunities galore in leveraging your current customer base, by giving them perks that encourage them to spread the good word about your product or service. For instance, when US-based restaurant chain P.F. Chang’s introduced its Home Menu frozen meals to grocery stores, its first communications target was the brand’s loyal customers.

P.F. Chang’s selected members of its loyalty program and customers engaged in the brand’s social media channels (Facebook and Twitter) and asked these fans to raise their hands and tell why they loved the brand so much. Those who participated in spreading word of mouth were entered into a sweepstakes to win one of 50 home dinners for two, complete with custom table settings.

The bottom line is that, like it or not, the way we communicate with customers is changing. The question is, are your clients or your company changing with them?

This post originally appeared on Loyalty Truth, March 16, 2011, and is by Tom Rapsas. Tom is a creative director and writer and can be reached at tomrapsas@gmail.com.

Borders and the Long Good-Bye.

By now, you may have heard about the big financial mess that the US-based Borders book store chain is in. They recently filed for Chapter 11 bankruptcy and it’s hard not to see the whole situation winding up in a very bad place--sooner rather than later.

The Borders predicament is emblematic of a continuing shift in the way we purchase goods and services in the digital age. The canary in the coal mine were the travel agents, who saw themselves squeezed out of existence once consumers figured out they could just as easily make travel plans on their own.

The next domino was the music business, and with the advent of Amazon and e- books, now the book industry. Even though Borders has a nifty Web site, they unfortunately entered the digital game very late—and as the demand for physical books shrinks, you sure as heck won’t be making a trip to the mall to buy an e-book.

It appears that Borders will go down fighting. As a member of the Borders Rewards program, I received an e-mail from Mike Edwards, the President and CEO of Borders, Inc. It was well-crafted and heartfelt, and included the following passages:

As Borders moves forward, our commitment to you is to be a best-in-class bookseller—whether it’s our stores or Borders.com—where you can purchase books and related products that stimulate and satisfy your reading interests.

Over the next several months, we will build on our core strengths as a great bookseller with the goal of emerging as the destination of choice for the millions of customers who shop our stores each year.

Sorry, but I’m not buying it. And the fact I’m not buying it leaves me feeling a little sad, as I think Borders was a good chain with some cool stores that I at one time visited frequently. I’m also left wondering which vertical will be impacted next.

This post is by Tom Rapsas and originally appeared on Loyalty Truth. Tom is a writer, creative director and strategist. He can be reached via Twitter @tomrapsas or at tomrapsas@gmail.com.

The Death of Loyalty Rewards As We Know Them?

I’m sensing a tipping point in how customers relate to loyalty program rewards, and my thinking goes like this: when customers choose which company to do business with, rewards just don’t matter like they used to.

My take is that the classic loyalty reward scheme—earning points toward “hard” rewards for repeatedly doing business with a company—has been trumped by the customer experience. In other words, today’s customer is more likely to opt for a better experience today, than accept a lesser experience that pays dividends down the road.

Lets start with a personal example. I recently cleaned out my wallet of old business and program membership cards. There, I found reward cards for both Borders and Barnes & Noble. Now, I know I have points in both of these programs, but I haven’t engaged with either brand for years. Why? I’ve given all my business to Amazon, which for me offers a better customer experience.

A recent blog by marketing guru Seth Godin points anecdotally to a similar trend toward “experience over rewards” happening in the airline industry. Godin believes that the greater the risk involved with getting a reward—one we have to save for and may never use—the less we value it. He writes:

Frequent flyer miles, for example, began with the promise that if you flew an airline regularly for months (or even years) you'd get a free flight. The airlines oversold the miles and undelivered on the free flights, though, so the reward started to lose its perceived value—too much risk that you wouldn't get the prize you wanted. Many of the frequent flyers I know have ceased to 'save up' and now use their miles for upgrades, moving the benefit closer in time.

Godin’s point is backed up by a recent article in the Miami Herald titled: Are loyalty programs worth it? Travel writer Christopher Elliott cites several real-life examples of customers leaving airline programs, because the rewards are just too hard to earn. He points to a recent stat that seat requests for USAir reward flights had an availability rate of 10% and muses, no wonder “there are several trillion unredeemed miles floating around out there”.

