Loyalty Management May 2011

Volume 3 Number 2
MAY 2011 powered by Loyalty 360
Elevate the Customer Experience

Creating Relationships with Data Rules of Engagement Customer Centricity through Contact Strategy: How OfficeMax Made it Work
Social Media Innovation: Success Stories
LOYALTY MARKETING
FROM THE WORLDS LEADING RELATIONSHIP BUILDING COMPANY
Carlson Marketing designs and delivers customer and business loyalty programs. Our strengths in strategy and operations, combined with our advanced analytics, research and planning, creative and communications, technology and awards have helped us achieve exceptional results for some of the worlds best-known brands. We can help your brand too. We e ectively harness the power of new relationships while retaining and growing existing ones. This will bring your brand value back to life, grow protability and drive the strongest customer experience. We have 70+ years of proven results. And were now part of the largest loyalty management organization in the world. Now, lets talk about you. carlsonmarketing.com/contactus
A GLOBAL LEADER IN LOYALTY MANAGEMENT groupeaeroplan.com
THE RELATIONSHIP BUILDING COMPANY carlsonmarketing.com
Loyalty Management MARKETING 2011 CARLSON LOYALTY360.ORG
This Month in
MAY 2011 VOLUME 3 NUMBER 2 WWW.LOYALTY360.ORG
DEPARTMENTS
6 Whats on Loyalty360.org 8 Letter from the Editor 10 Contributors
LOYALTY FORUM
12 Loyalty Forum: Your Voice 14 Behind the Brand Marcus Starke, SAP 16 The Inside Scoop: GameStop
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Learn the secrets behind the success of GameStop's PowerUp Rewards launch
The Inside Scoop
18 Q & A: Ask the Experts Ive been reading about all the new loyalty programs out there and the millions of members in each; Ive always thought loyalty programs should be for my best customers. Whats driving this trend and should I consider expanding my program/member criteria? 20 Loyalty Reads
Cause Marketing is Changing the Game - See How

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FEATURES
22 The Rise of Engagement Mark Johnson, Loyalty 360 24 Loyalty Expo Panel Explores Strategies for Engaging Post Recession Customers Stephen Rountree, Affinion Loyalty Group 26 Rules of Engagement: Why You Shouldn't Ignore Social Media When Trying to Increase Customer Participation Brad Pecot, Golfballs.com 30 The Iceberg Effect Amanda Cromhout, Truth 32 Five Steps to Creating Relationships using Data Connie Hill, VeraCentra 36 #Loyalty: How Cause Marketing, Fueled by Social Media, is Changing the Game Tim Crank, Young America 38 CEMEX USA: Customer Experience Strategy An interview with Ven R. Bontha, CEMEX USA
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Loyalty Management MAY 2011
Loyalty Management LOYALTY360.ORG
This Month in
MAY 2011 VOLUME 3 NUMBER 2 WWW.LOYALTY360.ORG
Global Coalition Loyalty Programs Decoded by Alan Leach from Finaccord

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TECHNOLOGY, TRENDS & REWARDS

40 Loyalty: Now Where Do We Go? Barry Kirk, Maritz Loyalty & Motivation 42 Global Coalition Loyalty Programs An interview with Alan Leach, Finaccord 44 Unleash the Voice of the Customer Nora Brown, FNC 46 Loyalty Innovation
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Design a Mobile Loyalty Program That Works

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Loyalty Management Editorial & Production Team Erin Raese - Editor in Chief Mark Johnson - Contributing Editor Caitlin Schar - Editorial Director Kathleen Ostoich - Graphic Designer Crescent Printing Company - Print Production Loyalty 360 Team Mark Johnson - President & CEO Erin Raese - COO Caitlin Schar - VP Account Management Amanda Chasteen - Manager, Marketing Operations Kathleen Ostoich - Marketing Manager Contacts Article Submissions & Advertising: Erin Raese erinraese@loyalty360.org or 513.360.8680, ext. 210 To subscribe to Loyalty Management, visit loyalty360.org.
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BEST BUSINESS PRACTICES

48 My Loyalty Program Sucks! Help! Bob Fetter, Pluris 50 Social Media Innovation Leads to Campaign Success Michael Martin, Eloqua 52 The Benefits of Loyalty Lesli Rodgers, Buxton 54 Q&A with Joe Sorge of AJ Bombers 56 Beyond the Loyalty Card: Designing a Mobile Loyalty Program That Works David Eads, Kony Solutions 58 Customer Centricity through Contact Strategy: How OfficeMax Made it Work Todd Thompson, Metrics Marketing Group 62 Behind the Brand Sean Geehan, The Geehan Group
If you would like to contribute to a future issue of Loyalty Management, please contact Erin Raese at 513.360.8680, ext. 210 or erinraese@loyalty360.org.
2011 Loyalty 360, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Loyalty 360 disclaims all warranties as to the accuracy, completeness or adequacy of such information. The opinions shared are those of the contributing authors and not necessarily reflective of Loyalty 360 and/or its affiliates. Loyalty 360 shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.
LOYALTY 360 ON THE WEB
whats on LOYALTY360.ORG
LOYALTY 360 ASKED ITS
Are you using social media sites like Facebook & Twitter as a way to communicate with your loyalty program members?
MEMBERS:
What's your favorite resource for industry insights? Email newsletters,
LOYALTY 360 PULSE
44% of you say YES; you are leading the way!

The rest are soon to follow,
at 44% get the bulk of the following. We hope Loyalty 360's "This Week in Loyalty" is at the top of your inbox!
WHERE ELSE DO YOU GO TO FIND THE LATEST INDUSTRY HAPPENINGS? Conference: 37% Printed Publication(s): 7% Company Websites: 7% Associations: 3%
another 44% responding "not yet."
TRENDING NOW
Loyalty Programs Are Getting A Face Lift: Marketers are re-evaluating and revamping their programs to keep their best customers happy and engaged. In the news recently: T.G.I. Fridays, Amtrak and AMC Theatres, are all players taking a fresh look at their loyalty programs. Social Media: Our recent Pulse poll provides just a snap shot of how the market is trending in the social space. The buzz on social media is ringing loud and clear. Marketers are talking about, researching and investing in a social media strategy. Mobile Technologies: QR Codes are getting attention from mobile users and retailers. Keep an eye on the marketplace as these cool little boxes pop up in engagement and merchandising strategies!
This summer, attend a Loyalty 360 webinar, learn from industry leaders and gain access to valuable insights, trends, tools and advancements.
LOYALTY 360 THOUGHT LEADERSHIP SERIES WEBINARS
DID YOU MISS A WEBINAR? Check the Loyalty360 archives and catch up on what you missed.
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Loyalty 360 Members' Services has THE directory for suppliers of engagement and loyalty needs. Let us help you find the partner that best fits your needs!
As a trusted advisor to marketers looking to build their organization's customer, channel, brand and employee engagement and loyalty strategies, we match your needs to providers that have the technologies, processes and business acumen to help you achieve your goals. Find a Partner allows you to search based on: Location Search our global list of partners. Your Industry Selecting the industry for which the product/program design or consulting expertise is needed will allow you to connect with a provider who has expertise working with companies in your industry. Resource(s) Needed Search our current partners' capabilities to find a partner to fit all of your program and product needs. Focus Narrow your search to companies who have expertise on the B2B or B2C side. Search results display real-time, providing results only for those partners who match/meet all of your needs. Browse each potential member page for further capability details, basic company information, relevant program/platform details, recent press, articles, research, whitepapers, case studies and multimedia. Directly connect with your potential partner via a built in form at the bottom of each partner page. A designated company representative will be alerted of your form inquiry and will connect with you directly. Need further help? Loyalty 360 is always here to help you find the perfect partner!
SUPPLIERS: INTERESTED IN JOINING OUR GROWING PARTNER LIST? Let Loyalty 360 connect you to potential sales leads.
Loyalty 360 membership comes complete with a customizable member page and the ability to appear in the search results for Find a Partner. Dont miss out on the opportunity to be matched with your perfect lead. Look for the Join Today icon at Loyalty360.org, sign up online and discover all of the benefits of membership now!
FROM THE EDITOR
A New Era for Loyalty

Todays customer is changed. They are looking for more personalized attention, they demand to be valued, and they are sharing their experiences with everyone (listening or otherwise). At a time when we are all taking a look at how to better retain, engage and reward our most loyal, many of you are re-examining your programs and approach to engagement strategies. In this issue, we are pleased to share the stories behind what it takes to up the ante and embark on a new era in loyalty. With continued advancements in technology and customer communication techniques, many of you are exploring ways to embrace social media to engage the customer and improve their experience with your brand. Learn how, Social Media Leads to Great Success as Michael Martin shares how an innovative web campaign increased the NBAs Golden State Warriors fan base and ticket sales! Explore another approach in, Rules of Engagement: Why You Shouldnt Ignore Social Media When Trying to Increase Customer Participation. Brad Pecot, from Golfballs. com, shares his story about how they recently tapped into technologies both old and new, to invite their customers to follow them on Facebook to virtually join in the discussion at the annual PGA Merchandise Show. Allowing followers to share in what theyre seeing, and embracing the feedback for what their customers love and would love to see more. Have you played with FourSquare yet? AJ Bombers has, and in an interview with co-owner Joe Sorge we learn how AJ Bombers has become a FourSquare phenom, helping take a newly launched restaurant all the way to Food Network fame. B2B is not to be ignored in the renewed loyalty space. The customer is getting much needed attention, as some companies shift gears to make the B2B customer experience a top priority. In an interview with CEMEX USA, they share their success in rebuilding the customer experience and how its integration throughout the company has lead to CRM awards, making them a leader to follow. The focus on customer centricity was imperative in the CEMEX strategy. We dive deeper with a detailed look at the steps to follow in leveraging your contact strategy in, Customer Centricity through Contact Strategy: How Office Max Made it Work. In the end, for many, a loyalty program is all about the data; how we bring it in and how we use it. Read, Five Steps to Creating Relationships Using Data, and follow the roadmap to unlocking this valuable data and build a relationship that retains your best customers. Keep the journey moving: keep enhancing, keep developing, keep exploring technologies and most importantly keep your best customer experience in mind. Your customers will keep coming back again and again, happy and engaged and ready to share their story too! Enjoy the issue! Sincerely,
Welcome new Loyalty 360 Members:
5one Clarabridge Epsilon ALG Partnership Marketing Direct Message Lab, Inc Progressive Insurance Panera Bread Loyalty Innovations Delhaize America, Inc Boston Globe Orlando Magic Seabourn Cruise Line
Erin Raese
Editor-in-Chief Loyalty Management erinraese@loyalty360.org
we're here to guide you along the way.
loyalty is a journey.
find tools, tips, and connect with your peers to find the answers to your loyalty questions at loyalty360.org
CONTRIBUTORS
Ven R. Bontha
Ven R. Bontha
Ven R. Bontha currently heads the Customer Experience for the US Operations at CEMEX. At CEMEX, Ven was recognized several times for exemplary customer service and was selected to complete CEMEX International Management Program as one of 80 candidates.
Connie Hill
Connie Hill, President and Founder of VeraCentra, brings more than 25 years experience delivering strategy and execution services to the marketing community. Ms. Hills passion drives VeraCentra to innovate new platforms that manage the complexities of data driven, customer relevant programs and campaigns.
Connie Hill
Nora Brown
Nora Brown joined FNC in 2008 and currently works as the companys marketing/ social media manager. She lives in Oxford, Mississippi, with a cat and a hedgehog.
Mark Johnson
Mark Johnson
Mark is the President & CEO of Loyalty 360. He has significant experience in selling, designing and administering prepaid, loyalty/ CRM programs, as well as data-driven marketing communication programs.
Nora Brown
Tim Crank
Tim Crank
Mr. Crank is a veteran of the marketing services industry with deep knowledge of the loyalty marketing and incentive space. In his role at Young America, Mr. Crank is responsible for assisting clients in the assessment, design and enhancement of consumer and B2B loyalty, incentive and engagement programs.
Barry Kirk
Barry Kirk
Barry Kirk is Maritzs chief provocateur in the Consumer Loyalty space, always looking to challenge where we are and helping to poke, prod and cajole loyalty marketing to its next iteration, including leading consultative engagements on customer loyalty and applying the latest thinking in the design of new program strategies.
Amanda Cromhout
Amanda Cromhout
Amanda Cromhout is an experienced Marketing and Executive coach who has been coaching since 2006. Amanda is eminently positioned to coach executives in all disciplines having operated as a senior executive within major blue chip organisations.
Alan Leach
Alan Leach
Alan Leach is Founder and Managing Director at Finaccord. His responsibility is to develop relationships with clients from the financial and other sectors at an international level. With a background in strategic research and consulting, Alan has extensive pan-European and global experience.
David Eads
A renowned mobile industry expert, David Eads brings more than 17 years of relevant experience to his role as vice president of product marketing for Kony. Prior to joining Kony, Eads founded Mobile Strategy Partners, a consulting firm that helped organizations develop actionable mobile strategies.
David Eads
Michael Martin
Michael Martin
Michael Martin is a Marketing Manager at Eloqua, the leading provider of marketing automation solutions and services. Martin has over 10 years of marketing experience with technology companies. Martin graduated from Bentley University with an MBA in Marketing.
An insightful industry veteran, Bob Fetter is directly responsible for expanding Pluris' leadership position in media and communications, retail, and other key markets where optimizing marketing spend is becoming critical to consumer marketers.
Bob Fetter Brad Pecot
Bob Fetter
Brad Pecot
Brad is the Director of Marketing for Golfballs.com, a leading online retailer of new and personalized golf balls and equipment. Brad has extensive experience in the many channels of online marketing, including SEO, paid search, e-mail marketing and social media, among others.
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CONTRIBUTORS
As vice president of Buxtons Direct Marketing Services organization, Lesli ensures that her clients obtain the best data and tools for reaching their customers. Her team provides CRM and direct marketing services.
Lesli Rodgers Joe Sorge
Lesli Rodgers
Joe Sorge
Joe Sorge is an American restaurateur based in Milwaukee, Wisconsin. He and his wife co-own four restaurants and an event space. His restaurant AJ Bombers was one of 30 small businesses taking part in the initial test of Foursquare, and has seen great success.
Stephen Rountree
Stephen is a designer, illustrator, and writer at Affinion Loyalty Group. For three decades ALG has been a pioneer in the loyalty and enhancements industries, continually developing ground-breaking products found in almost every wallet in America.
Stephen Rountree
Todd Thompson
Todd Thompson
Todd Thompson is a partner at Metrics Marketing Group, an analyticsdriven database marketing & interactive services firm. Todd works with OfficeMax and other clients to maximize marketing ROI through the development of customer insights and the implementation of marketing tactics.
Amisha Sinha
Amisha Sinha
Amisha M. Sinha serves as Vice President of Consumer Insights and Strategy for Carlson Restaurants Worldwide Inc. (CRW). She is responsible for all consumer research, marketing analytics, and loyalty and CRM initiatives for the T.G.I. Fridays brand.
If you would like to contribute to a future issue of Loyalty Management please contact Erin Raese at (513) 360.8680, ext. 219 or email at erinraese@loyalty360.org.
LOYALTY FORUM: YOUR VOICE
How can social media sites like Facebook and Twitter help a loyalty program?
evelant and Innovative. How will your customers buy from you in the future, from now till 18 months from now? How much is your business connected to Social Mobile Cloud and Deals? The age of your customer and their ability to use new technologies is key to your brand's loyalty program. Are your customers: Old School, Present Day Mix, New school, tech savvy? The ability to change or adapt to the current trends is a must. Multiple niche markets for multiple customers is the way of the future. Is your loyalty program adaptable to change for innovation? If you look at the fastest growing industry in the world, Groupon/Daily Deals, everyday their is a new niche market and a new technology being introduced. All of the big players make adjustments daily. This market is so profitable that they adjust the way they do business by the hour, not by the program. Where does technology and your customer meet? If you can find that intersection location, you are off to a good start. The chance of a tech savvy client bringing you an old school customer is better than old school client bringing you a new school customer. The reason for this is good old fashioned curiosity and the desire for someone to learn and become more hip. Darrell Ellens Founder, LinkedIn Groups "Daily Deal Industry" and "Bloomberg West"
he point is to understand the dynamics of social media and use the right tool for what you want to accomplish. Social participation still tends to follow the 90-9-1 Rule 1% are the true creators of content, 9% contribute sometimes and the other 90% passively watch or never come back. You seldom get permissioned contact information and you need to be careful about how you use click data to recontact so that it doesn't become creepy. Traditional POS implementation of loyalty programs can deliver permissioned contact info for up to 75% of a customers when well implemented. Social media reaches that hard to find 1% of early adopters and influencersthe ones who can help you co-create a ground-breaking program or destroy you; POS delivers more information on passive masses. Loyalty programs need integrated implementation of all the tools in the tool kit. Compensating with an established reward currency can engage those who otherwise are passive observers. It's a true intersection of traditional loyalty and social media. However, few companies using it seem aware of the potential issues opened up in terms of "compensation for time spent" vs. rewarding purchaseswe see companies who have been more lucky than good at avoiding tax implications or killing their profitability. Intelligent program design is critical. Kate Baumgart Hogenson Senior Associate, Metzner Schneider Associates
Social media reaches that hard to find 1% of early adopters and influencersthe ones who can help you co-create a ground-breaking program or destroy you.
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ocial sites are a way to get the message out about your business and gain new customers. Customer loyalty comes with the sale and how you handle it.
Gay Lynn Roberts Owner, Choicevac
It's better to have 100 active, advocates ENGAGING with your brand than 1000 who just 'follow.'
he new consumer driven market can be accessed with social media which would allow your loyalty program users and customers to discuss program details with you or even use it as a means of distributing program incentives.
Clayton Johnson Social Media Networker, Slingshot SEO
t may make sense to think of social media activity as an "advertising expense," as opposed to incentives to purchase. Another caveat: you'd better make sure your members really LIKE your program, because if they don't, they can really trash you in social media. A little discontent is OKit shows you're honest and it gives you valuable feedback. A LOT of discontent may lose you members, and even customers. Stacia Rubinovich Director, Retail Business Development, Advantex Marketing
nother way to add value to your program is to reward customers for talking about the brand in the various social platformscreating an advocacy effect. Also, the technology exists to link groups like Facebook to loyalty portals and reward people for reviewing products, posting videos and photos etc. Of course there are differing views as to whether you should encourage reward for advocacy, as some feel that prevents customers from being truly loyal. Loyalty isn't just about going back and purchasing, it's about engagement, growth and advocacy. In the past, loyalty has been viewed as short term, tactical and defensive; if planned properly a multi channel loyalty program can drive long term strategy and growth.
The technology exists but numbers of fans isn't the be-alland-end-allit's better to have 100 active, advocates ENGAGING with your brand than 1000 who just 'follow'. Anthony Monger Digital Marketing & Loyalty Consultant, Grass Roots
Optimize Your Loyalty Program
Through Metrics End-to-End Marketing Solutions

