Saturday, 31 January 2009

Increasing complaints equals increased profits

I know it's made the 6 o'clock news, but I couldn't pass up the opportunity to comment on the recent complaint letter sent to Virgin Atlantic.

The letter, reportedly sent by a passenger on a flight from Mumbai to Heathrow describes in a mix of humour and dry sarcasm the inexplicable combination of Indian in-flight food. With comments like "What is this? Why have I been given it? What have I done to deserve this? And, which one is the starter, which one is the desert?" it was clear that things had obviously gone wrong, both with the type of food being served ("The potato masher had obviously broken and so it was decided the next best thing would be to pass the potatoes through the digestive tract of a bird") and the presentation of it ("Luckily there was a small cookie provided…It appears to be in an evidence bag from the scene of a crime. A CRIME AGAINST BLOODY COOKING.")

Now as they say, no news is bad news and some have accused Virgin of creating this as a publicity stunt – especially given their current campaign around their 25th Anniversary. However given Richard's skill at publicity stunts, I'm not sure they would have chosen one which presented both their food and latterly in the letter their entertainment system in such a bad light. It has however got them airtime on the commercial free BBC with large chunks of their current TV campaign being shown.

Better still though it's shown in a really public way how they handle complaints. Richard Branson has apparently spoken personally to the author of the letter to apologise for the experience and invited him to help select food and wine for future flights. Putting my customer retention hat on, I'm betting this passenger will now still be loyal to Virgin. In fact, research has shown that customers who complain and are satisfied are up to 8% more loyal than those that didn't complain and are much more likely to speak positively to friends and family – so increasing word of mouth recommendation.

It's interesting though that many companies still don't handle complaints well – you only have to look at consumer champion programs like Watchdog on the BBC to see people who have come to the end of their tether dealing with companies who appear immovable and arrogant and then only with the intervention of the media finally "show a gesture of goodwill" in resolving the complaint.

As Virgin has demonstrated, at least in part, the trick to handling complaints is to provide a way for people to report them, then to resolve them where you can and finally to change processes, products and services moving forward to prevent it happening again. This approach to complaints can be termed the 3 R's for Report, Resolve and Restructure.


In surveying customers, an airline found that over 1/3 of them were dissatisfied, but that 2/3 of them had never complained. They calculated that for every small percentage of dissatisfied customers they could get to complain, they would retain a large percentage revenue. To support this they made it easier (and acceptable) for customers to complain – from in-flight comment cards to web chats.

What this airline realised is that if customers complain then they are actually taking a positive step - essentially saying "I'd like to continue to purchase from you – but I want you to get it right".

This experience is not unusual – in the book "Complaint Management: The Heart of CRM", authors Stauss and Seidel indicate that on average 22% of customers have a poor experience but 96% of these don't complain. Of this 96%, just over half will actually defect and the remaining customers will essentially be "at risk".


As always customers have a choice – they can continue to purchase from you or not – and how you handle the complaint will ultimately determine this. The book Complaint Management goes on to show that up to 40% of customers will defect where they are disappointed with their complaint resolution with the remaining 60% being at risk – at best becoming dormant – at worst becoming a detractor.

Resolution doesn't actually mean you have to "solve" the issue. I recently complained about the waiting time in a queue and although the company obviously couldn't give me back my time, what they did was explain their issues – their EPOS system was playing up resulting in one of their tills being down and they were switching customers from one type of account to another which was taking time with each transaction. They could have done things to mitigate these issues, but having listened to my complaint and explained their issues I left a happy customer.

Using a different example, in a measurement programme I was involved in a few years ago with a large UK high street bank, we measured the customer satisfaction of customers who had complained and noticed a drop in their score where they had complained and had then been sent flowers or chocolates by the branch in response. This seemed initially strange as you'd think customers would have been happy their complaint had been compensated for – however what we found out was that when someone was complaining about an unfair overdraft charge for example, what they wanted was the problem resolved – not simply a token gesture.


Not every customer will give you the benefit of the doubt and many will simply switch brands or service providers if you don't deliver the level of service required. Complaints help you to indentify key areas for improvement and allow you to restructure your service provision or product based on this valuable feedback. This helps to ensure that current and prospective customers who maybe aren't as vocal or loyal don't simply move their business elsewhere.