In another sign of the sea change, several companies are now offering customers “loyalty rewards” with no points, or long-term loyalty, needed. Take the telecomm space, where both Verizon and Optimum have recently launched reward programs with merchant discounts, special promotions and exclusive content—with no strings attached. Prove you’re a customer and you’re in.

Why is the trend moving toward more automatic and instantaneous recognition of customers? Godin attributes the change to the Internet, stating “one of the many things the web is changing is our focus on now”. I see his point. Now more than ever, today’s consumer wants things at the speed of the Internet, whether it’s information, customer service—or a perk for being a customer.

Is this the beginning of the end of long-term loyalty rewards? The floor is open. What do you think?


This post, by Tom Rapsas, originally appeared on Loyalty Truth on January 26, 2011, and was also picked up by RetailWire on January 31, 2011.

Announcing a New Loyalty Program with a Single Member: You.

With all the talk of loyalty programs here on Loyalty Redefined, I’m proposing a unique new program to kick off the new year. This new loyalty scheme is for a market that’s often under appreciated, overworked and overlooked—you, the loyalty marketing professional.

The fact is as we move into 2011, you’ve probably set up specific business-oriented goals for the year ahead, as well as personal goals. But a funny thing happens to the predominantly Type-A personalities who occupy the loyalty space—as the year progresses, your personal goals get squeezed out as business picks up.

The solution? A program that rewards your hard work, not with miles or points, but with the more valuable reward of time. And for the program strategy, I turn to one of the masters of business and life management, Napolean Hill.

You may recognize Hill as the author of the classic Think and Grow Rich. First published in 1937, the book’s message about gaining monetary success through visualization, hard work and a positive attitude, still holds true today.

Even more compelling than that book though, is the sequel to Think and Grow Rich which was published 40 years after the original. In 1967, an 84-year old Hill had come to a slightly different conclusion about the role of work in our lives and what success truly meant. The sequel’s title: Grow Rich—with Peace of Mind.

It seems that after a lifetime of fame, riches and service as an advisor to three presidents, the elderly Hill began to whistle a different tune: be successful—but have a life, too. Hill’s not pitching a 4-hour workweek here, but suggests that one of the best ways to achieve peace of mind is to “make a time budget”.

Spread out over a 24-hour day, his time management program looks like this:

o 8 hours a day for sleep and rest
o 8 hours a day for work at your profession (but as your success grows, work less than 8 hours)
o 8 “particularly precious” hours “devoted to things you wish to do, not have to do.”

Hill’s suggestions for the final 8 hours include: “play, social life, reading, writing, playing a musical instrument, tending a garden, or just sitting and watching the clouds or the stars.” You can add to that, quality time with the family, prayer, exercise, cooking, sex, or whatever activity makes you happy.

Hill firmly believed that all business could be taken care of within an 8-hour time frame, and that the key to success was to consistently take advantage of the “8 precious hours”. He amplifies this point by stating: “Do not let a day go by without taking some time for yourself — some time you spend in pure pleasure, as you see it.”

The bottom line is this: sure, we all need to make money. But in the year ahead, let’s have a plan in place to reward and take care of ourselves. After all, success is measured by more than the money in our bank accounts. It’s also measured by the richness of our lives.

This post is by Tom Rapsas and originally appeared on the blog Loyalty Truth, January 10, 2011. You can reach Tom at tomrapsas@gmail.com

You've Got Apped!...The ROIs of Social Commerce

Gone are the days customers when were incentivized for making purchases! Foursquare, Shopkick and a host of other players have armed mobile touting customers with rewards for checking into stores, scanning barcodes, posting reviews and just spreading the word.

As commerce got enriched with 'e-commerce', it has been taken into another orbit with social commerce! Driving the top end of the customer funnel for driving customer walk ins was usually the task for the media planning department, spraying the countryside with hoardings and television advertisements. Converting walk ins / check ins to transactions was the beleaguered task of marketing number crunchers doling out billions of coupons and referral incentives to hapless customers.

The new social apps have now taken over this end of the funnel and boldly incentivize customers for merely pressing 'check in' buttons on their mobiles. The difference of course lies in the fact that customers can check into multiple stores of their choice! So…is their loyalty to their thumbs or to the stores!...Well, that's a tough one. Let's come back to this on another post.

