If there is one point that we make over and over again talking to prospects, new clients, and existing clients, it's the importance of building flexibility into a program from the very beginning. No program can work on its own without any sort of

The world we live and work in is still abuzz about social media and the increased prominence of brand initiatives.  Even this morning, none other than The Wall Street Journal pronounced "The End of the Email Era".While we'll save c

The Freddie Awards, the frequent traveler's answer to the Oscar, Emmy and Grammy Awards, shuts down

rDialogue's perspective on the current state of the Loyalty Marketing industry. There is major room for improvement in the ways that companies and their brands connect with customers.

Surveys being conducted by Loyalty Leaders and the CMO Council will reveal how well loyalty marketers are doing - from the perspective of the marketers themselves and, more importantly, consumers.

How do you decide who has the best loyalty program? Is it program design or program execution? In reality it's both but program execution makes all the difference.

Takeaways from Coca-Cola, Cbeyond and State of Georgia on becoming more customer centric.

Denny's tried to hit a Grand Slam with their Super Bowl spot and free Grand Slam breakfast promo. All in all it was noteworthy though it could have done even better. Still, they scored.

[Editors Note:  This post below is from Michael Greenberg, COO at Loyalty Lab, a leading customer loyalty technology company for consumer brands.]

If there is one point that we make over and over again talking to prospects, new clients, and existing clients, it's the importance of building flexibility into a program from the very beginning. No program can work on its own without any sort of change, iteration, or contact strategy. Programs are living things-they must adapt to changes in the customer base and the business environment.

What does this mean? Effective change is driven by three sources.

Surprise. Customers should be surprised often. You would think that every relationship marketer knows this in their bones, but we continue to see the need to remind people of this over and over. Predictability in programs is good, because customers look forward to future interactions, but there still is a role for some form of surprise to keep a program entertaining.

Engagement. There many ways that customers will engage with you and your program. It is hard to predict all the ways this will manifest. Ideally, you can build a framework for capturing activity data and have robust mechanisms for responding to those activities. Automation is crucial, but you should not take a "fire and forget" point of view on automation. You still need to incorporate a human view, changing up your responses, interactions, and channels so that when customers interact with you it's still fresh, new, and interesting every time.

Analysis. Analyzing program performance entails thinking on two levels. At the macro level, you should be examining your overall program objectives, and watching metrics that point towards meeting those objectives. In the early stages of your program, enrollment, growth of enrollment, and engagement of any type are good measures. As a program matures, you should be looking for sources of lift, that is, places where you're generating positive return on investment. Whether you take a step back every month, every three months, or every six months, taking the time to take stock and look at what parts of your program are performing is a crucial component of long-term program success. On a micro level, looking at specific campaigns, channels, engagement activities, or other basic components of your program will force you to continuously evaluate specific tactics and seek improvements, leading to ongoing changes (and freshness).

Incorporating surprise, focusing on engagement, and leveraging analysis results are all foundations to a successful and dynamic program. Whether you accomplish this through technology, personnel, or (ideally) a combination of the two; maintaining a vibrant, changing, and interesting program leads to long-term success.

The world we live and work in is all abuzz about social media and the increased prominence of brand initiatives.  Even this morning, none other than The Wall Street Journal pronounced "The End of the Email Era".

While we'll save commentary for WSJ's opinion that email is over (we don't think it is, at least for many customers), the underlying issue is that marketing is much more complex than simply email, just as it is also about much more than social media.  Whichever of these media channels or strategies is more or less important is a function of a customer, a context, a time, a place and a brand relationship.  As was said long ago:  not all customers are the same.  Some may want brand friendships on Facebook some (many) don't or won't.  Ditto for ads.  (That's why mullets were invented:  business in front, party in back.  Kind of like brands in email, real friends on Facebook? Hmmm...)

Two other pieces today caught our eye and they both underscore the complexity and associated challenges facing marketers today.  One is fairly obvious though detailed in depth by none other than Peter Francese, founder of American Demographics and now head of demographic trends at Ogilvy.  The conclusion in the promotorial piece in AdAge is that there is no average customer anymore.  Perhaps this story will be on the network television news tonight.

