Saturday, 24 December 2011

You and Yours (3 key loyalty trends for 2012)

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At this time of year, thoughts tend to be about you and yours. This however may be a continuing theme going into 2012 as I think loyalty marketing is going to become a lot more interested in "you".

This is more than just mass personalisation or segmented communications. I believe 2012 will be about individual engagement and empowerment as consumers provide more and more data, expecting increased control over it and better experiences being delivered because it.

You (and your data)

Back in 2006, Time Magazine named the Person of the Year as "You". Pointing out the cultural shift that social media had begun to bring, they recognised that it was democratising communications, with people sharing with each other and big institutions and governments beginning to lose control. They described it as:-

"[The] founding and framing [of] the new digital democracy. It's [..] about community and collaboration on a scale never seen before [..] about the many wresting power from the few."

It's unbelievable to think that this was 5 years ago now and Facebook was just starting out and MySpace was king. Whilst the tools we use may have changed, the pace itself hasn't. Social media has indeed wrestled power from the few leading to Time Magazine nominating the Person of the Year in 2011 as "The Protester". Highlighting the role of social media in showing injustice and gathering support they said:-

"One of the unequivocal generational virtues of these movements has been their use of the Internet and social media."

It's not just in politics that we're seeing this democratisation however. Consumers are also gaining more and more power with the UK government for example recently announcing that they plan to give consumers more control over their data by releasing it back to them. In describing this they say:-

"[It] will give consumers increasing access to their personal data in a portable, electronic format. [..] Individuals will then be able to use this data to gain insights into their own behaviour, make more informed choices about products and services, and manage their lives more efficiently."

Outside of government, some of the biggest collectors of personal data are loyalty programmes and so I'd fully expect them to begin taking part in these kinds of initiatives, allowing members to use their data to better understand their buying habits, but also to unlock more relevant offers and promotions on their terms. Indeed, many of the companies signing up to the UK midata initiative are companies with their own loyalty programmes. Generically termed VRM (Vendor Relationship Management) or PIDM (Personal Identity Management), I think 2012 will be the year when we start to see this trend gaining ground.

Your Behaviours

Increasingly, as you carry out an activity you leave a trail of bread-crumbs which others can use to follow you. Whether its location information that your smart-phone tracks, items you view but don't purchase or the TV programmes you watch (and then discuss on Twitter), all of this information is out there waiting to be collected and used.

This data is providing insight into previously hidden behaviours. Bricks and mortar retailers will start to get the same visibility as that enjoyed by online retailers, seeing those customers who have visited, but not bought or which items they viewed before purchasing. TV advertisers will have more visibility of which adverts were seen by which individual customers, allowing them to create a true ROI from awareness to purchase.

This is all being made possible by a combination of smart-phone/tablet penetration, innovative new apps and an established social graph. Using tools like twitter and Facebook as identity management, companies can collect together and refine this raw information from apparently disparate sources.

People are already using twitter for example to comment in real-time on TV programmes and this experience is being enhanced through new applications like Zeebox in the UK and IntoNow from Yahoo in the US. Zeebox co-founder Ernesto Schmitt says:-

The emergence of net-connected TVs; the mass proliferation of companion devices like smartphones, laptops and tablets; and people's expectations that entertainment will be socially connected felt like a perfect storm. The time was right to revolutionise TV

Increasingly using "fingerprinting" technology, these applications can automatically detect what TV programmes you're watching and any associated advertising. Linking this to your loyalty purchase transactions is simply the obvious next step and something i'd expect to see appearing in loyalty programmes in 2012.

Your Experiences

Apple changed the face of electronics retail. By combining great looking products with a great in-store experience they managed to make the electrical stores more of a destination than a retail outlet. Others have quickly followed, most notably Dixons in the UK with their pilot store Dixons Black in Birmingham. As offline retail increasingly struggles against online, especially where the products are more commodatised like in electrical, then the focus is shifting to the in-store experience. Using a combination of knowledgeable staff and well presented products, retailers are fighting back.

As retail expert Clare Rayner of Retail Acumen says:-

When you don’t offer anything special then the only thing you can do is compete on price… and that’s a downward spiral where the retailer with the deepest pockets to “buy their customers” is going to be the winner.

Retailers like Apple, Dixons, Game and Disney are starting to offer something special to turn the shopping experience from a physical one to an experiential one.

Apple do more however. They have turned the purchase process into a relationship. Making the stores also a centre for servicing and support through the "Genius Bar" as well as running seminars and training, they actually want customers to return. Whilst this isn't a loyalty programme in the traditional sense, i think it indicates how retail loyalty is changing. It can't simply be something stuck onto the side of the retail process and instead needs to be deeply embedded into the experience.

Expect to see more retailers upping the experience in-store and needing their loyalty programmes to help both support and drive this.


As these 3 key trends converge we're going to see a blurring of the lines between online and offline retail, with consumers having a more tailored and personalised in-store experience and with retailers gaining a better understanding of (and ability to influence) the end to end purchase process for each individual customer. Loyalty programmes play a key and central role in all of this as a means of proactively gathering consumer data in an opted-in manner and allowing appropriate reward and recognition to be given back.

This will result in "you and yours" - your data, your behaviours, your friends, your experiences - being a central theme for 2012.

I probably say this every year, but 2012 is going to be an exciting time in loyalty marketing!

Image credit:♫muxu's photostream

Sunday, 4 December 2011

When excluding customers adds value

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I'm a loser.  I've been a loser lots of times.

