LOYALTY INDUSTRY

					LOYALTY
Volume 1 Number 1

January 2009                       MANAGEMENT
                                                    Powered by Loyalty 360




THE VOICE OF THE                              PREMIERE ISSUE
LOYALTY                                           FEATURING
                                                          OTM Partners
INDUSTRY                                            The Incentive Group
                                                              rDialogue
LOYALTY EXPO 2008
IN REVIEW                                           Connexions (CLTS)




                    Understanding Fuel Rewards
                       Tackling Common Misconceptions

                                                        PREMIER ISSUE
                                                                                                                                                                  This Month in LOYALTY                                                 MANAGEMENT


                                                                                                                                  JANUARY 2009                                      VOLUME 1      NUMBER 1                   W W W. L O YA LT Y 3 6 0 . O R G



                                                                                                                                                                                                      DEPARTMENTS
                                                                                                                                                                                                      4   Letter from the Editor
                                                                                                                                                                                                      6   Contributors


                                                                                                                                                                                                      LOYALTY FORUM
                                                                                                                                                                                                      8 Your Voice
                                                                                                                                                                                                      10 Q&A
                                                                                                                                                                                                      12 Behind the Brand/People
                                                                                                                                                                                                         Interview with Marti Beller


                                                                                                                                                                                                      FEATURES
                                                                                                                                                                                                      14 Customer Insulation
                                                                                                                                                                                                         Doug Press – The Incentive Group
                                                                                                                                                                                                      16 True Loyalty in Tough Times
                                                                                                                                                                                                         Steve Yastrow – Yastrow & Company
                                                                                                                                      (above) Steve Yastrow, Keynote Speaker, Loyalty Expo 2008
                                                                                                                                                                                                      18 Loyalty: a “Symbiotic System”

                                                                                                                                  E XPO IN RE VIEW
                                                                                                                                                                                                         Not a Program
                                                                                                                                                                                                         Paul Hebert – i2i
                                                                                                                                                                                                      20 Comp CustomersTM
                                                                                                                                  Susan Payton – Egg Marketing & Public Relations                        Phil Rubin – rDialogue

                                                                                                                                  With 475 attendees from seven countries,                            22 Dialing in on Relevance
                                                                                                                                                                                                         Connie Chesner – OTM Partners
                                                                                                                                  Loyalty Expo 2008 certainly exceeded
                                                                                                                                  even our expectations!                                              24 What is Loyalty and How Can I Get Some?
                                                                                                                                                                                                         Kelly Passey – Access Development
                                                                                                                                  39 / Expo Off to a Great Start                                      26 How Do I Value My Rewards Program?
                                 knowledge. deliver y. results.                                                                   40 / True Measure of Customer Loyalty
                                                                                                                                                                                                         Sarah Phelps – First Annapolis Consulting


                                          how mot ivatin g.                                                                       41 / Engaging Your Customer
                                                                                                                                  42 / Mobile Marketing
                                                                                                                                                                                                      TRENDS & REWARDS
                                                                                                                                                                                                      27 Gift Cards In A Down Economy
                                                                                                                                  43 / Tech Talk                                                         Deb Merkin – Gift Card Partners
                                                                                                                                  44 / Attrition:101                                                  28 Get the Most Out of
Let us motivate you.                                                                                                              45 / Marketing to Millennials
                                                                                                                                                                                                         Your Travel Program
                                                                                                                                                                                                         John Miller – Connexions (CLTS)
At A nion Loyalty Group (ALG), we o er ways to drive pro table behaviors among your customers using any means possible:           46 / Expo Summaries                                                 30 The Rewards Revolution is Here!
points, miles, rewards, incentives, enhancements.                                                                                                                                                        Jim Purdy – Bridge2Solutions

Our years of experience ensure we acknowledge, understand and anticipate marketplace and consumer trends, helping us                                                                                  32 Fuel Rewards Marketing and Loyalty:
                                                                                                                                                                                                         Gaining a Better Understanding
design programs to motivate your customers’ behavior. Some of the most recognizable brands have employed our services                                                                                    John Cullen – Pointe Advantage
to develop loyalty solutions to meet their pro tability goals. We believe loyalty should be a business strategy with a positive
ROI. And our proven loyalty solutions repeatedly result in pro tability for our clients.
                                                                                                                                                                                                      BEST BUSINESS PRACTICES
Visit us at www.a nionloyalty.com/loyalty or call 800.622.4863 to le n more about our loyalty our lo ar
                                                                  learn                 yalty
                                                                                        about                                                                                                         36 Successful Hires
marketing services and how we can help create loyalty between you and your customers.                                                                                                                    Amy DeBerg-Ferwerda – R&P Group



                                                                                                                                                                                                                     January 2009   | Loyalty Management        3
     FROM THE EDITOR

                                                                                       LOYALTY
                                                                                       in the NEWS
                                                                                       The Motivation Show
                                                                                       and Loyalty 360
    Welcome to the first issue of Loyalty Management, a one of                         Announce Partnership
    a kind, customer driven quarterly publication. Here at Loyalty Management,
    we define a customer as every person your company touches—your end users,
    your key accounts, all of your employees, partners and vendors. We are committed   Plastic Jungle Appoints
                                                                                       Gary Briggs CEO
    to creating a documented customer-centric forum for sharing ideas, concepts,
                                                                                       Former eBay Chief
    and trends across all industries interested in proactively communicating with
                                                                                       Marketing Officer to lead
    their customers and each other.                                                    gift card services company.

      Loyalty Management belongs to you! This is your publication; a platform
    for you, our readers, to share your thoughts, ideas and experience with            Loyalty 360 and PCATS
    others. We are here to help you deliver your message and we believe your           Announce Partnership
    contribution is valuable.

       Supporting this, in our premier issue, we hear from Steve Yastrow, sharing      2020 Marketing to
                                                                                       Offer RewardStream’s
    his ideas on building a “We” relationship, demonstrating the importance of         Lifecycle Marketing
    your brand approach. In addition, contributors from various backgrounds            Platform as Core Loyalty
    share their theories and strategies. Connie Chesner shares ideas on how to         Technology
    provide more relevant messages, while Paul Hebert explores the value in            Licensing Agreement to
    having a more consistent message across all business units. Be sure to check       Provide Loyalty Marketers
    out the closing section, which brings you the highlights and insights from the     with Industry-Best Loyalty
    first Loyalty Expo.                                                                and Incentive Solutions


      We hope you enjoy this first issue! As always, your thoughts, questions,         Loyalty 360 Announces
    opinions and insights are welcomed.                                                Two New Members to
                                                                                       Leadership Team
      Sincerely,
                                                                                       Maritz Loyalty
                                                                                       Marketing Launches
                                                                                       Next-Generation
                                                                                       Technology Platform
      Erin Raese
                                                                                       LoyaltyHQTM
      Editor
      Loyalty Management
                                                                                       Thanks Again Members
      erinraese@loyaltymanagement.com
                                                                                       Rewarded with Gas
                                                                                       FuelLinks Joins Airlines,
                                                                                       Retailers, Other Thanks
                                                                                       Again Reward Partners


                                                                                       To read more visit
                                                                                       www.Loyalty360.org




4   January 2009   | Loyalty Management
                                                                                                LOYALTY
     CONTRIBUTORS

                                                                                                                     MANAGEMENT




                                            Connie Chesner                                      Susan Payton
                                            Vice President, Director of Research for            Susan Payton is the Managing Partner of Egg
                                            OTM Partners. A qualitative research and            Marketing. Susan has worked as a writer in
                                            communications expert, Connie is adept              the creative capacity for ten years; harnessing
                                            at designing, analyzing and interpreting            her creative ability with her knowledge and
                                            qualitative data for trends, and then converting    experience in marketing, finance and business.
                                            those trends into themes used to understand
                                            the prominent perceptions and beliefs of a
                                            study population.                                   Sarah Phelps
    Connie Chesner                                                                              Sarah Phelps leads the Loyalty Program
                                                                                                Support services practice for First Annapolis
                                            John Cullen                                         Consulting. Her areas of expertise include
                           Susan Payton     John Cullen is President of Pointe Advantage        strategic planning, outsourcing, operations
                                            Consulting and a recognized expert in the area      management, negotiations and partnership.
                                            of fuel-based reward and loyalty marketing.
                                                                                                Doug Press
                                            Amy DeBerg-Ferwerda                                 Doug Press, President & CEO of The Incentive
                                            President of Recruiting & Placement Inc             Group, has over 30 years of Marketing expertise
                                            (dba R&P Group). For over 25 years Amy has          uniquely gained on both the agency and end
                                            been involved either directly or indirectly         user sides of the desk. He leads the formulation
    John Cullen                             in the credit card industry. Since 1996, as a       of winning customer loyalty programs for mid
                                            recruiter, Amy has specialized in the Cards and     size to Fortune 500 brands and previously
                                            Payments world.                                     served as CMO for a billion dollar publicly held
                           Doug Press                                                           computer company.
                                            Paul Hebert
                                            Paul Hebert is currently Managing Director          James C. Purdy
                                            of i2i – an influence consultancy that helps        Jim is a founder and executive vice president of
                                            companies align the behavior of their               Business Development for Bridge2 Solutions,
                                            employees, channel partners and consumers           Inc. His career spans three decades in awards
                                            with the goals and objectives of the company.       development and strategy, managing sales


    Amy DeBerg-Ferwerda
                                            Paul is widely considered an expert on
                                            motivation and incentives and authors the
                                            highly rated blog Incentive Intelligence.
                                                                                                teams and client programs in various executive
                                                                                                roles with S&H, Carlson and Marketing
                                                                                                Innovators.
                                                                                                                                                                                         SUCCESS MADE FRESH
                           James C. Purdy   Deb Merkin                                          Phil Rubin
                                                                                                                                                             When results go stale, CCG has the recipe to refresh your bottom line.
                                            Chief Operating Officer and Partner for Gift        CEO & President for rDialogue. Phil has nearly
                                            Card Partners. Deb brings 25 years experience       20 years of strategic marketing experience
                                            and global channel expertise in defining and        with an emphasis on loyalty and relationship                         Behind the counter: You’ll enjoy the benefits of an agency with more than 30 years of experience
                                            marketing new products, creating strategic          marketing, integrated communications,
                                            partnerships, and delivering solutions-driven       partnership development, promotions and                              developing and executing customer relationship marketing programs in the retail industry. Our team
                                            programs for both channel partners and end          program development.                                                 members are thought leaders and sought-after speakers who are committed to using their expertise
                                            customers.
                                                                                                                                                                     to help retailers attract, retain and grow profitable customer relationships.
                                                                                                Steve Yastrow
    Paul Hebert                             John Miller                                         Founder of Yastrow & Company. Steve Yastrow                          On the menu: Select the services you need from our full slate of offerings, including …
                                            Director of New Business Development for            has acquired a singular reputation among
                           Phil Rubin       Connexions Loyalty Travel Solutions (CLTS),         business decision makers as an outside partner                                  Strategic CRM consulting                                Customer research
                                            John brings over 10 years of loyalty travel         who challenges organizations to take a fresh
                                            experience and over 20 years of travel industry     look at themselves from the inside out. As a
                                            experience including positions within industry      consultant, speaker, and writer he encourages
                                                                                                                                                                                Loyalty marketing program development                   Creative execution
                                            relations, product development and sales.           his clients, audiences, and readers to reinvent
                                                                                                how they connect with customers.
                                                                                                                                                                                Loyalty program alternatives                            Production services
                                            Kelly Passey                                                                                                                        Data analysis and data management                       ROI measurement
                                            Kelly has over fifteen years of experience in the
                                            financial bank card sector with specific focus on                                                                        Five-star rating: CCG has developed, launched and managed dozens of CRM and loyalty marketing
    Kelly Passey                            incentive and loyalty solutions, including seven
                                            years at VISA managing Incentive Marketing                                                                               efforts for top retailers in the U.S. and Canada. Let your store be the next to take advantage of our
                                            Services. He is currently the Executive Vice                                                                             complete, proven approach — and start on the road to fresh sales and revived profits today.
                           Steve Yastrow    President of Incentive & Loyalty Services at
                                            Access Development.




                                              Erin Raese – Editor in Chief | Caitlin Schar – Editorial Director
                                              Victor Wilcox Graphics Plus Inc. – Layout & Design | Valerie Green – Cover Art
                                                                                                                                                                                                     800.525.0313 • customer.com
                                              Jet Lithocolor – Print Production
                                                                                                                                                                                  Greg Sultan, SVP, Strategist • ext. 122 • greg.sultan@customer.com


                                                                                                                                                   P E TCO    Ta l b OTs   C h EC k E r au TO Pa rTs              N O r d sT r O m       P i E r 1 i m P O rTs       G E N E r a l m OTO r s
6   January 2009     | Loyalty Management                                                                                                                                                                                                           January 2009     | Loyalty Management      7
     LOYALTY FORUM: Your Voice




    Favorite Loyalty Programs
    We posed the question: What are your top 3 favorite loyalty
    programs and why? Here’s what you’re saying.