The second and much more interesting story, also by coincidence in AdAge, is about a new report from our favorite Forrester analyst, Lisa Bradner.  In this report, coming out next week, one of the things Lisa addresses is the important reality that companies and brand managers aren't organized to effectively handle new media nor moving rapdily to adapt to, much less embrace, other new digital opportunities.  Like technology and social media and customers that don't fit neatly into demographic "target" audiences with labels like "A25-54".  Further, marketers need to be more able to do math and be able to develop and presumably use customer intelligence so as to be more accountable for results and be able to adapt and change course based on actual performance.

Now this is relevant and something we support. 

From our perspective, there is too much discussion about what is and what isn't dead or alive, and not enough discussion about customers.  For marketers, customers are the essence of social media's value.  Perhaps it should be called Customer Media - because that's who controls it, at least as far as brands go.

Late yesterday, I received an email from Randy Petersen, the editor and publisher of Inside Flyer and "the world's leading expert on airline frequent flyer programs".  His email announced the end of the Freddie Awards.  The real reason he cited for his decision, which he calls the toughest of his life, was the welfare of his employees.  After 21 years it simply got to be too much.  It was never a for-profit endeavor, but rather, like the rest of Randy's relationship with all things frequent traveler, it was a labor of love.

 

Which brings us to the loyalty marketing takeaway(s) from this news:  happy employees make for happy customers.  The correlation between loyal employees and loyal customers is well documented, going back to Fred Reicheld's classic "The Loyalty Effect" and more anecdotally, in Danny Meyer's "Setting the Table".

The other takeaway, in contrast, is that frequent flyer programs are tired models in an industry not known for happy or loyal employees.  The programs have matured and innovation is increasingly on the margin.  Hotel and co-brand credit card programs are a different story of course but are also quite mature.

 

Regardless, when it comes to understanding and documenting the frequent traveler industry, Randy is in a class by himself.  Randy, thanks and cheers to you!

We recently published our perspective on the current state loyalty marketing industry for Loyalty 360.  Based on the very supportive feedback we wanted to share it here as well.  As always, please let us know what you think.

THE BAR IS LOW...BUT IT'S ALWAYS OPEN:  IT'S TIME TO IMPROVE LOYALTY MARKETING

"80% of Success is Just Showing Up" - Woody Allen

Everyone with an appreciation for loyalty marketing gets the 80/20 principle, as observed and cited by Vilfredo Pareto.  As we look at the landscape of loyalty programs out there, this principle is in full effect as most loyalty programs out there are of the "so what?" variety.

Yet there has never been more opportunity for connecting with customers and building business. The key is for marketers and those of us in the industry, to keep raising the bar, which heretofore has been set quite low.

This is not meant to be an indictment of the industry but rather a reflection of its youth.  As my friend and colleague Bill Hanifin noted in his State of the Industry piece a few weeks ago, we are only post-adolescent in terms of age.

Coming on the heels of the deepest recession in at least a few decades, marketers have an unprecedented opportunity.  Customers are in play.  There has been research published recently supporting the idea that brand loyalty has declined.  Clearly this is partly due to economic conditions but it's our conviction that it is also because "loyalty marketing" has been on autopilot for too many, for too long.

How many industries are there, whether retail, credit cards, travel or telecom, where there are a bunch of me-too programs?  How many programs can you think of that are truly breakthrough?  That are truly "on brand"?  And let's not forget the most important questions: Are they meaningful and valuable for customers? Are they truly generating incremental revenues and profits?

So as we consider the state of the industry, let's look at opportunities for us to grow and improve what we do - for our stakeholders and most importantly, for customers.

 

Setting the Bar with Strategy

"Always remember, you're unique.  Just like everyone else." - Margaret Mead

Loyalty marketing needs to be more brand-centric.  Customers have relationships with brands, not with loyalty programs.  Way too many loyalty initiatives are formulaic.  The right program for one brand should be different than the one its competitor is (or could be) offering.  Take a look at your industry and see what your competitors are doing.  Whatever you do shouldn't work for a competitor and vice versa.

