Friday, 31 December 2010

Loyalty in 2011 - A marriage of location, gaming and social

Predicting where things will be in the next 12 months is notoriously difficult as you don't know what you don't know, and an unexpected innovation can pop up at any time. However as respected journalist and technologist John Battelle said in his blog recently about the "next big thing":-

Often times what's directly in front of you is, in fact, the next big thing.

Something however that doesn't need any amount of prediction is that there will be a peak in the sales of commemorative tea-cups, plates, tea-towels and other Royal memorabilia in 2011. With the recent engagement of Prince William and Kate Middleton it seems we'll have the first Royal Wedding in a quarter of a century as well as an additional bank holiday for us Brits to enjoy it. 2011 will be the year of wedding fever, nostalgia, bunting and street parties.

This does neatly segway into another type of engagement however - customer engagement and the associated loyalty we look for from it. What 2011 looks like for loyalty is a little harder to predict - there are no fixed dates or big events. There are though some key trends that we are seeing in the wider market which will all impact on loyalty in some way - taking us one step closer to solidifying that customer engagement into wedded bliss.

No self respecting bride however would consider walking up the aisle without taking account of the Victorian tradition of taking something old, something new, something borrowed and something blue - and neither shall my loyalty predictions.

Something old - Coalition

Coalition programmes have been around for decades, starting with the original stamp collecting programmes. However they have really come of age now with existing programmes going from strength to strength and new programmes rolling out worldwide. Group Aeroplan has recently launched Nectar Italia and Nectar Chile and Loyalty One has taken stake in Dotz in Brazil. Now American Express has bought Loyalty Partners who run PayBack in Germany. Ed Gilligan, American Express Vice Chairman said of the deal:-

“The loyalty coalition model is growing rapidly in many parts of the world [and] Increasingly, consumer decisions about where to shop and how to pay are based on loyalty offerings"

It's not just the growth of new programmes, the existing ones are also gaining strength, with Nectar UK recently following up it's new partner Homebase with leading utility company, British Gas.

This is a high growth, and increasingly competitive area so expect to see more of these programmes coming to a country near you.

Something new - Geo/Local


You can't have failed to miss the explosion of Groupon in 2010. It's meteoric rise culminated in Google trying to buy it for a reported $6bn and when that fell through they then managed to secure $0.5bn in additional funding. While Groupon has an interesting (but not unique) business model, what really makes it interesting is the local merchant aspect. Representing about 1/3 of all sales within the US, these independent retailers are a large pool to fish in, but the challenge has always been economies of scale.

What Google ad-words did for online marketing however, services like Groupon are doing for offline. Barclaycard Freedom is another example of scheme engaging the thousands of small independent retailers and although this has yet to become well established, I think the prospect of creating services that engage local merchants will grow.

The reason for this is simple - relevance. All brands need to be relevant to get cut through and it's much easier to be relevant when the marketing is from a local restaurant or retailer than when it relates to an increasingly sterile national (or global) brand. It also provides larger brands with the ability to target marketing spend more effectively, rewarding spend at locations that have room to grow without simply rewarding spend everywhere.

As Fast Company recently reported on Google's move into this area and it's recent move of Marissa Mayer from Search Products to Geo/Local, Google said

"Marissa is moving over to an exciting new role covering geo/local, which is crucial to our users and the future of Google" (emphasis added)

It's not just Google, Facebook or Foursquare that get this; location is going to be a key variable in our marketing toolkit in 2011.

Something borrowed - Gamification


Well 2010 was when gamification really burst upon the scene and along with it a lot of controversy about the term itself. However, despite the controversy most people agree that the idea of utilising gaming dynamics to help create motivation is worthwhile.

It's interesting that currently early adopters have been either online communities/e-commerce sites or offline automotive companies with both Ford and Nissan using gaming mechanics to improve driving techniques within their electric vehicles.