Customer Insights
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To find out how we can optimize your loyalty program, contact Todd Thompson, Partner tthompson@metricsmarketing.com 440.471.6024 www.metricsmarketing.com
Loyalty
Metrics Marketing is an analytics-driven database marketing and interactive services firm. Learn how we drive customer loyalty and profitability for some of the biggest brands in the world through analytics and complete program execution.
Metrics Clients include; OfficeMax, Midas, PNC Bank, Kay Jewelers, Regions Bank, American Greetings Interactive, Guitar Centers, Sherwin-Williams
LOYALTY FORUM: BEHIND THE BRAND
Marcus Starke
National Vice President, North America Marketing - SAP
Marcus Starke joined SAP in November 2009, after more than 20 years as a leader in the marketing and advertising industry. Marcus, as National Vice President of North America Marketing, brings a valuable outside perspective to SAP at a critical time. Externally, the world of marketing is changing quickly and drastically. Internally, SAP is broadening its marketing efforts to build volume, which brings new challenges to the proven models used to support enterprise sales. Additionally, the push to be on premise, on demand and on device will bring new challenges to sales and marketing strategies. At SAP, marketing is a valued partner to its sales organizations with a strong focus on demand generation activities. Marcus is leading his team through a two-year transformation to move from the traditional execution focus to a broader orchestration model and eventually marketing leadership with the objective to add much more strategic and innovation firepower to every experience customers and prospects have with SAP. SAPs traditional strategy of a push model has served it well for many years and Marcus knows SAP will not abandon it. He knows he has to build on it, and provide a superior experience to customers and prospects, to support the changes in our solutions and our industry.
When you look back, what was your favorite career experience and why? Over the years, who has had the most influence in your life?
I would have to say that the first job I had after graduating from college had the most impact on me. I had a huge opportunity to join the global marketing group for Pirelli (tires) in Milan. One of the executive team members gave me the opportunity to move from Germany to Italy. He was an incredible mentor. Entrusting and empowering me in a way that impacted the rest of my career. I was young and not very experienced and there was so much opportunity to grow and learn in a very short period of time. I have been lucky to have had a few incredible professional mentors who had a considerable influence in my life. I also would say my wife, who has been with me through my entire career, has been an integral part keeping me on track. She has moved with me to reside in seven different countries.
What inspires you?

People inspire me; people who are always looking for a way to improve themselves. Over the years I have had the privilege to see colleagues continually evolve, develop and grow in both professional and personal ways.
Which talent would you most like to have and why?

Professionally, there are certain skills that I have needed to develop out of necessity like data analysis and accounting. But this is one area that I hold the highest regard for those who can live in the numbers so to speak. On a personal level I would love to be able to paint. I admire the ability to inspire people through art. It is a contrast to my life. I enjoy art and I have always enjoyed talking to artists because it is a completely different way to work in comparison to my role as a marketer, which is structured by numbers and metrics.
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What are the qualities you most admire in a person/marketer?

I most admire the ability to be a multiplier as opposed to being a diminisher. By that I mean a multiplier has the ability to bring the best out of other people. A multiplier can amplify the performance and growth of an organization. A diminisher has the potential to have the reverse effect.
What brought you to the States?

It was a combination of two things. It was a great opportunity to add a new dimension to my career and life. Joining SAP to lead the North American Marketing organization was a chance for me to challenge and grow my skills as a marketer. By taking on a position with SAP in the US I also have had many positive experiences on a personal level. Moving to the US also was a way to meet a whole new arena of different people and professionals. It has been great!
What are some of the significant differences you see in the customer intelligence and experience space between other countries and the U.S.? Which country has a whole business culture which is best at focusing on the customer? If so, why / provide a few examples.
In general terms, US companies are more focused on customer service. For example in the retail and auto industries, there is a focus to make transactions for US customers fast and easy. There is a drive to learn what the customer wants and provide an experience designed to create a relationship. This is done in several ways that may not even be perceived by the customer. This is not the case in Europe.
What can we expect from SAP into 2012?

SAP is committed to becoming an amazing growth company and to evolve its image in the eyes of our customers. We are aggressively pursuing how we can improve all aspects of interaction with our customers.
What is your advice for a novice loyalty marketer?

Learn and listen. Talk to as many customers as possible. Never lose sight of the outside perspective. Be different and differentiate your offering to your customers to provide a distinctive experience. L
Learn and listen. Talk to as many customers as possible. Never lose sight of the outside perspective.
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LOYALTY FORUM: THE INSIDE SCOOP
GameStop
the inside scoop
GameStop launched their PowerUp rewards program nationally in September, 2010. By March, just six months into the program, they already had over 8 million members. On the surface this sounds like quick and easy success. What you dont know by looking at the numbers, is all the planning that went into the launch of this new program. Jenn McMillen, the brains behind the PowerUp program, is the director of customer loyalty and database marketing for GameStop, a $9B international retailer. Jenn is a multi-channel retail and relationship marketing expert, and her core areas of expertise are CRM, database marketing, targeted direct marketing, creation and hands-on management of customer programs, quantitative measurement, and modeling/ analytics. Here, Jenn describes the program set-up process, and looks into the future of PowerUp.
After extensive research GameStop identified two very distinct groups of customers; each equally important to the brand. Jenn, please tell us about this experience. What did you learn about your customer base?
Before I started at GameStop, if you had asked me which retailer owned the core gamer, I wouldve said, Hands down, GameStop. But after I started and was privy to our segmentation, I learned that one of our other, surprising, core constituencies is moms. For many mothers, GameStop is a great place to go because our game associates give great advice, know what kids like to play, and make age-appropriate game recommendations.
she can cash them in for discounts on games for her kids. It was important to us that we not alienate either audience with our program. We didnt want core gamers to say, You guys totally sold out to the parents, and we didnt want moms to say, This program is so niche that it has nothing for me.
How are you managing ongoing communication with each group? Are their different promotions, offers, etc for the different segments?
We ask members to fill out a pretty detailed profile about themselves and their households, precisely so we can target communications based on the members preferences. And we give bonus points to do it, so theres a healthy incentive in there. Yes, we do send different offers when we can determine where theres a good fit. For instance, if I can see that you own an Xbox 360 and a Playstation 3 and you tend to purchase mainly first-person shooter games like Call of Duty, Im not going to send you an offer for Just Dance. On the flip side, if you own a Wii and every title in your Game Library is an E for Everyone title, which are more family-friendly, youre not going
How did you structure your loyalty strategy to meet the needs of each group?
Our program is complex and layered for a reason. The core gamer will tell you that he loves the program because of the discounts and gamer stuff in the rewards catalog. And mom will tell you that she likes to rack up points because she knows
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to see an M for Mature title like Halo offered up. My goal for our program communications is to ensure that every email we send members is worthy of their time and attention.
Youve also given your members a choice: a free membership or one with a nominal annual fee. What was the thought process here?
We had an existing discount program called the Edge Card before we rolled out PowerUp Rewards, and it had a $14.99 annual fee. We had several million members in that program, and it was a solid revenue stream for GameStop. I figured that I wouldnt get a pass if I got rid of a multi-million dollar revenue stream, no matter how good the resulting loyalty program, so we built in a paid tier from the beginning. But we took every benefit from the Edge program and rolled it into the paid tier of PowerUp Rewards for the same price. And because the loyalty program comes with double the benefits than the Edge Card, we havent had any backlash from the gaming community, which tends to be very vocal when they are displeased with GameStops decisions. For our heavier purchasers, the Pro tier is a great value, but for our more casual consumers, the free level also has a lot of good benefits.
We ask members to fill out a pretty detailed profile about themselves and their households, precisely so we can target communications based on the members preferences. And we give bonus points to do it, so theres a healthy incentive in there.
Are your assumptions for this group holding true or have you seen some surprises in the paid membership audience?
We thought our take rate would be higher on the free card and lower on the paid Pro tier, but weve been pleasantly surprised that the reverse is true. But this is completely the work of all of our great store teams. They deserve the kudos on this because theyve made our loyalty program self-funding in the first year, which is virtually unheard of.
Whats next? With your heavy gamers, one would think mobile communication and social communities would be great ways to communicate and keep this group engaged. What are your plans for incorporating these strategies into your PowerUp experience?
We are also starting out our new year with some killer Epic Reward Giveaways: our monthly no way you could save up enough points to get this sweepslike private lessons with guitar great Dave Mustaine of Metallica and Megadeth, a trip to Amsterdam to visit Guerrilla Games Studios and hang out with the Killzone 3 development team, and a great experience tied to the fan-favorite game Mortal Kombat. Gaming is a great industry. Our products are fun, and our fan base is passionate. This beats the pants off selling yarn and cell phone service! And I am super proud of the program we built. L
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Q&A
LOYALTY FORUM: Q&A Yes, indeed, the program membership numbers cited above for Sears, GameStop and Rite Aid are huge. But really, what is of greater importance than the sheer number of program members is the percentage of members who are active. In the programs we manage, we want to see 50% - 60% of overall sales transactions being generated by program members. When this level of member activity/sales penetration exists, the program is lifted into the status of a critical tool for supporting decisions that extend beyond the marketing team to Merchandising and Store Operations, as well. Soshould the questioner consider expanding his/her program member criteria? In our view, inviting every customer to join the loyalty program, provided that resources are in place to allow for data optimization, is the right approach, e.g., you cannot develop customer insight without access to information relating to who your customers are, how often they shop, what they buy, what they should be encouraged to consider buying. What is key is to fully utilize all available datato create and analyze demographic and behavioral segmentation models for purposes of designing meaningful, segment based customer relevant communications.
Ask the Experts
Ive of the new loyalty programs out there and how Q: :manybeen reading about allSears and Rite Aid both 30MM+ and GameStop: members are in each; 8MM+. These numbers are staggering to me. I always thought loyalty programs should be for my best and most active customers. Whats driving this trend, and should I consider expanding my program/member criteria?
A:
The goal is to make possible what we call Meaningful Marketing. We must retain those who are identified as our best customers by making it clear in our communication with them that their preferences are understood and that their business is appreciated. Those, in lower segmentation categories must be reached with interest-pertinent messaging and offers intended to encourage repeat store visits (our purpose being to exploit the perceived potential these customers represent to become higher profit value patrons). As for those customers resident at the bottom of the segmentation who opted in but have never returned, well, there is little point, really, in spending precious marketing resources to reach out to them. In summary then, from our perspective loyalty programs are not for best and most active customers only (you may wish to offer a program tier offering special privileges or benefits for this group). The most effective loyalty programsthose that are truly customer data drivenare critical tools for gaining and fully utilizing a level of insight that supports differentiation of the brand from the competition at every touch point and, in the process, turns average customers into enthusiastic, high-value brand advocates. L
What is key is to fully utilize all available datato create and analyze demographic and behavioral segmentation models for purposes of designing meaningful, segment based customer relevant communications.
Jeffrey Harris
CEO, SHC Direct
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A:
The numbers are indeed staggering, especially in retail and travel where an expansive acquisition and member strategy is more the norm than the exception. While it is true that best customer programs can be extremely effective for recognizing and maintaining share with best and most active customer segments, todays loyalty programs offer greater opportunity to drive profit to the enterprise. The economics from a cost and incremental revenue perspective, along with advanced techniques in analytics are fueling this phenomenon. ROI continues to be the benchmark for evaluating financial success with loyalty programs. Savvy loyalty managers have diligently reduced technology and communication expenses with scalable solutions and digital channels, affording the luxury to amass and leverage loyalty marketing against larger universes of members. Further, a sharpened focus on aligning investment to the value or potential value of the member elevates the impact possible within the loyalty program, allowing the scale of the program to flex in a budget friendly manner. For most companies the loyalty program is the primary means to initiate targeted and relevant communications. When done well, this expanded reach can lead to greater overall impact. L
The economics from a cost and incremental revenue perspective, along with advanced techniques in analytics are fueling this phenomenon.
Dan Cleveland
Partner, Database & Analytics, OLSONdenali
A:
While it is true that 45-million customers cant be best customers, it doesnt mean they arent good customers or just customers in general. If I were advising a client who had 45-million known customers (even 4.5-million or 450,000 customers), I would recommend a tiering structure that delivered the appropriate level of benefits and experience based on the value of the customer. There doesnt need to be millions of individual treatment plans, but instead segmented groups based on attributes (total transaction value, product/category purchases, tenure, etc.). The goal should be to differentiate the experience for each customer segment in order to maximized the effectiveness of the loyalty strategy and drive incremental behaviors (increases in total transactions, average transaction value, top-line revenue, profits, web site visits, etc.)which needs to be routinely measured via solid performance reporting and analyses.
A benefit of having millions of registered program members is the sponsoring company now has the means to communicate directly with them in an acceptable, voluntary channel.
A benefit of having millions of registered program members is the sponsoring company now has the means to communicate directly with them in an acceptable, voluntary channel. Although those customers do have a common attribute of being in the program, their messages and promotional offers should also be differentiated based on their segment. As many studies have proven over the years, the more a company communicates in a loyalty program the higher the member awareness, the greater the member participation and the better the overall program performance. Remember: A well developed and executed communications strategy creates awareness, encourages participation, maintains engagement in the program and promotes advocacy of the brand. The right balance of rewards, benefits and communications in delivering the customer experience will lead to measurable program migration: fair/borderline customers will become good; good customers will become better; and best customers will
maintain their level of performance or become even more engaged with a companys brand. And for those customers who remain poor or unprofitable, a case will be made to stop attempting to engage with them. Enrollment in a program is only the first step. And if a group of members never evolve beyond the basic enrollment stage after a reasonable amount of time (varies by industry/business type), then the sponsoring organization should fire non-participating program members and invest those dollars towards segments of customers who are engaged and exhibiting desired behaviors. Its tough to do when a key performance index (KPI) is Number of Total Members in the program. I would suggest a modified KPI: Percentage/ Number of participating members vs total enrolled membership based. Thats a sure fire way of knowing if a program is effectively inspiring and maintaining member behaviors and can be benchmarked monthly and year-over-year. Can an organization have 45 million best customers? Not likely. But can 45 million identified/registered program members be valuable to the organization, as well as pay dividends to the members? Absolutely! L
Carlos Dunlap
Practice Director of Loyalty, Kobie Marketing
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LOYALTY FORUM: BOOKS
Loyalty Reads
BRAND SENSE: Sensory Secrets Behind the Stuff We Buy
by Martin Lindstrom
Free Press | February 2010
Did you know that the gratifying smell that accompanies the purchase of a new automobile actually comes from a factory-installed aerosol can containing "new car" aroma? Or that Kellogg's trademarked "crunch" is generated in sound laboratories? Or that the distinctive click of a justopened jar of Nescaf freeze-dried coffee, as well as the aroma of the crystals, has been developed in factories over the past decades? Or that many adolescents recognize a pair of Abercrombie & Fitch jeans not by their look or cut but by their fragrance? In perhaps the most creative and authoritative book on how our senses affect our everyday purchasing decisions, global branding guru Martin Lindstrom reveals how the world's most successful companies and products integrate touch,
taste, smell, sight, and sound with startling and sometimes even shocking results. In conjunction with renowned research institution Millward Brown, Lindstrom's innovative worldwide study unveils how all of us are slaves to our sensesand how, after reading this book, we'll never be able to see, hear, or touch anything from our running shoes to our own car doors the same way again. An expert on consumer shopping behavior, Lindstrom has helped transform the face of global marketing with more than twenty years of hands-on experience. Firmly grounded in science, and disclosing the secrets of all our favorite brands, Brand Sense shows how we consumers are unwittingly seduced by touch, smell, sound, and more.
DIFFERENT: Escaping the Competitive Herd