    Jack Williams CEO, eCommlink                                     Loyalty 360 Team Laura Rusche, Director of Marketing;           Mike Wittenstein Speaker. Facilitator. Consultant at Mike Wittenstein Speaks
                                                                     Amanda Chasteen, Operations Associate Manager; Ashley
    American Airlines AAdvantage: Able to earn miles from                                                                            My idea of the ideal loyalty program is one that simply provides a great customer                   In our next “Your Voice”...
                                                                     Bankes, Sales Coordinator, and Annie Lerner, Marketing Intern
    a large, diverse group of merchants. Multiple earn with one                                                                      experience. An experience so good and meaningful to me that I want to repeat
    burn allows me to continue my “equity” in the program for
    years. The availability of seats for “burn” are limited at the
                                                                     Kroger Plus Card: Love getting personalized coupons
                                                                     based on our spending habits, gas rewards/ rewards for
                                                                                                                                     it—and don’t need to be paid to do it!
                                                                                                                                                                                                                                         Who, what,
    last minute, or you have to use many more miles to get an        everyday and essential spending.
                                                                                                                                     Lynne Marmulstein GP-Product, LLC
                                                                                                                                                                                                                                         where are you
                                                                                                                                                                                                                                         loyal to without
    “any time” seat, the reality is if played right you can save
                                                                     CVS: Purchase prescriptions each month and don’t realize
    considerable dollars on long flights.                                                                                            One program that I like is the Discover rewards program and getting $$ back to use
                                                                     how quickly the rewards add up / rewards for everyday and
    Marriott Rewards: The earn here is not as broad as the           essential spending.                                             as I prefer and that Discover rewards me additionally when I shop at certain retailers              program
                                                                                                                                                                                                                                         incentives?
    AA program, yet at ten points per dollar spent, it can add                                                                       & online. Secondly, the air miles programs are a favorite, as we enjoy traveling.
                                                                     Other Favorites:
    up. It is the upgrades to much better rooms, concierge floor
    with free breakfast and snacks can really reduce your cost of    American Express Card: Free flights and can accumulate
                                                                                                                                     Mike Kolowski Datavantage Corp                                                                      Loyalty matters but it is not
    traveling, and not require travel out of the hotel. When I am    miles from shopping online /being rewarded for loyalty and
    in New York City or Washington, these advantages seem to         usage in ways that matter to us.                                My first Loyalty program I strongly endorse is the Charter One MasterCard Mega                      always earned through incentives,
    be nice, and in the winter, really nice.                                                                                         Rewards. Paying Bills is a must and being rewarded by my bank and MasterCard just                   points or coupons. An expanded
                                                                     Speedway: Purchase so many gallons, get some free/
                                                                                                                                     makes it better. In the last 6 months just paying my bills online, I have ended up with             understanding of what makes us
    The Kroger program for rewards that sends a check of             rewards for everyday and essential spending.
                                                                                                                                     $100.00 gift card to Best Buy (my choice), just in time for the holidays.                           “Loyal” may help marketers think a
    $5.00 after each $500 spent in a Kroger unit. While not real     Coach/Victoria Secret: Rewards for loyal customers /
    sexy, or fancy, if you are spending this much often, then you                                                                    My second Loyalty program to mention tonight would be CVS. They are not only                        bit outside of the box.
                                                                     special sales, coupons / rewards for being brand loyal.
    have a real 5% savings on your food costs.                                                                                       paying attention to how much you spend, but your product types. So while the receipt
                                                                     LaRosas: Local pizza place, pay for a Buddy Card (typically     coupons are printing out giving you $4.00 off your next $15.00 purchase, they’re                    What am I loyal to?
                                                                     a fundraiser), and you get all different types of rewards /     also printing out $.50 off of Neosporin since you just bought Band-Aid’s for your                   My hairdresser… my jeans…
    Caitlin Schar Director, Loyalty Management                       joining philanthorpy and everyday spending.                     daughter’s “boo-boo.”                                                                               my coffee shop (and I don’t just
    “Really Nice Restaurants,” Valued Member Program.                                                                                Lastly I have to throw in Micro-Retail’s “Relate CRM” software for my third                         mean Starbucks, I am loyal to a
    Hands down the BEST loyalty program created! Besides             Sudhakar Boddu Principal at Computer Sciences                   selection. Our loyalty CRM product is in use at Bebe, New York and Company                          very specific location). Why? The
    providing excellent food, atmosphere and service…the                                                                             and quite a few other retailers. It’s a favorite because of the versatility. “Relate”
                                                                     Corporation                                                                                                                                                         overall quality of experience, the fit
    instant and frequent rewards make this program easy                                                                              does Customer Management, Loyalty modules, Gift Cards, Deal and Promotion
                                                                     I like the loyalty program which gives points (like airline                                                                                                         and the people. There is something
    and valuable, which keeps me coming back again and                                                                               Management. This isn’t just a plug for our product, it is one of my favorites. I love what
    again. They understand who is trying to win whos loyalty.        miles). That’s because of the recent Delta’s turn around.                                                                                                           more personal than just a targeted
                                                                                                                                     I do with this product, helping retailers and their customers. L
    Don’t make me sweat to earn your loyalty—reward me to            Delta came out of its troubles, as its customers had invested                                                                                                       offer, with any of those to whom I
    encourage mine!                                                  their time and money with them over the years and it also                                                                                                           am truly a loyal customer.
                                                                     became their collective responsibility to keep Delta moving.
    2 & 3... Nothing compares! Truly, for me, any good               As long as Delta was offering reasonable fares and service        Please write us! Do you have an answer? Question? Or comment?
    program prioritizes ease of redemption and is quick to earn/
    deliver value.
                                                                     Delta frequent flyers never deserted Delta.                       We want to hear from you. E-mail us at: Mailbag@LoyaltyManagement.com.                            Share your voice !
                                                                                                                                       You can also find us by visiting Loyalty 360 groups at: Twitter, Linkedin
                                                                                                                                       and Facebook.




8   January 2009   | Loyalty Management                                                                                                                                                                                           January 2009   | Loyalty Management       9
 Q&A
      LOYALTY FORUM: Q&A




                                                                           Ask the Experts

     Q: “What are best practices in keeping employees engaged in
                  this current economic environment?”

     A:        The best way that’s worked for me in my career has been
     honesty. This honesty comes about from rethinking the top-down
                                                                                      A:        Understand what employees expect and meet or exceed their
                                                                                      expectations. Set performance goals and reward them for meeting
     models of management and to develop a real trust in the shared role all          them or exceeding them. Let them understand the Lifetime Value of a
     of us play in shaping an organization. Let’s talk about our challenges, our      Customer. A customer is not a “one sale customer” but an opportunity
     opportunities, our goals, and our purpose. Develop a dialogue around all         to build a relationship with that customer and eventually boost
     of that to gain a broad range perspective that will help us all understand       profits and sales to let you (employee) keep your job. Here’s a link to
     the pulse of an organization and help drive action plans and results that        an article I wrote on the subject: http://loyaltycoach.com/articles/
     comes from everyone within the organization.                                     expectations.html
                —Langston Richardson, Executive Creative Director, VP at infuz                                  —Allan Katz, Owner, Loyalty Marketing Institute



     A:         I think the process is the same in this environment as it would be in a better economy. To provide an environment in which people are encouraged
     to excel, develop their skills and delivery, and offer excellent customer service—is a challenge that requires special leadership and focused management.
                From the three secrets of the classic One Minute Manager (Ken Blanchard and Spencer Johnson):
                One Minute Goal Setting (clear goals/expectations/accountability for each assoicate)
                One Minute Praisings (frequent ecouragement—“Catching them doing things right”)
                One Minute Reprimands (Immediate, Specific corrective feedback, followed by encouragement for them to improve)
        When these steps are used often and repetitively they form the basis for achievement and help build a business relationship that can engender
     loyalty. There is much that can be done beyond these basic steps, but without all three of these, associate development will be difficult.
                                                                                   —Gary Duke, Installation & Service Mgr @ ESS (Electronic Security Specialists




       Q: Do you have a question?
       A: Maybe you have the answers.
       What are your best practices? What is your advice? You are our experts!
       We will publish your thoughts in our upcoming issue…

       Write us at: Mailbag@LoyaltyManagement.com or plug-in to the Loyalty 360 social network at:
         Twitter, LinkedIn and Facebook. Share your thoughts and start a discussion!



10   January 2009      | Loyalty Management                                                                                                                        January 2009   | Loyalty Management   11
      LOYALTY FORUM: Behind the Brand/People
                                                                                                                                                                                                         “My daughter... has had
     Marti Beller                                                                                                                                                                                         the greatest impact
                                                                                                                                                                                                          on me. She made me
     The other side of Marti Beller,                                                                                                     in turn more tolerant, of longer time horizons by which          realize that not all
     the President of Affinion Loyalty Group                                                                                             certain levels of success are measured. I think that changed
                                                                                                                                         me from being a good manager to a good leader and from           results can be measured
                                                                                                                                         running the company as a good vendor to a good partner.
                                                                                                                                         That’s just one of the many ways she has impacted my life.       in a single day’s time.”
     A VETERAN IN THE LOYALTY INDuSTRY with more than 14 years of experience                                                             Which charities do you support? My favorite charities
     developing and managing loyalty programs for some of the most recognizable brands, Marti                                            are Make-A-Wish and St. Jude’s. As a board member of
                                                                                                                                         Make-A-Wish for six years, I feel a strong local connection
     is considered a visionary throughout Affinion as well as the industry. The achievements which                                                                                                       one of the hardest years in 2009. We realized that although
                                                                                                                                         to it, but both charities show the power of children that
     make up a professional bio are only a fraction of the whole; personal experience, interests and                                     fight through great adversity that most adults would handle     we were doing well, we needed to challenge ourselves by not
     ideologies shape the choices which lead to success and further distinguish great leaders. Loyalty                                   with far less grace and optimism.                               creating a false sense of security. When people ask me why I
     Management asks Marti Beller questions to better understand who is Behind the Brand?                                                                                                                think we did so well, my instinct is that we have been born
                                                                                                                                         Who are your favorite writers? My favorite writers              and bread as a fast, nimble company. We did not have to
                                                                                                                                         are all business leaders. And those favorite writers change     veer from our core competencies as the economy changed in
      What do you consider your greatest achievement?                    Equally important would be empathy. I think it is
                                                                                                                                         over time. John Maxwell and Stephen Covey have had the          order to meet the challenges inherent in such difficult times.
     Professionally, I became President of ALG at 32 and many         both an innate and a purposeful skill to try to understand
                                                                                                                                         most long-standing impact on the way I approach every
     people would assume that I would list that among my              someone else’s situation, problem or viewpoint. The ability                                                                        What can we expect from ALG in 2009? A lot of
                                                                                                                                         day. One book that I love that was more autobiographical
     greatest accomplishments, but to loosely quote an old            to put yourself in another person’s shoes sets the stage when      than instructional is Carly Fiorina’s book, Tough Choices.      energy. We didn’t weather 2008’s storm, so as other people
     saying, “Getting there was the easy part, staying there…         trying to find win-win outcomes.                                   It strikes me as being more realistic and less self-promoting   are going in to their second year and it feels harder, we still
     now, that has been difficult.” I could easily point to one                                                                          than many books of its kind.                                    have a lot of pent up energy and a lot of excitement for
                                                                      Which talent would you most like to have? I would
     of many product innovations we have made at ALG, or                                                                                                                                                 others to draw from. I could answer in terms of products,
                                                                      like to be able to sing well. I love music. Music is a total       What is your opinion on the current state of the
     the culture that I have helped to create and foster; but                                                                                                                                            and we have plenty of them coming out. We’ve had the
                                                                      mood changer for me. So if I could have brought that to            economy? There is not much that I can say that hasn’t
     when I consider what made that all possible I think it boils                                                                                                                                        biggest product development year in our history in 2008,
                                                                      life, versus just being a benefactor of it, that’s talent that I   been said by so many people more qualified than I am.
     down to the consistency of leadership that has resulted                                                                                                                                             and have done incredible things in terms of new product
                                                                      would have loved to have.
     from staying at one company for 15 years, weathering                                                                                                                                                development. But I think our energy is the highest I’ve ever
                                                                                                                                            I’m clearly not an economist, but I think this downturn      felt it, and I think it’s because we survived so amazingly
     the inevitable storms that come over that time period.           What’s your personal motto? Things turn out best                   is going to last for quite some time. It took some time to      well in a year that so many people have suffered, and that
     Like many, I could have jumped at any point and left             for those who make the best of the way things turn out.            get here, and I think it will take some time to get out. I      has created a huge momentum for us that I don’t think will
     any mistakes that were made behind for someone else to           I believe you can look at most things either negatively            personally see this as a huge opportunity for change. If        stop any time soon.
     correct, but instead I feel they created a platform for the      or opportunistically. It’s not a rose-colored glasses thing,       necessity is what promotes invention, we will be in a very
     next level of professional growth. Over the past 15 years,       because I think I’m very realistic. I just choose to believe       needy time, and through that will come great things where       Word of advice for a novice loyalty marketer? Don’t
     this industry has gone through significant changes, and          there are opportunities in almost every situation, and             people put their minds to use to their maximum ability.         get married to your ideas to the point that you don’t see
     I’ve enjoyed making it through the hard times to savor           that those doors of opportunity open all the time—but                                                                              where it might not be working. I think loyalty marketing
     the good ones. So, interestingly, I think it has been my         many people miss them. Taking those opportunities and                I also think about the economy in terms of the types of       is really hard, and your reputation will be created on the
     commitment and loyalty to a company that I believe in so         making the most out of every single one of them is a non-          programs we run. I think they’ll change slightly. I think       programs you support. If you’re selling something you can’t
     much that brings me the most pride.                              negotiable for my life.                                            they’ll still be very important as consumers will want and      deliver, you will be found out—and it’s close to impossible
                                                                                                                                         need rewards more than ever. However, I think consumers         to come back quickly. I think the cycle of the comeback
     What are the qualities you most admire in a person?              Which person has made the most impact in your                      will move away from a sense of entitlement and more             from a major miss in this industry is 5 to 8 years, and there
     I admire people that are thoughtful regarding their              life? My daughter, without question, has had the greatest          toward a joint alignment of goals between the people            will be many more new novice loyalty marketers in the
     intentions. I fundamentally believe in win-win and I think       impact on me. She made me realize that not all results             offering the rewards and the people consuming them.
     that there are too many times in life where people lose          can be measured in a single day’s time. I became more                                                                              space by then.
     sight of that. Intent matters. People who are thoughtful,        intentional around the legacy I would leave—both                   What were your biggest challenges in 2008?                         Reputation matters, deliver what you say you’ll deliver
     self-aware and will push their creative minds to their limits,   personally and professionally—because of her. It was always        Amazingly, we did not feel the impact of the economy the        and play a niche role if a niche role is all you can be—don’t
     regardless of where those limits are, receive my admiration.     important to me, but she changed the way I approached              way many companies did in 2008. I think our primary             try to be all things to all people. L
     I believe that positive, thoughtful intent leads to positive     it. I have an innate intensity, and for me, results matter.        challenge in 2008 was to not lose sight of the fact that even
     results, even when momentary adversities arise.                  After having my daughter, I became acutely aware, and              though we were enjoying huge success, we are sure to face



12   January 2009   | Loyalty Management                                                                                                                                                                                       January 2009   | Loyalty Management         13
      FEATURES

                                                                                                                                        “We know that our most valuable assets…
     Customer Insulation                                                                                                                 our customers…are constantly exposed
     by Doug Press – The Incentive Group                                                                                                 to competitive offers, pricing discounts,
                                                                                                                                         substitute products, and exposed to
                                                                                                                                         customers buying nothing at all as a
                                                                                                                                         means of achieving cost savings.”