I think 2011 will see this become more mainstream, with full blown traditional loyalty programmes such as hotel, airline or retail loyalty utilising gaming mechanics explicitly. As I've blogged about a number of times this year, this one trend has the possibility to really lift levels of engagement within a loyalty programme and looking forward, to possibly remove the redemption currency itself (and the associated liability)

You don't get very far however within gaming mechanics before the need to go social kicks in - the real power being based on the bragging rights that come from achievement - and so this is the theme of the final predication.

Something blue - One word. Facebook.


Facebook has come of age. It now has the majority of the Western world assimilated into it's network. It has the lions share of their online attention (recently beating Google) and a depth of information on individuals that rivals Wikileaks.

Retailers like JC Penny and Best Buy are integrating their e-commerce offerings directly into Facebook and brands such as Oreo cookies are now driving all of their traffic to their Facebook page. The reason for this is simple - brands want to fish where the fish are, and Facebook represents a very big ocean.

What's interesting though is not the use of Facebook, brands have been doing this for a while now. It actually that Facebook is for many brands starting to replace their own online offering. I think in 2011 we'll start to see loyalty programmes actually launching their online offering directly within Facebook or at the very least, using Facebook Connect for security.

This will bring three huge benefits. The first is simplicity. Members will be able to login and service their loyalty accounts without any effort - no credentials to remember. The second is interaction. Members will be able to see posts from their loyalty programme directly within their social feeds - no email, no direct mail and much more immediate. The final benefit is social proof - members will be able to see what other friends are doing, what other friends have bought and what other friends have redeemed for.

Combine this with the potential that Facebook brings to virtual goods in the form of social gaming - something that Amex has recently introduced into the Membership Rewards programme and that Citi qucikly followed by introducing them into the Thank You programme - and you have a major change in how loyalty programmes are designed and deployed.

Whether proprietary or coalition loyalty, the marriage of these three main trends of location, gaming and social will change the face of loyalty over the next 12 months.

Image credits: Google T-Shirt, Badges,

Thursday, 23 December 2010

Give and ye shall receive (it's guaranteed)

christmas-gift-giving.jpgVisa Europe reckons we'll be spending nearly £14,000 per second this Christmas Eve - and it might be even more than that based on the disruption the snow has caused to peoples plans.

All that money ringing through the tills just so that we can give.

For the most part that's giving without any expectations of getting something back; buying presents for the kids or close family and friends. However for others you may give simply because you previously got given - returning the favour year on year.

What if though, rather than giving gifts as a selfless act, you instead gave gifts specifically for what you could get back. What if you knew before hand that buying a certain gift for a certain person would guarantee an even better gift in return.

Would you be more tempted to buy them a gift?

Well hopefully this isn't a scenario you'll experience this year at Christmas, but it's certainly one you might be experience in the near future - as a consumer.

Recently reported by AdAge, the Palms Hotel in Las Vegas is giving away access to specific services and amenities to customers they feel have influence. As Palms' chief marketing officer, Jason Gastwirth puts it "allow[ing] high-ranking influencers to experience Palms' impressive set of amenities in hopes that these influencers will want to communicate their positive experience to their followers."

In essence, "giving" not in return for what they have already been given. Nor even "giving" based on what they think a customer may be able to give back. Instead they are "giving" so that a customer will tell others about it, increasing everyone's value.

This is no longer a "Random Act of Kindness" so beloved of loyalty marketing - this is a highly engineered act of bribery, sugar coated as a gift.

Whether you feel this is right or wrong though - this will surely work, and the reason for this is all to do with the customers clout.

More specifically, this is the customers Klout score as measured based on their online social activity. Described by Klout as :-

The Klout Score is the measurement of your overall online influence. The scores range from 1 to 100 with higher scores representing a wider and stronger sphere of influence. Klout uses over 35 variables on Facebook and Twitter to measure True Reach, Amplification Probability, and Network Score.

