Back to the future: Forget loyalty programs, it’s about customer engagement.

When I read the recent headline “Only 16% of Consumers Redeem Loyalty Rewards” on the pages of Direct Marketing, I was taken aback. Are loyalty programs really that ineffective these days? If so, that’s not good, because if your customers aren’t redeeming for rewards, they’re likely not seeing any value in your program.

The 16% redemption figure was one of the key findings in a recent report from Forrester Research titled “The State of Loyalty Programs 2013,” which was based on surveys of executives at 50 member companies of Loyalty360. A Forrester analyst suggests the results signal a movement away from traditional loyalty programs.

“Loyalty marketing is on the cusp of an evolution,” says Forrester analyst Emily Collins, who directed the study. “There's a shift in focus from the idea that loyalty is all about transactions and discounts. In the future it needs to be more about engagement and emotion.”

I’m feeling a sense of déjà vu and maybe you are, too. Almost three years ago, I penned an article titled “The Death of Loyalty Rewards As We Know Them?” for Loyalty Truth, but in actuality this movement away from “transactions and discounts” toward “engagement and emotion” goes back much further than that.

I would argue that the idea of engagement was first introduced as “permission marketing” by Seth Godin way back in 1999. At the firm Bill Hanifin and I once worked at, Frequency Marketing, we took this idea and ran with it in the early-2000’s, promoting “dialogue” between customers and companies and stressing the need for engagement across multiple customer touch points.

That’s why this recommendation from the same article on “The State of Loyalty Programs 2013,” sounds positively retro, at least until you hit the words in bold type:

Embrace channels featuring two-way interaction. The top three channels used by marketers in communicating with club members are email, websites and Web portals, and call centers. Forrester strongly recommends that businesses begin dialogs with loyal customers via mobile and social media.

The addition of these two new ways to communicate with customers are the fresh components in the mix, as the way we engage with customers continues to expand. And it’s interesting to note that, while not mentioned in this article, old-school direct mail continues to be one of the best ways to interact with many segments of the population.

There’s one more passage in the story had me smiling, as it also brought me back to the past, and it had to do with the nature of rewards. Again, what is being passed as a current recommendation sounds dated to this loyalty vet:

Balance the reward mix with personalized offers that present customers with one-of-a-kind experiences, such as concert tickets or cooking lessons.

It’s something we at Frequency Marketing called “experiential rewards”, a phrase that John Bartold (or was it Mike Charron or Tom Parker?) coined a decade ago and has been in the loyalty marketplace for years. But just like the emphasis on “engagement”, maybe everything old is new again. Or as the saying goes, the more things change, the more they stay the same.

This post, by Tom Rapsas, was previously published at Loyalty Truth, October 23, 2013.

A Peek Behind the Curtain: What Marketing Data Do They Have on You?

There was a recent story in the New York Times business section that caught me eye. It was about the giant US-based marketing and data company Acxiom and the news that, in the interest of transparency, they were now giving consumers a peek behind the curtain—and letting you see just what data they had collected on you and your family.

According to the article, Acxiom “has amassed details on the household makeup, financial means, shopping preferences and leisure pursuits of a majority of adults in the United States”. This data includes everything from your income, family status (married? kids?), to the car you drive and house you live in. Plus, and here’s where it get’s interesting, your recent purchase categories “like plus-size clothing or sports products; and household interests like golf, dogs, text-messaging, cholesterol-related products or charities”.

So what does Acxiom know about you? It’s easy to find out.

The company just launched a free Web site called AbouttheData.com that reveals all. And even though I work in marketing myself, I was curious. What data do they have? Is it correct? Do they really know about my family and all our past purchases? Is the data then evident in the advertising materials I receive? After all, the primary purpose of collecting this data is to tailor offers that are relevant to me and my family.

So I went to the Axciom, answered a few simple questions that ensured I was looking at my data and not somebody else’s, and glimpsed the same vital marketing information that direct marketers and list buyers see. The result of my query? A mixed bag.

While Acxiom knew the ages of my family members and my income, they had greatly overestimated the income of my wife. And while they knew the make and model of our primary vehicle, my home details were missing even though we had moved into a new place well over a year ago.

When it came to “purchase categories”, they did nail several that were big in our household, including pet supplies. (With nine cats, we’re in “crazy cat lady” territory.) They also called out the women’s fashion category, no surprise with a pair of fashionistas in my home. (Which helps explain the nearly daily fashion catalogs that wind up in our mailbox, many from marketers we’ve never purchased from.)

But according to a recent report in the online pub Digiday, Acxiom did a lot better with my data than they did with others. Among their staffers who checked out the site, one was incorrectly identified as a military veteran, another household was incorrectly flagged as having children, while a third person who doesn’t own a car was listed as having their auto insurance due the following month. Their conclusion:

The tool allows consumers to see what type of data is being used to target ads and offers to them, but it also highlights just how inaccurate that information is. One could easily see the site as a way to convince people they shouldn’t be alarmed by data brokers because who they think you are is far different from who you really are.

Does Axciom have your data right? You can find out here.

This post originally appeared on Loyalty Truth, September 19, 2013.

Will the Publicis-Omnicom merger solve the riddle of Big Data?

There was recently some ginormous news in the ad industry where the Publicis and Omnicom holding companies announced a $35 billion mega-merger. But perhaps most surprising wasn’t that the merger took place, but how it was positioned. As reported by the online pub Digiday:

(Omnicom) CEO John Wren explained the merger, saying that gathering, sorting and using data had become a fundamental part of agency work, and combining would help the two agencies do the job better. The new mega agency…would be able to use data at a scale that would put them on par with data rich companies such as Facebook and Google.