                                                                                                                                        The Engagement Quadrant

                                                                                                                                                                                                         3) loyAlTy—The commitment a customer feels
                                                                                                                                                         Engaged Customers Deliver Results                  towards your Brand or the Relationship with you
                                                                                                                                                                                                            is a function of many factors which you are quite
                                                                                                                                                                               Ambassadors                  familiar with. It is an emotional identification that




                                                                                                                                         understanding
                                                                                                                                                           Bystanders                                       your Customer makes with the Product, Services and
                                                                                                                                                                            Champions                       Relationship you provide. We all measure Customer
     THE WARM AND FuzzY PINK PANTHER is the branded mascot that most often comes to mind                                                                                                                    Loyalty in various ways, most commonly with metrics
     when we mention the word Insulation. Thanks not to Inspector Clouseau (Peter Sellers) but to the Owens                                                                                                 around intent to repurchase and recommend to
                                                                                                                                                           Weak Links                                       others. But, we also have seen that leveraged cross
     Corning brand, this fiberglass form of insulation is the mental association we make at the mere mention of                                                            Loose Cannons
                                                                                                                                                                                                            sell of multiple products from the same brand can
     the word. But in the world of Customer Loyalty, Insulation has a much more profound and economically                                                 Saboteurs                                         drive incrementally higher levels of loyalty across
     valuable meaning. It is the impenetrable marketing fabric we co-create and deftly weave around our                                                                                                     any customer set. It is clear that the most effective
     customers to protect and preserve the relationship that they enjoy with us and our brand.                                                                     Commitment
                                                                                                                                                                                                            Customer Loyalty Program, and supporting initiatives,
                                                                                                                                                                                                            utilize expert structuring and best practices for

     W      HEN YOu THINK about the traditional use of                 Step 1-Engagement, Step 2-Dialogue, Step 3-Loyalty.                2) DIAloGUE—Next we need to establish a basis for                 engendering deeper, more pervasive loyalty across your
            home Insulation, it’s clear that this substance is                                                                               having a meaningful and relevant Dialogue around               segmented Customer Base.
     often applied to areas that are in fact outwardly facing            1) ENGAGEMENT—We begin by looking at the                            the areas of mutual interest with our customer. This
     such as ceilings, walls and floors. After all, they’re exposed.        Engagement Level of customers based on both how                  begins with having a web based Dashboard Loyalty             Why Insulate? Well in these economic times it is well
     Exposed to the elements of everyday environmental                      well they understand our products and services and               tool that “speaks to the Customer”. It has to allow       established in B2B marketing circles that there are arguably
     factors including snow, ice, rain, wind, cold, sunshine and            how committed they are to them. The Engagement                   for timely inbound and outbound communications            fewer new customers to be had. Therefore, one very savvy
     humidity. Now, as we think of our business we know that                Quadrant allows us to plot groups of Customers                   that help to educate, communicate and motivate the        strategy for growth is to reduce your Attrition Rate.
     our most valuable assets…our customers…are constantly                  based on these two axes with the clear intent of                 customer in a manner that is both convenient and          Imagine effectively insulating your customers so we can
     exposed as well. Exposed to competitive offers, pricing                moving them towards the Northeast quadrant and                   comfortable for them. It should cause them to select      drive your Customer Attrition down from 22% to 16%.
     discounts, substitute products (real and perceived) and                making them Brand Ambassadors. Not meant in any                  a goal for themselves then measure progress on an         All other things being equal, this would result in a 6% year
     especially true in recessionary times, exposed to customers            pejorative sense, but our failure to effectively engender        easy to read Gauge. The Dashboard should bring            over year growth in your business!
     buying nothing at all as a means of achieving cost savings.            our customers understanding and commitment can                   forward relevant information that they are intrigued
     Therefore, it is totally logical that we take on, as a primary         lead to brand sabotage. After all, people are media,             by on a regular basis, presented in a compelling and        With customers tightly insulated from competitive
     responsibility of the Enterprise, the task of creating                 and to the extent we can delight them with our brand             timely manner. Selecting rewards that the customer        pressures, dramatic reductions in attrition and the
     Insulation around our Customer.                                        experience and the relationship they have with us,               finds uniquely motivating to them is a critical           aforementioned growth are not only possible…but the
                                                                            their proclivity to act virally…by touting our brand             success factor. Finally, a good Dialogue allows for the   buzz fostered by the comfort of Insulation will have some
       How do we create Insulation? It is not one thing that we             and referring others…is greatly enhanced.                        assigning of urgency to those behaviors that are of       new customers itching to get their head wrapped around
     do but rather is the end result of 3 disciplined processes;                                                                             greatest importance to your Brand.                        your offerings. L



14   January 2009   | Loyalty Management                                                                                                                                                                                    January 2009   | Loyalty Management       15
      FEATURES



     True Loyalty in Tough Times
     by Steve Yastrow – Yastrow & Company




      Everyone is trying to steal your customers.
      And, with the current economic climate, you can bet that your
      competitors will step up their efforts to pilfer your customers.

      So, what are you going to do?
      To answer this question, let’s first think about another question:
      Why wouldn’t a customer leave you for a competitor?

                                                                                                                                    I
                                                                                                                                        ENCOuRAGE YOu TO think about a more valuable                               transcend promotional offers. This customer
                                                                                                                                        type of loyalty than Transactional Loyalty. Consider                       will be an example of True Loyalty.
                                                                                                                                        True Loyalty, where a customer is not only loyal to
                                                                                                                                    your promotional offers, but is loyal to you and to her                           At their best, loyalty programs and


                                                                   S
     IS IT YOUR PRODUCTS? Are your products so unique                     O, WHAT MAKES the best customer relationships?            relationship with you as well. True Loyalty is much more                       promotions eventually create their own
     enough that no competitor can offer a substitute?                    When the customer can’t think about you without           sustainable than Transactional Loyalty.                                        obsolescence in customers’ mind. Sure,
                                                                          also thinking of themselves—“We” relationships.                                                                                          customers like the rewards. But their
     YOUR SERVICES? Are your services really one-of-a-kind?                                                                            How do you create “We” customer relationships that          reasons for buying go well beyond the rewards. I am
                                                                     What happens when customers believe they are in a              result in True Loyalty?                                        writing this article on a united Airlines flight from
     WHAT ABOUT YOUR PROMOTIONS AND OFFERS?                        “We” relationship with you? They are loyal to you and to                                                                        Chicago to Frankfort. I guarantee you that the most loyal
     Are they special enough to bond customers to you?             their relationship with you.                                        Every relationship in your life was built one interaction   1K flyers (what is that?) sitting in first class appreciate the
                                                                                                                                    at a time. If you have enough relationship-building            miles they are earning for this flight but, even more, they
       We live in a world of crowded store shelves and endless        Notice what I wrote. They are loyal to you and to their       encounters with someone, you will eventually have a strong     appreciate their relationship with the airline. On the other
     purchase choices. Your customers believe there is always      relationship with you. I specifically did not say that they      relationship with that person.                                 hand, those frequent flyers on this flight who are less loyal,
     another product, service or deal they can substitute for      are loyal to your loyalty program, or loyal to your weekly                                                                      and booked united primarily for the miles they will earn,
     yours. You may believe your offerings are unique, but your    coupon offers, or loyal to your frequent buyer program. I          Which brings you face to face with a very important          are those who have only a transactional relationship with
     customers may not agree.                                      said they are loyal to you and to their relationship with you.   question you must ask about your current loyalty efforts:      the company. American Airlines could probably steal this
                                                                                                                                    What do our loyalty programs and promotions lead to,           second group if they made a rich enough offer.
      What do your customers think is unique about you?              This distinction is very important. We often lull ourselves    more promotions or stronger relationships?
     What is it they “can’t get anywhere else?”                    into a belief that we have a loyal customer just because                                                                           Which brings us full-circle to my opening comment.
                                                                   the customer buys whenever we make them an offer. But               If your loyalty programs become a dependency for your       Everyone is trying to steal your customers. As we fall
        I spend a lot of my time helping companies differentiate   this customer’s loyalty may be fleeting, and she may leave       customers, without which they would have no reason to          deeper into an uncertain economic abyss, there is no asset
     themselves in their customers’ minds. What I see, time        you as soon as a competitor makes her a better offer. I          buy from you, you have created Transactional Loyalty that      more valuable to you than your customer relationships
     and time again, is that when people feel passionate about     call this “transactional loyalty,” when a customer is loyal      is vulnerable, fragile and weak. Take away the promotions,     and the loyalty that comes out of those relationships.
     doing business with a company, when they say, “I can’t get    to your promotional offers, but is not really loyal to you.      and you have taken away your customers’ reasons for            If you want to thrive in 2009, focus on creating True
     it anywhere else,” it is usually because they have a strong   Transactional Loyalty is a fragile type of loyalty. And, it is   buying. If, on the other hand, your loyalty programs and       Loyalty, where every offer you make and every reward you
     relationship with that company. Simply put, relationships     the type of loyalty most companies are trying to cultivate.      promotions are building blocks of a We relationship,           give lead not just to more offers, but to sustainable We
     are the best differentiators.                                                                                                  your customer will develop reasons to buy from you that        relationships and True Loyalty. L




16   January 2009   | Loyalty Management                                                                                                                                                                                 January 2009    | Loyalty Management        17
      FEATURES                                                                                                                                                                                                                                                         Questions
                                                                                                                                                                                                                                                                       that need to be

     Loyalty: a “Symbiotic System”                                                                                                                                                                                                                                     addressed include:
                                                                                                                                                                                                                                                                       n What links the program for

     Not a Program                                                                                                                                                                                                                                                       the consumer back to the
                                                                                                                                                                                                                                                                         employee?

     by Paul Hebert – i2i                                                                                                                                                                                                                                              n Do the consumers have a way
                                                                                                                                                                                                                                                                         to interact and reward great
                                                                                                                                                                                                                                                                         customer service? Does your
                                                                                                                                                                                                                                                                         employee recognition program
                                                                                                                                                                                                                                                                         include customer input?
     Customer loyalty has been around for some time—over 100 years according to some sources.                                                                         No one runs the strategy that links           to consumers must take into account
     Starting with stamps given to customers who paid cash for purchases in the 1800’s to the more                                                                  these initiatives together. Now is the          that for a majority of businesses,
                                                                                                                                                                                                                                                                       n Do consumers have a way to
     formal programs such as Green Stamps and the well-known frequent flyer programs of today.                                                                      time to make that happen.                       consumers probably interact more
                                                                                                                                                                                                                                                                         interact with each other? Can
     Some studies indicate that over 75% of consumers belong to a loyalty program of some kind.                                                                                                                     with the distribution channel than the
                                                                                                                                                                                                                                                                         one customer drive another
     A Jupiter report from 2003 showed that companies spent over $1 billion on loyalty programs.                                                                    It’s a Symbiotic System—                        sponsoring companies themselves.
                                                                                                                                                                                                                                                                         customer’s behavior? How
                                                                                                                                                                    not a Program
                                                                                                                                                                                                                                                                         are you leveraging the social
                                                                                                                                                                                                                    It’s the White Space
     LOYALTY IS BIG BuSINESS. Customer loyalty is the                     Human Resources can now focus on employee loyalty                                            Loyalty is a system of initiatives that                                                           networking aspect of the new
     holy grail of marketing. If a company has loyal customers            and satisfaction and feel like they are contributing more                                 connect to, and rely on each other to             There is a lot of information and                  economy?
     their cost of customer acquisition almost disappears,                to the business than just making sure W-4 forms are                                       be successful. Individually, programs           there are a lot of companies that provide
     price sensitivity is reduced, customers’ tolerance for               completed. unfortunately—they don’t talk much. There is                                   can work—and work well. When you                loyalty program services from design               n Do      non-customer       facing
     mistakes increases and the company realizes higher profits.          no connection between what the HR department is doing                                     think of your programs in terms of              and reward fulfillment through data                  employees understand the
     Customer loyalty is good business.                                   to drive loyalty and engagement with employees and what                                   a symbiotic system you can multiply             analysis and business intelligence.                  loyalty program? Do they know
                                                                          Marketing is doing to drive loyalty with consumers. But                                   the affect of any one program to                                                                     what their role may be in driving
       Because customer loyalty drives so many great business             let’s really complicate this—Sales (sometimes Marketing)                                  create results that are greater than the                                                             loyalty?
     benefits it’s no surprise that the industry continues to             typically has the responsibility for driving sales within a                               individual results of each program.
     grow—more programs, more offers, more rewards, more                  distribution system—dealers, distributors, wholesalers,                                                                                 “A true loyalty                                      n Does the distribution channel
     points. But we’re not really getting all we can out of loyalty.      etc. There are a variety of promotions and incentives
                                                                          offered to distribution channels to drive sales. Sometimes
                                                                                                                                                                       By definition, symbiotic systems
                                                                                                                                                                    are any interdependent or mutually             strategy is symbiotic.”                               have a way to connect to
                                                                                                                                                                                                                                                                         employees at the sponsoring
     Service Profit Chain                                                 called “frequent buyer programs,” sometimes they are                                      beneficial relationship between two                                                                  company?
                                                                          hidden within “co-op” programs. By whatever form they                                     persons, groups, etc. A true loyalty
        Way back in the dark ages (1997) an idea called the
                                                                          are presented, they bear an eerie resemblance to loyalty                                  strategy is symbiotic. If you’re really         There are also a lot of companies who              n Are the members of the
     Service Profit Chain was proffered by some Harvard
                                                                          programs—do “x” get “y,” hit a goal and be crowned a                                      serious about loyalty with your                 can put together a great employee                    distribution channel consulted
     academics—Heskett, Sasser, Jr. and Schlesinger—linking
                                                                          “Gold” member.                                                                            customers—you then must also                    recognition program designed to                      on how the customer loyalty
     customer loyalty to employee loyalty and customer
                                                                                                                                                                    be serious about loyalty with your              increase engagement. Distribution                    program is designed and
     loyalty to profits and growth. Their basic premise was that
                                                                           But alas, and a lack—they aren’t connected. In other                                     employees and distribution partners.            incentive programs are very common                   delivered?
     customer loyalty was driven by employee loyalty, customer
                                                                          words…                                                                                                       One without the              and can be implemented easily. Each
     satisfaction was driven by employee satisfaction and profit
                                                                                                                                                                                       other is incomplete          of these discrete pieces can be designed           n Do members of the distribution
     was driven by customer loyalty. The typical representation
                                                                             n HR runs employee loyalty programs                                                COnSuMeR               and less effective.          and implemented flawlessly—and                       channel have any way to
     of this idea was a “chain of events” that led to profit.
                                                                             n Marketing runs consumer loyalty programs                                                                                             effectively. But it is less about the                customize     the    consumer
     This revelation drove an increase in attention on employee
                                                                             n Sales runs distribution loyalty programs                                                                   The loyalty               individual pieces than the white space               program for their audience?
     satisfaction and employee loyalty.
                                                                                                                                                      CHAnneL            eMPLOYee      strategy is less a chain     that is between them.                                (Within the scope and strategy
                                                                                                                                                                                       than a network,                                                                   of the base program of course.)
     Separate But Equal
                                           Serv ic e                                                                                                                                   with interactions              Do yourself a favor and look for ways
                                                           Internal                                          Employee                     Perceived
       The Marketing Department            P ro f i t      Service                 Employee                 Retention &                    Value of                 between all audiences. Loyalty                  to connect the white space between                 n How does the program pull
                                                                                  Satisfaction
     typically drives the customer         Cha in          Quality                                          Productivity                   Service                  strategies must take advantage of               your programs; take advantage of the                 in the channel members and
     loyalty program and helps the                                                                                                                                  the fact that employees not only                symbiotic nature of loyalty and enjoy a              make them want to support the
     business drive sales. With the                                    Profit &                  Customer                   Customer                                deal with consumers but with the                greater return on your program. L                    consumer program?
     new-found connection to profit                                    Growth                     Loyalty                  Satisfaction                             channel partners and vice versa. In
     through the Service Profit Chain,                                                                                                                              addition, loyalty programs targeted



18   January 2009   | Loyalty Management                                                                                                                                                                                                                        January 2009   | Loyalty Management   19
      FEATURES

                                                                                                                                  “Comp Customer metrics provide
     Comp Customers,                                                   TM
                                                                                                                                   visibility into how individual customers
     a Better Customer Metric                                                                                                      are spending...{this} provides insights
                                                                                                                                   into which customers are trending up
     for Managing the Business                                                                                                     and which ones are trending down...”
     by Phil Rubin – rDialogue




