Tuesday, 29 December 2009

2010 Loyalty Marketing Predictions

janus Technology moves ever quicker with a new set of doors opening at an increasing pace.

It would make sense then as we enter January - named after Janus, the Roman god of gates and doors - to look forward to the new year and consider the possible trends which might make it into our marketing programmes.

There is a theme in these predictions (which wasn’t intentional) and it all ties to this first one…

#1 - A stitch in time…

The web is moving real-time. As more and more people get immersed in social networks like Twitter and Facebook they are getting used to information having a best before date. Witness the latest deals that both Google and Bing have done to bring real time search to the masses. Now typing in “snow UK” in Google brings up results which are actually useful – a weather report (and twitter reports from seconds ago) of the current snow conditions.

What does this mean for marketing programmes? Well it means that monthly emails or quarterly newsletters are going to be perceived as quaint at best. In 2010 you’ll need to make sure you have something to say and say it fast. Better still get someone else to say it for you…

#2 – Many hands make [profitable] work

Loyalty programmes still see individuals when in fact individuals actually see groups. Whether that group is you and your partner or your family, your friends or co-workers, we are all part of many different groups which we interact with in different ways.

Opening up the programmes to allow interaction within these groups will provide additional word of mouth opportunities as well as increased loyalty. Indeed, a recent white paper by Colloquy entitled The New Champion Customers found that heavy users of loyalty programmes are over 50% more likely to be word of mouth champions (meaning they are both willing and able to recommend).

What was also interesting from the research was that 2 of the top 5 reasons for WOM participation were “to be first” and “to share my opinion” – both of which become more empowered by real-time communications – whether this is the brand sharing the latest information with the member or the member sharing it with friends.

Expect to see this utilised more in programmes in 2010 as brands truly look to unlock the social value within their loyalty membership.

#3 – What goes around, comes around

I find it interesting that everyone is now talking about real-time information and the “push” based services to deliver them. I’ve been around a while so I remember back in the heady days of the “information super high-way” companies like PointCast were going to deliver this dream – but then ultimately failed due to the technology of the time not being quite as good as the idea.

The same was true of net computers (NCs). Essentially a device for doing not much more than browsing – they were much feted when the idea was first announced by Oracle CEO Larry Ellison back in 1995 – only to disappear in 2000 and then reappear as the popular gadget of 2009 in the form of the Net Book. We’re likely to see further interest in these in 2010 with the (possible) launch of the much hyped Apple Tablet.

From a marketers perspective you could say the same thing about 1 to 1 marketing. Much hyped when it was first published back in 1993, both technology and available data didn’t really allow it to be fully supported. This has changed though and personalised one to one communications are possible – not just in terms of content but also delivery channel and frequency with providers like Silverpop gaining increasing accolades.

Might be time to take the book back off the shelf - expect to see more programmes bringing this onboard in 2010.

#4 – It’s the taking part that counts

I’ve blogged about it for most of this year and was writing about it back in 2006 - but interaction is the new transaction in loyalty. Wrapping it up under “Engagement” with the 4i’s of involvement, interaction, intimacy and influence – Forrester consider this the new Marketing Metric. As they say in their white paper:-

“Companies also need to track individuals who influence
others to buy. For example, a customer who buys very little from you but always rates and reviews what she buys can be just as valuable as someone who buys a lot — her reviews might influence 100 other people to buy your product. Tracking only transactions and loyalty at the end of the funnel misses this significant element of influence”.

I know this is only going to get bigger in 2010 and don’t be surprised to see reward programmes giving out points and miles just for the taking part.

#5 – Bird in the hand is worth two in the bush

In loyalty marketing it is well known that redeemers are the most active, loyal and generally profitable customers – so getting people to redeem is always key.

Digital redemptions can really help in this respect as an e-voucher for example can be despatched immediately, letting points in an account be translated into a reward in their hand within seconds. More and more merchants are beginning to see the value of these with many allowing e-voucher codes to be used both on and offline.

These are popular reward items not only because of the immediacy of them but also because of the cost effective fulfilment – no postage, no handling, no security storage. Loyalty programmes are clamouring for these and in 2010 I bet more merchants will be clamouring to provide them.

Agree, disagree – if you want to add more feel free to comment.

Ghost of Christmas Past… To see what I thought would be happening in 2009 – and whether I got any of them right, check out last years post.

Saturday, 19 December 2009

‘Twas The Week Before Christmas

‘Twas the week before Christmas and the shelves were stocked high
With customers browsing and looking to buy
Tills ringing loudly with the sounds of each item
Staff smiling sweetly as they scan, charge and pack them

Customers searching for the latest new gadget
For some it’s a present for others a self gift
Filling their baskets with all that they sell
This holiday season is really going well

More customers coming at this holiday time
Than the retailer sees across months one to nine
But who are these customers, have I seen them before
The retailer wonders as they leave through the door

Wouldn’t it be great if I could know what they bought?
And send them some follow-up now there’s a good thought
We could tell them what works well with the item they’ve got
Encourage them to think of us when next they might shop

We’d know if this was their first little peak
Or whether the customer was in every week
If only we’d setup that loyalty scheme
We’d have all this data and more in-between

Having a programme would give us their details
We’d be able to tell them about our great sales
Alas, we don’t have one so we have no idea
We may as well just speak to Santa’s reindeer

But St Nicholas will know them, he stops by their house
Delivering presents as quiet as a mouse
So Santa we beg you when next coming to visit
For their names and addresses leave your naughty and nice list

Merry Christmas!


Saturday, 12 December 2009

The element of surprise

wetfloor-fish2I know winter has arrived - it has finally changed from warm rain to cold rain – and in the last few weeks we’ve had a good drenching. 

This brought the inevitable wet floor underfoot and to my amusement there was a sign in my office saying “Wet Floor”. 

Apart from the fact that I’m obviously easily amused, the reason this entertained me was because the sign is there almost every day, and this was the first time I've actually seen the floor wet.

The problem is, the more the sign is used, or any communication for that matter - especially where it shouldn’t be used – the more people tune out of it and begin to ignore it. 

It fails to get cut through.

Whether the communication is for health and safety or customer loyalty it should have the same purpose - to change behaviour.

  • If your predominant form of loyalty communication is a points statement, showing points earned, redeemed and a closing balance
  • If your statement is sent every month or every quarter
  • If your statement is sent with un-targeted inserts or statement messages

Guess what – it’s going to fail to get cut through.

You need to shake thinks up a little and surprise people.

Saturday, 5 December 2009

ASDA - Loyalty rejecters?

asda-350ASDA CEO Andy Bond reportedly said just a few weeks ago

"You can't buy loyalty with plastic points"

Going on to say about Tesco Clubcard “They're based on conditional selling and only reward people that spend the most. At ASDA we reward customers with the lowest-possible prices everyday. That's why more people than ever are choosing to shop at ASDA.”

On the first point he’s dead right, you can’t buy loyalty – plastic points or otherwise – you have to earn it.