by Youngme Moon
Crown Business | April 2010
Every few years a bookthrough a combination of the authors unique voice, storytelling ability, wit, and insightsimply breaks the mold. Bill Brysons A Walk in the Woods is one example. Richard Feynmans Surely Youre Joking, Mr. Feynman! is another. Now comes Youngme Moons Different, a book for people who dont read business books. Actually, its more like a personal conversation with a friend who has thought deeply about how the world works and who gets you to see that world in a completely new light. If there is one strain of conventional wisdom pervading every company in every industry, its the absolute importance of competing like crazy. Youngme Moons message is simply Get off this treadmill thats taking you nowhere. Going tit for tat and adding features, augmentations, and gimmicks to beat the competition has the perverse result of making you like everyone else. Different provides a highly original perspective on what it means to offer something that is meaningfully differentdifferent in a manner that is both fundamental and comprehensive. Youngme Moon identifies the outliers, the mavericks, the iconoclaststhe players who have thoughtfully rejected orthodoxy in favor of an approach that is more adventurous. Some are even hostile, almost daring you to buy what they are selling. The MINI Cooper was launched with fearless abandon: Worried that this car is too small? Look here. Its even smaller than you think.
Get off this treadmill thats taking you nowhere. Going tit for tat and adding features, augmentations, and gimmicks to beat the competition has the perverse result of making you like everyone else.
These are players that strike a genuine chord with even the most jaded consumers. In fact, almost every success story of the past two decades has been an exception to the rule. Simply go to your computer and compare AOL and Yahoo! with Google. The former pile on feature upon feature to their home pages, while Google is like an austere boutique, dominating a category filled with extras. Different shows how to succeed in a world where conformity reignsbut exceptions rule.
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WE FIRST: How Brands and Consumers Use Social Media to Build a Better World
by Simon Mainwaring
Palgrave Macmillan | June 2011
A social media expert with global experience with many of the worlds biggest brands including Nike, Toyota and MotorolaSimon Mainwaring offers a visionary new practice in which brands leverage social media to earn consumer goodwill, loyalty and profit, while creating a third pillar of sustainable social change through conscious contributions from customer purchases. These innovative private sector partnerships answer perhaps the most pressing issue facing business and thought leaders today: how to practice capitalism in a way that satisfies the need for both profit and a healthy, sustainable planet. Mainwaring provides case studies from companies such as P&G, Walmart, Starbucks, Pepsi, Coca-Cola, Toyota, Nike, Whole Foods, Patagonia, and Nestl as well as a bold plan for how corporations need to rethink their strategies. We First is a new way of looking at the world. Its a personal and professional response to a sea of fears that surround us everyday. Social media connects us in ways that can build businesses and a better world. It can unite brands and consumers in a partnership that wont just fix problems from the past but build a brighter future. It can help big companies and consumers ease the suffering of those on the other side of the world simply by buying and selling our normal wants and needs.
Social mediaviral, borderlessis the perfect vehicle to promote "contributory consumerism," and Mainwaring has fascinating suggestions for technological innovation and systemic changethe author's enthusiasm and evidence make an excellent (and counterintuitive) case for big business's ability to make major strides in creating a more equitable world.
Publishers Weekly
SHOPPER MARKETING: How to Increase Purchase Decisions at the Point of Sale

by Markus Stahlberg
Kogan Page | February 2010
Shopper Marketing explores the subject of shopper marketing, which takes place in the store, aiming to turn shoppers into buyers at the point of purchase. The goal of shopper marketing is to influence purchase decisions when the customer is close to the product in the store. It is about the experience of shopping, the environment, the packaging, and the personalization of marketing. Shopper marketing is a relatively new area of marketing, but the financial investments being made in the area are increasing each year. According to surveys, shopper marketing is growing even faster than internet advertisingdoubling since 2004 and on track for an annual growth rate of 21 percent by 2010. Research has indicated that: At least 70% of brand choices are made in the store 68% of purchase decisions are not planned in advance Only 5% of shoppers are loyal to one brand of the product group
These results show that there is plenty of opportunity to influence and change shoppers' decisions at the time when they are actually doing the shoppingand this new title will show you exactly how to do this. Providing practical advice about shopper needs; retail environments; shopper trends; shopper marketing strategies; retailing relationships; effective packaging and much more, this book is a must-have for all sales and retail practitioners and students of marketing and sales.
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FEATURES
The Rise of Engagement

by Mark Johnson, Loyalty 360
011 has been quite an interesting year so far. We have seen thought provoking events on the world stage that have been of significant economic (bailouts in Ireland, Greece and domestic debt issues), climate (earthquakes, floods, tornados and tsunamis) and political interest (democratic uprisings and upheavals, bipartisan bickering at all time high). While were witnessing a tepid recovery in the US economy that many hope will not falter, the economic environment in the US remains uncertain at best: the federal reserve is set to end its quantitative easing; unemployment is ticking up to 9 percent and may actually be closer to 15%; and, there is a fear of a double dip recession/housing marketing correction confounded by the consumer and commercial credit crunch. Given these mounting external pressures, its important for brands to realize what a larger, more detailed although less understood role these factors play in the world of loyalty, customer experience, marketing and brand engagement. This quandary has created consternation and concern in the market. Consumer sentiment, as one would expect (as measured by the Michigan and Bloomberg surveys), is still hovering in the stagnant range. A recent article by Colloquy suggests that individuals are not recommending as many products or services in this period of economic stagnation as they did just three years prior, raising questions about one of the biggest attributes and promises of social media. So, with this uncertainty we take a pause to genuflect on the best practices of loyalty and engagement. It is with
these best practices that organizations can create truly unique differentiators for their brands and the individuals that engage with them in a mutually beneficial and rich dialogue. What does this mean for the retailer, the banker, the B2B organization, the channel provider, or the leading travel companies looking to understand and retain the customers they currently have? It means that there is more pressure than before to engage their core audiences by providing compelling customer experiences
The shift in focus at the organizational level from customer acquisition to retention has never been stronger.
that lead to long-term loyal brand advocates. Yes, as we have stated before that the connotative and denotative meanings of loyalty are changing. These long-term brand advocates will not defect after one bad experience; but they will expect that brands mollify a less than satisfactory experience to the their individual level of expectation.
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he shift in focus at the organizational level from customer acquisition to retention has never been stronger. And, it will take on alacrity as the economic environment remains stagnant and the internal and external factors increase their impact on the internal stakeholders. These challenges and their momentum will create an unprecedented concentration on and pressing need for actionable best practices. The interest in a more comprehensive, systematic and data centric approach to engagement, customer experience and eventual loyalty remains at an all-time high. Yet the challenges of our economy, stakeholders, rapid rise and proliferation of numerous new media (some understood and most not), and a more demanding and informed populace remain barriers to complete implementation of effective loyalty programs. Many merchants and consumer package good companies are heavily using deal of the day offers and constant discounting and couponing that lead to a short term fixation on revenue that can derail progress and jade the focus toward big picture of loyalty. Yet, as we have posited before, constant discounting, especially in the early stages of a relationship, can have lasting loyalty/economic impacts that could have been addressed with a more systematic consumer-centric development approachone that incorporates soft benefits, high value product offering and instances of surprise and delight that will be unmatched in engagement levels. We continue to have the pleasure of speaking with the vanguard of the loyalty marketing arena, and the breadth, depth and level of expertise continue to grow at a breakneck pace. The once cottage industry that was synonymous with points and trinkets now has the attention of the C-Suite with staffing levels once reserved for larger marketing and advertising divisions. We have seen programs that were nonexistent 18 months ago having already grown to 80 million members strong. And they have achieved this growth with aggressive marketing and delivery of programs that aim to provide the data rich insight that will prove actionable when driving consumer engagement, behavior and loyalty. Still, we continue to see companies show little reverence to the market and respective Voice of the Customer that should be driving all interactions with the brand participants. At this point, most loyalty and engagement marketing programs will not be lacking transactional behavior; it is usually the trove of data that organizations have that causes the most predilections. Economic and statistically relevant models that provide insight and understanding are more needed than ever before. L
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FEATURES
Loyalty Expo Panel Explores Strategies for Engaging Post Recession Consumers
by Stephen Rountree, Affinion Loyalty Group
ow do companies move todays consumers toward greater engagement? How do businesses build trust and clarity into their customer relationships? How can they develop a more accurate, nuanced understanding of their customers and is it even worth the effort? During this years Loyalty Expo, Affinion Loyalty Group (ALG) hosted a panel discussion focused on strategies to engage the post-recessionary new consumer. Panelists from Bank of America, Best Buy, the Mallett Group and Mintel Comperemedia shared the challenges and successes they encounter as they balance accommodating new consumer demands with business needs. They offered insights into their approaches to identifying and meeting those demands and needs in an uncertain economy, as well as into their current view of customer engagement as highly-regarded consumer brands. As moderator, Charles Christianson, Vice President at ALG, alluded to the toll that the recession has taken, though the news today is not all bad. According to Donald Norman, an economist with Manufacturers Alliance, there is a brighter side to the recent economic upheaval. Quoted in USA Today, Norman said, "The sharper the recession, the sharper the recovery. In virtually every case, forecasters underestimated how strong it would be. I think it was a product of pent-up demand." Christianson urged that in order to recover, businesses must learn how to relate to new customers by understanding who they are and what drives them. "Segmentation is a means of turning a crowd of customers into a series of personal conversations that deepen the relationship with a consumer and a brand, he explained, adding, These conversations will form the basis of the future relationships you will have with this newly formed customer base. Andrew Davidson, Senior Vice President at Mintel Comperemedia, observed that, Any segmentation needs to be well-balancedeach segment needs to be distinct and easily actionable. He warned against being too myopic in segmentation. Its a common pitfall only to focus on highly profitable customers. That approach, explained Davidson, can cause a company to
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ignore prospects and miss opportunities for future relationships. Additionally, a segmentation scheme needs to be dynamic, updated every 18-24 months to factor in changes in the marketplace. Within each segment, competitive intelligence is key to evaluating the changing landscape. He confirmed findings that the credit card industry is heating up and the industry is growing as indicated by the increase in direct mail in Q4 2010. In the credit card industry, he sees cash back rewards as a focus area, and there is opportunity for credit card companies to segment cash back even further. Davidson shared some data that could shed light on the issue of trust. In a recent survey, Comperemedia found that almost seven out of 10 [consumers] worry that new websites are using their personal information without their knowledge. A similar number, around seven out of 10, stated that if they
serve them better. The array of data that Best Buy collects is substantial: value-based, behavioral, geodemographics, needsbased, experiential and cultural. For example, with needs-based segmentation, Best Buy examines how people like to shop for technology. Some customers love to come in and touch and feel technology, others love to do all their homework online and then walk into the store to buy, Olson explained. As for her own persona, she noted that she is a love-it-and-leave-it gatekeeper. She loves technology but hates to shop for it. Just take care of me exemplifies her preferred shopping experience and that is what Best Buy does well for people like her. Olson also discussed mass, segmented, triggered and 1:1 marketing. As part of a recent trend, Best Buy is relying more heavily on mass marketing such as television ads to create general awareness. The company uses segmented marketing at
In order to be successful, companies need to deliver value and trust to their customers in a clear and simple manner.
found out their bank was using transaction information taken from credit cards or checking accounts to sell them other products, they would switch banks. So, theres definitely some concerns out there with consumers. Chris Sbriglia, Vice President at Bank of America, echoed Davidsons words about consumer trust: Its important to make sure the customer knows that we will protect their information and only use it in a proper way. In order to build trust, Sbriglia explained that businesses must make sure that additional benefits offered represent real value to customers. And he noted that, you really have to take a step back before you begin your segmentation process and understand what you want to get to as an end goal. That way, he explained, you dont end up with information that is not really usable. This approach helps you make a good assessment of what data is most relevant and how you should structure your loyalty strategy. And, according to Sbriglia, its not just about hard currency. Rewards programs need to include not only points, but also soft benefits that resonate with customers. All benefits should be delivered with simplicity. With Bank of Americas No Hoops campaign and Cash Rewards product, its about recommitting to customers that were here and we want to make things simple and easy to understand. Its really about a commitment to give the customer what they want in terms that they can understand and use, he said. On the topic of simplicity, Barb Olson, Senior Director at Best Buy, noted that the personal service provided by the Blue Shirts, Best Buys in-store sales staff, is the most important factor in the interaction with a customer. On the social media front, Twelpforce has been a good means of helping customers. It uses Twitter to provide quick and simple answers to customer questions in real time. Olson believes it's important to make technology simple for people. Offering an overview, Olson noted that Best Buy uses a multi-layered approach to segmentation. We have 24 million [people] in our loyalty program, she said, adding that the program, is the key way we collect data on our customers to the local level by stores offering promotions to certain population groups. Best Buys triggered marketing practices evaluate what the consumer has already purchased and what they might need now. Personalization on a 1:1 basis is the goal of their direct marketing efforts. Best Buy's main channel for 1:1 marketing is electronic communications. Best Buy understands that a message must be highly relevant in order to increase readership; irrelevant messages lead to consumers deleting all messages. Related to relevancy and adding value, Marc Berman, President of the Mallett Group, noted the importance of making a relationship with your customer through understanding the nuances of what the customer wants. Berman agreed with Olson that the landscape is complex. Analysis should include various generational (Millennials, Gen Xers, Baby Boomers), cultural and personality-based factors. Additionally, Berman noted, we evolve as a society based on technology developments. All of these elements need to be factored into the loyalty program strategy. Berman encouraged companies to look not only at the best customers, but to look in the subsets, especially at the emerging generations. You have to convert those people to be your best customers and you have to think about segmentationabout morphing them from one band to another. Berman noted that airlines are definitely marketing to their most engaged customers, even offering them the most cost-effective ways of getting to the next level of benefits in their mileage rewards programs. However, he added, Then theres the less frequent traveler, or the ones who are not motivated by that. This is why its good to look at what really makes these people our best customers. Is it enhanced earnings or special deals? I think that you have to look at the type of customer that is engaging with your program and also your vision about what you want your program to mean to those different segments, Berman concluded. The panelists all echoed a final sentiment that should resonate with anyone developing or reevaluating a loyalty program: in order to be successful, companies need to deliver value and trust to their customers in a clear and simple manner. And yes, its worth it. L
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FEATURES
Rules of Engagement
Why You Shouldnt Ignore Social Media When Trying To Increase Customer Participation
by Brad Pecot, Golfballs.com
eveloping customer response and participation in the realm of the ecommerce market can sometimes be difficult. Online retailers are constantly refining their operations, skills and websites in order to reach a larger audience and sell more. And many are good at it. But when you ask online marketers and managers about how to encourage customer participation, engagement, and feedback, their answers arent so cut and dry. Most online retailers have multiple ways that they can gauge their customers behaviors. Whether it is through their website analytics packages to see the popularity of the pages on their website, integrating customer comments & reviews on products or simply asking their customers over the phone, knowing the pulse of your client-base is necessary. In this regard, the challenge of generating online customer reviews tends to always be an interesting topic. Most e-commerce websites allow and encourage customers to post reviews of their recent purchase, for the purpose of helping out other customers that might be in the same boat, while also adding relevant content to the products webpage. E-tailers quickly realized that customers werent flocking to the website to graciously add their custom review. Incentivizing the customer helped, but they still werent responding as e-tailers hoped. Luckily, social media came along. Social media outlets like Facebook, Twitter and YouTube have given not just online retailers, but all companies an easier way to build loyalty with their customers by encouraging them to participate and interact regarding their products or services. Although there is much to learn about how to properly integrate social media into a marketing mix, companies are quickly finding out that they must have a presence in such arenas. However, companies need to realize that social media is just a part of your overall marketing mix and shouldnt replace anything that you are doing well, no
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matter how hot the topic is right now. You have probably been building customer loyalty through a variety of ways, whether it is through great customer service, an easy-to-use website or other areas that your customers react positively to. At Golfballs.com, a major part of our marketing mix in connecting with customers is through our e-mail marketing campaigns. Weve found that many companies are hesitant to market to their customers through e-mailnervous that it is too intrusive. They often ask themselves, Do I like getting e-mail marketing messages? Am I going to anger them by flooding their inbox with messages? Will I lose the trust that I have built up? These are valid questions that every marketer should ask themselves and their company. But the answer to these types of questions depends on the unique industry and customerbase. Some are more conducive and accepting to this type of marketing than others. In our case, weve learned that with the right frequency and by providing our customers the ability to change their e-mail frequency or opt-out of messages at any time, e-mail marketing fits in our marketing mix. And we learned that not only does it fit, but it thrives. Our customer base responds very well to our e-mail marketing messages and although they are primarily transactional-based, we do provide a mixture of messages to keep things fresh. A recent customer loyalty exercise that we performed involved both e-mail marketing and social media. Having done business as an online golf retailer since 1995, we strongly believe that Golfballs.com needs to continuously be on the forefront of the golf industry online. It is important for us to provide our customers with access to the hottest new products, news and upcoming trends so that they will continue to rely on us for their golfing needs.
Social media definitely isnt the only way that we deepen relationships, and even though it cant shake a stick at our e-mail marketing campaigns or other revenue generating efforts, we look at it as an integral part of our marketing strategy.
Part of doing that is for a crew from Golfballs.com to participate in the annual PGA Merchandise Show, where all of the major manufacturers in the world of golf display their current top products. Typically positioned shortly before the opening of golf season each year, this arena gives manufacturers the ability to develop buzz and hype for both their existing products and those that havent hit the market yet. This year, we decided to not only show up and use that information to provide our customers with access to these products once they hit the market, but gauge their interest and hopefully build loyalty through social media. We thought a good way to start would be to alert our customers with an e-mail announcing our attendance at the 2011 PGA Merchandise Show in Orlando a few days prior to the event. The e-mail was simple in nature. A query to our database pulled the customers name into the message, resulting in a more personal tone. We basically mentioned that we were heading to the PGA Merchandise Show and briefly explained its purpose for those of that werent familiar with the event. We explained that Golfballs.com will be meeting with the major golf manufacturers, checking out the new products and conducting some interviews with some industry professionals, and they could keep up with all of the action on our Facebook page. We certainly got their attention. We saw an immediate boost in our Facebook fan count after the e-mail was sent. But now that we had their attention, we had to deliver on our promise. Over the course of the next few days, we had our representatives at the Show send us anything and everything that they thought was worth sharing. This included video
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Rules of Engagement (continued)
Weve learned that its not enough to just post something and move on to the next post you must engage and respond to the customer every chance you get.
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interviews with industry professionals and PGA Tour players, excerpts about the show in general, or snapshots of the hot new products. We even posted a picture of a George W. Bush impersonator, which surprisingly enough peaked a lot of interest! We expected a solid interest level and some participation, but the response was overwhelmingly positive. We noticed a significant spike in our Facebook fans commenting on our posts, asking questions and expressing interest. Its worth noting that the more you participate in their responses, the deeper that trust level gets. Weve learned that its not enough to just post something and move on to the next post you must engage and respond to the customer every chance you get. To take our social loyalty experiment to the next level, we decided to take advantage of our interview time with a PGA Tour golf professional and involve our Facebook community in a way that they didnt expect. Prior to the PGA Show, Golfballs.com lined up an interview with PGA Tour professional Matt Kuchar, who was coming off of an outstanding year in 2010. In addition to the agreed-upon interview, we asked Mr. Kuchar if he minded that we ask him some questions from some of our Facebook fans. Fortunately, Matt agreed. So we challenged our
Facebook community to come up with some questions that we could ask Matt on their behalf. We received quite a number of questions and conducted a separate interview posing just the questions that our Facebook fans asked, mentioning the names of our fans in the interview. Imagine their surprise when we posted the video interview to our Facebook page where Matt personally addressed their questions! Needless to say, they were excited to watch the video and share it with their friends. Through the Q & A video with Matt Kuchar and the timely and relevant updates about the golf industry, we were able to strengthen and deepen our relationship with our fans. And by doing that, we think there is a much better chance of those Golfballs.com Facebook fans becoming Golfballs.com customers down the road. Social media definitely isnt the only way that we deepen relationships, and even though it cant shake a stick at our e-mail marketing campaigns or other revenue generating efforts, we look at it as an integral part of our marketing strategy. We see it as the best opportunity to build customer loyalty, today. Who knows what tomorrow may bring, but we sure arent going to let this opportunity pass us by. And if you monitor how your unique customer base is using social media, hopefully you can engage them in a similar fashion. L
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FEATURES
The Iceberg Effect