     T                                                                                                                            L
          HERE IS A fundamental difference between metrics            With these data in hand, there is a much better metric            ET’S START WITH “Smart Stores” which is                       unlike Smart Stores, “Typical Stores” is resorting to the
          that report on the business performance (i.e., how       to focus on: Comp Customers.                                         facing comp sales declines of 15%. Let’s assume           old mass marketing, spray and pray, discounting approach.
          are we doing?) versus metrics that enable you to                                                                              their performance is on par with their competitors.       This approach yields the same offer and deep discount to
     manage the business (what do we do?).                            Comp Customer metrics are similar to Comp Sales             Everyone has a loyalty program and everyone is basically        everyone, including those customers that are continuing
                                                                   metrics, but don’t confuse the two. Comp Sales measures        running the same program (just like real life!).                to shop in spite of the downturn. While they might have
         Take retailers, for example, who are struggling with      comparable stores sales over prior periods; it measures                                                                        slightly higher sales at the end of the period, they will erode
     double digit sales declines over the critical Holiday         changes in the total revenue. It does not reflect changes at      Just like their competitors, they know that sales are down   profitability by offering deeper discounts than necessary to
     period. The metric they follow, along with investors,         the transactional or customer levels.                          in Region A and B for products X, Y and z. But unlike its       customers that would have shopped anyway (i.e., dilution).
     is “comp sales,” or comparable same-store sales. For                                                                         competitors, Smart Stores just developed Comp Customer
     loyalty programs, there are similar numbers for program                                                                      reporting. using a proprietary customer segmentation
     performance; metrics such as “total program spend,”            “The value of loyalty programs rest in the                    scheme, they divide customers into four key groups and
     membership figures (growth, attrition, etc.) and now            ability to track and manage customers.”                      assign each customer to one of those four groups.                “There is a way for retailers to impact declines
     Net Promoter Scores (NPS).                                                                                                                                                                     more profitably: with the right loyalty tools
                                                                                                                                     Analysis of activity among those four segments shows that      and Comp Customer analysis on hand.”
        NPS is the loyalty metric most in vogue these days and        In contrast, Comp Customer metrics provide visibility       two out of four segments actually show increases, with one
     while it’s a good, high-level metric for measuring broad      into how individual customers are spending compared to         segment performing significantly higher than the others.
     customer “loyalty” (and significantly better than Customer    a previous period. Comp Customer measurement provides
     Satisfaction), it’s not effectively used as a management      insights into which customers are trending up and which           Based on this knowledge and their ability to send email          The real value of a loyalty program, and loyalty
     tool. A promoter doesn’t necessarily equate with a valuable   ones are trending down, and by how much. This allows           to customers, Smart Stores decides to send different email      marketing, comes in using the data and the program to
     customer. Comp Sales can identify dips in sales by region     marketers (and others in a company focused on driving          versions to each segment, messaged different based on how       do better relationship marketing through better insights.
     and by product, but that doesn’t give an indication of        sales) to look at individuals and groups of customers (e.g.,   each segment is doing from a Comp Customer standpoint.          The Comp Customer metric provides that window of
     how to fix the problem, other than mass promotion (i.e.,      segments) in terms of spend and trend. With these insights,    They smartly provide a richer offer to those customers with     insight into how customers are behaving and who we
     discounting).                                                 they can then treat them differently in terms of messaging,    negative comps, knowing that it will take more to win           want to target to behavior differently. In any market, but
                                                                   offers and timing of communications.                           them back.                                                      especially a tough economic market, it’s a vital tool in
        These days, most retailers have loyalty programs and                                                                                                                                      prioritizing limited resources to drive customer behavior
     store-branded credit cards, giving them insight into              So while many retailers struggle and default to mass          To those customers in the best performing segments,          at the greatest profit. L
     spending at a customer level. The value of loyalty programs   promotion, there is a way for them to impact declines more     they employ a message more focused on reasons to shop,
     rest in the ability to track and manage customers. The        profitably: with the right loyalty tools and Comp Customer     new merchandise and a more value-added offer, rather
     data yielded from programs, along with the ability to         analysis on hand. The following real world scenario            than a deep discount. They even recognize and thank
     relevantly communicate with customers is the power            illustrates the value of using Comp Customer metrics to        these customers for continuing to patronize them and
     that is increasingly overshadowing effectiveness (and         guide marketing decisions and investments.                     reinforcing their core value proposition.
     measurability) of other marketing activities.




20   January 2009   | Loyalty Management                                                                                                                                                                                January 2009   | Loyalty Management         21
      FEATURES



     Dialing in on Relevance
                                                                                                                                     In order to do this effectively, you must carefully listen         of consulting with an investment group. Some
                                                                                                                                  to how your customers are phrasing their talk around                  customers view the term “investment” as riddled
                                                                                                                                  your category, products, and services. Don’t judge their              with risk. Therefore, any mention of “investment”
                                                                                                                                  choices, embrace them. After all, your goal is to learn               in messaging will turn them off right away. To keep
     by Connie Chesner – OTM Partners                                                                                             about the world from THEIR perspective and to then                    customers engaged, the message must be relevant
                                                                                                                                  mirror that back to them through your communication                   and individually tailored.
                                                                                                                                  choices. Because this can be difficult to do, trained
      T H I N K L I K E YO U R AU D I E N C E . TA L K L I K E YO U R AU D I E N C E .                                            researchers are often brought in for their active listening        Knowing how best to segment and customize
      As customers we all have been on the receiving end of some really bad marketing. We’ve seen                                 and interpretation skills which reveal language choices            communication to an audience based on motivational
      marketing communication that clearly misses the mark. Whether it is the direct mail package from                            and patterns of the audience which can later be engaged            triggers can be a challenging task. Identifying existing
      your existing credit card company treating you like a brand new prospect, or the poorly timed                               during message design.                                             customer segments through conversation is the
      “would you like an apple pie with that?” you hear just after ordering a salad—we know what an                                                                                                  first step—an actionable step toward making your
      irrelevant message is and what it does to your perception of a brand.                                                        Caution: Know your own voice.                                     messaging most effective. Then develop a strategy to
                                                                                                                                                                                                     get the right messages to the right customers. Your
                                                                                                                                     Does this mean you should inject “dude” into every
                                                                                                                                                                                                     strategy will vary based on the specifics of your project
      TO HIT THE MARK, a message must be relevant to              most valuable in effective communication. understand            communication? Should you defer to using slang or even
                                                                                                                                                                                                     and objectives, but will get your brand noticed and
      consumers. But what are the hallmarks of relevancy?         how customers think about your category and then your           crass language because of common usage among your
                                                                                                                                                                                                     promote loyalty among your customers.
      How can we be sure that our communication is on             product, service or brand. How do they make decisions           target audience? Of course not. The important thing to
      target? And what are the associated benefits for your       specific to your category? For instance, someone who            remember is that relevance is about context—how your
                                                                                                                                                                                                     2. Use customer conversations to help you assess their desires,
      product, service or brand?                                  values independence is driven by different motivations          target audience thinks, talks and makes decisions and how
                                                                                                                                                                                                        then improve your current offerings to better align with
                                                                  in making financial decisions than someone who places           this impacts their perceptions of your brand and how your
                                                                                                                                                                                                        your target audience. For example, in a healthcare
         When a message truly connects with its intended          a greater value on family security and work ethic. When         brand is expressed via different communication channels.
                                                                                                                                                                                                        setting, it was found that minor changes could be
      audience there are two principles at work. Relevancy is     underlying motivations for the same action are different,                                                                             implemented in routine patient-staff interactions
      achieved when:                                              uniform messaging will not be very effective.                 Don’t judge your customers’ choices, embrace them.                      to greatly improve the patient experience, thereby
         n We think like our audience                                                                                                                                                                   increasing satisfaction, loyalty, and advocacy. A sports
                                                                     By taking the time to truly understand your                                                                                        nutrition distributor learned that retail customers
         n We talk like our audience.                                                                                                Thinking like your customers and picking up on
                                                                  customer’s motivational drivers via these conversations,                                                                              desired to have persons educated on product offerings
                                                                  your efforts will be appreciated and rewarded. Engaging         language cues can help you understand how to make a
                                                                                                                                                                                                        to make deliveries to their locations. By making a
      How to get started: think and                               customers in a meaningful dialogue and then messaging           compelling connection between your brand and your
                                                                                                                                                                                                        small change in operations, great gains in customer
      understand.                                                 back to them in terms they are familiar with, creates a         audience. However, what you say and how you say it
                                                                                                                                                                                                        satisfaction and loyalty were made.
                                                                  sustainable point of differentiation. When customers            must also be brand appropriate. Otherwise, you end
         Learning how to think and talk like our audience
                                                                  know they have been heard, they will flock to your              up with a transparent attempt that panders to your
      begins when you engage consumers in strategic                                                                                                                                                  Once changes have been made to align with customer
                                                                  brand.                                                          audience—a mistake that most audience segments will
      conversations with two overarching strategies. First,                                                                                                                                       desires, communications to existing customers and
                                                                                                                                  recognize and reject.
      determine who to talk to. You need a diverse group of                                                                                                                                       prospects alike can inform them of the availability
      customers to ensure that the insights gleaned from your        The idea is to know what to ask, how to ask it,                                                                              of desired products and services in language they
      conversations are applicable across your markets. Next      and then develop your marketing communications                   Take the process further.                                      understand. With little effort, your product or service
      use trained researchers to ask pointed questions and        accordingly.                                                       Now that you are thinking and talking like your              now aligns with customer desires making your offering
      probe for information in areas of additional insight.                                                                       audience, what can you do to move these ideas into              closer to customers’ ideal image than the offerings of
      Leave bias out of the conversation by engaging outside      Then talk in a familiar voice.                                  actionable strategies that can improve your business?           your competitors.
      resources not entrenched on a day-to-day basis with            Your customers likely do not think about your                Consider these two general approaches.
      your industry. During analysis, look for commonalities      products, service or category in the same way that you                                                                              In the end, the goal is to make consumer messages
      in thoughts and language across customer segments.          do. The words and phrases they use will vary, sometimes            1. You now understand that your customers do not             highly relevant. When marketing messages are highly
                                                                  dramatically, from yours. For instance, most customers                think and talk about your products, services or           relevant and brand appropriate, the connection is
          In structuring your conversations you may end           do not use phrases like “financial instrument,” “service              category the same way you do. Also, your customers        made with your brand and the relationship begins. By
      up asking questions similar to those that led to the        area,” or “share of requirement.”                                     probably differ from one another in terms of how          continuing to use highly relevant messaging over time,
      development of your products and services. In addition,                                                                           they talk and think about your products, services,        the relationship will evolve and customer loyalty will
      you’ll delve into customer psychology getting to the core       Relevance comes when we actively seek to understand the           or category. Often you can segment customers based        emerge. But it all starts with a conversation and careful
      of what really makes them tick, even in areas of their      customer’s language and adopt it in our communication.                on motivational drivers and the language they             listening which focuses on your customers and what it’s
      lives which may seem only tangentially related to your      It is about moving from corporate-speak to a tone and                 prefer. For example, not all customers within the         like to live in their worlds. L
      products or services. These areas often prove to be the     voice that customers can respect and relate to.                       same financial institution are enticed by the idea




22   January 2009   | Loyalty Management                                                                                                                                                                                  January 2009      | Loyalty Management       23
      FEATURES



     What is Loyalty and
     How Can I Get Some?
     by Kelly Passey – Access Development




        Today’s consumer is savvy enough to know that just
        because you say it’s a deal, doesn’t mean it is a deal.

                                                                                                                                    O
        If you want real loyalty, deliver real, relevant value—and                                                                            NLY CREATING A true emotional connection can           principle, many loyalty programs have evolved that require

        make sure redemption is frequent and encouraged.                                                                                      remedy loyalty fatigue, and luckily, delivering true
                                                                                                                                              loyalty has a simple formula: 1) know your customer,
                                                                                                                                                                                                     program administrators to discourage redemption to
                                                                                                                                                                                                     keep the programs solvent. Ironically, this is currently the
                                                                                                                                    2) deliver true value and 3) keep your program simple.           standard model for much of the financial sector.




     I
                                                                                                                                       First, know your customer. Take a look at your                   This phenomenon disregards a fundamental factor to
         MAY HAVE OVER 40 ties in my closet, but not all are         u.S. now participates in upwards of 12 loyalty programs,       loyalty program. What is the emotional tie? Have you             loyalty—redeemers outspend non-redeemers three to one.
         created equal. I am most loyal to the one my daughter       but is the average household a very loyal household? Or,       assumed that your customer must want points, simply              It is not the existence of an incentive that will get customers
         gave me two years ago for Fathers’ Day—it’s 100%            more likely, is this 12-program phenomenon an indicator        because you created a points-based program? What                 to bring you more business, it is the redemption of that
     polyester, probably from K-Mart, and may have cost as           that people are still looking for the right deal and haven’t   does your customer think is important? Yes, the answer           incentive. A successful loyalty program both encourages
     much as three dollars. However, there is an ‘emotional tie’     found it yet?                                                  is different for everyone, but there are some universal          redemption and drives revenue. In a very successful
     to that tie that does it for me.                                                                                               favorites: We all like to save time. We all like to save         program, redemption directly drives revenue.

        In the marketplace, I like to define loyalty as the         “If every program truly delivered                               money. We all like to feel smart. We all like a good deal.
                                                                                                                                                                                                        Keep any rewards/loyalty program simple. Value
     increased likelihood a consumer will engage or re-engage
     with a brand or product upon an identified need. Put            a real deal—‘loyalty fatigue’                                     For example, a few years ago HSBC created a Cab
                                                                                                                                    ride program in NYC to help customers get to the bank’s
                                                                                                                                                                                                     your customers’ time. Don’t make them count points or
                                                                                                                                                                                                     accrue miles for years. Save them money without requiring
     simply, loyalty means new business, repeat business and
     referrals—loyalty means revenue. If your loyalty program
                                                                     simply wouldn’t exist.”                                        branches. That one cab ride probably created more loyalty        them to jump through hoops. Make them feel smart
                                                                                                                                    than could any number of points or miles. The program            because they got a great deal, not just because they finally
     isn’t having an impact in these areas, it’s time to reassess                                                                   was personal, practical and memorable, and it earned             figured out how your loyalty program works.
     that emotional tie.                                               Effective loyalty programs do have significant power         HSBC an emotional tie with its customers. HSBC got
                                                                     to influence purchasing behavior, with 80% of those            to know their customers—and they offered them a good                An easy-to-use program simply increases the redemption
        Loyalty methods vary widely and many venture into            who participate in a loyalty program reporting that their      deal. And, although this approach may seem pricey, if you        factor, which in turn increases the power of your loyalty
     staggering complexity, yet too many of them disregard           membership in the program impacts their purchasing             consider loyalty for the buck, it surely compares more           program. If you want repeat business, give repeat rewards.
     their fundamental purpose—to ‘emotionally’ connect              decisions. In fact, 60% of consumers say they are spending     favorably than your average banking loyalty program.             If you want frequent business, give frequent rewards. If you
     with the customer. Simply having a loyalty program isn’t        27% more than they did before joining their favorite                                                                            want customers to think of you first, then think of them
     enough, it must offer the customer relevant value and           loyalty program, and would spend less if a company were           Next, deliver true value. Today’s consumer is savvy           first, by valuing their time, money and intelligence with a
     make them feel special frequently enough to actually            to discontinue.                                                enough to know that just because you say it’s a deal, doesn’t    practical program that promotes brand redemption—and
     create the ties that bind.                                                                                                     mean it is a deal. If you want real loyalty, deliver real,       therefore, brand allegiance.
                                                                       So, why the fatigue? Consumers keep adding yet another       relevant value—and make sure redemption is frequent and
        Offering true value is important, because a customer         program into their wallets—even as they are literally awash    encouraged.                                                        Offer real value. Encourage redemption regardless of
     never tires of getting a deal. They never stop wanting to       in a flood of points, miles, beans, xyz-bucks and pennies                                                                       your ‘currency’. Make it easy, and make it often. In this
     feel smart or special. Getting a good deal feels good and it    on the dollar rewards all in the name of “Loyalty.” Put           A healthy loyalty program brings you “goodwill dollars”       economy, it has never been more critical to refocus on these
     never gets old—“deal fatigue” just doesn’t exist.               simply, not every program delivers the deal it promises,       when the customer is rewarded—you invest in an incentive,        fundamentals and create that emotional tie—the one that
                                                                     and customers are getting soured on that. If every program     and the return comes in the form of repeat business,             will bind your customer to you for years to come. L
       Contrast that with “loyalty fatigue,” an increasing           truly delivered a real deal—“loyalty fatigue” simply           referrals, or a larger purchase. Despite this fundamental
     buzzword in our industry. The average household in the          wouldn’t exist.