So…what drives customers to check in? The social urge to tell their friends where they are, where they've been and where they're going?! Sure..but this post is about the other end of the equation pointing towards the retailers and service providers seeking to sell their wares.

Though the Starbucks - Foursquare promotion has been touted as a breakthrough model, a quantum explosion of such cloned offers is bound to result in a declining response trend. The challenge for conventional marketing and loyalty practitioners has been to invest and experiment in this new gamble called 'social marketing'

Facebook and a host of networking sites have been flooded with company pages, offer sites, fashion communities and a wide vocabulary of social concoctions that would make a teetotaler head for tequila shots!

The rough road to social marketing nirvana has essentially moved forward on gut feeling and boards seeking to position themselves as 'web' savvy and hip. Not sufficient fuel for significant, scalable and committed efforts in the long run. The question that has been posed behind closed quarters..

"What's the ROI folks?"

A nightmare for any model that attempts to break away from the now sanctum sanctorum of click rates and response rates.

Eventbrite, offers a web based service to publish events and sells tickets using social marketing techniques. It has conducted analytics on it's several campaigns and has come out with the following findings (excerpts below)

• Sharing equals transactions: Dollars per share When someone shares an event with their friends through social media, this action results in real dollars. Our most recent data shows that over the past 12 weeks, one share on Facebook equals $2.52, a share on Twitter equals $0.43, a share on LinkedIn equals $0.90, and a share through our "email friends" application equals $2.34. On an aggregate level across Facebook, Twitter and LinkedIn, and our email share tool, each share equals $1.78 in ticket sales. We're seeing this number improve every week with the most recent four-week average equaling $1.87.
  

• It's extremely sticky: Visits per share The hyper-relevancy of the social graph breeds deeper engagement, greater sales and stickier audiences. For Eventbrite, Facebook is now the #1 referring site for traffic to the company's site, surpassing Google as people discover events that their friends are sharing and they click through to find out more. On average each Facebook share drives 11 visits back to Eventbrite.com. Averaging across all channels, one share drives over 7 visits back to Eventbrite.com.
  

• It's happening everywhere, across all sizes and types of events: Consistency of sharing
  Sharing is consistent across event size. Sharing occurs at the same rate an event has 10 or 10,000 people. Classes/workshops and networking events have the most share activity, followed by fundraisers, conferences, and music events
  

Now, for those who may find this to be quite geeky, in a nutshell their findings appear to indicate that social marketing works and there is a potential ROI measurement that can be garnered from these exercises.

So, where does this fit in with the loyalty theme in this blog…… Marketing & loyalty teams appear to have a historical fixation on incentivizing economic transactions and few have ventured into the territory of recognizing and incentivizing 'social' transactions.

Perhaps the time has come! (now that you can satisfy the number crunchers approving your budgets!)

Mi lista de deseos para el 2011!

I wouldn't normally consider the Spanish language to be in my comfort zone, but I thought of entering this often cliched and dejavu experience of making predictions, wishlists and defining trending patterns on a different note. So...here goes!...truly hoping the readers more conversant with the English language relate with some of the aspects covered below more than the title!

1. The 800 pound gorilla : With ARPUs (average revenue per user) under severe pressure in mobile telephony, look forward to Mobile Operators (MOs) initiating relevant engagement initiatives for their subscriber bases. Though location based offerings, including Foursquare, have made inroads, there is a significant scope for MOs to create loyalty/engagement programmes leveraging their customer transactional insights, distribution reach, locational capabilities and sheer scale!

2. 360 degrees : Marketeers will focus more on the pan-channel / touch point experiences for their customers in driving customer engagement. So, more of back to basics, rolling up sleeves kind of initiatives, ensuring that the messaging, experience, feedback mechanisms and personalization dimensions are all kicking in. This in itself should offer a significant boost to customer loyalty.

3. Talk to Me! : The holy grail of consumer marketing...1 to 1 engagement. Personalized programmes, bespoke experiences, segmented offerings are clearly the order of the day. 'Dear Customer' communication should rightfully disappear into museums and Internet archives!. High end luxury and financial institutions are well placed to take great leaps in this direction...but will they surprise us this year?!