Peppers and Rogers provide a case study around Irish Ferries which in 1999 reportedly had very bad customer service scores and so they restructured their customer service to better empower employees to resolve customer complaints. As part of this they started to interview 100% of passengers on every trip to get their feedback good or bad and empowered employees to spend up to £1000 per customer to help resolve any complaint. By 2003, compliments had started to outnumber complaints 3 to 1.

Virgin's very public handling of the Mumbai to Heathrow complaint is great, but it's not how you handle the single visible and publicised complaint – it's how you handle every complaint that matters.

Many customers don't like the face to face stress of complaining to a brand's employees, or the hassle of writing a letter. Making it quick and easy to report a complaint at the point of purchase and via other channels ensures that customers can get the issue off their chest and a brand can learn how to make their product or service better.

If brands treat customers who complain as "best customers", empower employees to resolve complaints and put in place processes to learn from them, then they will benefit from increased customer retention, share of wallet and word of mouth.

Increasing complaints or at least increasing visibility of complaints really can increase profits.

Sunday, 25 January 2009

Social Currency Marketing

What do erotic balloon animals and dancing commuters have in common?

They have both been used by brands to provide a social currency which can be exchanged for consumer attention.

As more and more information is created, we struggle to consume it and so give it less and less attention. Simon Herbert first talked of this issue in 1971 when he stated that "a wealth of information creates a poverty of attention". It's ironic though that with all the demands on what is essentially a scarce resource – our attention – we choose to become ever closer and more connected by streaming information on each other through tools like Twitter or Facebook.

But is this really so surprising? As we are increasingly bombarded by external media with its demands on our time and attention aren't we simply forming a virtual "circle of wagons" – huddling together with those we trust (or would like to trust) to present a united front against the wider world.

This does though create a challenging opportunity for information providers - they might have to fight harder for the attention of consumers in the first place, but once they get it from a small number then it can spread like wild fire through the most effective peer-to-peer word of mouth "recommendation" in a matter of minutes. Using this blog as an example, I saw a 700% increase in visits in just one day when one of my articles got linked to someone's status update within twitter - much of that coming within just a couple of hours. And I wasn't even trying.

For a brand that is trying to find ways of breaking into these ever tighter virtual communities a commodity exchange is required that takes them from external threat (or worse still, a nonentity!) to a trusted (or at least accepted) insider. Continuing the analogy of the early pioneers, brands are finding things to trade. And where in the late 1700's it was mirrors, nails and buttons – in the 21st century the shiny objects are access, entertainment and kudos – creating essentially a social currency.

Looking at the recent viral campaign from Durex it's clear to see how this provided a valuable exchange – the video is extremely funny, and for those finding it first and forwarding it on to their friends, there's an element of kudos.

Durex have created an item to trade with potential and existing consumers which gives them access to a viral community and to a share of that most scarce resource – attention. In getting that attention they will have generated unexpected awareness and doubtless approval, as well as reminding people of a brand which of late may have been seen as less relevant than its competitors.

Mobile telco brands have really embraced this. In the UK, T-Mobile recently created an advert set in Liverpool Street railway station, with dancers mixed amongst the commuters who suddenly start dancing. This really captured the imagination of those who were there - sharing the event via their mobile and the video itself being posted to YouTube and receiving over 1.3m hits. With the strap line "Life's for Sharing" its clear they are trying to capture a share of consumers attention with something that can be talked about and traded.

The issue with these types of campaign is that although it breaks into the consumers consciousness, it is very quickly replaced by the next 'cool thing'. By its very nature it's difficult to maintain this kind of awareness through viral activity as the nature of this kind of interaction is that it is always looking for the next new thing, the next cool thing. Repetition is impossible – it's unremarkable – it's 'has-been', or worse still 'me-too' if you're the competitor brand.

Another way of gaining access to these hard to reach consumers is to not try and break in at all but instead to become part of their everyday life. Looking at another mobile operator O2, they have done this through their £6m per year rebranding of the Millennium Dome in the UK to the O2. This has allowed them to provide "access" for its customers such as priority booking for shows – allowing bookings 48 hours before non O2 customers - as well as bringing exclusive entertainment to their phones. They back this activity up with the ability to gain 4 free SIMS, allowing customers to introduce and share O2 with their friends.