24   January 2009   | Loyalty Management                                                                                                                                                                                   January 2009    | Loyalty Management        25
           FEATURES                                                                                                                          TRENDS & REWARDS


          How Do I Value My                                                                                                                 Gift Cards in a
          Rewards Program?                                                                                                                  Down Economy
          Let me count the ways…                                                                                                            by Deb Merkin – Gift Card Partners

          by Sarah Phelps – First Annapolis Consulting




            L                                                                                                                               W
                  AuNCHING AND SuSTAINING a rewards                            to its sponsor. Not only should the revenue over time               E AGREE, we’re in a down economy. Budgets are
                  program requires investment, focus and above                 of the relationship be considered but also the cost of              being stretched or eliminated, customer behavior             “Gift cards have both “trophy”
                  all, patience. Once in market, the only way the
            program is optimized is if the sponsor utilizes marketing
                                                                               replacing that customer in the event that they do attrite.
                                                                               In addition, the number of products carried by the
                                                                                                                                            is harder to predict, and getting the biggest bang for the
                                                                                                                                            buck is more important than ever.
                                                                                                                                                                                                                 and “halo” value. Recipients are
            and other resources to call attention to the program and           customer, or the number of incremental visits is also                                                                             reminded of how the card was
            remind current members and prospects of the benefits of
            being a “loyal” patron of their business.
                                                                               important to include.                                          A down economy can certainly have an impact on                     acquired when they redeem it or
                                                                                 Another example, but perhaps the hardest to
                                                                                                                                            any loyalty program. However, unlike other sales and
                                                                                                                                            marketing programs, loyalty programs have historically
                                                                                                                                                                                                                 share it with family or friends.”
               Today’s environment has all program sponsors, financial         quantify, is the marketing value of various forms of         endured economic downturns. A recent Incentive Research
            institutions and retailers alike, evaluating each line item        communications that the rewards program supports.            Foundation (IRF) study, “Effects of a Down Economy on
            of expense in their business looking for ways to generate          Each statement, e-mail and web visit supported by                                                                              gift they really want. Berg added, “As you’d expect, we are
                                                                                                                                            the Incentive Industry,” looks at ways incentive program
            savings that go straight to the bottom line. Certainly             the rewards program would have to be replaced by                                                                               finding the most popular redemptions are a mix of brands
                                                                                                                                            administrators are adapting their travel and merchandise
            rewards program reserves and administrative expenses are           another, less permissive, and often more costly, form of                                                                       that provide “everyday needs” like gas, groceries, discount
                                                                                                                                            incentive programs in response to current economic
            not immune to such scrutiny and can be an easy target              communication that equally impacts member awareness                                                                            merchandise and home improvement items, yet we are
                                                                                                                                            conditions.
            for financial analysts. After all, it really is just returning a   of the program and the sponsor’s value and brand.                                                                              also seeing an increased interest in experiential rewards
            portion of precious margin to customers…or is it?                                                                                                                                                 that provide a reprieve from life’s daily demands!”
                                                                                                                                               Results of the survey show that a down economy has
                                                                                  This is not to say that opportunities do not exist        more of an impact on travel incentive programs than on
                                                                               to reduce rewards program costs. There are several                                                                                For consumer promotions you can tap into the versatility
“Financial analysts have a tendency to underestimate the value                                                                              merchandise non-cash programs. Some 81% of survey
                                                                               strategies such as segmenting programs to target top                                                                           of gift cards to stimulate trial purchase, stimulate repeat
                                                                                                                                            respondents say that a down economy is having a negative
 that an organization garners from a rewards program.”                         tier customers with the most compelling value. There is                                                                        purchases, stimulate larger purchases, introduce a new
                                                                                                                                            impact on their ability to plan travel incentives, while
                                                                               also the potential for adjusting redemption options or                                                                         brand, combat or disrupt competitors, reward employee
                                                                                                                                            only 48% say that it’s been harder to plan and implement
              Financial analysts have a tendency to underestimate              raising redemption costs. Adding a nominal membership                                                                          performance. Gift cards have both “trophy” and “halo”
                                                                                                                                            merchandise non-cash programs.
            the value that an organization garners from a rewards              fee is also an option to consider. The impact of any of                                                                        value. Recipients are reminded of how the card was
            program. Financial institution sponsors will look at               these changes however, needs to be closely monitored to                                                                        acquired when they redeem it or share it with family or
                                                                                                                                               “We are certainly seeing a significant increase in gift card
            per card performance for rewards and non rewards                   quantify their impact on customer revenues.                                                                                    friends.
                                                                                                                                            redemptions in all of our client’s programs. In addition to
            customers, compare interchange revenues, net out                                                                                having a broad choice of appealing cards in our programs,
            the rewards reserve rate, and call it a day. Retailers,              At the end of the day, the value of a rewards program                                                                           Gift Cards are here to stay. Even as the retail market
                                                                                                                                            the economic downturn has accelerated redemptions in
            on the other hand, sometimes limit their evaluations               and of the customers participating in it should be                                                                             struggles, at this difficult time, consumers value Gift Cards
                                                                                                                                            general,” shared Nancy Berg, Vice President of Operations
            to average sales per ticket, net out in-store discounts            carefully evaluated before employing any cost cutting                                                                          from the right merchant. using them can enhance your
                                                                                                                                            at Kobie Marketing.
            provided to rewards members and look no further. In                measures. Those evaluating rewards program costs should                                                                        program more than any other vehicle.
            each case, the broader benefit of the rewards program is           look to the items mentioned above and consider others           Since most survey respondents agree that the use of gift
            underestimated, potentially…grossly underestimated.                that may be unique to their organization. One potential                                                                          An additional tip from Berg, “As a buyer we are far more
                                                                                                                                            cards is increasing, certainly you should be looking at ways
                                                                               challenge in all of this is the availability of behavioral                                                                     conscious about the brands we are working with and the
                                                                                                                                            to use closed loop gift cards to your advantage. A closed
               There are several additional elements of rewards                data to support such an analysis. Those embarking on                                                                           inventory levels we are carrying… we believe it’s important
                                                                                                                                            loop card is one that is issued by a specific retailer. Looking
            program value to consider. Perhaps the most under                  a new program construct should carefully consider the                                                                          to differentiate your value proposition through these
                                                                                                                                            at these cards there are those that can be used to purchase
            recognized with the greatest potential impact is customer          data points that will be necessary to support continued                                                                        rewards. We anticipate customers will find loyalty/rewards
                                                                                                                                            everyday consumables like gas, food, and those that can
            attrition. The length of a rewards customer relationship           program analysis such that the program’s performance                                                                           programs increasingly appealing as a way to supplement
                                                                                                                                            be used to purchase wished for items like electronics,
            as compared to a non-rewards customer can be eye                   can continually be measured. L                                                                                                 their income and enjoy access to value-added discounts
                                                                                                                                            travel, dining, or apparel. Because gift cards have become
            opening to skeptics of the value of rewards programs                                                                                                                                              and other benefits.” L
                                                                                                                                            so prolific they give the recipient the freedom to choose a



    26    January 2009    | Loyalty Management                                                                                                                                                                                     January 2009   | Loyalty Management        27
      TRENDS & REWARDS



     Get the Most Benefit
     out of Your Travel Program
     by John Miller – Connexions (CLTS)



     The Travel Industry of America (TIA) reports 2008 overall travel spend to be down 9% with
     2009 dropping even further. So what does this mean for loyalty travel? The answer might
     surprise you. Although there has been a decrease in travel demand across all travel sectors,
     leisure, business and incentives, loyalty travel program members have remained committed to
     their program and continue to value how far their points can take them.




     I
          N TOuGH ECONOMIC times program members                   searching various websites and making travel reservations      enables a customer to utilize their reward currency toward       or brand to try to distinguish the reward. The travel
          look to the value of their program to stretch their      online. It is very American to “do it yourself ” and online    any travel product (air, car, hotel, cruise, etc.) The message   supplier network is very upfront with item costs and the
          spending. Industry statistics show general purchase      redemption tools provide that service. Loyalty programs        from customers is clear, when the cost of travel goes up, I      sheer number of travel web sites makes masking a ticket
     travel is down, however loyalty travel remains strong as      can also reduce fulfillment costs by using online booking      don’t expect my reward program to carry the entire burden,       cost nearly impossible. Due to the clearly visible product
     members use their points to take that trip they may have      tools which shift travel redemptions away from high            but look to my reward program as a savior that enables me        pricing working with a provider of scale will only benefit a
     just purchased in good economic times.                        cost call centers. Call centers will still be required for     to take a trip that I otherwise couldn’t afford on my own.       program.
                                                                   select programs and segments of the cardholder base but        CLTS expects that partial reward utilization will continue
       As program members look to their travel programs to         used appropriately online booking tools will increase the      to grow in 2009.                                                    Proactive deal sourcing by your travel provider is another
     provide even more value in today’s market it may be time      program member’s engagement with the program as they                                                                            great way to keep program members involved with the


                                                                                                                                  O
     to ensure you’re getting the best value from your travel      come online to shop itineraries and see how far their points               NLINE SELF-BOOKING REDEMPTION                        program web site. Rotating specials and last minute deals,
     rewards. As the travel industry changes it’s vital to keep    will take them.                                                            also provides program members the option to          especially in today’s economy will drive traffic to a program
     abreast of those changes to deliver the expected customer                                                                                use points + cash to buy down part, or all, of       site. The key here is speed to market and consistency of the
     experience and value to your program members.                   Going beyond just the airline ticket many program            their desired travel itinerary. This leads to accelerating the   message. Members need to know that on designed times to
                                                                   members are using points to take the sting out of their        redemption of a traditionally high value reward and creates      check their program site for the latest offer.
        Due to the complex nature of travel rewards historically   entire vacation. Many programs are now flexible enough         more engagement with the program. Rather than waiting
     many had to be fulfilled using a travel agent or concierge    to allow travel rewards that include hotel stays and other     15 to 24 months or longer to get a “free” airline ticket many       Adding ancillary travel components to the redemption
     service. Also program members have been trained to pick       components of vacation packages. While hotel stays have        program members are opting to use the points and cash            mix also benefits programs. Components such as
     up the phone if they wanted to book travel rewards.           typically been in travel programs, they were traditionally     model to get their reward now and using split pays to do         destination activities and events can be booked in the same
                                                                   presented as a certificate based reward which provided         so. Satisfied they can get the high value reward when they       travel redemption itinerary creating a complete solution
        using online self-booking redemption tools, like           access to limited hotel brands and came with associated        want, program members start earning for the next reward          for the program member. Gone are the days of booking
     Connexions Loyalty Travel Solutions’ Online Rewards           “blackout dates.” With the advent of the modern online         sooner. There are a variety of pricing models available for      a reward ticket and then searching for companion tickets
     Exchange (ORX) program, members have the ability              booking tool program members have the ability to book          program managers allowing for the cost per point to be           at another source. Not only is this a better customer
     to select travel rewards at price points that meet both       any hotel property in the travel provider’s reservation        managed to meet the program’s economic model.                    experience but it drives additional card spend for the
     their and the program’s requirements on a website that        system thus greatly expanding the reward choice, usability                                                                      ancillary products.
     is available well beyond traditional call center hours. By    and lowering the cost of delivery for the program not to          As online redemption tools evolve to make the
     exceeding 60% of transactions online, the ORX platform        mention eliminating the issue of managing certificate          redemption process easier, access to travel reward inventory       The future of travel rewards continues to evolve with
     helped CLTS clients save in excess of $3M in operating        inventory. The same is true of rental car rewards.             at competitive rates is going to be a key ingredient for a       new tools and creative applications all designed to reduce
     costs in 2008 while improving customer satisfaction scores.                                                                  successful program. Just having a delivery tool won’t make       delivery costs and improve member experience. The ability
                                                                     The most important recent evolution in travel                you competitive. For many programs travel rewards are            to shop and redeem for cruise and packaged vacation
       using a travel reward strategy of shifting to an online     redemption has been the introduction of dynamic points         a key enticement and the reward cost, even if in points,         inventory are two of the rewards on the horizon for online
     delivery has many positive features for both the loyalty      plus cash, where even when the customer is penalized for a     needs to be on par with the large online travel agencies         fulfillment. Working with the right travel provider is the
     program and its members. Travel is one of the web’s most      partial redemption, programs are experiencing up to 70%        (OTA) in the market place. unlike merchandise travel             key to getting the most benefit from your travel rewards. L
     prevalent products and consumers are very in tune with        voluntary utilization of points + cash. Additionally, this     rewards don’t have the option of using a different model