4. Source of Customer v/s Source of Value : This is a jargon that I've been doling out for several years now. There are some brands that have a great source of quality customer and even data about them (which is quite different from understanding them). There are other brands, whose business lines with higher margin structures allow them offer greater incentives to their customer transactions. It's time that brands realize this challenge and opportunity and leverage mutual resources. These may be termed as coalitions or partnerships, but we need to several more of these around, hopefully offering greater value and relevance to customers. Look forward to seeing more mobile operators working with retail or restaurant chains in creating a segmented engagement programme!

5. Convergence Standards: Emerging technologies and systems offering convergence of multiple loyalty and payment cards into a single device or plastic address a clear need of wallet simplification! Is there a light at the end of this tunnel? Is there an opportunity for unrelated brands to work together on a single card, without it being a coalition loyalty programme? Smart card based solutions have been implemented in Turkey and the Middle east by banks, as examples of course. Can we see more?

6. It's just not the Transaction! : Economic decision making is 70% emotional and 30% rational! The transaction is not the beginning and end of the loyalty journey, as has been stated and quoted for time immemorial. Brands would need to start incentivizing good behaviour such as 'advocacy' to truly engage their customers. Points for referrals are again quite clearly and proportionately linked to end transactions. It needs to go beyond and appeal to the emotional side of their customers as well. Makes for a challenging business case, but critical in times to come to differentiate!

7. Coalitions are in! : Though conceptually well designed and executed coalition programmes offer significant consumer value, few have attained scale and profitability. With cost pressures increasing and an evidently clear need for delivering a greater impact to customers, brands may find it more appealing to directly participate in coalition programmes than be overtaken by third party aggregators and service providers in engaging their customer sets. The game lies in leveraging consumer insights to drive transactions which should overcome fears of losing customers and walletshare to competing brands. The battlefield is not in the coalition programme. The larger battlefield is in the consumers mind!

8. Greed is Good and so is Redemption : Mr. Gecko has propounded the former. We need to believe in the latter. Let there be game changers in the industry that incentivize redemption. The key question to be answered. If you don't want redemption...don't give out zillion points. Invest the money elsewhere.

9. It's just not about the Consumer : Employee and channel partner engagement are equally if not more important than the consumer engagement programmes! Look forward to seeing a higher salience of budgets towards these streams.

10. Instancy : The differentiator is going to lie in recognizing behavioral & transactional trends and having a framework that offers dynamic and instant value / gratification experiences to the consumer. A thank you email 33 days after my flight is not going to cut ice. A point statement once a month cannot be the only method of information dissemination. A birthday offer 17 days prior to my birthday may not be a standard industry practice to be adopted across product groups. A 100 point birthday incentive may just not excite the customer. The trick would be in getting a fine blend between proactive and reactive mechanism. The mobile and Internet channels have made the delivery channels ubiquitous across brands and consumers. The ball now lies in our court!

Would look forward to your views and lists!

Low Price Brands and Loyalty?

Should a low cost airline have a loyalty programme?

Should a budget retailer offer loyalty points?
Should a brand assuring no frills service and honest value for money fritter away rewards?

An often quoted stand, in quite passageways of course is.... what would our customers think of us if we start doling out reward points? Would we be sending out the right message? Would they start thinking that we can in fact offer them greater discounts? Wouldn't they prefer that they receive an upfront cash discount instead of some fancy points?

Some perspectives..
1. You are in the business of making profits and your customers know that! So...don't be shy!
2. My customer is price sensitive!..He switches for purchase decision for a few cents!...Undoubtedly, and she would remain so. It's how you play it when the playing field is at par
3. Too much liability!...A liability is created when you don't use the asset.
4. Too expensive!.....This is a matter of execution. It's as risky or expensive as above the line advertising. It's how you can measure the impact and correlate it back to the topline and perhaps even bottomline.

The case for loyalty for brands operating in the low cost consumer domain is possibly as difficult as for other brands.

It's the quest for excellence and the undying passion for capturing market-share that would possibly lead these brands on the journey to better understanding their customers, and hence their loyalty journey.

Your views?