With the Orange Wednesday promotion in the UK which provides 2 for 1 cinema tickets every Wednesday for Orange customers, this mobile telco operator has found an innovative way to really become part of their customer's everyday life whilst ensuring that their friends are introduced to the brand as well – providing a social currency through free films. This connection between their customer and their social network really does tie into everything they do, from the inclusion of free Facebook within their Dolphin package to the recent rebranding of Orange around the "I am" theme which focuses on how peoples social connections make up all that they are.

It's clear that brands are increasingly understanding that in the fight for a consumers attention they need to think not just about the consumer themselves, but all of the people they interact with and need to provide some form of social currency which can be traded in exchange for attention – whether this is erotic balloon animals, dancing commuters or free films.

As the recent Orange campaign says "I am who I am because of everyone".

Wednesday, 21 January 2009

Increasing profits - honestly

I was in Serbia this week and although I knew things had moved on I couldn't help but wonder if there would be any issues –I wasn't overly concerned but I still went on to the UK Foreign Office website to check its status and advice and even registered my travel plans with them just in case. Having now been there I can say quite honestly that it was a lovely place – friendly people, efficient and just like any other European city. However my concern or more precisely my lack of trust meant that I made an extra effort and spent more time planning my journey.

My reason for recounting this is that I'm reading a book at the moment called The Speed of Trust: The One Thing That Changes Everything, written by Stephen M R Covey, son of Stephen R Covey of 7 Habitsfame. What's fascinating is how he has managed to articulate simply what trust means and actually managed to demonstrate how trust affects the bottom line. Simply put he shows how when the level of Trust goes down, the speed of transaction/interaction goes down and the cost goes up – conversely, when the level of Trust goes up the speed goes up and the cost comes down. He then goes on to provide a couple of examples. Firstly discussing how in the wake of the Enron and WorldCom scandals, trust was shattered and so the US implemented the Sarbanes-Oxley Act which essentially introduced additional regulations and audit controls – which slowed things down causing additional work – and increased costs with one estimate putting this at $35 Billion. He then shows an opposite example of where high trust can increase speed and reduce costs – talking about a small vendor in New York who was struggling to serve customers at peak times and so simply provided a basket for customers to put their money in, taking any change and freeing him up to serve more customers (without additional hiring costs).

This example was demonstrated recently in the UK when a man left his shop open on Boxing Day while he went away so that customers who needed something could simply help themselves – trusting that people would be honest and pay for the goods – which they did to the tune of £187 with nothing stolen.

Now I'm not suggesting a new form of retail whereby brands simply open the doors and let customers help themselves, but it does raise some interesting questions about trust and how this can be developed with customers so as to "grease the wheels" to ease transactional pain and reduce costs.

A good example of a brand doing this at the moment in the UK is Norwich Union (soon to be Aviva). They have introduced a service within their motor insurance website which provides details of the prices of over 140 competitors – showing details of their quote even where this is cheaper.

Despite appearing to have its origins in the film Miracle on 34th Street where the store Santa advises customers to go to a competitor store for a better price, Norwich Union could be on to a winning formula here.

The reason for this is that firstly it builds confidence – people will feel the brand has integrity as they show themselves to be in touch with the market and willing to say "hey, we're more expensive, we know that - but there's a reason" – this then gives them permission to explain and demonstrate why.

Second it allows them to "own" the buying process – for many people insurance is commoditised and they simply use a price comparison site to choose the cheapest vendor that meets their needs. The hope here will be that these "price hunters" will give them a go knowing they get the comparison anyway, but now Norwich Union are in control and can begin to build a relationship.

What Norwich Union seems to have realised is that trust is a critical component of customer retention – something which has been severely lacking in the insurance industry for many years. Every time a renewal quote is sent to an existing customer which is obviously higher than that offered to new customers – trust is destroyed.

Focusing on genuinely building trust however can reap real and tangible benefits.

If a customer trusts that you have their best interests at heart then they will be less likely to look at competitor products and services.

If a customer trusts that you're always working for mutual benefit then they will be more likely to trial additional products and services from you.

If a customer trusts that you'll look after their personal data then they are more likely to provide it to you.

If a customer sees you demonstrating trust when problems arise – handling complaints or queries fairly – then they are more likely to speak about it with others – generating positive word of mouth.

On the other hand all of those benefits disappear quickly if trust doesn't exist or is destroyed through the course of doing business.

Trust is at an all time low within many industries at the moment so those businesses which cultivate it, demonstrate it and generate it will surely prosper with lower costs to serve, increased retention and a willingness to trial.