28   January 2009   | Loyalty Management                                                                                                                                                                                January 2009   | Loyalty Management        29
      TRENDS & REWARDS                                                                                                              “Adding such an extensive
                                                                                                                                     catalog with ease of navigation
     The Rewards                                                                                                                     increases the value of any
                                                                                                                                     rewards program.  ”
     Revolution                                                                                                                     —Michael Ruege, Executive Vice President,USMotivation




     is Here!
     by James C. Purdy – Bridge2Solutions
                                                                                                                                      T
                                                                                                                                               HE ENGAGEMENT OF the
                                                                                                                                               participant in a point rewards
                                                                                                                                               program directly corresponds
                                                                                                                                      to the reaching of business goals
                                                                                                                                                                                  to Montreal, green appliances, or 20
                                                                                                                                                                                  DVD’s—let them make the decision
                                                                                                                                                                                  and select their personal choice of
                                                                                                                                                                                  rewards priced in the earnings medium
                                                                                                                                      wrapped by the program. Additionally,       of the program.
                                                                                                                                      in the last year alone, we’ve fulfilled
                                                                                                                                      over 40,000 different SKu’s proving            In summary, the rewards revolution
     THE NEW REWARDS REVOLuTION has begun in earnest, evolving from the convergence of online
                                                                                                                                      that participants truly are individual      is here—enabling sponsoring
     consumers with new robust technology such as sophisticated web services and services oriented architecture, reward               and desire very different rewards.          companies to embrace more attractive
     programs now provide real-time online catalogs offering millions of choices—all branded and easily managed for                   The capability to offer this kind of        choices for today’s target audiences.
     the program sponsor’s specific needs. With it, the sales incentive, employee recognition and consumer loyalty                    selection only comes with the latest        Considering the latest global economic
     program marketplace has a new spark of life—emanating from the power of personalized choice and selection that                   of technology advancements, after           environment, it is more important than
     the rewards side of the performance equation can now offer. Technology has brought speed and vast selection to                   all, offering more than 6 million           ever to attract and retain customers
     our everyday lives and redemption options in point programs have now caught up.                                                  items doesn’t mean walking into a           with the assistance of offering valid,
                                                                                                                                      huge warehouse filled to the top with       enticing, timely rewards for points
                                                                                                                                      merchandise with no labels or signage!      earned, while making the selection



     P
             ARTICIPANTS AND PROGRAMS have changed                   all categories of point programs—mostly avoiding dollar-         Technology is enabling us to offer          process entertaining, and desired
             over the years, from the stamp programs of 100          denominated media—equating the earnings currency to              vast selection in an easy to navigate,      items simple to locate and quickly
             years ago, to the online breadth and depth of           the redemption currency. If you earn in points, you redeem       searchable interface that mirrors           delivered. If the point earners are
     rewards today—in between and still valid are emblematic         in points.                                                       leading online retail experiences.          redeeming more, then they will in turn
     jewelry, logoed merchandise, BOGOs, plaques, trophies,                                                                                                                       want to earn more in the sponsoring
     premiums, plateaus, catalogs, gift certificates, debit cards,      WHAT ABOUT RESULTS? Our collective vision to                     The last couple of years have had        company’s program. So, in the last
     gift cards and of course cash discounts or cash back.           bring the widest breadth of rewards to the marketplace           the equivalent impact on the rewards        part of the first decade of the third
     Participants have become more savvy and consumerism             in a real-time environment started less than five years          marketplace as the previous 10              millennium—technology and creativity
     has made them more impatient—when they know they                ago—while we knew we had a good reward solution, we              had on the same market. Rewards             are in sync for point earning and
     have earnings, they demand their rewards. Bank loyalty          didn’t know the extent of the results that vast selection        selection and redemption have now           point redemption activities—creating
     programs currently offer various reward options for different   and real-time inventory could bring to a rewards program.        caught up with the earnings and             excellent opportunities to maximize
     portfolios. Personal preference has become imperative as we     The excitement and changing environment of a real-               reporting technology of consumer            the effectiveness of rewards programs.
     all have grown accustomed to searching online for the exact     time “living” rewards catalog drives many more visits to         loyalty, employee recognition and           Not too long ago, many of us were
     item that we want– cardholders want experiential rewards,       the catalog uRL by the participating audience—which              sales incentive programs. There is          predicting that the TV remote would
     events, various activities and tours, online travel planning    translates into 5-10 times more brand “hits” per month for       no more need to espouse “awards             become what the mobile phone has
     and seemingly limitless merchandise choices.                    the sponsoring company. “Adding such an extensive catalog        neutrality” when millions of award          become—the access technology of the
                                                                     with ease of navigation increases the value of any rewards       choices may now be presented in easy        real world to the online world. Today,
       Having millions of reward options already accessible          program,” said Michael Ruege, Executive Vice President of        to navigate online catalogs for all types   and in the near future, technology
     online then opens up future opportunities for accessing         uSMotivation, headquartered in Atlanta, GA. “Participants        of programs. The customer-participants      will take revolutionary jumps in the
     desired redemption options. My company, Bridge2                 are visiting their program sites much more often because         have let us know that this is a different   u.S. and abroad and as biometric and
     Solutions, offers bridge technology necessary to present        they have such a wide variety of reward options and              world—they want to earn points, they        mobile devices edge out the plastic card
     millions of rewards, in easy-to-browse user interfaces, for     choices. Rewards range from books and CDs all the way up         want to burn points and most of all         market for identification, information
     those companies operating point accrual systems/programs.       to individual travel and high-end electronics. Choice is the     they want rewards that make sense to        and payments—I guarantee that
     The white label plug and play ability along with real time      catalog’s biggest attraction and our program sites create a      them, whether a redemption is for a         rewards programs will evolve
     rewards pricing, availability and accessibility has been made   customer experience that is personalized-there’s something       cappuccino machine, a 10mp camera,          accordingly. My TV remote told me so
     possible through advances in web services technology.           for everyone.”                                                   tickets to a theater production, an         … where the heck is it anyway? L
     We are helping to revolutionize rewards redemption for                                                                           iPod, zip-lining in Costa Rica, a flight



30   January 2009   | Loyalty Management                                                                                                                                                                                     January 2009   | Loyalty Management   31
      TRENDS & REWARDS



     Fuel Rewards Marketing
     and Loyalty: Gaining
     a Better Understanding
     by John Cullen – Pointe Advantage



     In recent years, a number of misconceptions have grown up around
     the use of fuel rewards marketing programs in the retail industry.
     Driven by ignorance or competitive zeal, some have questioned the
     usefulness and profitability of fuel incentives.

                                                                                                                                    There’s nothing to mail, nothing to track and no waiting       achieved to break even at gross profit. What if I told you
        The simple fact is that fuel rewards are working right      Understanding Fuel Rewards                                      weeks for the reward to be activated. This program is as       that through a fuel rewards program the retailer that
     now for a wide range of retailers including grocery and                                                                        simple as 1-2-3; shop, earn, redeem, 1-2-3.                    repurposes the margin dollars from the temporary price
     convenience stores, automobile dealerships and on-line           understanding fuel-based rewards means understanding
                                                                                                                                                                                                   reduction could achieve incremental profit ranging from
     retailers, among others. They have used this program to        the consumers’ attitude toward their fuel purchases. Buying
                                                                                                                                      By communicating a free gas offer at the shelf, where        160% to 324%, the difference being whether or not the
     attract new customers, build consumer loyalty and drive        gas isn’t gratifying and no matter what the price, consumers
                                                                                                                                    70% of all brand purchase decisions are made, fuel-based       fuel center is owned and operated by the grocer or if it is a
     incremental sales and higher profits. And the program is       always feel like they are paying too much for a gallon of
                                                                                                                                    rewards can be used to shape and drive consumer buying         partnered fuel redemption center.
     broadly applicable to all retailers and service providers of   gas. Fuel-based reward programs exploit this sentiment
                                                                                                                                    behaviors.
     every type and size. From the local dry cleaner and the        and the high perceived value of gasoline. In fact, today’s
                                                                    shopper would rather get a dollar of free gas than an actual                                                                     So let’s take a closer look at the fuel rewards offer,
     hair salon to your favorite restaurant, your accountant                                                                          Recently, however, several crucial misunderstandings
                                                                    dollar, because they perceive more value in the gasoline                                                                       repurposing the margin dollars from the example above:
     and all of the larger category killer retail chains. These                                                                     have arisen about the efficiency and cost effectiveness of
     diverse businesses can leverage innovative fuel-based          than in the currency.
                                                                                                                                    fuel incentive programs.
                                                                                                                                                                                                      With fuel-based rewards, the retail price remains at
     rewards programs to remodel their retail marketing and
                                                                      Fuel-based rewards put this powerful consumer                                                                                full retail, $1.99. The fuel offer, using cents-off-per-
     customer loyalty schemes and to drive same-store sales                                                                         Tackling the Common Misunderstandings
     and increase profits.                                          perception to work for retailers, manufacturers and fuel                                                                       gallon methodology would be .04 or 60 cents maximum
                                                                    redemption locations.                                              How can fuel-based rewards be used to drive profit?         redeemable face value (.04 x 15 gallons). Assuming 50%
                                                                                                                                    Some compare fuel rewards programs to loss leaders which       redemption the effective cost of the promotion comes
        And over time, fuel-based rewards will evolve from a
                                                                       Most fuel rewards programs are relatively simple:            are not profitable. But in fact, real world experience shows   in at 2 cents-off-per-gallon or 30 cents in total (.02 x
     closed network, retailer-centric model, to a broad based
                                                                    consumers shop at a given retail outlet, where point of sale    that when fuel rewards programs are expertly planned and
     community reward market where consumers will no longer                                                                                                                                        15). Typically this single unit promotion would yield a
                                                                    tags and other marketing and advertising vehicles are used      run in an efficient and optimized way, they generate new
     decide “what” they buy, but “where” they buy it. And with                                                                                                                                     minimum increase in units sales of 40% driving product
                                                                    to identify participating products or qualifying purchase       sales and higher profits.
     community fuel-based rewards consumers will cross over                                                                                                                                        revenue to $279. Since the product was sold at full margin,
     retail channels and retail brands to accumulate rewards,       requirements. Shoppers receive a Free Gas voucher or
                                                                                                                                                                                                   margin dollars would have increase to $112. But what
                                                                    electronically issued fuel reward at checkout when they           Here’s a real-world example of precisely how a fuel
     using free gas as the common currency. As a result, market                                                                                                                                    happened at the pump? With fuel rewards unlike temporary
                                                                    meet pre-established purchase requirements, then redeem         rewards program can work.
     share will shift away from retailers who do not offer fuel                                                                                                                                    price reductions where these margin dollars walk out the
     rewards to those that do.                                      the reward at a participating fuel station. From the
                                                                    consumers perspective this program more than exceeds              Imagine, for example, that a retailer sells 100 units        door with your customer, these same dollars are redeemed
                                                                    the test for program understanding and ease of use by           of product at a full price of $1.99 generating $199 in         at the pump driving 1050 incremental gallons of gas from
        To understand how we can get from here to there, let’s
                                                                    providing instant gratification with instantly issued rewards   revenue and $70 in gross profit. When that product goes        a planned consumer redemption event. In turn, $2,824 in
     take a closer look at how this increasingly popular form of
                                                                    that are available in real-time for immediate redemption.       on promotion, discounted 20% to reach a new retail price       fuel revenue is derived (15 gallons at $2.79) and $115 gross
     retail promotion is being used today.
                                                                                                                                    of $1.59, a 130% increase in unit sales must be minimally      margin dollars from fuel reward redemption.
                                                                                                                                                                                                                                             (continued on next page)

32   January 2009   | Loyalty Management                                                                                                                                                                                 January 2009   | Loyalty Management            33
      Fuel Rewards Marketing (continued)
       The comparison overall looks like this:                           To generate new sales and higher profits from fuel
                                                                      rewards, retailers must understand a number of economic
                              Full Retail   TPR    Fuel Rewards       and behavioral variables specific to fuel-based incentive
                                                                      programs, including: how consumers respond to cents-
      Product Rev               $199        $366      $279
                                                                      off-per-gallon or dollar off offers, where to set fuel rewards
      Gross Profit               $70        $70       $112            to achieve specific business goals, how to successfully
      Fuel Revenue                --         --       $2,824          promote singles, true multiples and combinations, how
      Fuel Gross Profit           --         --       $115            to handle variable weight items, and how to manage
      Overall Revenue           $199        $366      $3,103          coordinated basket value and threshold value programs to
                                                                      modify consumer purchase behavior and to optimize unit
      Overall GP                 $70        $70       $227
                                                                      movement, incrementality and gross margin performance.
                                                                      Consider all of these factors and then ask the question,
        Powerful results but this example doesn’t consider the
                                                                      “What happens when gas prices fluctuate during the
     additional value when product multiples and product
                                                                      year, how should I adjust my reward to retain consumer
     combinations are used in creating qualifying reward
                                                                      relevance and maximize program revenue and profit?”
     purchase requirements or the impact of new customer
     acquisition and increased shopping from existing
                                                                        To gain this expertise, without building a massive
     customers. Fuel reward customers by definition are your
                                                                      internal infrastructure, astute retailers can now call on
     best customers; buying more per visit, shopping more
                                                                      the services of experienced fuel rewards partners. Those
     frequently, sharing their stories about the size of the fuel
                                                                      specialized companies offer comprehensive support for
     rewards they’ve earned with friends and driving good will
                                                                      fuel rewards programs, including sales and marketing, data
     for your brand and store.
                                                                      collection, management and analysis, sales coordination,
                                                                      offer management, billing, collection, offer clearing and
        Have the technological hurdles been eliminated
                                                                      redemption processing.
     to allow for scale and program stability? Yes. In
     fact, the technologies needed to implement and operate a
                                                                        The bottom line is retailers can leverage a well-planned
     successful fuel rewards program—the hardware, software
                                                                      and coordinated fuel reward program to attract more and
     and integration strategies—are affordable, proven, stable
                                                                      better customers and to encourage those customers to visit
     and readily available from a number of reputable vendors.
     The real problem is that very few retailers have the specific
                                                                      more often, spend more per visit and purchase more fuel                                    • 20 Years of Winning Campaigns
                                                                      rewards products at a higher sales price, thus generating
     marketing experience and expertise needed to run a
                                                                      greater revenue and a higher gross profit per transaction.                                • Customized Reward Collections
     successful fuel rewards program.

                                                                         The issued fuel rewards can then be redeemed at
                                                                                                                                                              • Single Source Program Management
         All too often, retailers acquire the hardware and software
                                                                      the retailer’s fuel location, or at an allied fuel retailer,
     needed to deploy a fuel rewards solution, but their
                                                                      driving incremental revenue and profit and establishing
                                                                                                                                                            • Best Practices and Strategic Solutions
     technology vendor simply does not offer or cannot deliver
     the marketing expertise needed to make the program meet
                                                                      a 360-degree marketing circle between grocery and fuel             • Proprietary Dashboard Platform Delivering an Unmatched Customer Dialogue
                                                                      locations. That is why leading grocery retailers—companies
     it’s potential. And retailers seldom have the expertise, or
     invest in the needed in-house staff required to implement
                                                                      like Safeway, Kroger, Meijer, Giant Eagle, Nash Finch            • Totally Results Driven Team...due to our CEO having been In Your Seat as CMO
                                                                      and others are using fuel-based rewards and over 560 well
     and manage a successful fuel incentive effort. In most
                                                                      known retailers use fuel rewards as a part of their on-line
     instances a retailer operating a fuel reward program isn’t
     even aware that their program isn’t reaching it’s fullest
                                                                      strategies to improve sales, customer satisfaction … and
                                                                      their bottom line.
                                                                                                                                                               !"#$%&%$'()*+,)$-./#0,1
     potential because they are seeing positive results driven by
     the power of the free gas incentive. The problem is they                                                                                  Contact us for a demo of our web based Loyalty Dashboard at 800-416-2090x12
                                                                         By getting the facts, and improving their understanding
     never knew what increases to expect or what offers to use                                                                                                     or e-mail us at info@incentivegroup.com
                                                                      of fuel reward programs, all retailers can deploy this
     to generate even greater results. It’s a bit like buying a jet
                                                                      effective promotional strategy as part of their loyalty and
     airplane, but without the expert knowledge and flight
                                                                      reward initiatives. L
     experience of a seasoned pilot, that aircraft will never get
     off the ground or truly soar.