by Amanda Cromhout, Truth
ave you ever considered the power of the ice-mass below the surface of the waterline versus the small ice peak above the surface? I like to refer to the real impact of effective customer leadership or customer centricity as the Iceberg Effect. The Iceberg Effect is particularly insightful for the retail industry. Let's break down the benefits of customer leadership into three levels. Above the waterline is what your customers and competitors see as your 'loyalty strategy': i.e. your loyalty program (Clicks Clubcard, MySchool, Pick 'n Pay/Discovery benefits, etc). Initially, the retailer achieves level 1 results from the loyalty program. Typically, this can be a sales uplift of +/- 6% based on broad international trends. Therefore, the retailer is happy to settle for +6% sales performance and realises that the loyalty investment is worthwhile. The loyalty investment may give a 1% return for customers in vouchers or other incentives as per various different loyalty models. Level 1 benefits are clear and visible to customer and competitors, above the waterline.
offered, incentive levels, accuracy of data mining, etc.). Remember, your competitors can't see what you are doing (even if they subscribe to your loyalty program, they cannot see how often you send direct marketing to different targeted customers, with different tailored offers and communications). Are you ready to go deep-sea diving? The depth of your dive depends on how far you wish to maximize the customer centricity strategy. You won't necessarily need that extra warm wet suit because the energy from the positive benefits of customer centricity will keep you very warm! Let's go well beneath the waterline and into level 3 benefits.
Proper mining can strike gold

If the customer data is well mined and used to its maximum, the insights gathered can be used to drive the entire business strategy, significantly beyond just marketing. None of the benefits yielded from applying customer data to retail business decisionmaking can be seen at all by your competitors. Customers won't consciously understand how you are using the data gathered from their loyalty swipe, but should benefit from the right product being available at the right time, in the right place, at the right price and new innovations surprising the customers' anticipated needs. If this data is used effectively, product strategies will be strongly influenced, which could bring in new category ranges, new customer solutions or simply more of the old favorites. None of these decisions are based on product performance or old-fashioned retailer gut reaction alone (as they probably are today), but on the combination of a scientific data approach and the soul of the merchant. Your pricing strategy should be heavily influenced by customer insights to determine which customers are price insensitive to which products and vice versa. Why discount price if you don't need to and how can you leverage price discounts to the max to the most responsive customer groups? Your distribution strategy will benefit enormously from customer input: for example, product adjacency decisions may not be obvious (do you place lipstick next to shoes? She is the same customer after all). There are endless examples of how customer insights can be leveraged to yield increased sales and profits for your organization. We have merely dipped our toe into level 3 benefits. The depth of level 3 is not shallow and must not be ignored by any of us commercially driven retail leaders. L
It's only scratching the surface

However, this business performance uplift is only scratching the surface of the real benefits of a customer centricity strategy. Let's dip beneath the waterline and go snorkelling (in a very warm wet suit!) Level 2 results dip slightly beneath the surface and therefore cannot be seen by your competitors. In a retail environment, your loyalty program normally requires your customers to swipe their loyalty card. Every swipe captures point of sale data. Lord MacLaurin, former Tesco's chairman, famously told Dunnhumby: "What scares me about this is that you know more about my customers after three months than I know after thirty years!" A great CRM (customer relationship management) division in your company will use this data for personalised and targeted direct marketing. For example, I receive a direct mailer addressed to Mrs Cromhout, with a marketing message or offer that will interest or entice me, picked up from the data from my loyalty card swipe. If you want me to buy more, then listen to what I have already told you (by shopping and swiping my card). If I have previously bought Pampers newborn nappies, then send me information on baby weaning products when my baby is due to reach first solids age, so I don't have to even consider your competitor.
If the customer data is well mined and used to its maximum, the insights gathered can be used to drive the entire business strategy.
A host of variables
Here, we are achieving level 2 benefits of customer strategy which yields further incremental sales and profits. The level of commercial returns in direct marketing depends on a host of variables (products
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FEATURES
Five Steps to Creating Relationships using Data

by Connie Hill, VeraCentra
recently had the pleasure of speaking to audiences at this years Loyalty Expo conference in Orlando. During my session I had an opportunity to address the topic of customer intelligence. The focus centered on ways to leverage customer data to achieve and improve customer loyalty and lifetime customer value. Todays article follows that session with five specific steps toward unlocking the power of your data to achieve the customer intelligence that drives customer relationships.
Five Steps to Creating Relationships using Data

1. Establish customer metric baselines 2. Create customer value segments 3. Implement a customer contact strategy 4. Measure contact program results and improvements in customer metrics 5. Create a roadmap for continued success
First Things First

To truly unlock the power of customer data, marketing needs easy access to customer data. And that data needs to be organized in a way that makes it easy for marketing to analyze for insight and intelligence. If you do not have analysis capability at your fingertips, youll need to create that capability first. You dont need to boil the ocean at the starting gate, but you do have to have the right data in place in order to glean intelligence. Think in terms of basic customer information, such as demographics and contact data, and think in terms of customer interaction points, such as campaign response data, call center data, and transaction data. Once that data is identified, you have to find where the data resides within the organization. Valuable customer data can be found in all types of applications used by your business and a thorough audit will uncover several opportunities!
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The next thing to consider is tools and processes. You need technology to extract data from source applications, transform it and reload it into a centralized repository on an ongoing basis. And lastly, you need some sort of tool that provides you with a framework to analyze and track both customers and campaigns. You may already have a business intelligence application that your technology team can deploy for you or you may have an enterprise suite, such as Oracle that has built-in analytic capabilities marketing can leverage. If you are concerned with obtaining priority status within your companys IT group for these applications, consider working with on demand tools or completely outsource the analysis capability. Once your technology is in place, you are ready to unlock the power of customer data.
Are my customer communications increasing retention? Are my customer communications working to increase profitability, increase engagement, and improve loyalty? How are my customer segments changing over time? How is channel usage changing? By establishing meaningful customer metrics as a baseline for understanding where you are, you can set your objective for where you want to go. The ROI of achieving customer relationships can then be demonstrated by taking the budget used to achieve improvement versus the incremental lift achieved off the baseline.
Step One: Establish Customer Metric Baselines

At the highest level, you can use your customer data to set benchmarks to establish how well you are achieving loyal customer relationships. Analysis can reveal your customer retention rate, how often and how frequent your customers transact and interact, and if your customer base is spending more or less with your company during any given period. These three basic metrics are a great place to start.
Step Two: Create Customer Value Segments

To achieve a healthy return on your marketing investment, its critical to segment customers based on lifetime value to your organization. As the saying goes, not all profitable customers are loyal and not all loyal customers are profitable. Understanding value enables marketers to develop specific programs designed to retain the most valuable customers, move average value customers into the sweet spot, and more im-
By establishing meaningful customer metrics as a baseline for understanding where you are, you can set your objective for where you want to go.
For example, a national cleaning specialty franchise was able to combine customer data from its operational and call center systems with its customer database to determine baseline customer retention rates by service and by geographic area, the amount of incremental revenue contributed by repeating customers, and determine customer purchase patterns. The marketing team for this company went from no real knowledge about the value of their customer base to creating an understanding of how customers are contributing to overall revenues based on their behaviors. Once you are clear on your benchmark, you can then set objectives to improve. In the case of our specialty cleaning firm, objectives were established to increase the number of customers repeating, increase the frequency and ultimately increase the gross margin contribution of the customer base. Other areas to explore may include: What is my customer retention rate and how does it change over time? What are my customers spending year over year? How many services are my customers using? How profitable are my customer segments? How profitable are the active customers in my loyalty/rewards program? How many times do my customers repeat service? portantly, eliminate investment in customers generating loss. Further segmentation can be achieved through data augmentation and profile analysis, in essence, creating sub groups in addition to value segments. With segmentation in place, you are now ready to take analysis one step further. A deep dive into your data will help you to better understand your customer behaviors. For example, how do spending patterns change within your segments? How does customer behavior differ based on geography? Which channels are used most frequently by which segments?
Step Three: Implement a Customer Contact Strategy

Armed with objectives to improve customer metrics, value segmentation, subgroups and customer analysis, you are ready to design your communication programs. In an ideal customer driven organization, communications are focused specifically on customer need and desires. In a recent Experian QAS study (Feb. 2011, The Loyalist: Leveraging Relationships with Existing Customers to Increase ROI), 63 percent of responding organizations were found to track the lifetime value of each customer, and 72 percent see the value of those customers increasing over time. Recognizing this increase in value over time, its clear that customer engagement must be the driver. Marketers that keep the
continued on next page Loyalty Management MAY 2011
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Five Steps to Creating Relationships Using Data (continued)
customer connection going with personalization and relevant communications stand to reap the rewards. According to a February Colloquy article on loyalty programs, best practices to make those connections include engaging customers throughout their lifecycle, making account information easy to find and track and clearly communicate reward benefits. And as critical as data is to the analysis we used to better understand our customers, it is equally critical to execution, enabling marketers to personalize communications to customers and to establish trigger communications to profitably manage customer relationships. For example, our specialty cleaning franchise indentified a specific tipping point when interpreting their data. People who ordered carpet cleaning and then ordered one additional service were very likely to become regular customers. So marketing used deep incentives to secure the second service and then used less expensive customer incentives to secure ongoing retention. The same concept is applied to prevent defection. When the customers repeat pattern varies, a reminder is triggered to the customer with a specialized offer to encourage repeat services. In short, our cleaning franchise successfully interprets data and creates programs that move customers through the lifecycle, optimizing marketing spend.
The potential for increased profitability is directly tied to improved customer retention, yet many marketers still dont understand how these trends affect their customer base. For marketers who want to improve customer loyalty and lifetime customer value, improving customer intelligence is the key to success. By taking five key steps, marketers can leverage existing customer data to better understand where opportunities exist to improve customer relationships. First, by setting program and performance objectives, marketers can define how they want to determine success and set specific measurable goals for improved retention and profitability. Next, by examining existing customer data, marketers can analyze their customer population based on customer lifetime value and segment it, even at a micro level, based on retention and profitability parameters. Developing a targeted outreach strategy, marketers can then establish campaigns to meet specific objectives for each phase of the customer lifecycle. With each campaign outreach marketers can then collect and measure performance data, assess for success and feed the results back into the process for continuous improvement. The more data marketers can acquire about their customers, the greater the opportunity they have to reach them with offers that will generate results, foster loyalty and improve overall profitability. L
Step Four: Measure Your Results

Many marketers struggle with demonstrating marketings contribution to profitability. However, if you understand your overall customer benchmarks, and how your programs motivate your customers to influence incremental improvement, your ROI analysis goes well beyond the campaign level. Campaign performance should be measured in terms of revenue or profit delivered. Again, with careful design and planning, customer response to campaigns and loyalty programs are captured for tracking, program analysis and reporting. And the same activity used to mine data for customer insight can also be used to mine for campaign insight. Did our outreach achieve the desired effect? Did we drive additional business through our rules based triggers? More importantly, having captured these results enables marketers to better understand what worked well and what didnt and, even better, knowing why it worked or didnt workin order to invest in areas that deliver the greatest return.
Step Five: Create a Roadmap for Continuous Improvement

Understanding these performance metrics in a closed loop way enables marketers to foster continuous improvement and provides complete transparency and accountability for marketing. In short, once marketers begin to leverage their data, a love affair blooms, and marketers can never seem to get enough data! Additional data allows marketers to become increasingly granular in trend analyses and more targeted in their program outreach, creating endless possibilities for continuous improvement. Moreover, it becomes an opportunity to capture new ideas and possibilities and to prioritize efforts based on their impact and the ability to integrate more data into the mix!
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FEATURES
#Loyalty: How Cause Marketing, Fueled by Social Media, is Changing the Game
by Tim Crank, Young America
A Whole New World

New media channels, specifically social media sites, are opening up a whole new world for brands, and the driving force behind many brands success in this arena is rooted in cause marketing. Cause marketing has been around in its current form since the late 1970s, when the Marriott Corporation partnered with the March of Dimes to simultaneously promote the opening of a new facility and increase donations to the non-profit. Until recently, the business model for the practice has been mostly limited to a linear partnership: if you buy our product, we will donate some of the proceeds to a charity. Today, however, brands that are plugged into the social networking zeitgeist are poised to capture a much larger, more active audience and subsequently have a much broader impact than those who stick to the traditional methods alone. In addition, social media allows for unique, two-way communication that enables consumers to interact with one another, the cause and ultimately the brand as well. Social networking provides an outlet for peoples ingrained desire to not only connect with others, but also to improve the world around them. Many people with a Facebook page or Twitter account are constantly searching for new content to shareespecially if it helps a cause they find worthy. Companies that tap into this desire and give people something to rally around will find a willing cadre of participants that essentially become an extension of the companys marketing team. The key to success is making the cause more important than the profits associated with the brand. The ironic result is companies that are able to do this are the most successful at increasing sales. Two primary examples of how social media is spring boarding cause marketing are General Mills Box Tops for Education (BTFE) and Pepsicos Pepsi Refresh programs.
People Like Box Tops