When I play poker, I very rarely win big and tend to be happy if I break even.  When I was young and we'd play games like pass the parcel, I'd lose more times than I won.  Losing is part of life and it's what makes winning feel that much more special.

When my kids play games like pass the parcel now, every wrapper has a gift in it.  Everyone's a winner.  Yay!  Strangely enough they don't really play it that often.

If everyone is a winner then essentially no one is a winner.  All it does is dilute the whole process to the point where taking part ceases to have value.  Sure it's inclusive, but it doesn't take long to realise we don't want inclusive, we want exclusive.  We want to be winners.

Imagine a frequent flyer programme where everyone was a winner.  It didn't matter how many times you flew, you were top tier.  I'd feel great with my Platinum frequent flyer card, with its exclusive benefits.  Priority queuing - with everyone else.  Lounge access - with everyone else.  Priority Boarding - with everyone else.  Somehow that's not going to feel special very long if everyone is included.

This peaked my interest recently when I read about a new card that has been launched for what the Evening Standard termed as the "digerati".  Called the FoundersCard, they state

"[It] is a first-of-its-kind membership community for entrepreneurs and innovators" providing members with "access to frequent networking events held throughout the year [..] exclusive benefits, upgrades, and amenities from the hottest travel, lifestyle, and business brands, carefully selected to meet the needs of the entrepreneur"

Only 5,000 people worldwide have been accepted for one so far and it costs $495 to have it.

So I have to pay for it, I want it, I don't know what "it" is but I can't have it.

Still, it's cheaper than another card that I'm excluded from, the Centurion Card.  Another "invitation only" card with annual fees of $2,500, the FoundersCard looks cheap in comparison, especially given the Centurion card also has an joining fee of $5,000.

What do you get for that kind of money?  Well basically, in the words of Tolkien, it's "one ring to rule them all" or more accurately "one card to rule them all".  Providing elite membership in frequent flyer/guest programmes including Virgin Atlantic, US Airways, Delta and American Airways, elite status in Hertz and Avis and personal shopper access within many top retailers.  It's one card that can open doors to almost any other loyalty programme.

The only reason these cards work though is by controlling access and membership - including some and excluding others.  If Amex opened the floodgates to the Centurion Card, not only would it devalue the card to other members, but also to their partners.

This is something Groupon partners keep experiencing.  There was another report in the press this week of a partner being overwhelmed by the response to a Groupon deal.  A baker in the UK was inundated with orders for a 75% discount on 12 cupcakes.  Expecting only a "few hundred" orders, they received over 8,500 and had to make over 100,000 cup cakes - at a loss.

The original purpose of Groupon was to provide exclusive deals.  As they say on their website "Just imagine the joys of an exclusive spa day or a four course meal for half price".  The problem is, if it's not really exclusive then it won't be valued, either by the consumer or the partner.  This will mean it'll be harder for Groupon to source genuinely "exclusive" deals and consumers won't be getting a deal, they'll simply be getting what they paid for.

These exclusive offerings work on the scarcity principle, with people valuing (and overvaluing) something when it is in limited supply.  The real value of exclusive access within an airport is about £2.50 for fast-track security and £15 for lounge access - assuming of course you could buy it.  Limiting supply however allows airlines and operators to provide these low cost benefits as part of high cost business class seats and loyalty programmes.

Google used this principle when launching Google+ as an invitation only service.  For something many of us didn't know if we wanted (and probably still don't), there was a clamour for invitations on twitter with a clear divide between the haves and the have nots with reporting on this saying:-

When Google shut down inviting [for] a few hours [..] hype only intensified. Lesson: going slow with a launch is not only good for your servers and your sanity, but can extend a feeling of exclusivity to users.

By excluding potential customers initially, Google simply increased the desire of potential customers to gain access and at the same time increased the value of the service to those who already had.  Creating winners and losers created a win-win and in the process created the fastest growing social network in history.

This also applies where there is no real value.

Achievements or digital rewards may be cheap to manage and fulfil, but they'll also be cheap in the mind of the recipient if they don't have exclusivity tied to them.  Foursquare works because they make getting badges a challenge and also make it hard to find out exactly how you get them.  This means when you are awarded one there is genuine surprise (and delight if you're a little sad like me) or a genuine feeling of achievement.

This is something that the MacArthur Foundation is counting on along with the Mozilla Foundation.  They are looking to tap into it with a proposal to use achievement badges as a form of virtual CV.  Recognising that increasingly, formal qualifications don't express the richness of someones skills or those skills they learn ongoing, the badges would form a visual recognition of acheivement.  However these only work if they genuinely recognise achievement as a Mozilla spokesperson said

"The badge itself is more than a static image or button. Its value comes from the information or metadata attached to it [, including an] implicit validation system"

In reporting this the New York Times said "If valued, they might also inspire students to accomplish new tasks."

This in the end is the key to all of these solutions - the consumer has to value them and that value can be created and intensified by limiting their supply through achievement.

It doesn't really matter what the rules are, whether it's demonstrated by the size of your brain, your klout or your wallet.  There has to be winners, those who are included, and losers who are excluded for things to have enough value that it encourages motivation and engagement.

Sunday, 13 November 2011

Loyalty flows better with design


Being a little impatient I found myself slightly annoyed on the London Underground this week by a closed station. It wasn't that the station in question was my stop, it was simply that the train went on a go-slow when it approached and went past the station to maintain the schedule for the train but without actually stopping. Overall the journey time wasn't changed, but this didn't stop the slightly irrational feeling that I was being held up.

Whether it's a traffic jam, the delay of a plane or crowded streets, no one seems to like a loss of momentum.