On the second point I think he’s dead wrong and here’s why.

“Conditional Selling” – Unlike many US style grocery programmes which do actually have conditional selling - giving one price for card holders and one for none card holders - there is no tiering in the Clubcard model.  Everyone is equally rewarded and your reward is simply based on overall spend; assuming of course you join the programme

Obviously you have to spend enough to reach a minimum threshold for reward, but for a normal loyal customer this is not difficult.  In fact it is less about rewarding high spending customers and more about rewarding loyal customers – those who shop with you regularly.

“Lowest Possible Prices” – To fight on price you really have to be the cheapest.  I decided to try out ASDA by doing a monthly shop on ASDA online for exactly the same products (substituting where required) as my normal shop at Tesco.  At the end of it there was a few pence in it so hardly worth jumping up and down about – and I get Clubcard points at Tesco.

Maybe I’m not a typical ASDA customers and I’m also not a Tesco sycophant.  However I do believe that for a retailer like ASDA, understanding your customers is key – and interestingly so do ASDA to a point.

Reportedly gathering information from a pool of 18,000 shoppers that will be used to influence which products it sells and to drive the business around common themes that emerge – they are doing their level best to gain an understanding of their customers.

Whilst this may provide insight akin to what Tesco gets from Clubcard data, it will not allow for a feedback loop which would enable them to go back to individual customers to recognise, reward and influence. 

So are ASDA loyalty rejecters?

Well lowest prices do not reward or recognise customer loyalty – I get that price if it’s the first time I’ve shopped there or the 51st time.  What they will do however is maintain customer loyalty for that segment of customers who are price/promotionally sensitive – but only for as long as you have the best price.

However ASDA do have another trick up their sleeve and that’s transparency.  Andy states “My ambition for Asda is to actively involve customers in every aspect of the business, to lift the lid on how we do things, and enable our customers to help make decisions that have an impact on what we sell and how we sell it.”

It’s obviously early days for this initiative and whilst I’ve banged the drum for a while about it being less about the transaction and more about the interaction it remains to be seen how many customers will actually want to “lift the lid”.

Ultimately a good loyalty programme will allow you to have a two way dialogue with a customer about topics which are relevant and create a win-win for the customer and the retailer – in this respect ASDA are making positive moves with a non-points based mechanic.

Far from being loyalty rejecters I think ASDA are doing their best to embrace loyalty and to generate genuine customer engagement – the jury however is still out on how and whether this will actually work.

Sunday, 29 November 2009

One man’s baggy pants is another man’s well fitted trousers

This is the wisdom of Homer Simpson shown in the episode “Homie the Clown” where Homer Simpson decides to join clown school. On trying on his clown outfit the following exchange takes place:-

imageKrusty: OK, we'll start off with the baggy -- wha? [sees Homer] Those are supposed to be baggy pants. Baggy!

Homer: Ooh. I've never had a pair of pants that fit this well in my life.

Ok, so this is just an excuse to put some Homer Simpson into my blog, however it does raise an interesting question. When we try to second guess how people will use our products and services we don’t always get what we planned.

Microsoft recently started taking action against people who have modified their consoles with this resulting in kicking them off Xbox live or rendering some of their modifications useless.

Apple similarly plays a cat and mouse game with people who jail break their iPhones, essentially freeing themselves from both the Appstore and their cellular network.

Whilst both Apple and Microsoft would claim their activity is to prevent piracy and the creation of security holes – something which has some merit given the recent worm virus issues on jail broken iPhones in the Netherlands – it does also smack of an overly controlling corporate trying to dictate how people use their hardware.

This isn’t just limited to hardware manufactures. Customers are increasing promiscuous, choosing how to use brands as part of an overall portfolio. Loyalty has never been about getting 100% share of wallet, but all retailers or FMCG companies are looking for customers to “shop the shop” or fill their needs from across the range.

Whilst it makes sense to highlight other services or departments that a customer doesn’t yet utilise, this needs to be done sympathetically -a customer may not trust you for that type of purchase or may not consider it relevant.

I’ve been working with a retailer who provides two related services which are offered in different ways. It was interesting to see the research around the audiences using these services which suggested that they were completely different and there was little or no cross-over.

Looking in from the outside you may assume there was an opportunity for cross-sell between these services but when you understand the customers, what they do and when they do it you can see that there is little opportunity.

This also applies to the recognition and rewarding of customers.

Ideally your loyalty programme should align with profitability – rewarding customers for profitable behaviours and essentially “nudging” them in the direction you want. However this can backfire if you don’t understand how customers are working with your brand.

When reviewing an airline Frequent Flyer programme it was interesting to see that some of their most profitable customers weren’t being recognised in any way by their loyalty programme.

The problem?

The programme was tuned to recognise long haul business class customers, not short haul economy. However some of these short haul customers were essentially commuting by plane – racking up more flights and hence profitability than their top tier customers – but not miles, the standard measure used for recognition.

When considering how to retain and grow customers we need to ensure that we don’t assume how customers want to interact with us or what they want to buy from us.

Instead we need to take the time to understand different customer segments and ensure products and services are aligned to these customers in the context to which they utilise them.

Just because you sell baggy pants doesn’t mean you can’t market to a segment who like how they fit.

Sunday, 22 November 2009

Developing a Customer Conversation

whisper Building customer loyalty and engagement - essentially creating a relationship - is much like having a conversation, just over an extended period of time.

Whoever initiates it, whether it is the brand through communications or the customer through a first interaction, the aim is to continue the conversation.

The last thing you want as a brand is to be viewed as socially inept – a social bore - with customers looking to get away at the first instance.

American novelist Edgar Watson Howe famously said of having a conversation:-

No man would listen to you talk if he didn’t know it would be his turn next

The trick with loyalty communications is to get the customer to know it’s their turn to respond and this means creating relevant, engaging communications which demand a response – an interaction.

In order to get a response you first need to listen - no one likes to be talked at or talked over.

In a marketing sense customers are talking to you all the time – feedback in what they buy and what they don’t; when they complain, when they ask questions – in every interaction. If you’re not listening to this and simply send them the next “mass message” (or no message at all) why be surprised when 95% simply give up the conversation.

Even when you listen and respond back with something relevant, you need to consider how to keep the conversation going.

Within a normal conversation, if you answer the question “Where are you from?” with a one word answer such as “Northampton”, don’t expect much more from the conversation. People need something to build upon to keep a conversation going – giving them a reason to respond and letting them know it is their turn next.

If they’ve never heard of Northampton they will struggle to move the conversation forward and likewise for a brand if you, for example, simply say “Thank You” after a purchase, the customer will have no reason to continue the conversation.

Look at conversation experts Amazon – they lead you up to the purchase with wish lists and recommendations and after purchase make further suggestions that fit with your purchase and then ask you to review the purchase. Always looking to extend the conversation – letting you know it’s your turn.

