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.

Now...here'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!...Okay..got 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..."

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 kids...it 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..........

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, tom.rapsas@mrmprinceton.com

Trails and Triggers!

As marketers, our endless thirst for seeking to understand more about our customers often leads us to miss out on the information trail that a customer is leaving in her daily interactions with your brand.

There are two types of trails that are left by customers, the "Tangible" trails, distinguished by those that can be captured by your systems, and the "Intangible" trails that may be observed by your channels and customer facing colleagues.

The former would include her birthday, size of items purchased or time of shopping, value of salary credit into account etc., whereas the latter would include the details of other shopping bags she has carried into the store or the perfume she comes wearing in........

The challenge is two fold. Which of these trails are relevant for your business, and how can you act on them?

(Have come across one too many programmes in which customers receive birthday cards from brands who have not touched their lives for at least 11 months prior to that event! And even worse, these cards quite often bear signature stamps. These programmes are quite often templated and in my opinion a waste of time!)

Globally credit card issuers have leveraged "tangible" trails and defined trigger points to their business advantage quite well. Hence it is not too surprising to receive an offer for sales finance, when you've conducted a high value electronic item purchase. Now of course the challenge lies in when is it that I receive the offer? Is it an SMS the customer receives within a few seconds of the transaction or after a fortnight when the card statement is sent!

The larger challenge lies for organisations that can communicate with their customers cost effectively only when the customer walks in ( as mailing out coupons can be quite an expensive and time consuming process!)

Do you believe that systems and processes are attuned to pick up relevant customer trails, define accurate trigger points and communicate customer benefits in real-time?

Believe that a fair amount of investments are sunk into reward points and mailing costs. It would be refreshing to see business managers diverting some of those budgets into systems which would allow them to listen better and deliver greater value to their customers!

So what if I don't want to engage?

The loyalty buzz phrase of the moment seems to be “engagement marketing”. It a phrase that’s been around for several years, but its meaning seems to have morphed from engaging customers with the brand via dialogue and personalized communications, to inviting customers to actively participate with the brand, via interactive blogs, viral video contests and social networking sites.

Either way, the question I’ve been pondering is, what if I’m a loyal customer and I don’t want to interact with the brand? The fact is for every rabid Apple, Xbox and Toyota Prius customer, there are other customers that just want to be left alone to enjoy their product or service in peace. And for low involvement categories (think auto insurance) there may be few to zero customers who want to actively engage with you.

The point is, in the rush for companies to launch a corporate blog, put a page up on MySpace or release a new-fangled widget, it would be a mistake to forget the basics--the “blocking and tackling” that should be a part of every loyalty or customer retention program.

During my days as Creative Director at the now defunct Frequency Marketing, it was drilled into us that every loyalty program was about rewards and recognition. Rewards were the tangible stuff, the free flights, etcetera. But equally important, was the recognition—the intangible “thank you” messages and soft benefits like invitations to VIP customer-only events that showed your best customers you truly cared.

So in the rush to jump onto the Web 2.0 bandwagon, let’s not forget the basics. It’s still far more effective to send a personalized, relevant e-mail to a best customer than a come-on to become a Facebook friend. In loyalty, as in life, it’s the little things that matter most.

Tom Rapsas, Associate Creative Director, MRM Worldwide, trapsas@mrmgillespie.com

Guerilla Loyalty!

Was driving past a leading retail chain the other day, when the advertisement led me to take an instant U turn and head instantly towards the store! The tactic was refreshingly amusing and definitely merited a visit at the least.

The promotional campaign was quite simple, wherein it invited loyalty members of other leading retailers and offered a 20% discount on your purchases, provided of course you showed your loyalty cards with the other stores!

Not entirely original, but always an effective method in inviting the serious shoppers. In an environment where similar brands are available across most large format stores, and the absence of high quality store level apparel brands, the choice of store in multi brand formats is quite often led by the ease of parking, the service and ambience and of course any carrots that may be tossed in for a good measure.

This was a fairly new store situated in a street which has over 8 malls in a one kilometre stretch. The promotion obviously had customers flashing the loyalty cards in their wallets and diving into one more. Quite smart. Target the relevant high spenders and drive them in.

This raises another critical aspect and challenge for loyalty programmes w.r.t customer selection. Which customer should you invite to your loyalty programme and which one should you perhaps let go! The "I welcome all" approach results in large programme management costs and the management getting bogged down by the low active rates on occasion.

Most mass market retailers have either no / low entry barriers for their loyalty programmes, and the common criteria being the value of purchase on the day or in a defined period of time.I often question the perceived value of a product / service which I receive with extreme ease! Hence, do these programmes make the necessary initial impact at the welcome stage or was there a missed opportunity? Also, is the ticket size the only feasible entry criteria?

Hence, could all customers purchasing Swarovski crystals by default be invited to the programme, or men purchasing ties! What gives the customer's entry into the programme that distinctive edge, and in the bargain makes your customer selection more relevant and accurate?