Interestingly, momentum and the need to maintain it is one of the main aims for Controlled Motorways which use techniques like Variable Speed Limits. The thinking is that as roads near capacity due to congestion, it's possible to increase capacity by controlling driver behaviour - making it more uniform. When people are advised with the messages "Congestion - Stay in Lane" and are restricted to a lower speed limit, they reduce lane switching (which uses up two lanes capacity) and the need for braking behind which sends shockwaves down the lane. It also seems to work, reducing accidents (and the associated delays) by 55.7% and most drivers (60%) saying they'd like to see more of this kind of traffic management elsewhere on the road network.

The purpose then of these traffic management tools is to maintain flow and to essentially avoid "flow breakdown" by actively managing driver behaviour.

It's not just traffic management which benefits from directing peoples behaviour, games designers also utilise flow control. Based on a concept originally proposed by Hungarian psychologist Mihály Csíkszentmihályi, flow is the mental state someone is in when fully immersed in an activity. Maintaining flow within a game or keeping people playing is based on balancing a users skill level with a games challenge level. A games designer has to manage these two aspects for any game to ensure different users with different skill levels are always kept engaged.


Make it too easy and they'll get bored and move on. Make it too hard and they'll become anxious and frustrated and move on.

At a recent gaming conference called Games for Brands, speaker Mike Hawkyard from games design company 4T2 explained how they actively manage this within games they make for brands like Lego, making the game slightly easier each time a user fails to complete a level until their skill level and the games challenge level are balanced.

Flow is also something we have within loyalty programmes, even if we're not actively managing it.

Within a loyalty programme the skill aspect of flow is a little different. There may be some skill in terms of making the right choices to get the best from a programme, but this is also controlled to a great degree by ability. For example, I may have the desire (and skill) to get to Platinum tier, but if I don't have the reason (or money) to fly enough or stay enough then that skill alone won't be enough.

However, for those customers who have the ability to do more, something we term headroom, then flow becomes a big part of a loyalty programmes appeal. Making sure members have sufficient challenge is important for keeping them engaged, whether this is the rewards and their achievability, the tiers and how they are attained or achievements and how these are gained.

Loyalty programme design needs to take account of this such as using early days engagement journeys to on-board members or making sure that top performing members don't "top out" of the scheme and cease to have any meaningful challenge.

Most important though is a customers personal journey. In the same way that games designers actively manage each and every round of game play, we need to make sure we actively manage each and every customer journey using targeted and triggered communications and offers so people come back for more.

Keeping them in the zone. Keeping them engaged. Helping them flow.

Wednesday, 19 October 2011

The end of the line for payment cards?

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Payments cards are a legacy of the last century.

Their design was necessitated by a need to be able to communicate the identity of the holder and the provider/guarantor of the funds. This resulted in a physical card format, originally paper, more recently plastic which has since proliferated in our wallets as both payment choices and payment providers have ballooned.

Originally used in the 1920's, the first payment cards were issued by merchants with customers having a different card for each merchant. Seeing an opportunity to simplify payments for customers and possibly to create competitive advantage, several companies in the late 1930's started to accept each others cards. However it wasn't until the 1950's when Diners Club, Amex and Carte Blanche came about that the wider concept of a payment network was created.

Now customers could use a single card to pay for goods and services and since then the expansion of merchants accepting these has grown to cover almost every conceivable category and territory. Indeed, the latest contactless cards are finally opening up new sectors like transport or fast food which have been stubbornly cash based up until now.

Whilst this has made life simpler by removing the burden of physical cash, it is not however how people think about money.

The use of these plastic cards has forced us to channel our purchases through them as we attempt to manage our finances but ultimately our finances are more complicated and granular. This means we tend to carry more than one card - a debit card for every day small payments, a credit card for personal spend, a second credit card for business spend, an Amex...just in case.

Even with these different cards, they still don't align to our budgeting.

When we save for a holiday then the payment for that holiday comes from our savings (which may then have to be moved to our current account to then pay the credit card). When we incur business expenses, we have to pay for these through our personal account based on payments made by our company which are then paid to our credit card. We're constantly moving money around to make it work in a convenient way and we just accept it as normal. It's how things have always been done.

Then I saw BankSimple and saw what the future may actually hold.

There are a number of great ideas and innovations within the BankSimple interface, but in my opinion, one of the greatest is the ability to manage your money within goals.

Essentially these allow customers to decide what they actually want to use their money for (new car / holiday / home improvement / nest egg) and then can allocate funds automatically to this. BankSimple make decisions about how to invest this (long term/ short term) and the customer is always in control, able to change payments, end dates or simply pause the goal for a while.

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This works because they are not forcing a customer to take out a new payment card or setup a new savings account to keep their money separate. Instead, BankSimple lets the customer worry about what they want to do with their money and they will work out the best way to manage this behind the scenes.

This jam-jarring prinicple is how people think about money. They decide on different goals/expenses and make allowances for these on a regular basis to try and manage their finances and keep within their "safe-to-spend" balance as BankSimple term it.

Where I think this could get more interesting is when you look at this combined with some of the recent announcements about mobile payments - from Google Wallet to Visa Peer to Peer. At present, all of these solutions have tended to look at linking in a payment card or bank account to make the solution work. The mobile wallet concept simply moves the payment card from a physical plastic device to a virtual one.

Indeed, Google Wallet allows you to simply swipe the screen to pick the right payment card before a single tap then allows you to pay, redeem a coupon and earn points. Launching Google Wallet they said:-

The launch reflects Google's efforts to simplify and redefine the shopping process for both consumers and businesses. [..] Because Google Wallet is a mobile app, it will do more than a regular wallet ever could

Whilst their desire was to redefine the wallet, instead all they've really done at this stage is substitute it.