Loyalty marketing needs to go beyond programs.  Too often loyalty marketing is solely defined in programmatic terms:  points and rewards, cards and key fobs, credentials and collateral.

There is certainly a time and place for traditional programs, but more often than not, there is opportunity to create and execute "programs" that are un-programs.  Whether unpublished or simply integrated into a brand experience, there is more than a wide berth of opportunity here in terms of innovative strategy and program design.

Loyalty should be more natural and easy for customers.  Make it easy rather than cumbersome as each successive touch point or transaction should make a customer feel better and better about doing business with your brand.  For those running reward programs, make rewards easy to redeem and make them useful.  Lose the excessive restrictions and don't let customers feel like they are second class because they are using a reward (it should really be just the opposite but it rarely is).

Loyalty should be integrated into the business.  Many loyalty programs are still incidental to how companies operate and make decisions.  Every day there are promotions offered to all customers and prospects indiscriminately.  This is also increasingly seen in how companies promote through social media - where they provide offers via platforms like Twitter that are as good or even better than what they offer existing customers.  We see this as detrimental to existing customer relationships.  At its most successful, companies focused on customer loyalty will weigh the impact of most key decisions - both strategic and tactical - on how they impact customer relationships.  

Last, loyalty should tie to profits.  While this should need no explanation, there are still a majority of loyalty efforts out there that are either not being measured or not being measured properly.  As a completely measurable way to drive organic growth, loyalty must be measured in terms of incremental profits.  Beyond profits, using metrics like CompCustomers^TM are essential in directing marketing investments, targeting campaigns and understanding where opportunities lie and threats appear.

 

Raising the Bar with Execution

"Strategy gets you on the playing field, but execution pays the bills."-- Gordon Eubanks

While the right strategy can help you break out from the competition, execution helps you stay there and increase the gap.  And when it comes to executing loyalty initiatives, one of the reasons that so many companies can offer me-too programs (and succeed) is their ability to execute.

So what are the basics that set the bar for execution?

Fake it ‘til you make it.  Companies need to at least pretend to know who their customers are, even if they don't.  And they don't do either often enough.  It's important to be presumptive about recognizing customers because at least that way you don't make the mistake of not knowing a real one.  Better to treat a prospect like a customer - assuming you can't tell the difference - than to treat a customer like a prospect.

Listen and act accordingly.  Companies love to do surveys and customers, especially loyal ones, love to respond to them.  But too often we see and experience for ourselves companies not paying attention to what customers tell them.

Think (and act) customers first.  If companies are going to be promotional, they need to consider existing customers and especially members (if they have a program) before proffering special values to prospects.  The car companies were notoriously bad about this for many years before they started offering a "loyalty bonus" to existing owners.  Specifically there are or should always be opportunities to create customer exclusives, whether they are offers, soft benefits or events.

Test and learn.  Just like the basics of direct marketing, companies need to try new things.  Different tactics, different ways to execute these tactics, and most importantly - they need to measure the outcomes.  It's simple but then again, loyalty marketing (and marketing in general) should be about breaking new ground.

Be relevant.  The biggest hurdle in raising the bar is relevancy.  Companies need to do a better job of making their brands, promotions, communications, partnerships and services more meaningful to specific customers.  Not all customers, but the specific ones that will drive growth.  When companies treat (invest in) every customer the same in terms of customer marketing, that's called advertising.

Much of loyalty marketing comes down to answering a pragmatic question that every company should ask, and answer:  How do we profitably deliver more value for our customers so that they continue to deliver more value for our firm?  None of this is rocket science but rather is about being thoughtful about how to go about your business, with those thoughts keeping the customer in mind.

Yesterday Loyalty 360 published our perspective on the state of Loyalty Marketing.  It might not be a surprise to readers of this blogue but we think there is tremendous opportunity for marketing leaders to do significantly better than today’s status quo.