In a white paper by Bazaar Voice they call the development of this conversation the Participation Chain, going on to say:-

[the] “participation chain” – [is] a way of cultivating user involvement so that each action builds upon the one before, building value along the way.

Going on to recommend that you “look for participation dead ends, such as thank you pages that lead nowhere [and] consider possible ways to follow up.”

This doesn’t just apply to e-commerce sites. Think about an individual you’ve spoken to who always relates the same story when you meet – would you be keen to seek out this person at a social function… probably not.

From a brand perspective, if every time someone comes to your site they see the same content do you really think they’ll want to continue the conversation? Are you actually enabling them to have a conversation or simply talking over them every time they come with the same old message (or a message you want to talk about regardless)

Building a conversation with customers is critical to building engagement; and increased engagement leads to increased customer value. As Bazaar Voice points out:-

Time and money are two sides of the same coin. In general, the more time a customer spends with you – assuming a positive experience – the more likely they are to spend money with you.

As a brand it might be worth brushing up on those social skills to develop a customer conversation – learning how to be a social more, not a social bore.

Friday, 13 November 2009

Creating a Loyalty Flash Forward

ff-promo-1 New TV series Flash Forward presents an interesting plot whereby the whole of mankind loses consciousness for 2 minutes 17 seconds and in that time sees events 6 months ahead of time.

Apart from the initial chaos and destruction that ensues – i.e. planes dropping out of the sky and cars running off the road – it’s how people react to knowing their future which is interesting.

People seeing themselves as married or pregnant for example, or worse, seeing nothing at all and what exactly that may signify.

Within the plot there seems to be two main types of reaction to this event:-

  • Wait and See– these individuals saw nothing worth getting anxious about or felt powerless to affect what they did see and so just accept it.
  • Positive Intervention - These people saw something in the future they didn’t like and so try to change it.

Whilst each reaction depends on the individual personalities of the characters, it is largely driven by what they saw in terms of whether this was positive, negative or just every day.

Interestingly, while this is obviously science fiction, as loyalty marketers we can make it science fact and actually have the ability to provide a Flash Forward on consumers - seeing what they may be doing in 6, 12 or 18 months time - through predictive analytics.

Looking at a consumers behaviours and those of other consumers who have previously demonstrated these behaviours can provide a real indication of future behaviours.

For example:-

  • A credit card customer’s balance at 90 days is indicative of their balance at 14 months
  • A new frequent flyer member going long haul in the first 30 days is 6 times more likely to become a premium customer.

Knowing this information provides you with a choice.

Do you take the “wait and see” approach – monitoring their ongoing behaviour but essentially doing nothing more or take the “positive intervention” approach and use marketing tools to try and change or maintain the behaviour.

Whilst the approach you choose will depend on the actions you’re looking to develop, the key is actually having this choice.noh

Unlike the character Special Agent Demetri Noh who says “There is nothing you, I or anyone can do to escape what's coming”, a shrewd loyalty marketer actually can.

Putting in place an early life communications programme for example can create a significant lift in transactional activity – now if after 90 days that’s indicative of activity at 14 months that’s a insight worth having.

Without the “Flash Forward” that predicative analytics brings you're essentially walking in the dark - taking one day at a time – and in marketing terms spending money today in the hope it might result in a later return.

In contrast, being able to glimpse the future of every individual customer allows you plan ahead, surprise and delight your (potentially) best customers and maximise your marketing spend – focusing precious funds on those customers with the best propensity to return value.

Creating your own Flash Forward is definitely worth the investment - Flak jacket, FBI badge and large gun are purely optional.

Friday, 6 November 2009

The success of (personal) brands

brand me I was at Loyalty World 2009 this week and saw an excellent presentation by Alex Hunter – former Head of Online Marketing at Virgin but more importantly a really engaging speaker who knows what he’s talking about.

His presentation centred around the shift in relationships between the brand and the consumer; the focus though was slightly different from the usual discussions.

When marketers discuss loyalty it’s normally about creating and deepening the relationship between the brand and the consumer.

However Alex argued - citing examples like Steve Jobs who almost personify the brands they represent - that people build relationships with other people, not brands.

I thought this was a really interesting insight as there is an increased focus on “personal brands” – individuals building up their own brand and profile based on their thoughts and ideas almost independent of their employer.

I think this really show’s how things have changed and how social technology like blogs and twitter are helping to accelerate this.

Previously a companies value was measured on its fixed assets with its quality and reputation coming from it’s raw materials and how they processed these into goods and services.

The new raw materials are information, knowledge and creativity and these aren’t assets a company can own or process – these come from individuals.

The best companies have the best talent and so it makes sense that consumers will want to engage with these individuals and feel they have some form of relationship. The opportunity for brands is to harness and enable this – not to try and own or direct it.

Best Buy is a great example of this and Barry Judge, CMO is leading the charge. Not only does he have a personal blog which discusses what they are doing, but also uses other social tools like YouTube to put across his thoughts.

The obvious danger here is that with a relationship being built between the consumer and the individual, what happens when the individual moves on – and this was exactly a question posed to Alex during his presentation.

The answer is really the democratisation of knowledge.

Individuals move on, but a company is more than just the single individual - it’s the combination of individuals working as a team and so exposing a wider variety of team members, whether this is the CEO, a developer or a marketing exec ensures that the consumer get’s a balanced view and a real insight into the brand.

Best Buy is another great example of this with employees encouraged at all levels to interact – take a look at Best Buy Connected – in their own words “a new way for you to engage with the actual people, real behavior and unedited perspectives of those who power Best Buy”.

This combination of view points across many different individuals and roles is in essence what makes up the brand - so the relationships the consumer builds with the brands employees actually becomes the relationship with the brand.

This level of openness and perceived lack of control can be a real challenge for many brands, but the opportunity to engage consumers at a more emotional level has got to be worth the effort.

Tuesday, 27 October 2009

When reality bytes – a view into Augmented Reality

AR Augmented reality is one of the hottest topics around at the moment – it holds out much promise, but also the potential for much hype.

Unlike Virtual Reality – one of the last hot topics - Augmented Reality or AR uses the real world as a base to overlay additional detail and information. Also unlike the more niche Virtual Reality, AR has the prospect of engaging a much wider audience.

The challenge for AR however is to move from a interesting but currently niche technology to a useful, desired and mass marketing tool.

The challenge for brands is how to utilise this technology to engage and connect with consumers, providing additional ways to interact.

What’s great is that solving the second challenge will ultimately solve the first.

When I first started writing this blog my initial thoughts were to discuss how brands could use AR to create interesting interactions with consumers. However in researching it and finding some great pioneering examples this blog is about how brands are using AR and what we can learn.

Bringing it to life

GE have utilised AR to create a deeper emotional experience for their Plug Into the Smart Grid campaign. Consumers can print off an AR marker and then when viewed via their webcam, the sheet of paper comes to life showing a 3D representation of the smart grid.

The same technology could be used to view a a car brochure for example, showing the car in full 3D on top of a 2D brochure.