Osama Bedier, VP of Google Payments is quoted as saying:-

Our goal is to make it possible for you to add all of your payment cards to Google Wallet, so you can say goodbye to even the biggest traditional wallets.

To me though, the bigger question is whether there is a need for payment cards at all?

In the BankSimple world where money doesn't visually reside within accounts and instead has more meaning attached to it based on goals and budgets, then you can imagine that these virtual wallets may be able to access funds in this more natural way.

  • When I go shopping, I should be able to pay from my household budget
  • When I pay for a holiday, I should be able to pay from my holiday savings
  • When I pay for a car expense, I should be able to pay from the allocation for motoring expenses

Don't have enough money in my budget? Well then simply extend me a line of credit for that purchase in that budget.

This would immediately give me visibility that my car expenses are in the red, and I can choose to pay these down more quickly. Rather than an aggregated, monthly credit card statement with every expense stuffed into a single number, i'd have real visibility of my money as it relates to my life.

Technology like Google Wallet is fantastic and i'm genuinely excited about what it will offer in the short-term. However it's going to take some real visionary thinking like that shown by BankSimple to truly redefine our relationship with money.

When that happens I think the need for payment cards, as shaped by the last centuries requirements may actually become a thing of the past and mobile technology will redefine not only what we pay with, but how we manage that payment.

Saturday, 8 October 2011

Millennials - More open, but no less private

Well if you have any association with loyalty marketing, you can't fail to have noticed the new brand on the block, Aimia.

Whilst exciting news (full disclosure - I work for Aimia), it was also great to see some new research released at the same time which we've just carried out on the loyalty market. Part of an ongoing strategy for loyalty thought-leadership, the new research entitled "Born this way - the US Millennial Loyalty Survey" focused on the growing importance of the Millennial generation. Numbering over 1.7bn globally, this generation is bigger than the Baby Boomers and three times the size of Generation X - they are also coming of age and so will be increasingly important to brands who want to connect with them.

Whilst the research focussed on many different areas, a really interesting aspect was the Millennials opinion of data privacy.

Interesting because for many, including Facebook chief, Mark Zuckerberg there is a feeling that younger people don't care about privacy and will share anything and everything. Zuckerberg was quoted as saying:-

People have really gotten comfortable not only sharing more information and different kinds, but more openly and with more people

For a generation growing up in a connected world with internet access, mobile phones and social networks it's probably no surprise that they have a different take on privacy, openness and the sharing of data - but does this mean they are any less concerned about their privacy?

The Aimia research does indicate that they have higher levels of openness than non-Millennials being more likely to share personal information with websites (36% vs 22%) and more likely to share information with a reward programme (50% vs 37%).

Aimia privacy

However what doesn't seem to change with age and is consistent across the generations is the desire around data to be both informed and to inform. Consumers overwhelmingly want to know why data is being collected (84% Milllennials / 86% None) and want to be able to opt in to sharing it with with over 77% preferring to opt-in when sharing location information or online behaviour.

There is however a higher level of trust with reward programmes, with Millennials trusting these even more. It seems when the value exchange is explicit and the consumer knows why their data is being collected they are much more comfortable with sharing it. Highlighting this within the report, it says:-

Millennials expect the Value Exchange to be transparent and permission-based. [they] are willing to grant you a measure of trust—but will quickly end the relationship if you violate that trust.

Social network privacy is also important to all consumers with Millennials valuing this even more (40% vs 38%), indicating both the value they put on social networks and the value they put on their data. This is backed up by new research from Forrester in a report entitled "Personal Identity Management". The report discussed findings from Gigya which highlighted how consumers tend to use different social network identities to log into different types of web content, stating:-

Users are most likely to log on to entertainment sites via Facebook Connect, for example, but prefer to log in to news sites via their Twitter handles. Each option shares a different set of data with the authorized site, so the fact that consumers are making an active choice highlights how they differentiate among the various sites with which they engage.

The Forrester report goes on to highlight a growing trend for consumers taking more control of their personal information, something they term PIDM (Personal Identity Management) but which is also similar to the growing movement around VRM (Vendor Relationship Management). This is something which is backed up in the Aimia research where the consumers desire for more control of their data is expressed with a strong preference (76%+) for being able to create a portable "privacy profile".

Forrester go on to discuss the implications of this for marketers, highlighting five main areas that need to be addressed in order to "unlock" consumer information and which echo the Aimia research around the consumers desire for privacy, security, value exchange, transparency and portability.

Forrester privacy

In conclusion, Forrester articulates what they feel a value exchange looks like for consumer personal information saying:-

[..] Two factors will come into play when it comes to the notion of value. First, consumers will need to receive highly targeted and relevant content, offers, discounts, and rewards for sharing their data. Second, we envision a rewards-based system wherein individuals will accumulate points across a closed ecosystem of marketers, services, and vendors that wish to retain maximum access to consumer data

This sounds a lot like a loyalty programme to me and given the increased likilihood for consumers to provide this information to reward programmes as highlighted within the Aimia research, it would suggest that the future of loyalty is very bright indeed. Wrapping this up the Aimia research concludes by saying:-

[..] The tools of loyalty management can make the difference. By facilitating the value exchange through targeted applications of reward and recognition, you’ll gain customer data that provides insight into Millennials as individuals. You’ll learn to deliver offers that focus their attention. They’ll respond to your efforts with increased loyalty, profitable behavior and word-of-mouth advocacy.