 

While this perspective on the loyalty industry is just our opinion, there are two surveys in progress that are worth nothing and participating in.  Loyalty Leaders, an initiative of the highly regarded CMO Council, is conducting both a consumer survey and a marketer survey.  These studies will put some numbers behind the effectiveness of loyalty initiatives, from the standpoint of marketers who are making the investments and consumers who are (or are not) benefiting from them.

To participate in the consumer survey, click here.

To participate in the marketer survey, click here.

 

The results of these surveys will be released later this year.  As a Partner and Faculty member of Loyalty Leaders, we were privileged to get a preliminary read on the interim results of the consumer survey.  Not surprisingly, the single biggest positive benefit seen is “discounts and savings” while the biggest negative is – yes, you guessed right – “receiving too much spam email and junk mail”. 

Also interesting, in terms of program participation, the highly transactional businesses like grocery stores and airlines lead while more subscription-like businesses like internet/cable and health/fitness clubs are last. Not quite ironic but the last time we looked, these two latter categories suffer very high churn. 

The surveys will be up for a good bit more...maybe we'll be surprised.  Go fill them out and we'll report back when the results are released.

 

This question is one that clients and prospects ask us regularly.

 

We recently attended the Freddie Awards in Ft. Lauderdale.  The Freddies have been going on for 21 years now, thanks to Randy Petersen, aka the GFOFFP (with apologies to James Brown, RIP).  It was great to see a lot of old friends and familiar faces, and it also kept this burning question above top of mind.

 

While we think about this question a lot, it's tough to answer, because we don't honestly believe there are a lot of great loyalty programs out there.  There are some well designed programs and there are also some well executed programs.  However, they are not always one and the same. 

 

The Freddies reinforce these observations.  The Best Program winners in their respective category were not the ones that also scored Best Award (overall), but rather the ones that won for Best Member Communications and Best Customer Service - dimensions focused on program execution not program design..  The categories related to program design (e.g., Best Award) went to hotels and airlines that did not win Best Program.

 

 Loyalty program shortcomings, especially those in the travel space, are due in part to the fact that they are all basically constructed from the same model:  Transact, accrue points, redeem for awards.  Transact enough and you can accrue at a higher rate and get a bunch of nice, soft benefits.  (And please, use our credit card, because that's the real measure of success because it brings in so much non-core revenue for us!)

 

Ok, enough of the cynicism.

 

The real value of loyalty programs lies in their ability to engage customers and enable relationship marketing.  This is where executing marketing activities based on customer data creates marketing excellence, not simply program excellence. Loyalty program success is not just about fulfilling rewards, but about continually raising the bar in terms of meaningful (relevant) communications with customers.

 

The stakes here are being raised. 

 

Customers are increasingly sophisticated in terms of their expectation of companies to properly (and intelligently) use customer data.  In order for loyalty programs to engage members, customers are requiring that brands address their individual needs and make it easier to do business with them. Again, to illustrate, the real Freddie winners took home trophies for Best Member Communications, Best Website and Best Customer Service.

 

 A great loyalty program is perhaps less about the program and more about how the program is used - internally and by the customer.  Providing better service to customers and more relevant communications nets a win-win for everybody

 

For the 2010 Freddies, we hope that   a much-needed new category at the will be added: one for the best use of social media.

 

Social media is requiring companies to manage far more than their brand advertising and direct customer communications like email and newsletters. Customers are in the social media space, talking about brands and sometimes even their loyalty programs.  Consider the numbers: nearly 200 people million on Facebook, soon to be (according to TechCrunch) 50 million on Twitter. The mandate to add social media participation to other behavioral customer data is beyond compelling.

 

Unfortunately, this year there was no mention of social media participation from the airlines, hotels and other travel-related companies at the Freddies. 

 

Of course, the travel companies are not alone.  Many, if not most, loyalty marketers are not keeping up with these opportunities.  Bill Hanifin made this point clear in a recent post worth reading.  Of course, it's not just social media, this includes traditional channels like email and postal mail that so many marketers, even those with loyalty programs (i.e., those that have the data!).