Friday, 16 January 2009

The social value of detractors

I found an interesting presentation last week that I happened to stumble across while reading another blog. This presentation was from Masterfoods and looked at their internal employee networks – who knew who – to see how information and ideas flowed, with a specific focus on the R&D efforts. Now this in itself is interesting because although it has been around for a while, not many companies truly look at the value of their employees and how to unlock individual subject matter experts for the greater good of the organisation. As expected within the document, it identified a few key individuals who essentially channel information around the organisation – from a consumer point of view these would be the Influencers or as Gladwell puts it – the Connectors – the people who have the relationships and move key information and ideas.

The reason I thought this was interesting was because they actually highlighted a negative aspect to this – these people essentially had the power not just to move good ideas across the organisation but also to prevent good ideas from moving. From their position they could decide what was good and what was bad and this opinion may be biased based on what they thought was the right thing and their experience. This potential suppressing of ideas was highlighted as a risk – termed network "domination" - with the recommendation to break these silos by creating new connections.

This got me thinking about whether the same thing could be happening within consumer social networks. We all know about the Net Promoter Score where Promoters (people who would recommend you to a friend) are measured against Detractors (people who wouldn't) to arrive at a score that measures the relative loyalty value of an organisation. However, after a brand has this score what do they do with it. Best practice suggests they look for differences between branches, regions, etc. to understand what may be contributing to any differences with a view to creating more Promoters – all at an aggregate level – but what about the individual customers themselves? Obviously Detractors are themselves not satisfied and this is something to be addressed at an individual level - but what if I knew which other customers these detractors were connected to and more importantly, what if I knew WHICH of these detractors could be considered an "Influencer" – albeit a negative one. All of a sudden these detractors become more powerful – potentially dominating their social network and creating more detractors.

Taking this thought on – if I knew who the socially connected detractors were or could see someone who had had a bad experience and changed from a promoter to a detractor, wouldn't I want to speak with their friends to reassure them about my brand – to try and diffuse any negative feedback or indeed to try and connect them with a promoter instead within their network? If as is estimated, 1 in 10 people can be classed as influencers then this is 90% of my customer base which is swayed by the opinion of a minority – surely this makes it worth trying to understand a customers social connections further.

What would it take to do this though? Well we all think we're very clever in loyalty marketing (well some of the time) – and that data is king. We know the customer individually, we know what they have bought and can predict (or at least try to) when they will buy again. Increasingly with NPS we also know if they like us – or not. What we don't know in most cases is who they know – most programmes don't track, collect or facilitate members connecting with each other. Even where a programme does provide ways to connect people through "send to a friend" or "member get member" promotions, this information is typically not used or even retained.

I think this is increasingly a big mistake – the more we can understand a customers relationships and their opinion of a brand the more we can understand the power they may exert. I've yet to see anyone proactively engage with detractors and their social network – but looking at the work done with Masterfoods this could potentially reap real dividends.

Tuesday, 13 January 2009

Money can't buy loyalty

I was intrigued by an article yesterday on plans UK entertainment retailer HMV has for a new loyalty programme. Matt Button, Head of CRM at HMV was quoted as saying "Rather than simply offering discounts on future purchases, which is how the vast majority of loyalty programs work, the aim of our rewards scheme is to more fully engage with our customers by giving them the opportunity to earn and redeem points against 'money-can't-buy' items, such as signed products, back-stage passes or invitations to special events. We believe this would make our scheme unique…"

Now the reason this peaked my interest was the inclusion of the phrase "money can't buy" and how it was felt this was a unique offering. Anyone who has worked in loyalty marketing will know the phrase "money can't buy" as its typically used by brands when they want to create a point of difference – offering rewards that only their brand can leverage rather than "me too" rewards you may get on other loyalty programmes or a simple discount off future purchases.