With the Klout score a brand can be more assured that a member has the capability to make some noise - they just to give them the reason to do so. (Or in the case of a customer service issue, even more reason to get it resolved well)

While it is easy to be cynical about this, it does add another dimension to loyalty programme design. Traditionally programmes have been very insular, rewarding individual customers for their individual behaviour, but only after they have demonstrated it.

Some have become a little smarter, looking at an individual customers behaviours and rewarding them based on predictions on their future behaviour - many frequent flyer programmes for example will now "fast track" new members who appear to look like top tier members.

It's a natural extension then to begin rewarding customers based not only on their predicted ability to be advocates, but also based on their actual capability. This is fine line between "rewarding the behaviours you seek" and blatant bribery, but used well, I think this becomes a key tool within an overall loyalty offering.

Maybe the saying in loyalty should now be:-

[Before you] give, [checkout their ability to give] and ye shall [be guaranteed] to receive.

Not quite the Christmas Spirit, but possibly a more prosperous New Year.

Merry Christmas. ;o)

Sunday, 12 December 2010

Did the Grinch steal Christmas (TV)?


I miss the Christmas movie.

As a child, when we only had three TV channels, no VHS and single screen cinemas, the Christmas movie was for many people the first time the movie had been seen.

We'd cherish the Radio Times to see what was on and then plan ahead to watch all the great movies.

How times have changed.

I now have IPTV on 3 different boxes, I can choose to watch a film on demand through BT, Sony or LoveFilm. Invariably I've already seen it at our 10 screen cinema, purchased it on DVD or loaded it onto my iPad.

I watch more films, but they don't have the same special magic they used to. I still buy the Radio Times, but that's largely because it's the Christmas thing to do - I have an EPG on my TV and TV Guide on my iPad.

The Grinch didn't really steal Christmas TV - instead it was our desire to have everything now at the touch of a button, and the medias desire to supply it.

I'm not saying any of this is a bad thing. We've essentially traded the Christmas Movie that was created through scarcity for the everyday convenience of entertainment on demand.

What's interesting though is how this plethora of choice for something we really wanted and valued can actually result in us valuing it less.

Seth Godin discussed this in a recent blog entitled The inevitable decline due to clutter where he discussed the trend within digital to just keep giving consumers more of everything - more messages, more offers - because essentially it's free. However he points out that:-

Once you overload the user, you train them not to pay attention. More clutter isn't free. In fact, more clutter is a permanent shift, a desensitization to all the information, not just the last bit.

commsfreq.gifWe saw exactly this effect in some research we carried out a couple of years back. When looking at communications within retail, there was a increase in relationship strength as communications increased - suggesting that building a dialogue with customers is a positive thing to do.

However this quickly turned into a decrease as these communications became too frequent. Customers were tuning out of the communications as they got overloaded and at the same time, were tuning out of the brand.

If you want to keep customers coming back, want to keep them interested, then you need to keep things special.

  • Change the experience - Mix things up a little. Email is great and it's cheap, but finding other ways to communicate, even if it's just an occasional quality DM piece can really cut through.
  • Keep it relevant - It's better to send nothing than to send something irrelevant. If a customer consistently finds nothing of value in your communications they will simply cease to value them.
  • Facilitate, don't just communicate - As the clutter increases, people shut down the overload and start to look internally to friends for opinion. Be part of that conversation.

A great example of someone doing this currently is Coca-Cola. They have always "owned" Christmas, having Santa Claus in their advertising since the 1930's, but there is always a risk that people become "desensitised" to it.

This year however they have had their Coca Cola Truck touring Europe and this has managed to do all three things.

It has changed the experience, bringing the advertising to life. It has kept it relevant, doing something we'd expect from Coke at a time of year when we want it. Most importantly though, it has facilitated the conversation, with friends snapping pictures of the truck locally and posting them to Facebook (here's one a friend of mine took)


Having driven past it on the motorway, there is something almost magical about seeing it in real life - even if it is just a truck. I may have been even more excited than my kids - but it's nice that some things are still special.

Grinch image by Mykl Roventine (Flickr)