Saturday, 24 September 2011

Halifax Bank gambles on loyalty?

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Halifax Bank announced this week that it is intending to run a lottery style monthly promotion called Halifax Savers Prize Draw. The scheme will reward savers with deposits of £5,000 or more (and who opt-in) with the chance to win one of three top prizes of £100k a month or smaller prizes of £1,000 or £100 - paying out a total of £6m in the course of the year.

While this is undoubtedly a promotion to attract new customers, it also has an interesting loyalty angle to it.

If Halifax attempted to create a "full" loyalty programme for savers this just wouldn't be rewarding enough to make it motivating. Savers are already paid out interest on their deposits and if there was much more room to manoeuvre on this to provide greater value then you would expect the bank to be looking here instead.

A lottery style programme however lets them provide a powerful retention mechanic for a fraction of the reward budget.

There are great previous examples of how powerful this can be. Research from the National Lottery Commission showed that 67% of the UK population had purchased a lottery ticket at least once and that about 40% of people played regularly (at least every week).

A more direct comparison to the Halifax programme would though be Premium Bonds, the UK government savings account which also pays out a lottery style prize. These are still proving popular with around 40% of the UK population having on average £1,131 in bonds. They have also proved increasingly popular in these tough economic times with a 26% increase in the amount saved since 2008.

Despite Harold Wilson MP, reportedly calling Premium Bonds a 'a squalid raffle…a national demoralisation' when he opposed their introduction, it seems they're the more acceptable side of gambling - with £21m of Premium bonds sold every day.

In an article back in 2010, the Daily Telegraph discussed why Premium Bonds are so popular saying:-

They remain popular primarily because, unlike most lotteries, Premium Bonds guarantee to return your capital. So they are widely regarded as a free chance for a flutter.

Just like a loyalty programme, both Premium Bonds and the new Halifax Savers Prize Draw do the same thing - provide a little extra for nothing. You still get to keep your money and uniquely with the Halifax you actually get to earn interest; however you also have a chance to get a reward. It's this reward, this promise of something for nothing which will make this scheme not only good for acquisition but also help to retain balances.

In a loyalty programme points are used to make the programme sticky, customers build up value in points and this helps to focus them on collecting more - remaining a customer and shifting/concentrating category spend. The power of this depends on how achievable the rewards are perceived to be.

In a lottery style programme however there is no increasing points balance - there is just a prize, potentially.

Instead, the stickiness in these types programmes comes from something less tangible - the gamblers fallacy. This is the fallacy of the maturity of chances, the belief that past results have an impact on future results.

If the coin keeps coming up heads, there is more chance of it coming up tails.

If the roulette wheel keeps coming up red, there is more chance it will come up black next time.

If I didn't win this month, or the previous 10 months then it's my time now.

This belief is what keeps people buying their lottery ticket and it's what will keep people retaining their savings account.

Whether you call it a lottery, a prize draw or a flutter, the gamblers motto still applies... "I’ll quit when I’m ahead".

Thursday, 15 September 2011

PayPal banks on convergence in offline retail

A recent PayPal blog by Scott Thompson, President of PayPal gives a strong overview of their future direction - and in a word it's convergence.
  • The convergence of offline and online retail
  • The convergence of social and retail
  • The convergence of EPOS and payments
  • The convergence of offers and payments
  • The convergence of payments and loyalty
  • The convergence of the purchase and the purchase decision
That last point is the most powerful - previously banks and payment providers like PayPal moved money.  It was all about the transaction with little regard for the person making it or the reason behind it.  However as Thompson indicates in his blog, this is changing:-
PayPal is re-imagining money and making it work better for merchants and consumers.  The act of paying for something should be as seamless as your decision to buy it. The future is about creating real consumer choice, flexibility and control over how people shop and pay.
Payment providers are realising the power they have within the data they hold and the relationships they enable, and now they are starting to do something about it.

    PayPal are squarely banking on convergence across all of these areas into a single solutions provider - and obviously they would like it to be them.

    They're not alone however, both Google and Square, amongst others, are competing in this space, bringing together mobile, payments, POS, offers and loyalty rewards into a single platform / eco-system.

    The ability to drive a purchase from demand generation and follow it right through to purchase and post purchase recognition is something that is going to gain traction and there will be winners and losers.

    I suspect any single vendor will struggle to dominate and open standards (or mass payment networks) will win out, but it does set the tone both in terms of customer and retailer expectations - and it throws down the gauntlet for all players within the payment and retail transaction space.