There are however a number of potential flaws with this approach. In a previous post I spoke about the three criteria any reward selection should meet which are that they should be Achievable, Desirable and Brandable:-

  1. Achievable - Contrary to popular opinion, money can buy almost anything you want. If I wanted a signed CD or access to an event, there is a good chance with the right amount of money I would get it. The laws of supply and demand state that where supply is short and demand is high, the price will go up – so I may have to pay a lot, but I'll get it. Let's take the example of a Girls Aloud CD – a quick search on Google tells me I can buy a mounted gold record with signed cover art for £159 – not cheap, but hardly money can't buy if I'm a fan – also not overly expensive suggesting not exceptionally high demand. However within a rewards programme this is either going to have to be expensive in points terms, limited in supply or made available as part of a prize draw. All options mean the reward is out of reach for the vast majority of customers and so won't be seen as achievable. Sure customers will have a punt initially in a prize draw – but watch that participation plummet like a stone when they constantly don't win.
  2. Desirable – Although back-stage passes and meet the star rewards sound great on paper, in reality they only appeal to a small segment of a brands customer base. Firstly I have to be a good customer – capable of buying/winning it, then I have to like the brand/celebrity/event, then I have to actually like meeting them. This is where it typically falls down… sure I like the band, I like the idea of seeing them – do I really want to have dinner with them? If the answer is yes I'm probably 14 or have stalker tendencies.
  3. Brandable – Is this type of rewards selection on brand? Well yes, they are an entertainment company and these types of rewards tie in well with the products they sell. However so do lots of other reward options such as pre-release access to new albums, having input on console game design (think Lego User Groups), selection of entertainment related merchandise or integrating my purchases offline with my use online (buy physical album have access to download it for free).

I've no doubt there will be more to the HMV loyalty programme than just money-can't-buy rewards – there will be options for the masses. However if you look at the Coke Zone programme in the UK currently, they appear to have taken a slightly different approach. Sure they've had signed merchandise - and if any brand can deliver money can't buy, Coca Cola is going to be somewhere near the top of the list - however what they seem to be using at the moment is the concept of a "leader" reward. A leader reward is an item which has mass appeal and tremendous pull to drive loyalty programme acquisition and usage. The idea is the same as what supermarkets call a loss leader or leader product such as selling milk or bread at below cost to attract customers into store.

For example the recent Coke Zone Christmas promotion used amongst other rewards an iPod Touch as a leader reward and the promotion appeared to work in two ways. Firstly they offered iPods at a quite obviously discounted points rate based on the number required - you still needed a large amount of points to purchase them, but no where near what would have been the equivalent retail price. At the same time they offered the same iPods as part of a prize draw so that for those customers without enough points to purchase the iPod, they could still take part in trying to win it.

This looks like an excellent approach as it would seem to provide a reward option which is very on brand – think – very desirable to consumers and actually achievable or perceived as achievable for a large number of customers. For those customers with high balances but not enough to redeem at this time, it would also send out the message to keep saving to take advantage of the next promotion.

I don't doubt that HMV will create a successful programme, but it won't be because of money-can't-buy rewards – it will be because they create a reward portfolio which appeals to the masses, is achievable by all good customers and is very on brand.

As an aside, money off future purchases also works pretty well – Tesco hasn't done bad on this score with over 95% redemption and recognised as a world leader in loyalty programmes – to misquote "money can't buy [loyalty] – but it improves your bargaining position" - however that's a whole different discussion.

Monday, 12 January 2009

The futures bright – the futures open

So Apple has followed Amazon's lead and is planning DRM free downloads. This is quite a turn up for the books as industry insiders had been saying that it could be anywhere up to 5 years before the market realised what a handicap DRM actually was. The main drivers of DRM have been two-fold – a demand from the music industry keen to protect its content and a bonus for suppliers like Apple, keen to take advantage of a closed market that forces users of its hardware to buy the music it sells.

However what everyone seemed to have missed was what the consumer wanted. Sure, before legitimate sites appeared people were downloading and sharing MP3 tracks like it was going out of fashion and this made a real dent in record label sales. However this was in part driven by the desire to consume music differently and the record companies were slow to react to this initially. When they did then begin to recognise this paradigm shift they were trying to close the stable door even though the horse had already bolted – consumers were used to having their music held electronically and moving it from device to device and DRM was preventing this.

Apple managed to mask this undercurrent of discontent by creating a fabulous product – the iPod - which is still yet to be bettered in many people's eyes and it was this that drove sales on iTunes. It was never about the iTunes software or the iTunes store – these were simply a means to an end which was the iPod itself.

But for consumers like me – and I know I'm not alone here – DRM created a fundamental stumbling block. I refuse to purchase something which I own but cannot do with as I wish. I know I could burn music off onto CD to "own" – but this is a poor substitute to the real CD and anyway, I want the music on my PC, on my laptop, on my server, on my phone. It's my music and I want it where I am. While I'm paying a price close to the physical product I'll just buy the CD instead which gives me a multitude of options – and it looks good on the shelf.