BTFE started in 1996 as a means for people (particularly moms) to support their local schools by doing little more than pay attention to their routine grocery-shopping list. The company benefitted by gathering a willing base of brand-loyal customers encouraged by the positive experience of donating to a worthy cause. Here is how the program works: Consumers buy the products, clip the coupons found on the box tops and send them to school with their children. The school then mails them to the loyalty fulfillment house, which sends a check directly to the school twice a year. The coupons can also be dropped in collection boxes at many grocery stores or local businesses. At the start of the program, and for several years, communication with school coordinators, another primary participant in the program, occurred mainly via direct mail. This was a slow process of one-way communication that naturally led to relatively slow, albeit steady, growth. Now, however, with the advent of Facebook and Twitter, not only can the company respond directly and quickly to inquiries from coordinators as well as consumers, those participants have become the programs primary evangeliststweeting about how their school is helped by the program and encouraging other parents, family members and friends to participate as well. A quick Google search of Box Tops for Education returns about 260,000 results, most of which feature school and community organizers asking for submissions or talking about how their organization was helped by the program. Many actually list the brands that support the program and encourage friends, family and anyone who reads their posts, tweets or blogs to seek out those brands. BTFE has over 1,600 followers on Twitter (and follows over 1,300 in return) and is liked by more than 350,000 people on
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Facebook, more than double the amount from six months ago. Today, General Mills has added nine corporate partners to the program (Land OLakes, Welchs, Brita, Avery, Nestle, Juicy Juice, Kimberly-Clark, Pactiv and SC Johnson), and countless brands carry the Box Tops logo and coupons redeemable for 10 cents each, which is a greater value than most loyalty programs, according to its director, Zack Ruderman. Since the programs inception, the brands have collectively donated more than $340 million to schools throughout the country. The brands find it so valuable that some, like Progresso Soup, have established direct-to-consumer advertising campaigns, including TV ads announcing their participation in the program.
The more people know that their purchase is supporting a good cause, the more likely they are to select a name brand.
Pepsi Brand Refreshed Through Social Media
In early 2010, Pepsico launched The Pepsi Refresh Project, a groundbreaking campaign that provides grants to individuals or organizations to fund social improvement projects in one of six categories: Health, Arts & Culture, Food & Shelter, The Planet, Neighborhoods and Education. Through the program, organizations go to the programs Website, www.refresheverything.com, to submit ideas for programs that will move the world forward. Consumers are then encouraged to vote on the best ideas in each category. The idea
with the most votes in each category receives a funding grant from Pepsi. By the end of 2010, over 50 million votes had been cast and the company had awarded more than $20 million in grants. According to Pepsi, a key to the programs success has been the companys social media presence. Since the start of the campaign, the company says its Facebook likes have increased by more than 500 percent to over 3.3 million. Currently, Pepsi has more than 56,000 followers on Twitter and boasts over 100 million Twitter impressions as a result of the project. The reason for the success is that the nominees use social media outlets to actively request votes for their own cause. Consumers, meanwhile, promote their favorite programs and ask their online network connections to join them in voting for their preferred cause. A primary function of cause marketing is to engender brand loyalty through positive affiliation. The more people know that their purchase is supporting a good cause, the more likely they are to select a name brand over a store brand, despite the price difference. For example, according to Pepsi, when Millennials learn about the Refresh Project, their purchase intent increases.
Be Ready For A Growth Spurt

These two examples illustrate that cause marketing programs enhanced with social media capabilities can result in an abundance of activity surrounding the brand. A note of caution, however, is that companies must be prepared for the growth of these programs or risk getting overwhelmed by the demand that this dynamic duo creates. A successful campaign can grow very quickly in this digital age, and companies need to align themselves with a full-service loyalty and engagement company that can manage the program from end-to-end and handle the workload regardless of capacity. L
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FEATURES
CEMEX USA: Customer Experience Strategy

An interview with Ven R. Bontha, CEMEX USA
oyalty marketers have been exploring programs, engagement and customer experience for some time. But, the B2B space has never quite pulled these strategies into their business approach. CEMEX USA is leading the way in revitalizing the B2B strategy, giving customer experience the much needed attention it requires. Others are taking notice; Gartner & 1to1 Media recently announced CEMEX as a gold CRM Excellence Awards winner. Loyalty 360 asked CEMEX to share their inspiration, approach, challenges and successes in their progressive approach to enhancing the B2B customer experience.
Who is CEMEX and what differentiates your customer experience approach?

CEMEX is a global building materials company that provides high-quality products and reliable service to customers and communities in more than 50 countries around the world. After numerous acquisitions within the span of a decade, our US-based network grew to include a total of 14 cement plants, strategically-located distribution terminals, and more than 100 aggregate quarries and hundreds of ready-mix concrete plants. As a result of the rapid growth, a review of internal operations revealed that customers were served through multiple touch points, each with varied levels of service. Historically, the buildings materials industry had maintained only a status quo approach to customer service. CEMEX viewed that to achieve long-term business goals and to differentiate itself within the industry, it was imperative to enhance the overall customer experience. To that end, a customer survey was conducted to obtain information regarding the most important attributes of good customer service expected from a building materials supplier. Based on the survey findings, a formal Customer Experience initiative was launched with sponsorship from the executive team to make CEMEX the easiest partner to conduct business with for our customers, offering captivating experiences to drive long-term loyalty and deliver sustained growth for our shareholders.
itive transportation limitations, service delivery takes place at the regional level with centralized administrative support. The Customer Experience strategy was adopted to consolidate these transactions to one single point of contact for customer interactions. The objective was to standardize the levels of service being provided to customers throughout the country and to define service levels in the supply chain. Real-time visibility and the monitoring of the supply chains main variables to ensure on-time delivery and stock-out avoidance were some of the main challenges. Having all of this information in one central repository was one of the main goals that would allow CEMEX to make proactive decisions.
What was the most immediate and impactful change to your approach?
In our industry, most of our relationships with our customers are business to business, and depending on the segmentation they belong to, we aim to provide them with a customized customer experience based on their management style, size, potential to grow and profitability. For example, we are able to process customer orders in less than two minutes over the phone; however, we have made available other channels such as efax and email for customers that would prefer not to call. Our Customer Experience strategy has completely transformed the way CEMEX conducts business in many ways and we continue redefining customer service benchmarks for our industry to de-commoditize our products and services to enhance our customer experience. Customers are able to transact business around the clock at their convenience via a myriad of interaction channels with a live person over the phone or online. CEMEX vertical integration created a scenario whereby our internal and external customers competed for service deliveries during peak hours. With offerings such as Vendor-Managed Inventory (VMI) and electronic load tendering, we are now able to better serve our external customers as requested, while maintaining agreed-upon service levels for our internal customers. A major transformation has been the ability to push information to customers as opposed to customers making requests for it. We also have a continuous improvement methodology in place to fully-develop Customer Lifetime Value and to continue the evolution of the customer value proposition. Our team has been involved in exploring new technologies such as the mobile platform and integrating social media to drive CEMEX to provide captivating experiences for its customers.
What was the catalyst or inspiration for revamping the CEMEX customer experience strategy?
The strategy is to develop a differentiated and superior value proposition for our key customer segments in our offerings of products, services, transactional and delivery processes to generate business value for CEMEX. Although the company operates nationally, the true nature of the customer lies at the local level, which is where the building material product manufacturing and delivery take place. Since products are constrained by shelf-life and cost-prohib-
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What did you find to be the largest challenge in developing a more integrated approach to customer care? Biggest hurdles in implementing a new strategy?
The biggest challenge for us was organizational buy in and managing change, to convince stakeholders to consider the possibilities and step away from status quo. We were able to overcome it with persistence, measurable results and endorsement from upper management. During implementation we deployed our customer care representatives nationwide to live in the regions and meet face to face with our personnel and our customers to convey the message about our initiatives. Continuous communication also played a key role.
In your experience, how can an integrated approach to customer care affect overall productivity and efficiency?
Today we not only handle order fulfillment on a 24 hour basis at a lower cost,
vice failures (We manage more 150,000 shipments per year). Our managed volumes increased 30% versus 2009 and we were able to sustain our service levels without any headcount additions due to our customer centric approach to people, processes and technology.
What are some of the standout value added services that CEMEX offers their customers?
Single point of contact to resolve all inquiries. Personalized services offered to customers based on the 360 degree view. There is enhanced customer satisfaction in ensuring accountability at all touch points, as all interactions are recorded. Transparency and visibility into customer account information. If a phone call is chosen as the channel, the call is answered by a live person. Agents are available 24 hours a day throughout the entire year. A variety of interaction channels available including phone, email, fax and the customer portal, each with its own standards for quality assurance. The case management system allows the company to record and monitor all customer inquiries and complaints. The interaction records, in turn, provide for proactive service measures to be put in place.
How did you educate and excite the CEMEX customer care team for delivering on your new mission for exceptional service?
With the endorsement from senior management, onsite visits were planned across all levels of the organization to introduce the Customer Experience goals and objectives, with major emphasis on Change Management. Customer Care representatives were deployed to reside in each region for extended periods of time to establish the Customer Experience processes and methodologies. In doing so, the teams became familiar with local market conditions and layout of the regions to launch the Customer Care centralization efforts. Service Review Board (SRB) meetings are scheduled monthly with participants from each region. This provides an open arena for inter-departmental discussions of customer-related services. The role of our employees to provide captivating experiences is key for the success of our customer experience strategy. This is the reason we have company-wide incentive programs in place to ensure customer focus is retained during all customer interactions.
The role of our employees to provide captivating experiences is key for the success of our customer experience strategy.
but at a high rate of accuracy by having a centralized operation with a single point of contact. We are more efficient to right size our operations depending on the market needs. We expect to continue decreasing our cost to serve by providing customized experiences to our customer segments. An example of this effort is the launch of our self-service portal where our customers can retrieve all their relevant account information online at their convenience 24/7. By doing so, we have managed to reduce 50% our number of calls for account information as our customers get more familiar with the Portal. We have deployed electronic load tendering to over 100 carriers nationwide to reduce non value added interactions with our haulers over the phone and focus on managing any potential ser-
Can you share with us some of the tools you are using to help integrate customer touchpoints as part of your customer experience strategy?
SAP CRM interfaced with CISCO VoIP, Verint recording, and APEX/JWS were selected for customer-related operations because they provided a flexible, easy-toconfigure platform. Read more about the 1to1 Media CRM Excellence Awards and how CEMEX USA has caught their attention in, The Business Case of Customer Centricity at loyalty360.org. L
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Loyalty: Now Where Do We Go?

by Barry Kirk, Maritz Loyalty & Motivation
hat lies ahead for loyalty in both the business-to-consumer (B2C) and business-to-business (B2B) spaces? Lets look into the crystal ball that was the panel of industry experts I moderated at the 2011 Loyalty Expo, March 20 to 22. Opinions varied on the current state and future of the loyalty marketing industry, but one thing was clear: significant change and great opportunity lie ahead for loyalty. Panelists ranged from specialty marketing firms to gamification leaders to international consumer brands: Rajat Paharia (Bunchball), Jenn McMillen (GameStop), Sean Geehan (The Geehan Group), Marcus Starke (SAP) and Stacy Speicher (Starbucks). Five main themes emerged: 1. Points and Rewards 3.0 Yes, points still work well, but they wont for much longer without significant evolution. A new model is needed, one that creates greater emotional connection with consumers and integrates social, mobile and location-based components. I believe every loyalty program needs to have three main components: value, aspirational appeal and a personal connection, said Speicher. If all of those facets exist there is a much greater likelihood of generating longtime loyalty.
Paharia, founder of gamification firm Bunchball (a Maritz partner), outlined the basic driver for shifting how companies think about customer engagement: that loyalty is built with meaningful interaction between the brand and the consumer. For instance, participants in PowerUp Rewards, the loyalty program of video game and entertainment software retailer GameStop, are shopping three times as often as non-members and outperform average customers at both trading games and multichannel shopping. McMillen, GameStops director of loyalty, added that unique value and relevant offers (based on a members interest and preferences) trump sheer points earning almost every time. I believe in the marriage of the old and the new. Loyalty is headed toward a more holistic view that combines both points and more experiential programs, she said. This realization is starting a re-think of how the industry operates. The current points-and-rewards modeldo this, get thatis too rational and serves mostly to build loyalty for a program, not a brand. Based on what were learning about people with advances in neuroscience and social psychology, we know people have multiple motivators, want emotional connections and desire relationships. The industry cant provide for those needs with transactions alone. I want to be able to craft an experience for each indi-
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vidual customer as they walk in the door that is customized to their personal behavior, said McMillen. Its time for companies to move away from just recognizing transactional behavior and instead create a real, emotional connection, added Paharia. Some brands are catching onto this added value idea quicker than others. For example, Starbucks new mobile application empowers consumers to track payment and program status right from their phone. Tasti D-Lite uses Points 3.0 to let consumers earn points for checking in to popular social networks. 2. Data, Data, and More Data There is no shortage in data when it comes to loyalty programs. In fact, there is now more data than ever, granting us insights into massive amounts of information. What we have to figure out is how to understand and manage all of this data in a way that creates a program that is meaningful. We discussed how Apple is quite possibly the most successful loyalty-driven company in business today, yet they dont have a loyalty program. Theyve discovered how to mine and align data. Speicher called for action: What we need is the infrastructure and resources to process the data on a consistent basis. The fact is, most companies havent really done their homework, said Starke. If all interactions and touchpoints arent consistent through an entire experience, then the notion of a loyalty program is futile. With data at our fingertips, its just a matter of organizing and understanding it to make the customer experience match the promises of the loyalty program (and vice versa). 3. Reverse Loyalty Defined as a brands commitment to the customer, reverse loyalty will demand the attention of marketers as consumers get savvier. Post-recession consumers are using dollars strategically. They hope to influence corporate behavior through incentive-based buying patterns. In other words, people are turning the tables on brands. Brands that ignore these strong signalsbrands that dont join the peoples loyalty programwill struggle. Reverse marketing is definitely the case in the B2B space, said Starke. We make sure not to bombard our customers with messaging and marketing collateral. We filter and fine-tune the information to the point that it is relevant, interesting and provides value. Speicher agreed, saying that in many cases reverse marketing is something that happens organically. Starbucks has powerful examples. One involved a barista who actually donated a kidney to one of her favorite customers. It isnt uncommon for baristas to clap and cheer for customers who are new gold card members, demonstrating their loyal commitment to the individual. 4. B2B Loyalty Loyalty Expo 2011 had a distinct B2B focus, and everyone agreed B2B is a growing part of the loyalty industry. However, its not going to continue growing if we limit our thinking to traditional consumer strategies. Points-based strategies can cause headaches within the B2B environment related to restrictions on who is allowed to earn and redeem.
More importantly, businesses are more likely to see quality of product and customer service as drivers for brand loyalty. Successful retention and growth strategies in the B2B environment will need to focus on creating meaningful connections to the brand and delivering on exceptional experience, rather than relying on a hidden discount. Its about proving the ROI to the financial people, said Geehan. Its the amplification to the top and bottom line. Marketers need to demonstrate how a loyalty program will generate more dollars and in return pioneer a new way of doing business. 5. Gamification Gamificationapplying the mechanics of gaming to non-game activities to influence peoples behaviorsis one of the industrys most popular topics. Many marketers are still trying to wrap their arms around what gamification really means and how it can be applied to business. Panelists talked about the industrys intent with gamificationdo marketers understand the difference between simply driving more participation versus actual engagement? If we want engagement, including emotional connections, is the secret sauce in best-in-class gamified experiences? For all the talk around changing the industry from within, the conversation also turned to potential forced changes from companies like Groupon, Facebook, Four Square and Zyngawho are encroaching on the loyalty space. As prime examples of gamification in action (Facebook is the unofficial king of social gaming, and Zynga is the brain behind those games, with titles like FarmVille and Mafia Wars), these companies have the potential to completely change the industry. They have the inherent capabilities to offer brands what consumers are cravingemotionally satisfying experiences with engaging participation and opportunities to connect with other people. Those games are perfect little machines at manufacturing status, progress, achievement and reward on a very regular basisthings people are hungry for all the time, said Paharia. People are so hungry for this that if you can wrap it around something that is real and meaningfula real business, real products, real contentthen the opportunity is huge. Even Microsoft Office is being forced to think about ways to turn learning their product into a game that drives customer loyalty and keeps people involved in the massive upgrade cycle, versus turning to a new offering such as Google Docs. I firmly believe that traditional companies that figure out how to work with the Facebooks and FourSquares of the world will succeed at loyalty program while the rest will fail. These new forces dont sit still for long and they are going to completely change the face of the loyalty industry.
Whatever loyalty marketings future, it starts now. In fact, its already under way.
Whatever loyalty marketings future, it starts now. In fact, its already under way. The opportunities in front of the industry are all within grasp, but theyre all rooted in change: integrating interaction, creating emotional connections, noticing patterns, providing multiple motivators, showing commitment to consumersessentially, re-thinking and rebuilding loyalty marketing with new knowledge and technology. L
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Global Coalition Loyalty Programs

An overview of the market for coalition loyalty schemes worldwide with a focus on the financial sector
Interview with Alan Leach, Finaccord
inaccord, a London-based market research consultancy specialising in financial services, has just released the worlds first report about the development of coalition loyalty programs around the world. Alan Leach, Founder and Managing Director of Finaccord, shares with our readers a few key findings from the research, titled Global Coalition Loyalty Programs: Affinity Marketing Opportunities for Financial Services Institutions and Other Organisations, which analyses 115 loyalty programs from countries as diverse as Brazil, China, South Korea, Turkey and the UK.
This seems to be a vast and growing market. From which industry sectors are these programs developing?
In terms of industry sectors, frequent flyer programs set up by airlines remain the largest segment of the market by total member numbers at around 417 million. Following airlines are hospitality (189 million), retail (104 million) and banking (72 million). However, while airline frequent flyer programs and hospitality schemes dominated launches in the early years, from the late 1990s onwards there were many more launches of coalition programs originating in the banking, retail and other sectors.
Mr Leach, could you give us an overview of this research?