    Sunday, 4 September 2011

    Avios says adios to BA Exec, IB Plus and Airmiles

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    Loyalty is making headlines again.  With Airmiles announcing that it's to rebrand to Avios, there has been a media feeding frenzy discussing everything from the u-turn on taxes and potential devaluation through to the re-branding and how long it might last.
    Overall the publicity seems to have been negative but then this is to be expected; Airmiles is a well loved brand but has become a little like Woolworths before it's demise - everybody of a certain age knows about it and many remember it fondly, however actual usage has declined over time from it's height in the late 80's and early 90's with only 2m active members now out of the 8m total.
    Renaming it will feel like the end of an era for many.  However people mellow over time and get used to change, even for every day brands like Norwich Union (Aviva) or Marathon (Snickers).
    While most of the mainstream commentary though is focusing on the fact that Avios is replacing Airmiles, what's interesting is that it's also replacing the BA Exec club and Iberia Plus, now all part of International Airlines Group (IAG).  Both of these frequent flyer programmes will retain their current branding, but the underlying currency (whether that's BA Miles or IB Puntos) will change to Avios.
    This is also not just an alignment of currency name, it's also an alignment of the currency itself.  BA have been quoted on Flyertalk as saying:-
    We realise that we may have members in the Executive Club, the Avios reward programme or in Iberia Plus so we are developing a new tool called Combine my Avios which will allow you to combine some or all of your balances into one or the other programmes
    This is actually quite an interesting step.  By combining Airmiles UK, BA Exec and IB Plus into a single currency they have instantly created an international loyalty programme - albeit heavily biased to the UK and Spain.  If this was just BA and Iberia combining then you could argue it was more of a consolidation of schemes in the same way Northwest and Delta programmes combined.
    The inclusion of Airmiles UK though which is not a frequent flyer programme and is instead a more traditional coalition programme suggests an ambition for the currency to be used wider.
    This is backed up by Andrew Swaffield, Managing Director of the Mileage Company who runs Avios when he was quoted in Business Traveller Magazine as saying:-
    [The intention of the new programme was to] "create a new shared global reward currency to provide benefits for all three members"
    While the main focus of discussion is still around how members perceive the change in benefits with the introduction of Avios I suspect the real discussion is yet to be had about the potential impact of a new, global reward currency with around 17m members (Iberia Plus 4.2m, BA Exec 4.5m and Airmiles UK 8m).

    Wednesday, 24 August 2011

    "The Internet of Things" is the new Sorcerer's Apprentice

    Mickey mouse in fantasia 492

    In Disneys Fantasia, Mickey Mouse as the Sorcerer's Apprentice brings to life everyday objects such as brooms and buckets to help him with his tasks of cleaning - what starts as a good idea though ultimately ends with terrible results as he fails to be able to control them.

    Whilst Mickey may have gotten out of his depth, this thinking of everyday objects being brought to life isn't just a fantasy.

    Obviously not in the literal sense we see in the Sourcers Apprentice (although that would have been great!), but more in the sense that previously inanimate objects can now start to record their activities. Termed the "Internet of Things" this was discussed in part by a talk at DICE by Jesse Schell about gamification and how this may extend into everyday items and tasks. (The video is really worth watching if you haven't previously seen it)

    What Jesse discussed in terms of earning points for brushing your teeth has now been enabled by start-up Green Goose. Using a combination of intelligent stickers or product add-ons, Green Goose claims to be able to track any activity, from cleaning your teeth to drinking a class of water. The system utilises a base station linked to your internet connection to allow the different tags to communicate activities wirelessly and for these to then be tracked centrally. Each device/sticker includes a 1 year battery making them truly untethered and so there is no syncing required, you just use them (or not) and see the updates online.

    There are obviously implications for this within industries that care if you do these activities, whether that's a tooth paste manufacturer or a dental insurance company. If the Green Goose solution gains traction and most importantly open standards then we could easily see products in the future including these kinds of monitors as part of the manufacturing.

    Already the car insurance industry is using tracking products within cars to provide more cost effective insurance for young people or low mileage drivers based on when they use their car and how they drive it. Green issues aside (lets assume it's a hybrid/electric car) - imagine if that technology could also be used by the car manufacturer or tire producer to track the miles you drive and to reward you for that, giving you feedback on how to get the best from your purchase, when it needs to be renewed/serviced and discounts off your next purchase.

    Internet of Things pioneer, Kevin Ashton said of this:-

    The problem is, people have limited time, attention and accuracy—all of which means they are not very good at capturing data about things in the real world. [...] If we had computers that knew everything there was to know about things—using data they gathered without any help from us—we would be able to track and count everything, and greatly reduce waste, loss and cost

    But it's not just waste, loss and cost in terms of the tasks we're tracking, but also the marketing budgets of the companies we purchase from. Knowing who uses the products, how often and for how long can enable targeting of spend and offers to customers based on their current and potential behaviour.

    Originally Green Goose was positioned more as an energy monitor, letting you track time spent in the shower, riding your bike versus taking the car or turning the thermostat down rather than up. The idea was to track these little decisions in real-time as well as the potential financial savings you accumulated so that these add up to a "nest egg" value which provides a nudge to do more.

    Great in terms of saving my money, but not necessarily great in unlocking savings from companies who provide the products and services.

    Their new positioning suggests a movement to tracking wider activities including many they haven't even thought of. Opening this up to developers (which they have) means more solutions and more ways to commercialise it. Companies wanting you to use their products and use them more often will soon be able to tap into a continuous stream of data about how and when people are consuming them bringing in a wealth of information and requiring new ways to reward and recognise this.

    The challenge for both brands and consumers however will be the same as that faced by the Sorcerer's Apprentice - once we start providing/collecting this information, can we keep control of it, manage it and get the best benefit from it... or will it simply overwhelm us.

    Mickey mouse sorcerers apprentice wrong

    (images copyright Disney)

    Monday, 1 August 2011

    The future of customer interactions is yesterday


    One of the interesting aspects of the rise in mobile devices is how these are reinventing established ways of doing things.

    Things that we've been used to for decades have suddenly been made accessible and interactive by being combined with mobile devices like a smartphone.

    Take the payment cheques for example.

    This was a technology waiting to die. The thought of filling out a piece of paper to make a payment to someone else that then took days to transfer between accounts was an idea rooted in the last century. We're much cleverer now - allowing payments via a tweet or a simple bump of the phones. One of the most popular innovations however is remote deposit of cheques whereby customers can pay in a cheque simply by taking a picture of it. Banks such as US Bank, Chase and USAA have introduced it, with USAA originally pioneering this back in 2009 and now introducing the service to the iPad2. Having processed nearly $4bn transactions in just 2 years, this reinvention of an old technology has proved a hit with customers.