The argument that DRM prevented music theft through file sharing was ridiculous – anyone wanting to share music would just rip the original and post it for everyone else. This meant the music industry spent time and money trying to fight these file sharers – posting spoof tracks to the sites and taking legal action where they could. Meanwhile their law abiding consumers were being inconvenienced and ripped off because of their DRM technology.

Many years ago the software company Borland had a simple and ground breaking licence agreement – treat the software as you would treat a book. You can't read a book in two places at once so don't use the software in two places at once. They didn't try to actively prevent you installing it on two different machines, say how many people could use it or dictate how many times it could be installed – they just told you how it could be used in a way which was fair and worked for them and the consumer.

Contrast this with the attitude of Sony in 2000 when they were quoted as saying "The industry will take whatever steps it needs to protect itself and protect its revenue streams… Sony is going to take aggressive steps to stop this… We will block it at your cable company. We will block it at your phone company. We will block it at your ISP. We will firewall it at your PC". Despite sounding like Deputy Marshal Samuel Gerard from the Fugitive with his request for a search of every "warehouse, farmhouse, henhouse, outhouse and doghouse", it's also not a particularly customer friendly approach and quite obviously there is no mention of the consumers interests here – simply the protection of their revenue streams.

Later when Sony tried to implement DRM on CD's in 2005, the public backlash to this was probably the nail in the coffin for DRM. A number of people filed lawsuits against Sony BMG because of how this was implemented and the potential security holes it created and they ended up having to recall all the affected CDs.

Customer loyalty can be earned through consistently good customer service and great products or it can be forced in the short-term by monopolistic behaviours such as walled gardens and proprietary products – I know which I'd prefer and I've demonstrated it with my own purchases. Since the launch of Amazon MP3 I'm now buying music online in non-DRM MP3 format and it sits on my server, my phone and my laptop so I can listen to my music when I want and where I want.

All in all this has been a demonstration of an industry that hasn't seen the tide of change coming and was surprised and out manoeuvred by new technologies and which then reacted to it in a slow and draconian way.

It's good to see the industry is finally seeing sense and although it's taken almost a decade to get this far I think the future now looks bright. Removing DRM will allow for increased competition and openness – spurring on innovation in how people find, buy and consume music - it might also allow a refocus on customers and what they want.

Tuesday, 6 January 2009

Air Miles is on the right track

It's certainly a sign of the times that when traditional brands are cutting back on their above the line activity it's the loyalty schemes which are bucking the trend and spending on it.

The new Air Miles TV advert is exactly the right thing for a loyalty scheme to be doing at this time when customers are looking for ways to make their money go further.

Air Miles as a brand has been around for over 20 years and although it has a loyal following, in reality it's been resting on its laurels for quite some time. Now it's back and it's recruiting!

Obviously the strap line "Make your money fly" fits in nicely with the current climate, but it's the other messages in the advert which interest me. The advert has 3 main themes which are:-
  • Reassurance - Everybody is doing it / you don't need to do anything different
  • Everyday Spend - Earning miles on your grocery and fuel spend (encouraging frequency usage)
  • No Hidden Extras - All flight taxes/fees included (previously an issue for many collectors)
The Air Miles member base is ageing and it needs to inject some new blood and this advertisement is designed to do just that by using messages you would typically see when on-boarding or looking to recruit new members to a loyalty scheme. The focus shouldn't be on the rewards but on how you get to the rewards and re-assurance that you're making the right decision.

Focusing on rewards day 1 works well in terms of attracting interest in a scheme, but very quickly consumers want to know how to get that reward today - working out the effort it will take (and the amount they need to spend) - and then thinking that this will be unachievable. Instead, hinting at rewards but focusing on earning allows members to begin to build up a balance initially and they can then see how far they have progressed - allowing rewards to be introduced later.

The no hidden extras message is also about re-activation - anyone who has been part of Air Miles previously will have experienced the extra charges that used to be levied - this is saying "we've changed - come try us again".

This can be contrasted with the Air Miles scheme in Canada which although a younger scheme (started in 1992) it is a much more mature scheme in membership terms. In Canada 2/3 of all households are active collectors and the scheme has 97% awareness - making it one of the top 3 coalition schemes worldwide.