Better still, rather than bringing the car brochure to life, why not bring the car itself to life. Place the marker on the floor outside and you could see the car sitting virtually on your drive outside your house.

Want a new plasma TV, not sure how it will look on your wall – why not simply view it in place virtually.

The US postal service is using this technique to allow customers to see if the item they want to send will fit within a given box – showing the box actually overlaid on the item.

Lego are also using a similar approach, allowing consumers to pickup a box of unassembled Lego and view it through AR to see the fully assembled model sitting on top of the box in full 3D, allowing you to view it at all angles.

Many of these applications however fit the “pre-purchase validation” model. They allow you to virtually try before you buy, seeing the product in a real world scenario.

This is great for helping with more complex purchases or those that require a little extra reassurance, but what about everyday purchases. How could AR work for example with FMCG brands?

Many brands are looking to build longevity and increased interaction into the purchase process, using on-pack codes for example to create and foster loyalty. Whether it’s BudBucks from Budweiser, Brit Trips from Walkers or Coke Zone from Coca-Cola.

However the issue with all of these solutions is ongoing usage – stemming in part from the process required for code entry. Using AR and existing solutions could provide a more engaging experience.

Imagine viewing your can of drink through your phone’s camera and whilst it logs your purchase (through a marker such as a shotcode) it simultaneously shows your current balance and a selection of available rewards, all overlaid in real time on the drink that is sitting in front of you - in fact the can itself could evolve into the different rewards as you look at it.

In essence the combination of your phone and a can of drink becomes your loyalty card, your loyalty statement and your rewards catalogue.

Metaio, a pioneer in the area of augmented reality technology provides a view into how AR can be overlaid on a consumer product – showing how a packet of cereal can be brought to life.

With younger and younger kids having mobile phones, you can see how this could replace the “purchase with gift” sales promotion.

I’m really excited by the prospects of this technology and how it can be utilised not just for fun short term sales promotions but to actually provide value in the longer term - supporting consumers through the buying process and ongoing reward and recognition.

This is a fast moving technology and as phones get quicker and more feature rich it’s only going to grow.

PS. Can’t think of a marketing application – but AR allowing you see through walls – now that’s an interesting development. ;o)

Friday, 16 October 2009

First Direct – Is being the listening bank enough?

active_listening First Directs roots come from the Midland Bank – at one time the largest bank in the world and one with its roots in my home town of Birmingham.

As a lad I remember the slogan they used which was “The Listening Bank” – and it would seem their young protégée First Direct is doing this in spades.

They listen.

They listen to their customers feedback – and it’s good – as one of the most recommended banks they rightly promote this to anyone else who will listen.

Basking in their reflective glory – they listen and then playback what they have heard. As a First Direct customer I know first hand that this is true – I’ve recommended them.

However me saying this is called advocacy – First Direct saying this can simply become tiresome.

We know they’re great, we know people think they’re great – but telling me isn’t great – show me.

Their latest offering called Talking Point, part of First Direct Live extends this listening – now customers can post their thoughts about the bank on topics from “What do you think about the bank” to “What makes you happy”.

And the customers have responded with the good, the bad and the ugly.

The Good:-

Mandagod says “I love you First Direct – I’ve been with you almost from when you started […]”

The Bad:-

Paul from Sheffield says “Really really annoyed with fd for the first time ever. Have had a Visa Debit card foisted on me to replace maestro. Don’t want. Don’t like. No consultation. A retrograde step.”

The Ugly:-

Ripped off says – “Used to love you. Moved my mortgage to you – […]you don’t pass on rate cuts - I will be leaving as soon as I can as I feel cheated by you – your staff are lovely”

What is notably absent however is any kind of response – I can almost see the tumble weed rolling on by. I don’t want you to just listen, I want a dialogue.

Listening is good.

Telling us you’re listening is good.

Telling us what people think of you is good.

Actually showing us how you responded would make you great.

Actions speak louder than words.

Saturday, 10 October 2009

B&Q – You broke my heart

BQHeartI loved you B&Q.

Your wide aisles, filled with tools, materials and furnishings that inspired me to do more.

Your warm colour of orange welcoming me when all others failed – stocking those items in such breadth that I never failed to find what I wanted.

Your tips and hints that helped when I doubted my skills and filled me with confidence to finish what I’d started.

True you didn’t always reward me – Wickes was always trying to get my attention.

But I stuck by you because you felt comfortable, I knew you, I knew you’d always be there when I needed something. I didn’t care about price – I was happy with a wide selection and good friendly service.

I opened my wallet to you and you responded in kind with a pleasurable shopping experience.

selfserviceBut then you ripped out my heart… when you ripped out your tills.

Instead you replaced them with self service units which meant I had to scan my own products.

No longer the warm, friendly voice of a satisfied employee – instead an automated voice ordering me what to do – telling me when I get it wrong (even when I don’t) - questioning my age when I buy solvent based products (even though I’m paying by credit card) – refusing to scan my barcode (even though it was completely undamaged).

I know you tried – one employee to man 4 automated tills – all of them going wrong. I tried to talk to you – but you said “there is only me”.

You had tills – but no one staffing them. You knew I was coming, it was Saturday at 2pm – it’s when we all come – yet you had no one to help.

I know I’m not aloneothers have felt the same way.

Surely you understand that the purchase process is critical to repeat custom – a time when reassurance that you’ve made the right decision is key.

Surely you realise that as my money flows from me to you I want to feel I’m getting good value for money – not feeling like I’m paying the same price for less service.

Surely you know that employees are the physical manifestation of your brand.

Surely you can see how a brand which has tied it’s proposition to its staff – showing them within your advertising, speaking of them by name – has managed to completely destroy this in one failed moment of truth.

Surely you understand there are plenty more fish in the sea.

Your automated voice asked me at the end “How did we do? Please tell us”.

Consider this the reply.

Thursday, 1 October 2009

Breaking the mold

egg Seth Godin made an interesting point in one of his latest blogs when he said:-

Your industry has been completely and permanently altered by the connections offered by the internet. [..] Not a little different, not just email enabled or website marketed, but overhauled.

Whilst additional channels to consumers such as email, IM and social networks can be utilised in traditional ways - essentially lowering the cost per contact - it’s how these can be really leveraged to completely overhaul the process – to break the mold - which is most interesting and retention marketing is not immune from this.

Within loyalty we talk less and less about the actual transaction and more and more about the interaction. 

Loyalty programmes are beginning to focus on recognising and rewarding this interaction – in all its forms – because we know that interaction with the brand leads to positive customer sentiment – and this in turn leads to increased consideration and transactional behaviour.

I’ve spoken previously about Dell and how they interact with their customers through IdeaStorm.  Well it looks like brands are increasingly seeing the benefits of involving consumers in decision making.  MyStarBucksIdea for example allows customers to share, discuss and vote on ideas, but also crucially to be able to see how the ideas have been actioned – this isn’t an empty suggestion scheme, it’s a true interaction.