    Taking this one step further, start-up have introduced a solution which allows a customer to make a payment by simply taking a photo of their payment card.

    Another innovative use of the smartphone was demonstrated by Tesco in Korea when they transformed outdoor media from being passive to interactive. Recognising that people didn't always have time to visit a store, but had to make time to stand, waiting for a train, they decided to bring the store to them. Using outdoor media within the station platforms that mirrored store shelves, customers were able to add goods to their virtual basket by taking a snap-shot of items they wanted. These were then delivered that day so that orders made on the way home could be enjoyed that evening. With sales reportedly increasing by 130% and registered users up 76%, this cross-over from old school media to new media struck the right note with customers.

    This can also be applied to loyalty interactions between customers and a brand.

    Startup Punchd is looking to change how traditional paper-based punch card promotions work. Moving the card to the smart-phone and replacing the punch with a QR code - and in the process they are revitalising punch card loyalty programmes. Recently purchased by Google, this start-up is offering retailers a cost effective (free) solution for tracking and rewarding customer frequency. Better still, they are then utilising this data to provide retailers with reporting and the opportunity to target communications, something the paper based solution alone could never provide.


    Another start-up has done the opposite of Punchd and used a paper based solution to create a cutting edge loyalty programme. Blitzly uses paper cards with unique codes on them to let retailers reward customer purchases. Aiming to create loyalty for smaller retailers who don't have the POS infrastructure in place, the Blitzly solution is both simple and elegant. Each retailer is given a set of cards which are uniquely linked to them, this then allows Blitzly to track customers by retailer, providing reporting and insight for the business and ensuring that only points earned at that retailer can be spent there.

    It's not just silicon valley start-ups however they are using the mobile phone to augment traditional customer interactions.

    Within the Nectar programme for example, the standard paper coupon has been moved onto the smartphone. This not only allows customers to see all of their coupons in one place but also provides a means of having more up to date coupons based on current behaviours. The usage of coupons is further simplified by not requiring the customer to present them at the time of purchase and instead, simply opting in when they see it.

    Sears are currently testing the integration of QR codes with traditional catalogues to let customers get more information such as product videos. This combination of offline media with online content is something loyalty programme catalogues could also utilise.


    Although some solutions such as QR codes or Punchd need an app installed which typically isn't there by default, this doesn't deter many customers. In a campaign run by Australian product coupon specialist Letterbox Deals, they reportedly saw 25% of customers using a QR code to submit their entry for a deal - for a campaign that went to 1.3m Sydney households. Even more interesting, 60% of customers who entered via the QR code downloaded a QR reader for the first time.

    Sometimes using offline solutions, whether it's printed catalogues, unique printed codes or paper punchcards can be the most effective choice to reach customers. However, combining these with online technologies such as smart-phone/tablet technologies can bring a different angle, increase speed of response and allow ongoing tracking of those interactions.

    Article first published as The future of customer interactions is yesterday on Technorati.

    Tuesday, 19 July 2011

    The problem with foursquare...

    CrunkedFoursquare is seen by many as a template for a new style of loyalty programme - trading physical rewards for virtual achievements in the form of badges and showing how tiering can be scaled horizontally, not just vertically. Whilst these achievements may technically be valueless, they do seem to provide value for Foursquare with various reports indicating that it is still the King of location based services with up to 5x more check-ins than rival, Facebook Places.

    But as a (reasonably) dedicated Foursquare user, what's becoming clear is that the design of foursquare is really less about retention and more about acquisition. Sure, I'm still playing so it's done a great job of keeping me engaged - in essence retaining me. However at an individual behaviour level it is less convincing.

    The challenges in terms of collecting badges ensures I continue to check-in, but each badge, once attained is essentially done. I don't need to do anything more for that badge, it's mine, forever. The same for mayorship. If I don't do anything more (and if no-one else checks in) then I retain that ranking.

    Simplistically, Foursquare is a behaviour change acquisition programme, not a behaviour change retention programme.

    Foursquare probably don't care too much - they don't need me to exhibit the behaviours necessary for the "Crunked" badge more than once, they just want me to keep checking in and to chase that next badge.

    However, as we begin to echo these kinds of gaming and recognition mechanics into mainstream loyalty programmes, we need to consider the consequence of recognising a behavioural achievement only once.

    We can see this consequence in traditional loyalty programme tiering. While tiering can be quite limiting in that it normally only recognises one behaviour - that of spend - it is also limiting in that it "tops out" with many scheme operators seeing customer behaviour begin to tail off once a customer has reached a designated tier level. In essence they have achieved it.

    This isn't because the customer has given all they have, instead the customer has simply moved on to a competitor programme. They are "gaming" the whole loyalty eco-system, racking up recognition across different brands as they've exhausted the challenge (and the benefits) within that one brand.

    This isn't just limited to loyalty.

    Banks see the same behaviour around card fees. Where a customer is charged a fee but can essentially "earn out" that fee based on spend, there is a noticeable drop in spend once this earn out period has been met. Customers haven't stopped spending, they have just reached the goal or challenge set, even though this wasn't the intention.


    Given that customers have a psychological need to finish what they've started and a competitive streak to do better, it doesn't make sense to limit achievement recognitions to a once only event. Instead, we need to make sure that they can keep progress, either to maintain that recognition or to lift it further.

    Looking across to games, they recognise different levels of achievement for the same behaviour. The iPhone game Cogs for example provides a bronze, silver and gold recognition for different behaviours such as the time taken or the number of moves required. This means even when the task is complete, I can usually do better.