Due to the popularity of the scheme, people who want it are already in it and they all understand how it works. The focus for this scheme then is not reassurance and education, but is instead aspirational, focusing on the rewards and benefits the scheme brings and more importantly, reminding people to carry the card.

However, that said, I have no explanation for the Yummiest Mummy promotion by Air Miles Canada... there are obviously still some cultural differences between us but one look at the "related" videos on YouTube tells it's own story.

Monday, 5 January 2009

It takes two to Tango

One thing that really annoys me is how companies only allow the named customer to make account enquiries – from gas bills to credit cards, typically only the primary or named card holder can make enquiries, which seems ridiculous when the caller is quite obviously a spouse. I know from personal experience the frustration this brings when my wife is trying to organise things and has to rely on me to make a phone call… normally 5 days later than agreed!

This may be fine for utility and finance companies that are not known for their levels of customer service, but within loyalty programmes this really is unacceptable as more often than not the spouse can be a major force within loyalty programme decisions.

Recent research from TNS showed that UK housewives spend 47% of their leisure time online – one of the highest percentages across the 16 countries surveyed. Now that might seem like a lot of time in comparison to other groups but you can bet that those housewives are doing more than just "surfing" – they are probably doing the weekly shop, managing the household finances, researching household purchases, buying gifts and quite possibly managing their partners loyalty accounts.

Within many schemes, despite not being the primary user of the scheme the partner does take an interest in the rewards. In some schemes such as frequent flyer programmes, it has been known for points to be contested during relationship breakdowns due to their high perceived value. On a day to day basis, for many of the schemes I've been involved with it is the partners who call the service centre to try and make balance enquiries or reward redemptions – and quite often find the response being that the primary card holder must call back.

This really is a missed opportunity and in many cases may be value destroying.

Within B2B marketing it is recognised that buying decisions are very rarely a one person activity and instead they are made up of a number of stakeholders. Names have been given to these different players within the process such as Users, Influencers, Deciders and Gate Keepers and there are strategies for addressing each role. Within B2C though it is sometimes overlooked that many consumers are also part of a larger unit, the family, and that decisions are very rarely taken in isolation. Obviously a decision about which airline someone may take for a business trip wouldn't be a family decision, but how the subsequent points will be spent probably will – the destination, the date, the additional spend – all of these will be subject to a larger discussion.

Marketers working in the kids sector understand this principle. As Dr James U. McNeal pointed out in his book "Children as Consumers: Insights and Implications", the big power of children was not just within the limited purchasing power they had, but rather in the influence they had over family purchases – or as its typically termed now – pester power. Marketers needed to create demand within the child for a product whilst separately communicating to the adults about the relevant benefits, pricing and availability – two separate communications messages – one communication strategy.

These disciplines should also be applied within loyalty marketing.

Understanding that the partner may have more time to review rewards and benefits and more desire for certain types of product can help to create that "pester" power or "Nag" factors that ensures the primary member stays firmly within the programme and maximises their earning potential. These spouses are also probably more likely to expound the benefits of the scheme to friends both online and offline so providing greater word of mouth potential.

Credit card companies cottoned on to this very early on and there is generally always a space on the application form for including an additional card holder – the card company knowing that this will lead to increased card spend. Loyalty programmes on the other hand normally just assume that its one account one person with no encouragement or messaging for additional account holders – this needs to change.

Loyalty schemes should actively encourage partners to register as joint participants and the scheme should understand their preferences and provide the primary participant with the ability to grant permission for them to manage the account. Even where schemes do support additional account holders, this is usually documented in the small print rather than highlighted as a programme benefit and positively encouraged.

It's also worth noting that these additional partners will have different needs and desires and so communications shouldn't use a one size fits all approach. Some more forward looking schemes have actively sent a glossy DM rewards booklets to the home address knowing that these will in all likelihood be opened and perused by the partner or spouse; if you're asking questions about preferences you also cannot assume that these apply to the household – whilst the husband may like short breaks and golfing holidays the wife may like lakes and mountains - as ever there would be compromise but if you're hoping to engage both partners you'll need to understand separately what they are looking for.

Involving partners/spouses directly within a loyalty programme can have real benefits and I think it's high time that loyalty programme operators liberated their schemes and maximised the potential that they can offer.