Of course. Our research provides a global overview of coalition loyalty programs with a focus on financial organisations which use them either to acquire new customers or to generate more revenues from existing customers. The research, which investigates 115 of the worlds leading coalition loyalty programs, was carried out between November 2010 and January 2011. We have defined a coalition loyalty program as a scheme by means of which members can earn points, miles or cashback directly through expenditure with entities from more than one ultimate holding company. Specifically, we have considered earning (rather than redemption) as the defining factor because multiple earning partners imply that two or more organisations have joined forces to develop a more compelling loyalty initiative for consumers than would otherwise have been possible. Our research contains sections on the history and growth of coalition loyalty programs, total member numbers and segmentation worldwide, consumer penetration rates by country and more.
Which coalition loyalty schemes have the most members?

According to our research, the largest schemes are SkyMiles (Delta Air Lines), AAdvantage (American Airlines) Mileage Plus (United Continental Holdings) and Priority Club (InterContinental Hotels Group), which are also the four that have been established the longest (since the early 1980s). Other programs that have amassed a substantial number of members are Starwood Preferred Guest (Starwood Hotels & Resorts) and South Koreas OK Cashbag (SK Corporation), which were launched in 1999 and 2000, respectively.
Estimated growth in total number of members of coalition loyalty programs worldwide segmented by sector of origin of program, 1981-2010
Estimated total number of members of coalition loyalty program worldwide (billion) 1.0 Non-specific
0.8
Other
What are the main findings?

In terms of market size and market growth, we estimate that the total number of members of coalition loyalty programs worldwide has increased significantly in the last 10 years, from around 305 million in 2000 to approximately 975 million in 2010 which equates to an average growth rate of 12.3% per annum. This implies that in 2011 total member numbers will exceed one billion. Moreover, once consumers who belong to more than one such program are excluded, almost 650 million individuals worldwide are likely to be members of at least one coalition loyalty program, equivalent to around 14% of the worlds adult population.
0.6 0.4
Retail Hospitality Banking
0.2
Airline
0.0
1980s
1990s
2000s
Note - data is estimated using the information gathered for the 115 coalition loyalty schemes investigated for this report as a basis with no adjustment made for individuals who are members of more than one scheme Source: Finaccord PartnerBASE for Global Coalition Loyalty Programs
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This data is interesting because it shows that the most developed programs are not always the oldest
Thats right. Overall, there is little apparent relationship between longevity of coalition loyalty programs and penetration within the consumer market of a particular country. For example, two of the oldest schemes (Aeroplan and Airmiles UK) have fairly unremarkable penetration rates within Canada and the UK, respectively, whereas OK Cashbag and Finlands K-Plussathe two programs with by far the highest penetration rates within their national target audienceswere established in 2000 and 2001 respectively.
Your company specializes in research about financial services. Why are loyalty schemes so relevant to the financial sector?
Deals with coalition loyalty schemes constitute very interesting partnerships for financial institutions because they tend to have a high number of members, are growing more quickly than other affinity groups and their membership is often made up of individuals with above average wealth. Our research indicates that the vast majority of coalition loyalty programs have established at least one partnership with a company from the banking or insurance fields. In the specific area of co-branded cards developed with coalition schemes, American Express, Bank of America (including MBNA), Citibank, Barclays, GE Capital (including GarantiBank and Hyundai Card which GE Capital co-owns), Diners Club, Chase and HSBC are, in descending order, the card issuers that possess the most relationships around the world for this activity. Moreover, in terms of the partnership share of networks, MasterCard seems to be ahead of Visa.
Almost 650 million individuals worldwide are likely to be members of at least one coalition loyalty program, equivalent to around 14% of the worlds adult population.
Thats interesting. How important are co-branded payment cards associated with coalition loyalty programs?
Very important. Of the 115 coalition loyalty programs included in the research, 92 (80%) had at least one associated co-branded payment card at the time that the research was carried out. In essence, payment cards are the most logical financial products to link to such schemes as programs exist partly to encourage member expenditure, and a proportion of this expenditure can be captured through a related payment card. Most of these payment cards are credit or other pay later cards (as opposed to debit or pre-paid cards), although we did not systematically analyse this segmentation.
So loyalty programs seem to be potentially beneficial to financial institutions as an affinity marketing channel
Yes, our research suggests that coalition loyalty programs constitute not only a global distribution opportunity for financial services institutions but also a potential marketing channel for many different types of financial products. For example, across the 115 coalition programs analysed, points or miles can often be collected by members through acquiring other banking, insurance and assistance products, most notably motor, household and travel insurance. However, there are also plenty of examples of niche services being marketed through such schemes; these services include identity theft assistance, travel money, home assistance, boat/yacht insurance and pet insurance. L
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Unleash the Voice of the Customer

by Nora Brown, FNC
oftware technology company FNC Inc. builds systems that give mortgage lenders and servicers access to the most current residential real estate information available. For more than 10 years, FNC has turned paper into data and data into knowledge. The company offers a suite of products including Collateral Management System (CMS), Collateral Headquarters (CHQ) and Collateral DNA that offer compliance and appraisal workflow platforms to automate vendor management, valuation ordering, tracking, documentation, and review for lender compliance with not only federal financial institution requirements, but also HVCC guidelines and other regulations. FNC processes more than 350,000 appraisals per monthrepresenting 1.2 to 1.6 million property recordsallowing the industrys top mortgage lenders to realize compliance security, reduced costs, and more efficient risk management. For consumers, FNCs technology speeds the loan origination process by allowing lenders to deliver a better customer experience. The mortgage industry is very complex and FNC hosts seminars and conferences to provide clients with valuable product and industry knowledge. Not only are these events vital to keep clients and employees informed about FNC and how to maximize the benefits of the products, but essential to all organizations to hear industry experts explain new regulations and updates that affect the mortgage industry at large. Over eight years ago, FNC realized they needed a Voice of the Customer platform to not only survive in the mortgage business battleground, but to obtain a tangible advantage. The Director of Education and Training was creating her own surveys in Word, would print them out, and deliver them to seminar or conference participants. Then, tabulate the results by hand. As the number of conference attendees increased, this survey method became ineffective. By automating the process, the director is now able to produce and deliver surveys
The surveys uncover more than just problems; they uncover opportunities as well.
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almost in real-time. "When we host webinars, well send a survey link to participants while the webinar is still going on. Theres no way we would have been able to capture those responses using our old, paper-based survey method, states Nora Brown, marketing manager for FNC. This careful, analytical approach has been a driving factor in the companys rise to prominence. Bottom line, FNC required a means to collaborate and share intelligence with its customers to give clients a competitive edge in todays constantly changing mortgage market. AJ Ureel, a project manager with the Client Services Group at FNC, spearheaded the most recent survey. He discovered several inefficiencies in FNC products to which users had become de-sensitized over time. FNC responded quickly with improvements that eliminated the inefficiencies, demonstrating its foresight to head off potential concerns before they could evolve into real ones. The problems were easy to address once we knew about them. The key was to uncover them, says Ureel. The surveys uncover more than just problems; they uncover opportunities as well. By digging into customer usage patterns, Ureel and his team understand how customers are using various components of FNCs offerings and where they may not be taking full advantage of system functionality. We pass the information on to our sales team, which uses it for up-selling, for cross-selling, and for ensuring customers are getting the most out of their FNC products, Ureel says. Great data not only enables FNC to make adjustments as customer needs and the mortgage industry change, it prevents them
from making critical errors. Consider FNCs AppraisalPort, a service through which lenders can access a database of more than 50,000 appraisers. Looking for ways to boost revenue in todays cash-strapped economy, FNC wondered whether users would be willing to pay a nominal fee for this previously free service. The four thousand respondents to the survey were overwhelmingly against a fee, says Brown. Their feedback saved us from trial-ballooning a fee that would have alienated clients. I suspect that this survey alone saved us from losing a few hundred appraisers and helped us retain a few thousand dollars in subscription business. For us, theres a huge benefit in being able to see responses displayed graphically. We couldnt do that (at least not easily) with the pen-and-paper method, explains Brown. We also enjoy being able to have an archive of past surveys so we can actually see how our survey participation has gone up since 2002. By leveraging Vovici as the feedback management tool, FNC is able to take its expertise a step further, collaboratively partnering with clients to help them address todays pressing mortgage challenges. This has been essential to FNC in making strategic decisions, improving products and services, and retaining customers. Having clients know that we are listening to themnot just nodding our heads but probing for information and then responding to itis key to deepening our relationship with them, concludes FNCs Ureel. As our needs and goals have evolved over the years, Vovici has evolved right along with them, always ready with new capabilities when we need them. L
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Loyalty Innovation
PRODUCTS, ADVANCEMENTS, & TECHNOLOGIES Moontoast
It almost doesnt matter what market youre in anymore, with a worldwide audience of nearly 700 million, at least part of your audience lives on Facebook. But are people selling there? Yes, but only the ones that understand both the technology and psychology of selling socially. Moontoast gets social commerce. Their suite of products (including Facebook commerce, distributed stores, and full-featured commerce communities) helps artists, authors, celebrities, and specialty retailers build their audiences and generate revenue. Moontoast provides both the technology and the social analytics that are critical to social commerce success. From their best practices, here are 5 quick tips for succeeding with social commerce:
Each of our products is designed to address a different situation, but all of them are built to give you control over your commerce channel. These are your fans, friends, and followers; shouldnt you be the one in the drivers seat?
1. Be where your customers are Deliver your offers directly into the social stream. Moontoasts products, for instance, lets brands promote and sell products directly from their Facebook page. 2. Offer unique and profitable packages Put together irresistible and lucrative offers by bundling products into special packages designed specifically for your social customers. 3. Create a frictionless experience Make sure the transaction process is seamless. Moontoasts products let Facebook Fans shop, share, and make purchases right from the News Feed items on your Wall, without ever leaving Facebook.
4. Be consistent Promote your entire store or specific products by sharing them to your Page wall. Repeated exposure keeps your offers top-ofmind and leads to incremental sales. 5. Optimize, optimize, optimize Analyze traffic, engagement, and transactions to get a clear sense of which offers customers respond to and then improve your results by replicating those successes. Making a successful start in social commerce requires three things: the right offer in the right place at the right time. Sustained success requires the ability to analyze the performance of your offers so that you can constantly improve them. A simple yet powerful platform like Moontoasts makes it easy for brands to deliver on all of these requirements.
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Paycloud
Retain rent tome Check.
CurCusrs? Bet-
ter Yet? Find New Ones. Paycloud takes the traditional loyalty program outside the store. Consumers can find a merchant on the map, join their program and see offers from anywhere. Even better? Merchants can actively promote themselves with locationbased coupons and promotions to drive traffic. Within a single app, merchants can cost-effectively find new customers, reward them for their loyalty, and communicate with theminside and outside the store. Paycloud allows merchants to reward customers for actions they see as importantnot just simple punches or check-ins. It uses the SparkBase processing platform, so just about any program is possible. Driving loyalty also means promoting the merchants brand, not Payclouds. Thats why the app autoloads a merchants virtual card whenever a consumer is in the store. A big investment in cards is a thing of the past. A small fee for artwork and the
sensor gets a merchant up and running in days, not weeks. The good news? You can clean your wallet out of all those plastic membership cards. The better news? Its easy for a merchant to grow a program from hundreds to thousands of users. To join, consumers dont fill out a form. They push a button. The best news? Merchants get the data immediately. Paycloud works with all existing SparkBase programs, not separate from them. Consumers who join Paycloud can receive triggered messages via email, text message, or on their receipt. It also means that plastic cards will still work if needed. Paycloud takes the traditional loyalty program outside the store. Consumers can find a merchant on the map, join their program and see offers from anywhere. Even better? Merchants can actively promote themselves with locationbased coupons and promotions to drive traffic. Within a single app, merchants can cost-effectively find new customers, reward them for their loyalty, and communicate with theminside and outside the store.
Communicate with your customers inside and outside the store.
Turn your most loyal customers into social media ambassadors.
Parallel 6 Captive Reach Mobile Marketing Platform

The Parallel 6 Captive Reach Mobile Marketing Platform enables you to turn your most loyal customers into social media ambassadors and influence their buying behavior via geo targeting through their mobile device. Captive Reach allows businesses to upload promotions and information (content) to a Mobile Marketing platform, and have that content displayed immediately on their customers mobile devices and track ROI through redemption. With Captive Reach youll: Communicate with your customers through a client branded mobile app and allow your customers instant access to their account information and company communications on their handset. Already have a mobile app? No problem, Parallel 6 made it easy to embed Captive Reach functionality within your existing structure and increase the value of your app to your users. Incent your customers to become social media ambassadors by awarding rewards points when your customer views and shares promotions or other content out to their private social media networks, on your behalf, and from the palm of their hand. This low cost word of mouth marketing channel amplifies the reach of a single promotion or piece of content by a factor of 200 within a captive word of mouth network. Send the right offers, incentives, promotions or other calls to action to the right customers, at the right location and at the right time, resulting in the ability to influence consumer behavior and drive immediate volume and revenue to a particular location. Allow customers to redeem offers at the point of purchase through the mobile app
The shift to Social is happening. More than ever before, successful companies are leveraging Social Media to build and engage customer communities, market products and services, build brands, improve customer service, conduct market research and gain valuable feedback on their offerings. However, the Social Media landscape is constantly changing. Almost weekly, new technologies, tools and techniques continue to emerge. Businesses struggle to keep pace with this rapidly changing Social Media landscape and many are challenged with finding the most effective way to integrate Social Media into their marketing strategy and ensure a positive return on their Social Media investment. Parallel 6 is a Social Media Technology and Services firm that leverages their proprietary Captive Reach technology, expert talent, processes, tools and techniques to optimize Social Media and drive measurable business results.
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My Loyalty Program Sucks! Help!