UK clothing retailer New Look is embracing interaction across many channels.  It’s New Look TV through YouTube allows consumers to interact by uploading videos of themselves and their friends, interacting via Facebook with all of it linking back into the main New Look website.  For those really keen on getting close to the brand, the MyLook website allows consumers to share their views, make suggestions and connect directly with New Look.

One brand that really excites me is GiffGaff, a new UK mobile brand. They are taking this interaction one step further with the launch of what they describe as the people-powered mobile network.  Their model is very interesting because while they have elements of the “ideas” model - allowing members to nominate and feedback on suggestions - they have linked this back into a currency in the form of rebates off your mobile bill. 

So in theory, the most active brand advocates – those who provide suggestions, take part and recommend friends - are able to have their calls for free.iStock_000006428830XSmall

This is ground breaking.  A loyalty programme which rewards not based on the brands share of customer spend but on their share of customer voice.

And this makes sense, but you have to overhaul your approach to loyalty and recognise that the interaction – both between the brand and between individuals – can bring in additional (and potentially higher) revenues through both retention and word of mouth.  Lauren Freedman, president of the e-tailing group says:-

Customer engagement has become a metric to be reckoned with, where failing to engage consumers via community and social media will have brand and bottom-line implications.

This is a real epiphany for many brands though – and I’m guessing for many loyalty agencies.  Being so used to loyalty meaning points equalling prizing – to rewarding the behaviour after it has happened - they haven’t realised that the real focus has always been on building relationships.

Loyalty programmes don’t add value if you simply dish out points like toffees – to gain growth from the programme you have always had to encourage the behaviour you want, using the currency to reinforce good behaviours.  The change now however is that “good behaviour” is not just the purchase itself, but the interactions that lead up to the purchase.

Points aren’t however dead – there will always be a need to recognise the interaction that is the purchase - but brands that haven’t yet realised that retention marketing means more than simply a deferred discount and a box of wine are missing the opportunity to unlock the real value.

This new interaction loyalty – in essence this Lean Forward Loyalty – which recognises and rewards individuals for getting involved with a brand, for sharing it with others, for interacting with it on an ongoing basis is where the future lies.

Recognising and rewarding those customers who actually “add” value to your brand – through their thinking and participation – ensures that your overall proposition remains appealing to the consumer, whether they want to be actively involved or passively entertained.

Might be time for an overhaul – might be time to break the mold.

Sunday, 27 September 2009

Divide and Conquer

lg_couponCoupons.  Despite their long history - first appearing in the early to mid 1800’s and being used to great effect by Coca-Cola in 1887 - they are however strange beasts.

Every brand seems to want to give them – research suggests almost all of us use them – yet no consumer wants to be seen with them.

One of the reasons for this is that as we have a tendency to upward social comparison, we are more likely to want to align with those better off than ourselves – and as people tend to associate coupon usage more with less well off people, coupon usage overall has a negative image.

The modern word “coupon” derives from the French couper which means “to divide with a blow or stroke, to cut” which led to the word coupon which means “a portion that is cut of” - essentially describing how the coupon is actually presented.  However, the meaning of the word coupon today has less to do with physically how it is made available and more with how it is used – the association being more one of a discount.

Coupon perception can though span between money saving discount and deserved benefit, although at this end of the scale it’s typically called a voucher – probably more to disassociate it from its “cheaper” cousin. 

Whilst many of us may shy away from using a 20p off coupon, we wouldn’t think twice about a coupon which gave us a perceived exclusive benefit.

As an example, I was travelling on a flight recently and purchased priority boarding as part of my car park booking - a benefit which essentially allowed me to whisk through security and customs and something which many frequent flyer programmes offer as a feature. 

When I arrived, people were standing in a very long queue, which was even snaking down the entry stairs, and yet I had a “coupon” which allowed me to ride up the escalator and go through a dedicated channel with no hold-ups.  The cost of this privilege - £3 – the benefit (to quote a popular card brand) – priceless.

There is a very fine line between an unmerited discount and deserved benefit and it’s all in the positioning – how it is “sold” to the consumer and the reason for achieving it.

Clipping a coupon from a magazine for buy 1 get 1 free is obviously a mass campaign and smacks of penny pinching or smart consumer depending on who you talk to.  However, earning benefits based on purchase behaviour, perceived position or who you know turns it into a deserved privilege.

Another advantage of focusing on a benefit rather than a discount is that it tends to attract the more affluent consumer who, whilst not accounting necessarily for a larger share of the footfall or penetration will typically account for a larger share of the revenues – they will be loyal rather than shopping around based on who has the special offer.

In promotions I’ve worked on with FMCG brands where the campaign focuses on delivering a benefit, not a discount, there is a definite skew in participation and redemption to more affluent groups. 

Whilst less affluent groups tend to show initial interest, it is the more affluent who follow through to redemption.  However, providing a deserved benefit can be harder within an acquisition campaign than a retention one.

It is obviously hard to position something as a deserved benefit when quite obviously it is delivered via a non-discriminating channel such as a door drop or magazine coupon - however there are brands that have achieved this. 

Threshers famously managed to reposition a discount coupon to a deserved benefit by simply using viral elements so people thought they had access to a benefit that wasn’t intended for them. 

GHD created a programme called Blessed which was positioned more as a members only club than a mass loyalty programme.

Closer to home, I’m currently working with a hotel group which has created a programme which uses advocacy to drive through acquisition.  It’s positioning of secrecy which bestows privilege to those invited, allows them to offload inventory at discounted rates, without ever appearing to be discounting their brands.

It’s not the discount itself that is bad, it is how the discount is positioned and the perception as to why it has been granted that is key.

For them, the whole proposition is one of deserved benefit rather than cheap discount and they get to know their customers and potential customers at the same time.  (I’d love to tell you who they are and how you get access, but I'm sworn to secrecy – unless you’re a friend of course…)

Ironically, despite the negative image coupons have, usage has increased in the last year or so as people look to reign in their spending – however this is a false positive for brands.  These consumers are buying simply on price and won’t stick around for long or at all after the coupon has been used.

Better to make people want your brand, rather than paying people to take your brand - coupons can be used to do both, it just depends on how you position them.

Whilst the original definition of a coupon referred to the division of the physical paper, used correctly they can be used to divide good customers from bad – now that's got to be a challenge worth conquering.

Sunday, 20 September 2009

Back to the future

back-to-the-future I’m very excited.  I’ve just got the new Dan Brown novel “The Lost Symbol” and already I’m a third of the way through it. 

Without giving away the plot to those who haven’t got it yet, it’s safe to say that it includes the usual mix of secret societies, mythology, symbology and real life locations in a way that really brings the novel to life – and starts you questioning reality based on fiction.

However while this blog isn’t a book review what did intrigue me was a section in “The Lost Symbol” where one of the lead characters demonstrates how breakthroughs in science today were actually already documented in ancient texts centuries ago.  From string theory to multi-dimensional universes, all of these things were apparently discussed in ancient documents.

