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.