As an endnote, I did'nt end up purchasing a single item at the above mentioned store, as at the cash counter they politely indicated that I needed to make a purchase equivalent to approximately USD 75 to avail of the offer ( I was a few dollars short...) ! And yes, I did leave without a single purchase. They definitely got the buzz, but lacked the fizz.....

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...

Show Me The Plastic!

I've been intrigued by the passion in issuing plastics to customers, to mark their entry into Loyalty Programmes. I must confess that I've got over 23 loyalty plastics at last count and have discarded all of them!

Yup...all of them, and yet remain fairly loyal to some brands...allow me to elaborate...

My airline allows web check in and allows me to select my seat and even incorporate my frequent flier number, ensuring that I get my due points. My preferred retailer for apparel, requests my mobile number and allows me to earn points on all my transactions. The restaurant that I frequent, quite strongly believes that my presence suffices to avail of the discounts privy to their loyalty members, and need not flash my glorious card for all around to see and drool over.

Hence why are millions of dollars invested into the issuance of plastics, which several customers forget to carry, or even worse...have forgotten about them altogether!

The loyalty card obviously "reinforces the brand imagery, the proposition and the urge to avail of the benefits with every exposure in the wallet". In some cases, customer authentication is facilitated by the loyalty card, but not in the most foolproof manner, and in other cases, the change in colour of the plastic with every upgrade massages the customer ego (and so we believe)

If the loyalty plastic were truly such a miraculous tool, then we would perhaps have more customer research showing that customers get emotionally charged on their prized possessions, of which I've yet to come across.

Hence, are we issuing plastic more out of habit? Perhaps...Yes in several cases.

There is quite clearly an opportunity and need to revisit this fundamental tenet. I would bet on the mobile and the humble fingerprint as the gateways to access the world of benefits that you seek to offer your customers.

They're always with you, and you're not likely to "leave home without them"

Hence do strongly evaluate service offerings such as Pay by Touch which leverage the fingerprint and you might just see your activation and active rates drastically go up.

The cost savings could perhaps be channelised towards reinforcement of your core proposition.......

The 6 Best Reasons Not To Use Your Customer Information!.........

I've come across several organizations where they've forgotten why they actually have a loyalty programme?

They seem to go through the grind to achieve the processes as defined in the goal sheets without a tangible quantifiable outcome...

What's even more distressing is the total disrespect for the customer data opportunity that exists within their databases.

Now that I've come across this so often, thought it would be a good time to list out the top 6 reasons for not using your customer data.

a. I need a new database
b. We are setting up a new CRM package
c. We are rebranding our current programme
d. We do not have a budget for undertaking any direct marketing activities
e. We are redefining our value proposition
f. Our data is in a mess

One can write tomes on each of these subjects, but quite honestly it is sacrilege not to interpret and analyse your information in a systematic periodic manner.

Would be great hearing your views or any other points that you may like to add to the list!

As a sign off....every time you look at that data, you will find a new perspective on your customers...

Power Redefined

"Power is the ability to hold someone else's power in your hands and show it to them"

The World's Most Powerful Loyalty Programme?

Have been searching the web, chasing acquaintances and reading tons of reviews to determine the ingredients of a successful, sustainable and scalable loyalty programme. Loyalty as we all know is what makes every business tick and clock in the revenues. Be it banking, soap or even socks.

The quest for exemplary loyalty programmes typically results in recounting leading hotel and airline programmes that result in points, freebies, upgrades, massages and lots more. This of course is possible in industries where there is a direct customer contact coupled with transaction, and fairly higher operating margins (in good times at least). The sustainability factor of course is rather questionable, with several airlines having collapsed on account of air mile point liabilities in the recent past.

Retailers have been prone to issuing loyalty cards as if there were no tomorrow, be it the local neighborhood grocery or the big brother hypermarket on the outskirts of town. Points, discounts, special offers galore are showered on hapless customers, who rarely seem to be able to differentiate a United loyalty programme from that of Best Buy!

Marketers have been struggling to ensure that their loyalty programmes and cards remain top of mind and wallet respectively for decades. But as luck would have it, with activation levels of most programmes barely crossing the teens, the quandry remains - How in god's name do we make our customers remember the core value proposition and purchase at their stores on a frequent basis?

Hence the question of the hour " Where lies the holy grail of Loyalty" - Is there a loyalty programme out there, that has withstood the sands of time, behavioral nuances of generations and continues to grow each day?...Phew....

I posted a question on Linkedin recently soliciting feedback on Loyalty programmes that have impressed them the most, and received a response that quite clearly showed that I need to shake off my MBA hallucinations.

And that response - Religion!

Proven sustainability, adaptability and spanning all economic groups and lots more.....

So what is the secret ingredient about Religion, that drives and binds people the world over on a consistent and frequent basis?

A clear value proposition, sense of identity and social recognition that is reinforced with every generation.

"The best Loyalty Program in the world is organized religion. Highest number of enrolled members. Maximum membership longevity (hooked for life & at times from the time of birth). Moreover, it is the essence of what all successful Loyalty Programs should be. The members should not for once realize that they are the one’s who are paying for the ‘benefits’ & perpetuating program."

And all this with no loyalty cards or airmiles...hmmmm...