Now I don’t know how true that is, but the reason it struck a cord was because I’ve also been reading some older books recently including Hidden Persuaders by Vance Packard (first published in 1957) and Propaganda by Edward L. Bernays (first published in 1928).  What’s really interesting about these books is that barring a reference to steam ships in Propaganda and shortening in Hidden Persuaders, you’d be forgiven for thinking they’d been published recently.

In Propaganda, Bernays describes one of the problems facing society, saying:- 

“[] today, because ideas can be instantaneously transmitted to any distance and to any number of people, this geographical integration has been supplemented by many other kinds of grouping, so that persons having the same ideas and interests may be associated and regimented for common action even though they live thousands of miles apart” - 1928

Indeed he quotes H. G. Wells who had written in the New York Times “ Modern means of communication – the power afforded by print, telephone, wireless and so forth..[].. have opened up a new world”.

Bernays then goes on to describe some of the tens of thousands of groups listed in the World Almanac – which I guess would be the fore bearer to Facebook Groups – listing groups such as the “Association to Abolish War”, the “Anti-Cigarette League” and the “Ayrshire Breeders Association” – all of which can now be found on Facebook in one form or another over 100 years later.

Whilst we think that social networking may be something wholly new, in reality we have simply changed the channel – made it more visible and accessible – but we haven’t really changed the underlying activity.

In Hidden Persuaders, Packard describes some of the techniques being used by agencies in the 50’s to sell goods.  Given this was over 60 years ago, little has changed.  Yes, phrases like “the little woman” when referring to a housewife wouldn’t play so well these days; however when he describes some of the issues marketers faced back then, we’d do well to pay attention.

For example, when discussing the issue that “you can’t assume people know what they want” he uses the case of a major ketchup company who decided to change their bottle design based on customer complaints.  In interviews most customers indicated they preferred the new bottle the company was considering however when it was then launched it was overwhelmingly rejected in favour of the old bottle – what customers had stated when interviewed didn’t match with what they did in practice.

Almost 30 years later, one of the biggest global brands made exactly the same mistake when Coke launched it’s new flavour in 1985 after extensive customer research which indicated it was preferred - only to find it was wholly rejected by the public and had to be pulled.  This despite blind taste tests indicating they really did prefer the newer recipe.  The book Yes! 50 Secrets from the Science of Persuasion discusses this and indicates that it probably had more to do with the psychology of “scarcity” and how people react when they think something is in short supply or they are losing something.

Going even further back, in 1894, Richard Sears, co-founder of Sears said "We Can’t Afford to Lose a Customer” and so to help retain customers he used a number of techniques over the next 10 years including:-

  • Printing testimonials from satisfied customers
  • "Club Order Program" - Encouraging customers to combine their orders with friends or neighbours to share in discounts
  • "Customer Profit Sharing" - giving the customer a one-dollar certificate for every dollar spent.

searscertKeep in mind, this was over 100 years ago and we essentially have a company utilising a loyalty programme, peer based feedback and elements of social networking.

Sometimes I think we get so wrapped up in the technological advances that we forget that what's important is not how we say something – the technical channel by which it’s transmitted - but what we have to say and even more importantly what we actually do.

Times change, technology moves on – but basic human needs and desires remain the same – and success depends on meeting and exceeding these, whatever century we are in.

Sunday, 13 September 2009

It’s coming and it will be game changing

iphone_smsT-Mobile are offering free texts – for life!  

This is currently a specific promotion for customers joining the reward programme during the next month or so and who top up with £10 this month and continue to do this each month thereafter.

However, this is significant because it won’t be long before a competitor responds and free is difficult to beat. 

Look at the credit card market and the 0% offers.  They basically eroded their own market to the point where almost no one takes out a card anymore without some form of 0% deal, whether this is for balance transfers or retail spend.

Music downloads are another example.  Technology outpaced the publishers, providing music when and where people wanted it rather than how the music companies wanted to control it.  Once the horse had bolted and people got used to “free”, it has become a difficult thing to undo.

Free texts will go the same way.  Once people see SMS less as an individual purchase and more as a service, charging for texts will be dead.

Whilst putting “free” onto something can increase attention and gain new prospects –these don’t necessarily translate into customers.  Worse still, if the element of the product or service being given away as free doesn’t support a business model which can be charged for – and more importantly – which customers want to pay for, then this can simply erode marginal revenues for all.

However “free texts” aren’t really the whole story – they are not really free, they are just un-metered within an overall service provision.  This means they are becoming more akin to mobile data contracts or home broadband, where within the restrictions of “fair use” and a monthly commitment consumers can basically use as much as they like.

Seth Godin makes an interesting point in his latest blog post when discussing the issues around brands making something free

People look at the free revolution and say, "oh, that could never work. If I gave x, y or z away for free, I'd fail." They're right. They will fail... If they keep the model the same and just give away stuff for free.

So where is T-Mobile going with this?

Well there are two interesting issues within the mobile telco market.

1. Market Saturation – Everyone who wants a mobile has one – there are very few new new customers so brands need to increasingly look at ways to attract customers from other brands and then retain them.  Witness the plethora of loyalty programmes being introduced such as Orange Bright Top-Ups or O2 Treats which are looking to reward customers for their continued loyalty.

This new promotion from T-Mobile also works in that it has an attractive proposition - “free texts” – which will attract and acquire customers combined with a lock-in based on losing the benefit if you cease to top-up regularly.

2. Product Saturation – Increasing competition has meant the cost of voice minutes and now texts has been increasingly driven down to the point where customers have more than they need – brands can’t really differentiate in this area any more.

As pointed out in the blog I’m Cellular “As prices fell for a voice minute of use (just as with Long Distance before that), subscribers could afford to purchase more minutes for their dollar, but at a point their demand was sated and they had no desire to consume more.  SMS has certainly provided an unexpectedly large increase in data use, but that is, like voice, largely played out.

So the business model has changed and the new growth area has moved on – in this case it’s data – with data predicted to double revenues over the next 5 years.

The blog I’m Cellaur does highlight another potential issue:-

Although (like prepaid) these [flat rate] plans are simple for subscribers to understand, and very attractive in avoiding unpleasant surprises, they invite unrestrained use with no marginal revenues.

So the real issue for T-Mobile will be in how to continue to increase revenues in the future if everything is based on a flat rate fee. 

Well when people stop worrying about the cost of the service, they will start to concentrate on what can be delivered across the service.

As we’ve witnessed with the iphone and it’s unlimited data contract – expect a deluge of digital services such as music, applications, location tools, social tools and games.

And for all other brands – the prospect of free unmetered SMS and data opens up a world of possibilities for creating closer relationships with their customers.

Is “free” SMS really game changing and a win-win for all? 

I think it could be.