34   January 2009         | Loyalty Management                                                                                                    399 Knollwood Road White Plains, NY 10603    www.incentivegroup.com Management 35
                                                                                                                                                                                                    January 2009 | Loyalty
         BEST BUSINESS PRACTICES
                                                                                                                                                                      On the other extreme, if you plan your year to include

     Successful Hires                                                                                                                                              adding 3 Regional Sales Managers, 2 more Call Center
                                                                                                                                                                   Supervisors, a Financial Analyst, and a new in-house
                                                                                                                                                                   CMO—a recruiting partner can again really help. The

     Can Executive Search Firms, Recruiters                                                                                                                        recruiting firm can help you define your expansion roles.
                                                                                                                                                                   They can help recreate and rewrite roles in which people

     & Headhunters Really Help?                                                                                                                                    have failed or left to make the jobs more interesting with
                                                                                                                                                                   specific measureable accountabilities and a more involved
                                                                                                                                                                   definition of your culture. Once your recruiting partner
     by Amy DeBerg-Ferwerda – R&P Group
                                                                                                                                                                   understands your future (and current) hiring plans and the
                                                                                                                                                                   profile of employees who fit well within your culture, they
                                                                                                                                                                   work for you every day. Even when they are searching for
           According to a recent survey, heads of Human Resources of Global 100 companies                                                                          candidates for other companies, when they find someone
           stated that their companies mis-hired people 80% of the time.1                                                                                          who may be a skill and culture fit, the firm can build—for
                                                                                                                                                                   your company—an inventory of people who want to hear
           Statistics like this challenge us to evaluate our hiring practices and to look at our department and                                                    about jobs within your company. As your jobs are approved
                                                                                                                                                                   or come open, the recruiting firm more quickly produces
           company statistics to determine how we compare. With an economic mandate to accomplish more with
                                                                                                                                                                   a selection of candidates. Over time, the more people an
           fewer resources, how can we ensure that we spend our resources efficiently and prevent costly mis-hires.                                                industry recruiter knows at your company, the better they
           The cost of a mis-hire for a $100,000 employee is quoted anywhere from $50,000 to $1 million.                                                           become at helping you hire more successful “A” employees.

                                                                                                                                                                     What goes wrong? Some companies spend hundreds
       The question for today is “Can Executive Search Firms                                        As Terry Petra has been know to say, “It’s not the what        of thousands of dollars with the best retained firms in the
     really help increase the percentage of successful hires?” It                                 we do, it’s the how.”                                            world to hire their top managers. But, they do not allow
     certainly seems the loyalty industry believes that recruiters                                                                                                 those same managers the opportunity to retain excellent
     have value. Indeed the largest firms in our industry retain                                    What do they do? Recruiters have “helped” companies            recruiters to fill their jobs with the type of A players who   a prospective candidate about how great your company
                                                                                                  achieve successful hires by simply sending a resume of           will ensure that the new manager is able to accomplish         is. Yet most A employees who are ready for their next
     executive search firms for every job above a certain level. But
                                                                                                  someone with whom they have never spoken. On the other           corporate goals. Since A players tend to hire and promote      career step will talk with a trusted industry recruiter about
     do we track the success of our hires? Can recruiters help?
                                                                                                  end of the spectrum, search firms interview hundreds of          As, both time and money are saved by engaging industry         opportunities. They will be more likely to believe the
                                                                                                  potential candidates to present a select few top candidates.     help to locate, screen, and present top talent quickly and     glorious benefits about working for your company from an
           Let’s first define a successful hire.
                                                                                                  Your recruiter may help create your Job Description,             consistently.                                                  unbiased third party. I’ll bet almost everyone reading this
           Successful Hire = Person hired quickly meshes into                                                                                                                                                                     article appreciates when the “right” recruiter calls to “let
                                                                                                  Candidate Scorecard, Interview Questions both oral
           the company culture and achieves all first year                                                                                                           What to do? Train all managers in professional hiring        them know about an opportunity.”
                                                                                                  and written, and may even be with you for the Face-to-
           business goals at or above standard                                                                                                                     methods. There are books, DVDs, and other tools available
                                                                                                  Face Interviews. There are long lists of services the most
                                                                                                                                                                   so that managers don’t have to “wing it.”                        Candidates who allow a recruiting firm to present them
                                                                                                  successful firms provide.
       So how would an executive recruiter help ensure                                                                                                                                                                            for a job opportunity understand that they are one of
     successful hires?                                                                                                                                                Find an industry recruiting partner. Meet with them         3 to maybe 5 people the firm is presenting. This means
                                                                                                    How do they do it? Do you need a quick fix, someone
                                                                                                                                                                   in-house regularly. Treat your need to locate and recruit      that the candidates are much more open about both their
                                                                                                  ASAP? If so, a recruiter can still help in several ways. A
        What are recruiters? To begin to answer this question                                                                                                      exceptional talent like you treat your need to stay out of     excitement in and concerns about the job and their ability
                                                                                                  recruiting firm can assign a full-time, dedicated team to call
     let’s first look all the types of recruiters. Personally, I am                                                                                                jail by retaining an external tax and accounting firm and      to do the job.
                                                                                                  Industry people everyday, all day, until they have people
     okay with being called anything from headhunter to                                                                                                            a quality law firm. Shop for your recruiting partner like
                                                                                                  who meet your requirements. The level of work on the
     executive search professional. This is because no matter what                                                                                                 you would shop for a heart surgeon—the best versus the            Companies need no longer tolerate underperforming
                                                                                                  recruiter’s part can be anything from a brief scan of the
     you call me or any of my peers, there is one bottom-line                                                                                                      cheapest. Allow all your managers the opportunity to work      employees, or 80% mis-hires. As Brad Smart says, “There
                                                                                                  person’s resume to see that it matches your Job Description
                                                                                                                                                                   with your company recruiting partner for all levels of jobs.   is absolutely no reason for such massive waste and human
     fact—the mission of an executive recruiter is to help                                        to hours of conversations to find the potential candidates
                                                                                                                                                                                                                                  pain.” When your Board and your Management team view
     our clients realize successful hires. That is what you                                       who are interested in and excited about your company and
                                                                                                                                                                      Your internal Human Resources team is very valuable         the candidates presented for their open jobs like looking
     pay us to do—to help you do. The most successful hires are                                   the opportunity. They may even require that the candidates
                                                                                                                                                                   in the recruiting process also. They should be involved in     at the menu at their favorite restaurant, things are on the
     based on partnership that allows the recruiter to be excited                                 achieve at least a certain score on the candidate scorecard
                                                                                                                                                                   the interviews to explain your benefits and they will most     right track. All of the candidates look good—they just offer
     about the opportunity and to offer a chance to interview for                                 and that the candidates complete written interviews and                                                                         a different way to fulfill your hunger, your need. Yes, the
                                                                                                                                                                   likely provide your Offer Letter templates. Remember
     such opportunity to only the very best people.                                               provide references and specific salary information.              that even the best recruiter—if they work in-house—is          right executive search firm can really help you benefit from
                                                                                                                                                                   only believable to a certain point when they speak with        more successful hires! L
     1
         Brad Smart, President of Smart & Associates, Inc. and author of Topgrading: How Leading Companies Win by Hiring, Coaching and Keeping the Best People.




36   January 2009           | Loyalty Management                                                                                                                                                                                                       January 2009    | Loyalty Management       37
     EXPO in
                                                                                                                                                                                EXPO in REVIEW

                                                                              “I felt like the size of this event provided more


     REVIEW
                                                                               intimacy than others—which made the networking
                                                                               contacts more valuable.” —Loyalty Expo 2008 attendee
                                           By Susan Payton,
                                           Egg Marketing & Public Relations




     With 475 attendees from seven countries,
     our first Loyalty Expo certainly exceeded
     even our expectations!                                                      The Loyalty Expo 2008:

                                                                                 We’re Off to a Great Start!
                                                                                 With 475 attendees from seven             to learn more about loyalty marketing.       John Dawson, of Dataco, made
                                                                                 countries, our first Loyalty Expo         Romo’s company, Ampersand, provides       several good client contacts at the
                                                                                 certainly exceeded even our               loyalty programs for companies like Ixe   show. He said he learned just as much
                                                                                 expectations. We were thrilled to get     Financial Bank, who was represented       from vendors and clients outside of
                                                                                 such positive feedback from attendees     by Hernandez. The ladies attended         the sessions, and that “networking has
                                                                                 and speakers. The conversations           John Dawson’s presentation, “Analyze,     been valuable.”
                                                                                 we heard about retention, avoiding        Reward, Understand
                                                                                 attrition and customer relationships      and Retain” on
                                                                                 were truly worthwhile, and we hope        Sunday. They said
                                                                                                                                                “This conference was and
                                                                                                                                                 will continue to be about
                                                                                 everyone left knowing more than they      they learned that
                                                                                 did when they came.                       they needed to focus
                                                                                   As Mark Johnson, President and
                                                                                 CEO of the Loyalty Expo, said, “This
                                                                                                                           not only on new
                                                                                                                           clients but also on
                                                                                                                           clients who are at a
                                                                                                                                                 the voice of the customer.”
                                                                                 conference was and will continue to be
                                                                                 about the voice of the customer.”         higher risk of leaving.
                                                                                                                           The ladies also said as a result of the      Vendors also found benefit in
                                                                                                                           presentation, they would focus on         attending the conference. Jessica
                                                                                 WHY THEY CAME                             segmenting their customer base to         Rotoli of Hipcricket, who provided
                                                                                 Many attendees were at the show           better understand varying needs.          text messaging services during Steve
                                                                                 to learn. The Loyalty Expo offered a
                                                                                                                              Other attendees came “shopping” to     Yastrow’s general session on Monday,
                                                                                 tremendous amount of knowledge
                                                                                                                           find service and technology providers.    was at the Expo to offer the company’s
                                                                                 packed into a few short days. Mark
                                                                                                                           Angi Grisham of AMC recently stepped      mobile marketing solutions to
                                                                                 Rubenstein, CEO of EZ Rewards, said he
                                                                                                                           into the role of Technology Project       potential clients. “We have solutions to
                                                                                 went to learn from others with more
                                                                                                                           Manager for the theater company.          provide companies if they want loyalty
                                                                                 experience in the loyalty industry. His
                                                                                                                           AMC, she said, does have a loyalty        programs.”
                                                                                 company develops loyalty programs
                                                                                                                           program, but it has not changed in          Everyone at the conference was
                                                                                 for convenience stores, restaurants
                                                                                                                           nearly 10 years. She attended the         excited about our next Loyalty Expo,
                                                                                 and car washes, and has learned about
                                                                                                                           Loyalty Expo to meet exhibitors who       which will be May 31 to June 2 at
                                                                                 loyalty programs as it has gone along.
                                                                                                                           could offer services that could revamp    the Westin Diplomat in Hollywood,
                                                                                    Liliana Romo and Alma Hernandez        the company’s loyalty program.            Florida. L
                                                                                 traveled all the way from Mexico City




38   January 2009   | Loyalty Management                                                                                                                             January 2009   | Loyalty Management        39
EXPO in REVIEW                                                                                                                                                                                                                              EXPO in REVIEW


“Good info                                                                                                                                                                                                             “With so many
 on the current                                                                                                                                                                                                         good sessions,
 issues, future                                                                                                                                                                                                         it was difficult
 trends, and                                                                                                                                                                                                            to get into the
 different                                                                                                                                                                                                              exhibit hall!”
 segments.”                                                                                                                                                                                                                                   —Loyalty Expo 2008 attendee
                 —Loyalty Expo 2008 attendee




      The True Measure of Customer Loyalty                                                                                                 Engaging Your Customer
      Do your customers think of you in terms of “us and them”               Yastrow told his audience how to create those “We”            The keyword these days when it comes to your customers is:          important to them, can lead to a great opportunity to
      or “we?”                                                            relationships with clients:                                      Engagement.                                                         follow up with a strong product story.
         Steve Yastrow, Founder and CEO of Yastrow & Company,               n Don’t interrupt all the time. Listen to what the client         What is customer engagement? It’s about catching and           n Be Useful. You gain tremendous trust and credibility by
      and author of We: The Ideal Customer Relationship, gave a               is saying.                                                   keeping the attention of your customers. It’s about providing       providing useful content on a relevant topic -- and that
      stellar presentation on creating true customer loyalty at the         n Create building blocks of customer relationships one         value to them. And with over 5,000 marketing messages               trust can be quickly redeemed for product knowledge
      Loyalty Expo.                                                           step at a time.                                              coming at every person daily, it “is about being the one or         AFTER you’ve proven you care about what’s important
        Many companies think they need to create new customers,                                                                            two brands in a given day that a consumer actually chooses          to them.
                                                                            n Every time you interact with a customer, strive to           to spend time with,” says Ian Baer, Managing Partner and
      new products, and new geographic markets to find                        improve the relationship.                                                                                                       These days, it’s fairly easy to engage customers online
      additional revenues, but the fact is, most businesses are only                                                                       President of Big Fuel, an interactive marketing agency.         using these “Three Be’s.” Consumers are flocking to places like
      getting 15-20% of the potential business from their clients.           He differentiated between encounters and transactions,           Companies and advertisers have been telling stories          Facebook, blogs and forums to discuss their problems and
      Your existing customer base is where your company’s true            saying that a transaction was not memorable, and provided        of how amazing their products are for years, says Baer.         needs. This is the perfect opportunity for you to start and
      potential lies.                                                     no real benefit to the customer. He gave the example of          Screaming the benefits of your product doesn’t work in an       participate in conversations. Because the Internet is such an
                                                                          the cashier at the grocery store. Likely you do not have a       era where consumers can easily tune your message out.           up-to-the-minute platform, it’s easy to be relevant to your
        Yastrow explained to his audience, “You don’t drive sales.        relationship with this person, and you are not better off
      Your customers do.”                                                                                                                  Consumers today want to hear how it relates to them, and        customers’ changing needs, because you can see what’s
                                                                          because of your interaction. In encounters, you are engaged,     why they should care. You may have heard of WIIFM, or           relevant and what’s evolving as it happens. And blogs and
         He went on to say that strong customer beliefs are more          you participate in a conversation, and the experience is         “What’s in it for me?” Customers care only about how your       emails are the perfect opportunity for you to provide useful
      likely to create customer action. If a customer likes what you      unique.                                                          product, with all its fancy bells and whistles, can help them   information on your industry. Don’t make it a blatant sales
      offer, they will tell others, who will buy from you. You will see      Yastrow closed by explaining the difference between           improve their lives. Ignore that, and you’ll lose customers.    pitch. Offer resources your audience can use, and the sales
      action through word of mouth.                                       transactional loyalty (customer is loyal to offer, will likely                                                                   will follow.
                                                                                                                                             Baer says there are “Three Be’s” when it comes to engaging
         There is a connection between belief and loyalty, said           leave if a competitor offers a better deal) and true loyalty     consumers:                                                          Let’s face it. How we send out our marketing message
      Yastrow. You have to give your customers a reason to think          (promotions lead to relationships, customer is loyal to                                                                          is changing. We can’t rely on the old broadcast methods
      “I can’t get this anywhere else.” This doesn’t necessarily          company, relationship is long lasting). L                          n Be There. Consumers won’t stop whatever they were
                                                                                                                                               doing to come to you. Be where the consumers are, and       anymore. The consumer is in command, and we must
      mean your product, service or experience are unique,                                                                                                                                                 respect that in order to succeed in this changing
      but rather the relationship you have with your customer.                                                                                 be ready to participating in current discussions.
                                                                                                                                                                                                           marketplace. L
      Relationships cannot be duplicated.                                                                                                    n Be Relevant. The trust you gain by meeting your
                                                                                                                                               consumers’ needs where they are, and based on what’s