 

Those brands and loyalty marketers ready to innovate and change are the ones who will be the clear winners.  For some the innovation will be about fundamentals like relationship marketing.  The leaders, however, are and will be focused on the cutting edge of communication - to include social media and whatever new modes of information exchange evolve in the future to increase brand relevancy and customer engagement.

 

Recently at CRMA Atlanta (founding chapter of CRMA), we held a panel discussion on "Creating a Customer-Focused Culture through Process Improvements" featuring three Atlanta-based practitioners representing a cross section of industries and sectors. 

 

The three panelists were:

Joe Doyle, Administrator of the Governor's Office of Consumer Affairs for the state of Georgia

Michael La Kier, Director of My Coke Rewards at The Coca-Cola Company; and

Terry Trout, Vice President Customer Experience at Cbeyond

 

As you might imagine, there was a wide range of perspectives given the differing nature of these organizations and the customers they serve.  Being customer centric means different things for different companies, underscoring the idea that a company's customer strategy should be tailored specifically to that company, its customers, operations, economics and its competition.

 

For Cbeyond, it means refining and further developing its core competency of listening to its customers.  Cbeyond's business of serving small businesses and providing advanced telecommunications solutions is wrought with technical challenges.  

Listening to customers has enabled Cbeyond to create a culture of referrals, making it no surprise that their net customer growth was well over 20% last year.  After all, how many companies try to actually listen to customers as opposed to telling them what they "should" do? (Answer to that rhetorical question:  some do, most don't; social media makes this easier yet even then, most companies still don't actually listen.)

 

At The Coca-Cola Company, My Coke Rewards "is about putting a smile on customers' faces"...and being a "consumer's intuitive friend."  A brand wanting to be friends with consumers?  Smells like relationship marketing.

 

Part of the Coke customer strategy is, obviously, mass:  it's not about awareness it's about impressions and lots of them.  They deliver 2 billion (yes, with a B) consumer impressions on a daily basis.  If you're skeptical about that, think trucks, vending machines, signs, cups and, of course, advertising.  All of these impressions translate into customer opportunities, which is part of the company's current and ongoing challenge.

 

If there was a surprise during the discussion, however, it was the story that Joe Doyle told about the work he's led with the State of Georgia.  For all the hoopla about what President Obama is trying to do about making the federal government more transparent and "constituent-friendly," the real success story is right here in Georgia.

 

Joe Doyle, at the request of Governor Sonny Perdue, has transformed everything from the DMV to voter registration and made it all consumer friendly.  And easy.  He has taken the previously impossible task of getting a live human being on the phone to answer a question related to the State of GA and made it work to the point where Georgia's service quality is approaching levels seen by Nordstrom.

 

Importantly, he did this with a fairly simple strategy, starting with a top-down mandate from the Governor, illustrating the importance of top-down leadership in making progress on customer centricity.  With this mandate, Joe focused on three priorities, including being:

1. Principle centered
2. Customer focused
3. Results driven

 

For each of these, his approach was inside out, recognizing that it takes employees, and the right ones, to lead the effort to make things happen.  One of the common fallacies about customer loyalty is that it's not connected with employee loyalty.  WRONG.  Read Reicheld's The Loyalty Effect or Danny Meyer's Setting the Table and you'll see the clear, powerful correlation.   

 

Last, perhaps the most interesting anecdote came from Joe, who shared that before they got started with their work, employees at the DMV did not want to go out to lunch in their uniforms.  These employees were afraid of other diners knowing they worked at the DMV and what they might think (or do!).  This shows how acute the problem, and the opportunity were.

 

If you (or your employees) worry about running into your customers in a Waffle House, you'd better get to work.

While many managers and executives find the idea of CRM, customer loyalty and customer centricity a daunting challenge, the takeaways from this discussion were invaluable, if nothing else, because of their simplistic nature.  Putting customers at the proverbial "center of the page" is not rocket science.  As we learned from these successful practitioners, it starts with the basics and builds from there.