by Bob Fetter, Pluris
f you believe the common legend, the original loyalty program dates all the way back to 1793 when a U.S. merchant started giving out copper tokens to be collected and redeemed for items in his store (which was no doubt called Ye Olde Shoppe). But I would argue that loyalty programs are as old as commerce itself. After all, humans are generally loyal creatures by nature and smart merchants have probably always played on that trait to some extent. Unfortunately, attempts at rewarding customer loyalty can easily backfire. A major independent research firm recently sampled 52 senior marketers and more than 40% of the respondents admitted that their loyalty programs underperform. Even worse, loyalty programs can adversely affect overall brand perception if theyre not done just right. Of course, there are some great examples of loyalty programs that actually do the job they were designed to do; you can find plenty of them detailed in Fred Reichhelds marvelous book, Loyalty Rules! But given that marketers have had at least 200 years of experience in designing and implementing loyalty programs, you have to ask: Why are we missing the mark so often? Basically, three common problems are to blame: 1. One Size Only Fits Some Loyalty shouldnt be a one-size-fits-all proposition. As much as we can generalize about broad categories of consumers, each customer is unique and may be attracted to your brand for sometimes dramatically differ-
ent reasons than the next customer. If youre a retailer, for instance, some customers come because of your product selection and brand inventory; others come because you happen to be the most convenient option, and so on. Designing a good loyalty program is all about pinpointing the range of things that make your customers satisfied and makes them feel valued as individuals. You need to tune into their lifestyle and needs to figure out how to augment their satisfaction and keep them coming back. 2. Your Datas Not Working For You Data about customers is exploding and most organizations dont have a good handle on it. As customers participate in social media, use search engines, visit your website and post on blogs, they generate a lot of information that can be useful in loyalty program design. Its through this creation and consumption of content that customers express their desires and needs. Theyre laying it all out there for you, but many organizations just dont have the means to listen: their data-harnessing systems miss some or all of the most relevant data. Thats because marketing databases and data warehouses have been historically inflexible and typically cant rapidly adapt to changing data inputs. 3. Your Content Is Irrelevant Companies often have insufficient content and no well-defined content strategy. Thats because creating
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As consumers come to your website through search, understand all of the search terms they are using and use keyword expansion tools and match those terms to your content. Are there gaps there? Can you close those gaps?
sufficient content to tailor messaging and promotions to consumers whether thousands or millions of them is hard. And so many companies still rely on blast emails, or, at most, A/B testing of certain content elements. To put it bluntly, lame content strategy has become a key inhibitor to great marketing. outcome. But by adopting this goal, marketers can take the steps necessary to achieve breakthrough results. Heres how to get started: First, you need to enhance your marketing database by converting it into an audience database. This involves rethinking your data strategy to include all consumer-related content. For instance, as consumers come to your website through search, understand all of the search terms they are using and use keyword expansion tools and match those terms to your content. Are there gaps there? Can you close those gaps? Do the same with email and off-site visits across the web. Create meta-data about each email, so downstream analysis can help guide subsequent strategies. What calls to action worked? How much do price points matter? Look at typical patterns of behavior on your website, and map those to the content on each page. And dont forget social media. Determine how consumers are discussing your brand by using listening tools. Track the effectiveness of each of your social-media posts. Identify bloggers who can be great distributors of your content and champions of your brand. All of this is possible with the development of an audience database. Second, begin to identify and personify patterns of behavior within your audience database by tying in transaction data (purchases, registrations, etc.), with all of the other behavioral data. The development of these logical personas is critical. It doesnt matter if you can individually identify consumers to get demographic-type data. Behavioral data around the consumption and distribution of your content is far more important. Demographic data should be used only to personify behavioral segments. Finally, develop a solid content strategy. This means not only the development of appropriate content, but also describing all content correctly with meta-data. If you fail to describe your content appropriately, then you cant expose that content to analytics and reap the benefits of that exposure. When analytics can access, prioritize and select content based on consumer personas, then you can begin to start communicating with your consumers in engaging and relevant ways, in real time.
A Case In Point
Suppose John Smith is an avid, self-taught chef. As such, hes purchased a bunch of merchandise from a well-known multi-channel retailer of cooking gear, along the way joining the loyalty program. So the retailer knows Johnor thinks it knows John. At some point, John starts thinking about investing in a really high-end knife set. His initial research tells him that doing this may cost upwards of $1,000, so he really wants to understand his options and get the best value for his money. In addition to surfing through the knife section of the retailers website, he starts paying attention to some of its promotional emails. In the past, hes typically received four emails per week, but had a really low open rate. Now, all of a sudden, he starts opening those emails whose subject lines are related to knife sets and sometimes he even clicks through to the website. He may have even gone so far as to put a particular knife set in a shopping cart, but then abandoned it. Basically, by this point is should be blindingly obvious that John is in the market, right now, for a knife set. But his behavior also shows that he is not quite ready to pull the trigger. So how does the marketer push John over the edge? By customizing a message for John, delivered through his preferred channel, which helps him overcome any doubts he might have. For example, the value points in the message may be: a. Subject line reads Knife Set Sale for You Only! b. John, as a valued member of our loyalty program, we would like to offer to you $100 off our best price on a knife set of $500 or more, as well as free shipping. c. We also know that investing in a knife set is a complex decision, so we can also provide a 30-day money back guarantee. d. Finally, our store in your town is having a knife skills class next week. We will waive the normal fee of $75 if you decide to purchase a set from us. For this particular retailer, this message might apply to 1,000 customers at any given point in time. But imagine the cumulative power of being able to regularly detect such consumer tipping points, automatically help prompt a purchase and in the process strengthen brand loyalty.
Moving to this level of marketing is a journey, but one that will provide huge returns.
Best of all, your loyalty efforts will delight your consumers, because you can offer benefits far in excess of any pointsdriven program. Thats the beauty of analytics-driven loyalty programs: At their best they can be optimized to achieve maximum benefit not only for your company, but for your consumers. L
How do we do this?
Admittedly, this level of content customization is difficult, and should be thought of as a goal rather than an immediate
Loyalty Management MAY 2011 Loyalty Management MAY 2011
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Social Media Innovation Leads to Campaign Success

by Michael Martin, Eloqua
Warriors leveraged several social media channels offiRecently, the NBAs Golden Statelogo and branding. The result? Large growth amongtovarious cially launch the organizations new social platforms, greatly increased web traffic, record attendance at their NBA Draft party and a notable boost in ticket revenue.
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Social Media Strategy & Evolution

A key part of the Golden State Warriors marketing strategy is to use social media as a tool to reach their fansand even those who wouldn't classify themselves as fans. They use a variety of platforms in a host of ways, including sharing breaking news, giving behind-the-scenes updates, integrating organizational marketing efforts, giving fans a place to let their voices be heard and much more.
Use of Social Media in a Recent Initiative The Warriors 2010 Draft Challenge
One notable example of their strategy in action was a campaign centered on the official launch of the Warriors new logo and branding. The marketing team wanted to create a unique way to unveil the new logo, while also engaging fans and expanding the organizations social media presence. They also wanted to build a list of engaged, fervent fans for future marketing and sales efforts. Rather than just unveiling the logo at a press conference, the goal was to make the unveiling personal, exclusive and interactive using social media, said Kyle Spencer, Executive Director of Team Marketing. The campaign was called the '2010 Warriors Draft Challenge.' The idea was to capitalize on the anticipation of the teams new logo and unveil it piece-by-piece each day. For nine days, participants in the contest obtained an answer to a daily challenge question on one of the teams official social network hubs. In addition to giving fans the chance to be the first to uncover the new logo, the Warriors further incentivized them by offering daily prizes and the chance to win season tickets. The contest launched on the day of the 2010 NBA Draft Lottery. The Warriors condensed their entire website to one splash page with no semblance of their old logo. The main focus of the page was to drive users to the Draft Challenge. Each day during the contest, one of the nine 'challenges' was revealed using a different form of social media. This kept fans engaged, built anticipation, generated awareness of their various official social media channels and Main page of the 2010 Warriors Draft Challenge, with puzzle pieces and partially obscured new logo helped drive traffic to their official site during a traditionally slow traffic period. By utilizing the organic nature and reach of social media channels, the Warriors were able to dramatically increase awareness of their contest and their new brand. Each fan that entered the contest was automatically regExamples of individual challenge pages istered for the team's 2010 Draft Party, one of the Warriors biggest sales events of the year. The contest acted as a way for them to not only creatively unveil their logo and build their presence on various social media platforms, but also to grow their database and generate engaged leads for their sales department.
From a marketing perspective, the campaign was a rousing success and our new brand has received overwhelmingly positive reviews. The approach with which we went about unveiling the logo for our fans was unique and progressive, especially in the ways we utilized social media. We increased awareness of our brand by using social media platforms and tactics, and we also expanded our presence and reputation in the social media realm.
-Robert Rowell, President, Golden State Warriors
aged via e-mail and on hypersites to share their experience on Facebook and Twitter.
Measurable Results
The Warriors saw tangible, measurable results in a short amount of time. The contest attracted more than 4,000 fans to the teams Draft Party, a record for that event. Since the time of the contests launch, the Warriors have generated over $400,000 in ticket revenue and sold 150 new season tickets to contest registrants. The teams web traffic increased 66 percent yearover-year during the length of the promotion. Finally, the Warriors greatly boosted their reach and followers during a critical re-branding period through several social media outlets. Since the launch of the contest, the Warriors have increased their Facebook follower count by 175 percent (from 39,000 to 107,000), while more than tripling their Twitter follower count (from 4,000 to 15,000). In addition to experiencing measurable results from this effort, the Warriors also received a good deal of outside publicity from sports media outlets like ESPN and the Sports Business Journal, as well as numerous fan sites and sports blogs. L
Additional Technologies Leveraged For Initiative

By leveraging a marketing automation solution (Eloqua), the marketing team was able to fully integrate a variety of social media channelsincluding Facebook, Twitter, YouTube, Flickr, SayNow and SMS. All of this was done while collecting data on those who participated. Kevin Cote, the Warriors Assistant Director of Digital Marketing, used Eloqua hypersites, content substitution and forms and developed a detailed, integrated program that was ideal for the contest. Upon registering, users were able to access the challenge for that specific day and/or previous days. Once the user entered the correct answer to each challenge, a new piece of the puzzle was uncovered, triggered by Eloquas data collection capabilities. All the while, users were encour-
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The Benefits of Loyalty

by Lesli Rodgers, Buxton enefits and loyalty are two of the most well understood words when it comes to marketing in America todayarent they? Unfortunately, all too many marketers think that loyalty marketing is simple. All it takes is creating an opportunity for customers to supply their name, their home address, and their email address, making it possible to promote them ad nauseam. Right? Not quite. Creating a loyalty program that is in effect nothing more than a mailing list is a betrayal of customer confidence. The average consumer is smarter than ever and understands that giving up their personal information is way too valuable to be done without something of real value in return. What that something is can vary from consumer to consumeralthough cash remains the universal benefit. But other benefits can readily include free publication subscriptions (frequently offered by museums), private sale days and personal shoppers for upscale spenders, or even that free cup of coffee when theyve punched your membership card ten times. Whats important is that the benefit is meaningful, relevant, and currently compelling to the consumer. Of course, there is a fine line between making something currently compelling and creating true loyalty. In the Barnes & Noble loyalty program, there is a hefty annual membership
changes from visit to visit. For true fans of the product, this is fun and exciting; what is the mystery gift of the day?! But making the benefits of loyalty compelling to the consumer is only half the battle. There has to be a realistic understanding of the benefits for the marketer as well. The first step is understanding the cost of running a loyalty program. Costs include: Promoting membership acquisitionincluding in store signage, training and possible SPIFs to sales associates, external marketing, etc. Actual customer acquisitionincluding membership materials (cards, fobs, etc.), customer capture software at POS, third party data entry of handwritten membership cards, etc. Maintenance of customer fileappending postal/ email addresses, regular data hygiene maintenance (CASS certification, NCOA, DPV, duplicate consolidation, etc.). Promotion of ongoing conversion/retentionmailings, email promotions, register triggers, etc. Delivery of timed rewards, via mail or email Escheatmentthe costs and tax implications of dealing with unclaimed rewards on a state by state basis
Whats important is that the benefit is meaningful, relevant, and currently compelling to the consumer.
fee ($25) which helps to separate the serious buyer from the casual customer. The membership fee helps to fund the program, and the savings, but the benefit is a discount on product purchasesno more, no less. On the American Airlines program, theres no fee to join, but the program is really designed for the business traveler. It takes a long time to rack up sufficient points to take an average family of four away for a weeks vacation, so to keep the members engaged, members receive ancillary benefits along the way (prioritized boarding, potential upgrades, free baggage handling, etc.). Panera Bread has added a new twist to their loyalty programpresent your card each time you go in and the sales associate will tell you what your benefit is for that visit. And it Of course, the biggest cost is the hidden one. Having once wooed a customer in with a loyalty program, that program has to be maintained and evolve with the consumer over time, or the customer will be lost. Wowwhen you total up all the costs, is it really worth offering a loyalty program? It isif it can measurably improve customer retention and lifetime value. The key is to determine in advance what kind of an improvement is needed just to cover the ongoing maintenance of the program itself, and then evaluate whether or not that improvement is a realistic expectation. If the outlook looks promising, launching a loyalty program opens up new opportunities to create and maintain the ties that bind. Isnt that what were all looking for? Now thats a benefit! L
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Save up to S$350 when you register before 19 Aug 2011!

Conrmed Speakers include:
Asia 2011
Co-located with:
27 29 September 2011, Singapore
Luca Deplano Vice President, Marketing Banyan Tree Hotels & Resorts
Eduardo Imperial Director of Service Management Asia Cable&Wireless Worldwide
Innovation, best practice and ROI for all business

Riad Shalaby Senior Vice President - Marketing Marina Bay Sands
Businesses have evolved over the last decade with a gradual move from a product-focused strategy to customercentric business strategy. Is this the winning formula to reach out to todays consumers? YES! But how can businesses implement a successful customer management strategy that encompasses all functions?
Find out from The Customer Show Asia 2011 on:

Riad Shalaby Senior Vice President - Marketing Marina Bay Sands
The correlation between customer obsession and business growth Secrets to converting prospects to revenue How customer experience management is the strategic differentiator for todays business Finding and focusing on the positive in crisis management The thinking process behind developing disruptive branding strategies How to reach out to the next generation consumer Bringing customer service to the next level through re-imagination Engaging employees to create customer loyalty
Do you have the solutions for companies looking to develop a holistic approach to customer loyalty? If you do, it is imperative that we get in touch. Please contact Ms Lynette Han at +65 6322 2792 or email to lynette.han@terrapinn.com . We need to explore ways on reaching out to the companies who may be in need of your solutions!
The Customer Show Asia 2011 is uniquely positioned as Asias only platform where worlds largest brands, major stakeholders and leading solution providers in the customer care industry explore and showcase innovative solution and technologies to solidify customer satisfaction, loyalty and advocacy to capture new revenue growth. Hear from over 40 customer related executives from across 8 industries on how they tackle the unique set of challenges in their markets and take away new insights to apply to your business Loyalty World Asia 2011 will be a one day event on 27 September 2011 where marketing and loyalty leaders gather together to discuss and innovate new strategies on how to build trust and drive brand loyalty through different customer loyalty frameworks and technologies.
www.terrapinn.com/customerasia
Call Ng Yaling at +65 6322 2771 or email her at yaling.ng@terrapinn.com to reserve your seat now!
BOOK NOW! online www.terrapinn.com/customerasia | email yaling.ng@terrapinn.com | phone +65 6322 2771 | fax +65 6223 3554
When it Comes to FourSquare... AJ Bombers is the Bomb!

Q&A with Joe Sorge of AJ Bombers
J Bombers, a burger joint in Milwaukee, was launched in the middle of the worst recession in generations and was located at an address that had seen at least five businesses fail in recent years. The restaurants year-long journey from grand opening to FourSquare phenom is a best-practice example of how business can use social media to effectively drive sales. In fact, as AJ Bombers co-owner Joe Sorge points out, sales of menu items promoted on FourSquare have risen roughly 30% since the restaurant began using the service.
Its been reported that in April 2010, Bombers pulled together the most successful FourSquarebased event run by a restaurant in a 24 hour period, and proved that your FourSquare formula truly works for restaurants and that its repeatable. Can you explain how the Im on a Boat event worked and what the results were?
JS: I think youll love this: http://youtu.be/iw69XdYYkKk
AJ Bombers has earned a reputation as being a best-practice example of driving business using FourSquarewhich is a relatively new social media platform. Why did you choose to make FourSquare a cornerstone of your social media outreach? How do you integrate it with your outreach on other social media vehicles such as Facebook and Twitter?
Joe Sorge: We discovered our customers using FoursSuare very early on. So, just as with Twitter, we made it our job to become a user of the tool first, develop a personality for our venue second, and lastly we found ways to engage our social media community by inviting them to build our content within our venue page. That is, we invited and incentivized them to add tips-and-todos as well as photos when that feature was introduced. But the short answer is that using FourSquare helped us to build more community around the restaurant. As for integration, we find ourselves using all of our social tools the exact same way; for two way communication. Its a conversation, not an advertisement. Youll rarely find us selling within our social networks.
Can you tell me a bit about how AJ Bombers has been able to add a customer loyalty element to its FourSquare campaign? How does the Loyalty Royalty menu work and what results are you seeing?
JS: Thankfully, weve found some real and sustainable success utilizing FourSquare and its badge and mayoral rewards program to drive top-of-the-mind awareness for AJ Bombers within the social media and geo-location space, but more importantly, from a business standpoint weve also had success in partnering with the dynamo that is foursquare to actually increase sales. But weve discovered that its lonely at the top for a Mayor like Jim Simon at AJ Bombers, and thats a problem, for Jim and for the continued enthusiasm for FourSquare as a whole. Its really tough to dethrone Jim, as he compiles on average about 16 checkins per month. That difficulty leads to a bit of checkin fatigue for our regular customers who are FourSquare users because they feel like they could never reap the rewards of the program. Jim has been our mayor basically since the introduction of FourSquare to our restaurant, but he wasnt reaping many rewards after the fact of securing that mayorship (which earned him a free burger).
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Ever so slowly and gradually, weve built a special Mayor Menu for Jim. Jim would tweet about a craving or talk about how great it would be to have a certain food item during a visit and our Chef and burger creator extraordinaire, Todd (AKA @burgerwhisperer) would find a way to make it happen for Jim. I should point out how remarkable the menu itself is, as were a burger
out that FourSquare had already created it for businesses in its Dashboard utility for venues. Loyalty Royalty So heres how our new FourSquare loyalty program works at AJ Bombers. We use our dashboard utility to track the three FourSquare users with the most checkins for the last 30 days. Then, the very next month, those customers can help to create that month's Loyalty Royalty menu. A menu, built by them, just for them, whenever they visit AJ Bombers. They name the items themselves and can even create and tweak the recipe themselves. As a bonus, they can also select one day that month where their menu item is featured and available to all guests of the restaurant. (This further helps to spread the awareness and fosters adoption of FourSquare in general.) Were just instituting these changes this week and so far, checkins are up! More importantly, were seeing some old faces through the door again, which also means repeat business.
We find ourselves using all of our social tools the exact same way; for two way conversation. You'll rarely find us "selling" within our social networks.
joint and many of these items have ZERO to do with burgers. But still, Jim was lonely Then, we had an idea: why cant more of our intensely loyal customers participate in the building of the Mayor menu? Who says you cant have more than one Mayor so to speak? So I set off to do some brainstorming with one of my most favorite brains in the country to create ideas with: Steffan Antonas. You probably remember Steffan from his great multi-media blog posts recapping our previous FourSquare endeavors: Im on a Boat and How to use a Swarm Badge. Out of this latest brainstorm session came the concept of Loyalty Royalty the premise of rewarding more loyal customers than just the Mayor. And we knew just the tool to help us create the program because it turns
Theres no doubt youve been able to leverage the web and online communities to drive sales to AJ Bombers. Are you planning to roll out any of these ideas/strategies to your other restaurants? If so, can you tell us a bit about your plans?
JS: We do indeed intend to continue to utilize the platform for all of our restaurants. Its our job to stay on top of the latest social trend and help to provide a place of education for our social media community if we hope to stay on the top of their minds from a marketing standpoint. Not only is this aspect important, but its integral to our businesses success in this realm. But most of all, this is just flat out fun! When it stops being fun, well know weve reached the end. L
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Beyond the Loyalty Card: Designing A Mobile Loyalty Program That Works
by David Eads, Kony Solutions
o you realize your brand needs a mobile customer loyalty program, but now what? The complex features and functionality available in the mobile medium, combined with the more than 8,500 mobile devices on the market today, can overwhelm companies looking to develop a mobile loyalty program strategy. Companies often get paralyzed at the mere thought of how much budget theyll have to dedicate to development, deployment and management of applications across such a diverse and varied landscape. The answer to this problem is often to decrease a mobile offering to the lowest common denominator, relegating a mobile loyalty application to its simplest form. However, this approach can be the kiss of death for a brands mobile offering. To truly stand out in the crowded mobile landscape, companies must maximize todays newest technologies in order to provide a sophisticated, highly functional mobile loyalty program. Offering a program that is optimized across all devices and takes advantage of a devices native capabilities is critical to ensuring the greatest customer engagement, ROI and expanding brand awareness.
Setting The Strategy