 40   January 2009    | Loyalty Management                                                                                                                                                                                       January 2009    | Loyalty Management        41
EXPO in REVIEW                                                                                                                                                                                                                                EXPO in REVIEW

                                                                                                                                          Tech Talk:
                                                                                                                                          Better Serving
                                                                                                                                          Your Customers
                                                                                                                                          with Technology
                                                                                                                                          With millions of people using social networking sites like
      Mobile Marketing                                                                                                                      Facebook, LinkedIn and Twitter, it’s no wonder major
                                                                                                                                          brands are connecting with consumers on these sites.
      and Loyalty:
      Is it Right for You?
                                                                                                                                          Times have changed in the customer service department.            MORE ACCESS
                                                                                                                                          Where we might have started with a one-size-fits-all attitude,    Technology, for better or worse, has made consumers
                                                                                                                                          now it is possible (and necessary) to use technology to better    even busier than they used to be. There’s no time for long,
                                                                                                                                          understand our customers and keep them!                           drawn out computer repairs in between work, life, dry
                                                                                                                                                                                                            cleaning pick up and soccer practice. That’s why PlumChoice
                                                                                                                                          MORE TARGETING                                                    developed its online PC and technology services. Computer

      Mobile marketing is affordable, fast to implement,                                                                                  Think your blanket direct mail campaign is going to be
                                                                                                                                          effective? Think again.
                                                                                                                                                                                                            problems can be troubleshot remotely, and customers don’t
                                                                                                                                                                                                            have to stop their busy lives to get the help they need. The
      and gets an increased response.                                                                                                         Technology has become so sophisticated over the years,
                                                                                                                                                                                                            company can also help set up MP3s, digital cameras and
                                                                                                                                                                                                            wireless networks virtually.
                                                                                                                                          it’s now possible for us to give customers exactly what
                                                                                                                                          they’re looking for. That’s what Cardlytics helps banks do

                                                                                                                                                                                                           “Customers are getting
      Go anywhere, the mall, school, work, and you’ll see a good          average of three cents per recipient. Studies show that 80%     for their customers. Customers of a client bank receive
      amount of people using cell phones. They’ve become our              of recipients of mobile coupons respond within one hour of      special targeted offers based on their actual spending. So if
      security blankets. We don’t leave home without them. We
      use them to make calls, send messages, check email, surf the
                                                                          receiving the text.
                                                                             Passey and Ayeni also offered a variety of ideas to use in
                                                                                                                                          a customer spends $300 over the course of several months
                                                                                                                                          at Anne Taylor, (assuming Anne Taylor is a merchant with          smarter, more tech savvy,
      web…it only makes sense that loyalty programs would get
      the idea to use them sooner or later.
                                                                          mobile marketing. Coupons are just one example. Companies
                                                                          can also offer suggestions (a la Amazon) of other products a
                                                                                                                                          Cardlytics), the customer would then receive a special offer,
                                                                                                                                          like $25 off her next purchase, that would appear next to this    busier and more impatient.”
         Mobile couponing, while still relatively new in the U.S., has    subscriber would be interested in, inform subscribers of new    transaction on her online banking page.
      been huge in Asia for years. The concept is this: text a specific   store locations opening, and create advocates by offering a       The customer gets the savings she really wants, the
      code to a number to receive text coupons and offers to your         discount for each person a subscriber refers to the service.                                                                        Customers are getting smarter, more tech savvy, busier
                                                                                                                                          merchant gets the sale, and the bank gets the revenue.            and more impatient. It’s the role of each company to find a
      cell phone. It’s convenient and you never forget the coupons,          In their presentation, they gave Dunkin’ Donuts in Boston    Everyone’s happy.
      like you do with their paper counterparts.                                                                                                                                                            way to combat this with appropriate techniques that best
                                                                          as a case study. The company sent out a text coupon for 99                                                                        serve the changing needs of customers.
        At the 2008 Loyalty Expo, Kelly Passey of Access                  cent lattes and saw a 90% response rate and 20% increase in     MORE SIMPLICITY
      Development and Ola Ayeni of M-Dialog spoke about this              sales as a result.
                                                                                                                                          With an average of six loyalty programs in every American’s       MORE COMMUNICATION
      up-and-coming tool for the loyalty industry. They stressed             While building awareness will be the biggest channel for     wallet, it’s clear that consumers also want simplicity.           Today’s consumers are talking to one another, for better
      three key points:                                                   mobile marketing in the next few years, the benefits greatly    Technology is helping us reach that goal too. More loyalty        or worse. And they use technology to do so. With millions
        1. It has to be easy for the customer                             outweigh the challenges. Mobile marketing is affordable, fast   programs are taking their customers online, and savings           of people using social networking sites like Facebook,
        2. It should have the largest reach                               to implement, and gets an increased response. As a last bit     can be realized through online retail as well as brick and        LinkedIn and Twitter, it’s no wonder major brands like Crest
                                                                          of advice, Passey and Ayeni urged attendees to add mobile       mortar stores.
        3. It should be simple and cheap                                                                                                                                                                    Whitestrips, Victoria’s Secret and Jeep (just to name a few) are
                                                                          marketing to their current marketing campaign rather than
                                                                                                                                            ID Loyalty is a company that understands this need for          connecting with consumers on these sites.
        SMS text messages, which the majority of phones can               rely upon it solely. L
                                                                                                                                          simplicity. Their platform transfers information for existing       These are exciting times as far as technology goes. We look
      receive, are the cheapest to send coupons through, at an                                                                            loyalty programs to a consumer’s driver’s license. This one       forward to seeing what’s in store that will help us offer even
                                                                                                                                          card can be used for multiple programs, and saves space in        better, more targeted customer service! L
                                                                                                                                          the wallet!




 42   January 2009    | Loyalty Management                                                                                                                                                                                        January 2009    | Loyalty Management         43
EXPO in REVIEW                                                                                                                                                                                                                               EXPO in REVIEW


“Including topics
 of interest to                                                                                                                                                                                                       “Loved the
 merchants and                                                                                                                                                                                                         amount of
 issuers added                                                                                                                                                                                                         time that was
 interesting value                                                                                                                                                                                                     allowed for
 to the mix of                                                                                                                                                                                                         networking...”
 participants…”                                                                                                                                                                                                                               —Loyalty Expo 2008 attendee
                 —Loyalty Expo 2008 attendee




      Attrition 101:                                                                                                                      Marketing to Millennials
      How to Keep the Customers You Have
                                                                                                                                          Recently Bill Hanfin, Managing Director of Customer Growth         Online rewards and loyalty programs are working
                                                                                                                                          LLC spoke at the Loyalty Expo 2008 about marketing to            with Millennials. Programs like AceBucks, the largest
      Today in the loyalty industry, we’re seeing a shift from trying       Dawson said that while most marketing budgets dedicate
                                                                                                                                          Millennials. According to Hanfin, Millennials refers to the      “underground” currency for Facebook, and urTurn Rewards
      to get new customers to working to keep the ones we’ve got.         only about 21% to customer retention, that number should
                                                                                                                                          generation born between 1977 and 1996, and make up 77 to         are keeping Millennials loyal to brands.
      The economy is tight, and bringing new customers on board           be closer to 50%. He recommends these steps to keeping a
                                                                                                                                          80 million of the US’s population. They’re the most ethnically
      is tough. It is easier, however, to keep current customers.         customer loyal to your brand:
      Studies show that securing a new customer can cost at least           1. Drive engagement. Encourage customers to want to be
                                                                                                                                          and racially diverse generation in US history, and are what
                                                                                                                                          Hanfin calls the super-sized “me” generation.                    “According to studies, 62% of teens
      five times more than keeping a current customer happy, so
      why wouldn’t you want to keep your customers?
                                                                               a part of your brand.
                                                                                                                                             As far as technology is concerned, Millennials are totally     are apathetic to advertising...”
                                                                            2. Watch for continued relevance. Don’t assume what           immersed in it. They own computers, cell phones, and
                                                                               you started doing to get your customers’ attention will    portable music or video devices, and they use websites             Hanfin ended the presentation with a few key suggestions:
  “Most marketing budgets dedicate                                             work forever.                                              as their primary source for news. This generation is               n Meet them where they are
   only about 21% to customer                                               3. Maintain quality and frequency of communication.           always plugged in, and heavily use text messaging, social
                                                                                                                                                                                                               – Sell less, share more
   retention—that number should                                                If you send emails or direct mail, give your customers a
                                                                               reason to want to read it. And don’t bombard them with
                                                                                                                                          networking and blogs to communicate.
                                                                                                                                            In order to market to this segment, said Hanfin, businesses      n Fulfill the promise of data
   be closer to 50%.”                                                          mail.                                                      have to understand that there is not just a shift in behavior        – “1 to 1” marketing may finally be affordable
                                                                            4. Liven up your program. Add new offers, new rewards,        with Millennials, but rather they are a wholly different
                                                                                                                                                                                                               – Social networking opens the door
         At the 2008 Loyalty Expo, John Dawson of DataCo spoke                 and new business partners to keep your customers           consumer.
      about attrition and keeping current customers. He honed in                                                                                                                                             n Don’t try to rationalize the need
                                                                               excited.                                                      According to studies, 62% of teens are apathetic to
      on the importance of studying your company’s demographics.                                                                          advertising. 42% make purchasing decisions based on                  – They think differently than we do…you don’t have to
                                                                            So think about your current marketing strategy. Does it
      What are your customers doing? When and why are they                                                                                recommendations of friends. Millennials are four times more            “get it”
                                                                          focus on attaining new customers? If so, you should consider
      leaving? What can you do to prevent further attrition?                                                                              likely to use online banking than download music, and 1.5          n Don’t forget everything you learned
                                                                          shifting gears and refocusing on keeping the customers you
        Sometimes the reasons for attrition are simple. Customer          have. Keeping your current customers will help you grow         times more likely to use credit cards than Boomers. How,
                                                                                                                                                                                                               – Remain attentive to profitability & marketing ROI
      service isn’t up to par. Prices aren’t competitive. Service isn’t   your business and increase sales in the long run. L             then, do you reach them?
      quality. These are things that are pretty easy to fix. But what                                                                                                                                          – Be attentive to traditional financial models   L
                                                                                                                                            Most businesses recognize the need for change in the
      about loyalty to your brand? Are your clients ready to stick                                                                        approach to a customer strategy for this generation, but have
      with you no matter what? Do you give them a reason to?                                                                              yet to embrace it.




 44   January 2009    | Loyalty Management                                                                                                                                                                                      January 2009    | Loyalty Management     45
EXPO in REVIEW

“The presentations I attended were great...
  smart, good speakers, engaging.”
                                                                                               —Loyalty Expo 2008 attendee


      EXPO summary:                                                    EXPO summary:
      Frequent Shopper Data                                            From Data to Information
      Speaker Jeff Gale recently gave a presentation on collecting
      data about frequent shoppers at the 2008 Loyalty Expo in
                                                                       to Advantage
      Orlando, Florida. He began the presentation with a brief         In his presentation on Loyalty Marketing at the Loyalty
      history lesson on innovations in retail. One of the highlights   Expo, Randall A. Fine of the Fine Point Group, remarked
      was the world’s first grocery store scanner, which was           that “Relationship Marketing is like a wet towel and most
      installed in 1974 and led to better inventory management.        companies haven’t started squeezing.” Fine illustrated the
      From there, retailers began to ask, what else can we do with     fact that most companies are not taking advantage of the
      this? So began the trend of frequent shopper programs.           many opportunities present in the marketing world today.
                                                                       He explained that there are two sides to Loyalty Marketing:
        According to Gale, retailers nowadays are utilizing
                                                                       rewards and offers. Rewards are controlled by the customer
      new technologies in order to draw customers in. Key
                                                                       and reward past behavior, while offers are company-
                                                                                                                                      Building relationships, one person at a time.
      demographics can be targeted by:
                                                                       controlled and act as incentives for future behavior.          Carlson Marketing knows how to take care of your customers.
        • Personalized direct mail campaigns                                                                                          We have unparalleled experience launching and managing relationship marketing programs.
                                                                         Fine demonstrated the Fine Point Group’s Proprietary
        • E-mail                                                       Loyalty Circle, broken down into five main points:             Our deep understanding of customer data translates into insight – and value – for you.
        • Recorded voice messages                                        1. Simplicity – understand how to earn/redeem rewards        Our full suite of services, creativity, strategy, execution, end-to-end operational excellence
        • Text messages                                                                                                               and enthusiasm all combine to make us the perfect marketing partner.
                                                                         2. Control – control how/when/where rewards are
          Personalized direct mail with relevant content is likely          redeemed                                                  When you’re looking for direction on how you can turn customer engagement
      to produce increased response rates; however, E-mail is            3. Aspiration – incents wallet-share consolidation through   into organizational value, contact us.
      less expensive and offers a much faster delivery time. With           targeted rewards
      voice marketing, specific messages are recorded and sent to                                                                     Let our experience work for you. carlsonmarketing.com | 763.212.4520
                                                                         4. Transferability – points travel to other company-owned
      consumers’ home phones and/or cell phones with targeted
                                                                            facilities or external partners
      precision. Voice marketing is also inexpensive and fast, but
      can also deliver time-sensitive messages. SMS (Short Message       5. Flexibility – reinvestments can be varied by customer
      Service) texting is similar, but messages are sent directly to        segment (one size does not fit all) L
      the users’ cell phones and digital devices. Each method has
      its own advantages and disadvantages, but Gale insists that
      mobile marketing through SMS texting best performs when
      it’s used alongside other channels of marketing. L




      We hear you.
      We have had a fantastic response to Loyalty Expo. Your questions,
      comments and suggestions are all very much appreciated and provide great value as
      we get ready for our spring show. We hope you will join us May 31st through June 2nd
      at the Westin Diplomat in Hollywood, Florida. Register for Loyalty Expo 2009!
      Visit www.loyaltyexpo.com for more information. Thanks for the feedback!




 46   January 2009   | Loyalty Management                                                                                                                                                                                  January 2009   | Loyalty Management   47
LOYALTY
   MANAGEMENT

				
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