Tuesday, 8 September 2009

An open debate – acquisition vs retention

I always like a debate and I was recently having one with a colleague of mine  - I thought it such an interesting discussion that I’d post it here in it’s raw format…

8th September 2009 12:30 - Rachel

I think there's a piece on loyalty in advertising and DM... Previously they just blasted advertising messages to everyone in the hope some of it stuck... Or segmented communication based on some REALLY rudimentary data (I think geodem is an utter waste)... Now its backfiring - the value of media is in the knowledge and understanding of the intended target... Lifetime value HAS to be more valuable than response... Says that in the article in MediaGuardian that ABC (Audited Bureau of Circulation who validate newspaper and mag sales) measure web effectiveness by unique users per month, and for the online papers that's an issue as they think success should be measured in terms of repeat visits as someone dipping in once is of less interest to them than someone who comes back every day...

Anyway, there's an article there about something... Something really provocative to try and get a reaction out of the ad or media boys…

You also need to look at Twitter... [Some people] have sided with the masses who think things like the death of Michael Jackson being the No1 trend on Twitter within an hour is a sign of something profound, like those people who think they're 'protesting' about the abuse of electioneering in Iran by putting a green ribbon on their Twitter profile pic... People THINK it means something, that its a modern way of campaigning against injustice... But that's insane! Its incredibly easy to go to gov.org and put your email address down on a petition calling for more sanctions against China in response to more human rights abuses - but its NOT standing in front of a tank now, is it???

Some might call it the democratisation of the democratic process - but its set the benchmark at the lowest common denominator, and so stuff that REALLY matters is just gonna get lost in a load of junk. Someone's got to have that fight with the digi boys, and I dont seem to be able to get the words out...

8th September 2009 12:38 - Mark

I like the second bit.  I read a book – Bowling Alone– which talks about this.  How people used to be genuinely involved in things but this has declined so it now has no real meaning.  Using the example of Greenpeace – when they started using DM their membership ranks swelled and could be translated as a “movement”, however when they stopped it all fell away – these people weren’t really bothered – well not enough to actually do anymore than put some cash in an envelope.

Looks like Twitter is the same – people like to jump on the band wagon – to feign concern, but like you say, will they actually do anything about it.  The danger is that people given an opinion without giving it thought – and if people read too much into this they may think that’s where public opinion lies when in reality it is not.

First bit I’m not getting…  I understand the principle, especially around frequency, but don’t see the line of argument. 

8th September 2009 13:10 - Rachel

Both of the points were meant to be about acquisition without retention... Into a product or even an idea... It's lazy marketing when penetration is the main measure... 8million people think I'm great, but not one of them would p*ss on me if I was on fire... Mates vs friends... But as you say, its REALLY dangerous if politicians start thinking it actually MEANS anything. And you only have to watch the news to see the weight that the media puts on these online petitions, and Twitter trends... It's a worry. But of course it suits them, because it moves super-fast and that suits 24hr news... It doesn't really matter WHAT you're saying, so long as you're saying SOMETHING, and of course if loads of people are saying it it must be worth saying...

I can't BELIEVE some b*stard stole my idea :oO

On the advertisers bit... I was just thinking that mass-market advertising has been feted as the most effective communication and persuasion tool forever (Have you read Vance Packard yet??), and now their lack of real knowledge and understanding of their consumers is backfiring on them. Cost-effective attitudinal micro-segmentation - deliverable only through the digital WILL be the most effective marketing tool of the future.

And even in digital, the payback will require an evaluation of lifetime customer value as it will still be too expensive for a single hit. So its all about retention... And suddenly the ad agencies are interested in loyalty marketing... And the Media Agencies are beefing up their digital production departments whilst everyone tries to work out how to make digital advertising work... But they've taken the same rules as press and applied them to web - produce an ad in a pre-specified format, find the websites that have the largest number of people who meet a set of pre-prescribed criteria as having a propensity to buy your product, and place your ad in their way... and that's SOOO missing the point...

8th September 2009 13:23 - Mark

Hmmmm… not sure I agree with you entirely.  Yes when you know your customer it’s all about retention – but to acquire them you need to find them and by definition this means you don’t know who they are and so are limited in your ability to segment to reach them.

I think digital is great for retention – one to one relevant comms – but for acquisition I think it’s sh*te – based on nothing but my own experience.  Digitial is a pull based medium, I go online because I want something, I search it out.  TV, Press, etc. is different as I watch it/read it to be entertained – I’m open to new things being pushed to me.   For me, digital is about cross-sell (people who bough this also bought this – that’s relevant), it’s about referral (thought you might like this because I do), it’s about discovery (I want a new TV – lets read reviews/search/comparison).

Example: T-Mobile offer free texts – I saw it on TV – I went online to look it up and I’ll be blogging about it this week – TV works, but needs to fit into the overall purchase process.  It’s no longer just Awareness, Interest, Desire, Action – there is a host of other stuff in the middle such as Research, Validate, Compare – before I get to Action.

Acquisition through awareness will always be required and I think mass-media (albeit increasingly segmented) will always play a big role in getting them – however retention follows quickly otherwise you’re back on the hamster wheel to re-acquire later.

8th September 2009 13:26 - Rachel


8th September 2009 13:44 - Rachel

I'm in shock... You just disagreed with me... On ACQUISITION!!!!!!!!!!!!! :oO

I think you're half wrong half right... I think you should look up something called "Groundswell" marketing... Its my new favourite thing ;o)

….. the debate continues – feel free to chip in.

Sunday, 6 September 2009

Is it loyalty or is it addiction?

farmtown I have a confession to make… I’m an addict.

This isn’t however a drug addiction (or any other kind of substance), but I do tend to partake at least once a day.  What am I addicted to… well I’m kindof ashamed to say, it’s Farm Town on Facebook.

I realised I was addicted when I came home from holiday and within an hour had logged on.  Interestingly I’m not alone either – I've seen many people using their laptop in public and on the screen was Farm Town.  In fact, for those of you that haven’t heard of it, count yourself lucky, you’re not one of the 18.5m monthly active users, 6m daily users or the 1.1m fans. 

This got me thinking.  How was I so easily hooked in and how does it continue today to attract – no demand – my attention.  In fact, what has actually gone through my mind is how could I unlock and leverage this level of stickiness and loyalty for use in customer retention programmes.

At this point it’s probably worth explaining exactly what Farm Town is and in my opinion, why it is so sticky.

Farm Town is an online game which allows you to build and develop a virtual farm – going through the motions of ploughing, planting and harvesting and then earning an income from crops sold.  In this respect its a Tamagotchi style application as it requires regular attention to harvest crops before they go bad – so in order to continue to take part you have to continue to log on. 

However, as you build up money you’re able to extend your farm and buy buildings, animals, fencing etc. to personalise your farm as well as being able to grow more crops – and earn more income.

There are many reasons at play for why this game is addictive.

At a high level the stickiness of Farm Town is based on goal directed behaviour – using various mechanisms to set out different goals requiring specific interactions that draw people deeper into the game one step at a time.

To achieve this the game uses a form of tiering to unlock features. 