The first step in effectively designing a mobile loyalty program strategy is to plan for the long-term. The rate at which innovations and new technologies are being introduced to the mobile marketplace, in addition to the current market fragmentation, makes a long term strategy essential to success in this market. The key steps to developing a long term mobile strategy include: Determining goals for the mobile portfolio Determining the channels, devices and operating systems to leverage in your mobile offering Preparing for the unexpected
Making It Work
Many companies have turned to platforms that leverage a single application definition in order to effectively reach all customers across all devices and channels. A true Write Once, Run Everywhere technology enables an application to be developed
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just once and deployed across the entire breadth of the mobile landscape. In addition, it allows the application to take advantage of each devices native capabilities. This approach is not only cost effective for development and ongoing management of a robust mobile portfolio, it enables a brand to mitigate risk associated with new technology innovations in the market. This type of platform allows a company to future-proof its mobile investment through its change once, change everywhere ability. This ensures faster adoption of new operating systems and standards as they are introducedwhile at the same time eliminating maintenance, upgrade and future development costs.
Companies must maximize todays newest technologies in order to provide a sophisticated, highly functional mobile loyalty program.
What Does It Look Like?
A mobile application that encourages customer loyalty can take many forms. For brands with existing customer loyalty programs, this can mean offering the same program with the ease-of-use of mobile. For brands creating a new program, there are opportunities to design an engaging program, such as integrating location-based promotional programs or creating SMS/MMS promotional and coupon campaigns or personalized shopper loyalty programs. This may also include integration with external social media programs that encourage mobile coupons and tips, including FourSquare or Facebook Places.
Utilizing the existing website for data integration, a robust application was developed allowing for the simultaneous implementation of an applications functional elements across the entire breadth of mobile devices without limitations or compromises. The airlines application enabled mobile customers to book, view or cancel flights, and get a mobile boarding pass with mobile check-in. In addition, customers can opt to receive promotional offers as on-device alerts. As a result of this new mobile offering, the airline has seen a 134% increase in customer logins to the loyalty program. Mobile offers significant opportunity for brands looking to deepen customer loyalty. A long term mobile strategy that leverages a single application definition allows for effective development of a mobile offering that optimizes consumer engagement while remaining cost efficient. Mitigating the impact of the inevitable future advancement in the mobile marketplace can be a daunting task. Companies should look for partners with a proven track record of success in order to get the greatest return. L
One Airlines Success

Frequent flier miles, flight schedules and customer service compel the loyalty of travelers to their preferred airline. One major international airline, with more than 3300 flights per day to 200 destinations around the world, had great customer loyalty when they chose to expand their loyalty program to mobile. To make travel more convenient for their customers they wanted to launch better mobile web, SMS and iPhone capabilities. Developing customer loyalty starts with the first contact a customer makes with the airline including contact through their mobile device. With the expectation of a trouble-free transaction when booking a trip or checking flights, mobile applications have to stand up with a flawless performance. Recognizing the customer loyalty reinforcement a rich, native application could bring them, the tactical implementation of this airlines mobile offering had to be optimized for the mobile web and iPhone to ensure a powerful user experience. In addition, the brand required a solution that would be cost effective over time while also effectively handling ongoing improvements in functionality and frequent changes in user devices. Monthly volume was expected to be very high from the start and only continue to grow.
Loyalty Management MAY 2011 Loyalty Management MAY 2011
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Customer Centricity through Contact Strategy: How OfficeMax Made it Work

by Todd Thompson, Metrics Marketing Group
very company wants to be thought of as customer-centric. While this is a worthy goal, most companies find this a case of easier said than done. While companies continue to improve in the core aspects of marketing, like building better products and implementing more targeted marketing efforts, they struggle with silos. Product managers with specific P&L responsibilities think of only their product. Line of business managers push their specific agendas. Few companies look holistically at what might be best for the customer. To become truly customer-centric, leading businesses are implementing sophisticated contact strategies focused on whats best for the customer, as well as the company.
Leveraging Contact Strategy to Drive Customer Centricity

At Metrics Marketing we have the good fortune of working with a number of enlightened clients that have partnered with us to make customer-centric marketing a reality. In each case, we built a comprehensive contact management strategy to drive our approach. Following are the five main ingredients necessary for customer-centric marketing through contact strategy: 1. An organizational focus on the customer. The company must agree that building customer relationships by delivering whats best for each customer trumps internal product goals. This includes organizational alignment, where business process and resource management are centralized and internal incentives support this approach. 2. Technology infrastructure. Data must be collected from disparate places around the organization and attributed to customers so that a comprehensive picture emerges for each person. This provides the platform for customer-centric marketers to understand whats best for each customer and measure the impact across all offerings. 3. Customer management framework. Successful companies create a framework that is used to segment customers and establish customer goals and strategies, and then measure the impact of programs against the goals. 4. Analytical expertise. Data analytics drive the decision-making process regarding such things as: customer profitability, propensity to buy, likelihood to defect, test design & analysis, and measurement of program results.
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5. Automated marketing solution. Implementation of a contact management strategy typically requires an automated marketing solution. This provides the ability to implement complex decision matrices regarding offer, timing and resource allocation in a lights-out fashion. The following case study provides highlights for how one company, OfficeMax, has addressed customer centricity through contact strategy.
er. Multiple versions of the framework were established, one for each business segment. Finally, customer value and potential was calculated for each customer and they were assigned to a framework cell. 2. Establish customer management objectives To establish management objectives for each customer the team focused on three key themes: Growing high opportunity customers Retaining best customers Minimizing cost on low value customers By virtue of their placement within the framework, each customer was assigned a management objective.
OfficeMax Case Study Achieving Customer Centricity

OfficeMax has spent considerable effort to become a customer-centric organization. To continue that momentum, OfficeMax partnered with Metrics Marketing to develop a customer-centric marketing approach leveraging Metrics Contact Management Optimization (CMO) process. OfficeMax Background OfficeMax (NYSE: OMX) is a leader in both businessto-business office products solutions and retail office products. The company provides office supplies and paper, in-store print and document services through OfficeMax ImPress, technology products and solutions, and furniture to consumers and businesses. OfficeMax customers are served by approximately 35,000 associates through direct sales, catalogs, e-commerce and more than 900 stores. OfficeMax segments the business market into a number of distinct groups. Each segment has unique challenges and receives a number of different marketing and sales contacts across multiple channels. OfficeMax sought to maximize the effect of these disparate marketing efforts with a customer-focused approach. Goals OfficeMax and Metrics formulated the following goals: Create a logical framework for OfficeMax employees to understand the customer base Provide a contact strategy that optimizes customer relationships over time Develop a contact strategy that supports tactical, campaign-specific decisions Development Process Contact Management Optimization follows six steps. 1. Understand customer value today and tomorrow A customer value framework was developed based on the current value and potential for each custom-
3. Establish strategies tied to management objectives OfficeMax and Metrics worked to establish relevant strategies for each customer group which drove tactical customer treatments: 4. Ensure the best message is delivered. Marketing messages were focused in four key areas: Cross-selling: selling additional products to recent buyers Lapse repurchase: generating repurchase from customers who have recently lapsed Loyalty: creating loyalty with high value customers Defection prevention: retaining high value customers most likely to defect
continued on next page Loyalty Management MAY 2011 Loyalty Management MAY 2011
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Customer Centricity through Contact Strategy (continued)
Marketing tactics were implemented leveraging an analytic targeting approach that incorporated the following: Triggers identify customer behaviors that are linked to cross-sell, lapse repurchase and defection prevention Models identify product purchase propensities Promotional campaigns drive specific product purchases Loyalty communications tout reasons to be a customer beyond specific offers 5. Ensure customers are managed properly. A number of critical elements are considered to ensure customers are managed properly. One area is contact cadencethe frequency and timing of customer contacts. Contact cadence The contact strategy approach dictates that cadence link to customer objectives in order to optimize the entire customer portfolio. Through data analysis, and in consideration of OfficeMax budgets, the optimal number of touches between buying cycles for each customer (company) and each buyer within each company was determined. This assignment was based on where the customer fell on the framework. Cadence assignments were calculated for each of the business segments separately.
A number of critical elements are considered to ensure customers are managed properly. One area is contact cadencethe frequency and timing of customer contacts.
able customers receive the lowest number of contacts. Another critical element to ensure customers are managed properly was to install an automated marketing solution to allow for seamless implementation. Automated marketing solution The implementation of the OfficeMax Contact Management Optimization solution is complex and requires an automated marketing system. Metrics utilizes its ATOM (Automated, Triggered-Opportunity Marketing) solution. ATOM blends all of the inputs to deliver the optimal contact stream to each company and to each individual buyer within the company. Inputs include: Cadence rules by company and individual buyer Marketing triggers Planned campaigns Loyalty contacts Contact management rules 6.Test, measure and optimize A number of customer-centric goals related to CMO were developed, such as: Revenue/customer Margin/customer Categories/customer Retention In addition, the program includes tests within contact streams related to tactics like offer and timing. These tests are critical to improve results over time. While still early, the OfficeMax CMO program has delivered impressive results. Individual phases of the program (onboarding, cross-sell, lapse) are measured and with ROIs ranging from 39-346 percent. L
As logic would dictate, most valuable customers receive the highest number of contacts per buying cycle, mid-range value customers a medium level of contact and least valu-
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CUSTOMERS COME AND GO. FANS RETURN AGAIN AND AGAIN.

For three decades, Afnion Loyalty Group has been a pioneer in the loyalty and enhancement industries. We help our clients retain and motivate consumers while delivering tangible results and incremental revenue. We continually develop ground-breaking products found in almost every wallet in America.
www.afnionloyalty.com
1-800-622-4863
BEHIND THE BRAND
Sean Geehan
Founder, The Geehan Group
Sean Geehan is Founder of Geehan Group and author of upcoming book The B2B Executive Playbook, due out spring 2011. Sean received the prestigious Ernst & Young Entrepreneur of the Year award in 2002. How did you get started in loyalty and when did you become committed to supporting B2B executives to succeed in customer loyalty?
My first job after my MBA was at E. F. MacDonald (now Carlson Marketing) in 1987. And seeing the impact it has on business success, I have never strayed too far from it in the 25 years since. 90% of my career has been dedicated to the B2B world.
Which books are you currently recommending?

David Thomsons Blueprint to a Billion and Pete Luongos 10 Truths of Leadership. The first is about profitable growth and the second is about successful leaders. Both are straightforward, insightful and very practical for marketers.
Keep [your] plans simple and consistent dont confuse activity and staying busy with results.
What trends are you seeing in B2B loyalty marketing?
The recognition of management that retention and account expansion is being taken much more seriously (primarily due to analyst now using this as key success metric)This in turn is a huge opportunity for marketing to understand, align and execute programs that boost these metrics. This will catapult marketing credibility and value to the entire organization. Those that prioritize this are the ones being rewarded, promoted and are getting expanded budgets and job security.
If you werent running the Geehan Group and writing books, how would you be spending your time?
Surfing the North shore of Oahu, playing the guitar and coaching my sons water polo team.
Who has had the most influence on your life and why?
There are too many people Id place in the upper tier to listI do try to learn something from everyone I come in contact. Each time I observe something valuable or impressive, I challenge myself to apply it.
Please share a few words of advice for novice B2B marketers.

Here are my three keys to B2B marketers success: First, start by understanding the difference between the B2C and B2B environment and make sure you are applying these factors to all aspects of your area responsibility and beyond. Second, keep the plans simple and consistentdont confuse activity and staying busy with results. Third, establish and measure ROI on everything you do. Youll put yourself in an elite class quickly if you make these your focus. L
If you could invite 5 people to dinner (past or present), who would they be?
To have a fun, interesting and entertaining dinner Id invite Brett Favre, John Kennedy, Michael Jordan, Vail Miller, Jr. and Dave Matthewsand who knows where the night would go after dinner.
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Mocapay makes customer engagement easy

Customer Intelligence at Your Fingertips: Mocapays unique ability to track customer behaviors allows you to deliver relevant incentives directly to the handset, increasing customer engagement and loyalty. Mobile-enable your existing gift and loyalty program or create a new one. No-fuss implementation: Fully integrated with leading POS providers. Flexible and secure across any handset: Single-use, perishable token makes transactions secure. Supports a variety of communications: Text, WAP and mobile app for Android and iPhone.
Mobile marketing. Mobile payments. Mobile loyalty. Mobile gift.
Contact Mocapay today to learn more.

1660 17th St., Ste 310. Denver, CO 80202 | 303.444.1771
www.mocapay.com
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CAROL STREAM, IL PERMIT No. 475
NOVEMBER 6 - 8, 2011
Westin Stonebriar Dallas, TX engagementexpo.com
Customer engagement begins the first time a person is introduced to your brand and continues as you initiate a dialogue, get to know each other and develop a rapport. Are you creating positive experiences to engage your customers? How do you begin the conversation? How do you keep them interested and involved? Engagement Expo 2011 is bringing together a slate of best-in-class speakers and partners to arm attendees with the education, insights, and proven tools they need to present their customers with the most inviting, interactive and personalized experience possible.
Key areas of focus will include: Insight into what engagement means and how to manage that across the multi-cultural and multi-faceted client/customer constituencies. Customer experience Are you offering the best first experience possible? What about the second and third? Building customer trust Using positive customer experiences and learning the best questions to ask (when and how) to engender the trust needed to begin to build a successful two-way dialogue. Social networking and how to leverage this in your marketing communication strategies to create more engaged participants. Tools such as best practices, processes and analytics will give you much more granular insight. Cross-over of emerging (wireless, mobile) and traditional medium to make the most of your engagement/marketing strategies.
PLEASE VISIT ENGAGEMENTEXPO.COM FOR SPEAKER INFORMATION & TO REGISTER

If you're interested in sponsoring at this conference, please contact Erin Raese at erinraese@loyalty360.org

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Volume 3 Number 2

MAY 2011 powered by Loyalty 360

Elevate the Customer Experience

Social Media Innovation: Success Stories

A GLOBAL LEADER IN LOYALTY MANAGEMENT groupeaeroplan.com

THE RELATIONSHIP BUILDING COMPANY carlsonmarketing.com

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Cause Marketing is Changing the Game - See How

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Global Coalition Loyalty Programs Decoded by Alan Leach from Finaccord

TECHNOLOGY, TRENDS & REWARDS

Design a Mobile Loyalty Program That Works

BEST BUSINESS PRACTICES

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LOYALTY 360 ON THE WEB

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LOYALTY 360 THOUGHT LEADERSHIP SERIES WEBINARS

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FROM THE EDITOR

A New Era for Loyalty

Welcome new Loyalty 360 Members:

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we're here to guide you along the way.

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LOYALTY FORUM: YOUR VOICE

Gay Lynn Roberts Owner, Choicevac

Clayton Johnson Social Media Networker, Slingshot SEO

Optimize Your Loyalty Program

Through Metrics End-to-End Marketing Solutions

LOYALTY FORUM: BEHIND THE BRAND

What inspires you?

Which talent would you most like to have and why?

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What are the qualities you most admire in a person/marketer?

What brought you to the States?

What can we expect from SAP into 2012?

What is your advice for a novice loyalty marketer?

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LOYALTY FORUM: THE INSIDE SCOOP

the inside scoop

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Ask the Experts

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Partner, Database & Analytics, OLSONdenali

Practice Director of Loyalty, Kobie Marketing

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LOYALTY FORUM: BOOKS

DIFFERENT: Escaping the Competitive Herd

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SHOPPER MARKETING: How to Increase Purchase Decisions at the Point of Sale

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The Rise of Engagement

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