Which raises the question: will the merger of a bunch of ad agencies really result in a better use of big data? Not everyone, yours truly included, is convinced that bigger means better. Dave Morgan, the CEO of Simulmedia and a leading voice in the ad technology sector, remarked: “I think it’s a total misdirection to think that you can leverage the scale and advantages of big data if you’re bigger. Quite the opposite.”

Doubts about the effectiveness of big agencies getting a handle on big data were also expressed by Jon Morris, founder and CEO of independent digital marketing agency Rise Interactive, on the pages of DMNews. I think Morris nailed it when he questioned whether the mega-merger portends that anything different will be happening in the future:

Both of them already have access to so much data that they’re not leveraging. So how is merging and becoming a larger enterprise going to help them out more? It’s basically two identical companies merging together. Not one person can point to the technology that Omnicom has or the technology that Publicis has that would speak to how this makes sense from a Big Data standpoint.

Meanwhile, I continue to be surrounded by dumb data.

Personally, what I’m seeing most frequently on my computer screen lately isn’t the much ballyhooed big data, but what I like to call “dumb data”. While some of the banner ads I see may be aiming for the new digital nirvana of showing ‘the right message to the right person at the right time”, what I most often notice are the stalking ads.

I wrote here a few months ago about various companies following me around the Web after I had visited their sites, from a sneaker company to an online MBA school. For instance, back in February I visited the Web site for the Broadway show Pippin. I bought tickets to the show at the theater’s ticketing site and saw it in back in March. Several months later, I am still seeing Pippin banners popping up everywhere I go.

As the online pub Digiday recently opined, these follow-you-everywhere banners are becoming the new equivalent of the pop-up ad. They’re mildly annoying, but judging by their widespread and continued use, they seem to be working. The only danger, Digiday correctly points out, is their overuse:

The industry just needs to hope that consumers don’t become so frustrated with seeing the same pair of shoes for two weeks that they decide to do something about it. Otherwise it’ll only have itself to blame.

Will the new Publicis-Omnicom entity be able to better figure out how to put big data to use—not just to attract new customers but retain and grow existing ones? Personally, I’ll believe it when I see it. And with a new set of banner ads from a hotel chain starting to follow me around the Web, I’ll be glad when they do.

How about you? Do you think there are any agencies, companies or brands who have a real handle on effectively using big data? Can you cite any examples?

This post originally appeared on Loyalty Truth, August 2, 2013.

Whatever happened to the promise of big data?

In a recent DM News article titled “Big Data Must Create Big Experiences”, direct marketing vet Ernan Roman pointed out that for all the data that’s apparently being collected, marketers don’t seem to be doing much with it. And judging by my e-mail inbox, I couldn’t agree more.

An appraisal of the brand and loyalty marketing e-mails I’m receiving reveals scant few that mention my relationship with the company or that address my past buying behavior. That’s a serious omission, because research shows that if a company provides me with personally relevant information, I’m much more likely to make a purchase.

The unfulfilled promise of big data also came up during a recent DM News roundtable. While there were a few on the panel who paid lip service to combining “research, analytics, and transaction data…to produce more tailored communications”, the conversation was long on talk and short on examples.

However, there was one roundtable statement that rang true, and I think it sums up the current state of big data. It came from a straight-shooter by the name of Ilana Rabinowitz, the CMO at a company called Lion Brand Yarns, who said:

“I think that for most small and midsize companies Big Data is irrelevant. It’s like the Wild, Wild West of information. You can’t use it, you don’t have people who can analyze it, and if it’s there, you don’t know how to get to it.”

A damning but, I believe, true claim. And the concerns about big data extend into the loyalty marketing business, as well. A recent report in Retail Wire asks the pointed question: “Why Aren't More Companies Connecting Big Data Dots for Loyalty Programs?” The online pub cited a serious lack of effort on the part of marketers, coming to the conclusion that:

“While most respondents feel the need to engage customers based on their needs and expectations, they're not leveraging the data in a way that maximizes the potential loyalty offered by customers.”

To use a football analogy, big data feels like the first round draft pick who has tremendous potential—but who hasn’t yet proven himself on the field. The coach isn’t quite sure how and when to use him, so for now he’s relegated to the bench. He may play in the future, but when is anyone’s guess.

Is there a better way to personalize customer communications?

Since it appears a lot of marketers haven’t yet gotten a handle on how to use the voluminous amount of data they’re collecting, maybe it’s time to go old-school. I again quote DM sage Ernan Roman who made this astute observation:

Customers, both B2B and B2C, are sophisticated enough to recognize that to receive increasingly relevant offers, they must share detailed preference information.

And if you’re not able to leverage big data, the best way to compile accurate customer preference data is through surveys, both online and off. With this approach, you start a dialogue with customers asking them to share their wants, needs and expectations. This allows you to continue the dialogue by serving up relevant, personalized communications featuring the products, services and benefits that interest your customers most.

For me, this idea is an e-mail blast from the past. Several years ago, my former employer Frequency Marketing had a major client who committed the time and dollars to collect customer information via surveys—and it allowed us to send out personalized, relevant e-mails. The result was a sharp increase in incremental sales and customer share-of-wallet.

Are customer preference surveys the sexiest, most cutting edge way to personalize customer communications? Probably not. But until big data gets its act together, it may be all we’ve got.

This post previously appeared on Loyalty Truth, May 29, 2013.