In the early days for a new player, it is possible to rapidly rise through these tiers and begin to unlock different crops, buildings etc.  This starts to create a feeling that the higher levels are achievable so you put more effort in to get there – however the higher the tier, the more effort is required.

This to me is one of the key aspects of the design which makes it so clever, the tiering is always achievable, but the more you do, the harder it is to get to the next tier.  Having experienced getting to higher levels and and the crops or buildings this unlocks – essentially setting you apart from other “newbies” – you want to achieve more – to keep climbing the ladder.

I’ve seen similar stickiness in an FMCG loyalty programme I’ve worked on where participants were able to partake in online games for little or no points and redeem points for prize draws.  It might be expected that where consumers are not forced to make a purchase to take part or where they constantly “redeem out” by taking part in prize draws, that there would be an element of wear out.  In practice though we saw the opposite of this.

Where we see increased online interaction - whether this is no points or low points interactions – we see a direct correlation to increased retention.

What I think makes Farm Town more powerful is that taking part is rewarded not with more of the same, but with more!  Increased interaction provides increased privilege.

The tiering is also clever in that it essentially creates two currencies.  Growing and harvesting crops earns “coins” which are the base currency to purchase more crops, extend the farm, add paths, buildings, fences and trees.  Money isn’t everything though – I’ve earned over 1m “coins”, but I still can’t purchase what I want as I need to earn “experience points”. 

This second currency of experience points is earned by working – helping others by harvesting or ploughing their fields or building your farm with additional buildings, paths and fences.

Now this bit is very clever, because if it was all about the money you’d simply plough the whole farm, plant crops and maximise revenue.  However to get higher earning crops you need experience and this means giving land over to farm buildings and to helping others. 

By combining 2 different currencies, one which measures “transactional behaviour” and one which measures “engagement”, it leads the participant to interact in a way which creates deeper engagement.

Some loyalty programmes attempt to do this – just look at frequent flyer programme tiering with it’s use of base and bonus points.  However, I’ve never seen a programme that has so visibly recognised the difference between transactional behaviour and engagement.  The recent Huggies programme  “Enjoy the ride” was a great example of an engagement currency – but then missed the opportunity to combine this with a transactional currency.

The social interaction cannot be ignored either. 

You get increased benefits by having neighbours and increased earning if you work your neighbours farm – this ensures that people want you to be their neighbour and you want to be theirs. 

Having neighbours or seeing other farms as you work them means you begin to see people who are at higher tiers, who have bigger farms, who have crops you can’t plant – all of this acts as “social proof” which further spurs on activity.

I think this is one area that many loyalty programmes today still haven’t grasped.  Many brands are so nervous about connecting consumers together that most programme interactions are largely centralised and push based.  However the power of social proof – or in effect the ability to compare your performance to that of others – is well known to stimulate increased activity.

What I think the developers of Farm Town have done very cleverly is to create a really well designed journey which drives early engagement, rewards interaction, encourages peer comparison and recognises increased experience.

Obviously for many people the simple pleasure of building a farm is what drives them to participate – it might not be an addiction - but whether they like it or not, they are being played as much as they are playing. 

PS. In case you’re interested, this is my farm ;o)


Sunday, 30 August 2009

O2 creates loyalty through entanglement

O2 Providing additional ways for a customer to interact with your brand is a great way of creating “entanglement”.

The phrase “entanglement” is well used in loyalty marketing and typically refers to the process of meeting an increasing number of your customers needs with additional products and services in the hope of both becoming a trusted first point of call and making it harder for a customer to unpick themselves from the relationship. 

In the book Customer Winback: How to Recapture Lost Customers and Keep Them Loyalthe authors describe that the goal of entanglement “is to earn the customers dependence on your firm in as many ways as possible”

Interestingly, the phrase entanglement is also used in quantum mechanics.  There is a property known as quantum entanglement and it is described as where the quantum states of [two or more] constituting objects are linked together so that one object can no longer be adequately described without full mention of its counterpart.

I quite like the idea of that definition of entanglement for brands – essentially two or more products or services that can no longer be adequately described without their counterpart.  This would indicate that a brand was not only fulfilling a wider breadth of a customers needs, but that the product/service extensions actually supported and enhanced the originally offering – dare I use that much overused phrase – a synergy.

It’s rare to see a brand extension that works this well – sometimes they can appear disconnected, standalone and clumsy – but one company that stands out to me is O2.

They have recently released the O2 Money prepaid card which allows customers to top-up the card and use it in the same manner as a standard credit card, but with the condition that you can only charge as much as you have balance to support. 

There is nothing new with this product – prepaid cards have been around for a number of years now and are increasing in popularity within certain segments such as teenagers (allowing parents a vehicle to provide pocket money), the unbanked (allowing people to access online deals even if they are not credit worthy) and travellers (providing a safer way of carrying money). 

But it’s no secret that in these uncertain times people are looking for better ways to control money and this evidenced in a shift from credit to debit card payments as customers try to live within their means. 

A prepaid product can be seen as a modern version of household budgeting.  Rather than drawing out a fixed amount of cash and using this during the month for household expenditure, consumers can utilise a prepaid card in the same way, transferring a fixed amount onto the card and then using this to pay for goods and services during the month.

The only downside – and it’s a big one – is that you need to be on top of your expenditure to know what’s left on the card to ensure you don’t overspend or have the embarrassment of not having enough funds for the purchases.  This is where the O2 offering fits so well.

O2 have linked the prepaid product tightly into their mobile offering so that the two are entangled – in essence they can no longer be adequately described without their counterpart.

The mobile is used to check balances on the card, to top-up the card and a really nice feature is that real time balance updates are sent to the card after every transaction -  so it’s easy to keep on top of  the available balance and to manage funds.  Of course, as it’s cash, the card can also be used to top-up the mobile phone.

As you’d expect, the card is only available to O2 mobile customers and if you stop being a customer you can no longer load credit onto the card.  O2 see the card and the mobile as inextricably linked, with O2’s UK Chief Exec Ronan Dunne, saying:-

“We believe we are at the start of a journey of the coming together of phone and wallet and we intend, through O2 Money, to be at the forefront of this trend”

The entanglement of the two products – the mobile and the payment card – will inevitably lead to the entanglement of customers with the O2 brand.  For customers who build the card into their daily routine, this could be a powerful retention mechanic for O2 – and as it’s one of the few “fee free” cards on the market, it makes it an even more attractive proposition. 

It’s clear when you look at recent O2 innovations such as the branding of the Dome to “the O2” - and the entanglement this creates between the mobile and music - or the O2 Juggler – and the link this creates between the home, the family and the mobile – that O2 really get how to augment the basic provision of a mobile phone service.

It might not be quantum physics, but creating brand extensions that fit with, enhance and synergise with the core proposition is no easy task.  However it’s one that O2 seems to understand and is a strategy that is sure to create customer entanglement – ultimately resulting in greater loyalty.