    This isn't to say that one off recognition isn't important. Customers need to feel they have achieved something, "banked" it and can move on. However, if this is the only sticky retention mechanic a programme uses it risks losing focus on key, repeatable behaviours.

    Behaviour isn't simply changed, it is maintained.

    A great example of recognition which looks to maintain behaviour (if slightly unique) is United Airlines acknowledgement of frequent flyer, Tom Stucker, who has racked up 10 million miles on their programme. In recognition of this amazing feat, Stucker was given a unique (for the moment) titanium loyalty card and has had his name put on the side of a United Boeing 747. Whilst a tearful Stucker was overwhelmed by this recognition, the problem for United is they have just raised the bar again. There is now a new challenge to be achieved and you can bet there are some out there with their eyes set on it.

    As we start to democratise our loyalty programmes, bringing in horizontal recognition and increasing the engagement through broader challenges and rewards we need to make sure we don't limit a programmes growth by letting a customer simply tick the box and move on.

    Wednesday, 6 July 2011

    Gamification expands the loyalty toolbox

    I spoke at Marketing Week Live last week on the "Future of Relationship Marketing". It's always great speaking about the future of something as in theory nobody can question you; by definition the future is yet to happen - so I could be right...

    However, whilst the topic was on the future, in reality the future is already happening, we just aren't seeing much of it within mainstream loyalty programmes (yet).

    As I've written about previously, the presentation was all about Interaction Loyalty and the impact that recognising every interaction - every check-in, status update or product review - has on loyalty programme design and specifically reward and recognition.

    Given the requirement to recognise activities which don't always have a nice neat margin attached to them, we also now need some different tools in the box to support this - and this is where gamification thinking comes in. Through gamification we can exchange rewards with actual value for rewards with social value and link recognition not just with rewards but also with core motivation. However, what's interesting to note is that gamification is simply a set of tools within Interaction Loyalty - not a new definition of loyalty itself.

    Embedded below are the slides I used, feel free to review and comment.

    Sunday, 19 June 2011

    Pizza Express app - a glimpse into the future of VRM?

    Pizza Express have launched a new iPhone app which redefines the space for retailers and at the same time provides a possible glimpse into both the future of payments and CRM (but more on that later).

    The application includes a number of clever features such as allowing customers to view their past receipts (great if you need to expense something), create "favourite" restaurant locations and pre-book a table. The really interesting part however is a deal with PayPal that also allows a customer to pay their bill directly via their mobile by entering a unique 12 digit code printed on their receipt - letting the customer then simply get up and walk out as it's seamlessly integrated into the restaurants POS.


    This in itself is an interesting loyalty play as Pizza Express get to know who the customer is, what they purchased and how often they come and there is not a loyalty point in sight. It's a compelling application that smooths the purchase process, making the next purchase more likely.

    Whilst this is a really innovative app for Pizza Express it's actually part of a wider trend to disintermediate the payment eco-system and the functionality is quite similar to that offered by payment start-up Square.

    Jack Dorsey, Square's founder is quoted as saying that they want to replace cash registers, wallets and loyalty cards. Rather than simply trying to replace a specific part of the existing process - exchanging the plastic card for the mobile phone - Square are actively trying to join the whole process up with Mr Dorsey saying:-

    "We think it should be one system"

    One really interesting innovation within Square is their application Card Case. This allows a customer to create a list of their favourite places and to setup a tab with them, simply paying by giving their name - no swipe of the card necessary. Like the Pizza Express app it also provides access to your receipts; in essence centralising your payment and purchase history and making it accessible.

    Square card case2

    This is a really interesting feature that both Pizza Express and Square have in common - the provision of customer data back to the customer - and it is becoming increasingly common as customers begin to expect their data to be collected, but increasingly consider it "their" data. When I shop at Tesco I know they are tracking my purchases, however when I go online and see new products added to my favourites list it begins to actually feel like my data.

    This trend of providing information back to customers and giving them access to and ownership of it is also gathering pace.

    Within websites and applications for example you are increasingly given the option to login via social networks such as Facebook or Twitter. While you still login, connecting via a social network provides a subtle change. You are actually granting permission to that application to connect to you rather than the other way round. At any time, I can review my relationships with different applications and simply close them down by removing the authorisation. I can also look at the permissions I've granted to those applications and change what information they can see.

    There has been a transfer of power within identity management. It's now my identity and I can choose who has access to it, how much access they have and when I want to end it.

    Imagine this trend being extended to all your interactions.

    Within a supermarket loyalty programme for example you could link your purchase history to an app from a CPG manufacture like Unilever. You'd be doing this in the full knowledge that Unilever could then access your purchases and provide you with relevant offers (or reward points). You'd be choosing how to use your information for your benefit.

    This is a really amazing thought and something that has been termed VRM or Vendor Relationship Management by Doc Searls, a veteran technology journalist and key founder of ProjectVRM which he describes, saying:-

    Since the dawn of the Industrial Age, large companies have been working to "capture" and "lock" customers inside what we today call "silos" and "walled gardens."... ProjectVRM is a new Berkman Center research and development effort that is working to provide customers with tools that provide both independence from vendor lock-in and better ways of engaging with vendors -- on terms and by means that work better for both sides.

    I love the idea of this - letting customers engage with brands on their terms with their data - and can see many applications across different industries.

    How far this can go will be interesting to see (and to define), but the principle of making customer's data accessible to customers is a key trend. Facebook, Twitter et al. have already proved that making their systems open and giving customers control has only made their service more compelling.

    Brands and loyalty programmes collecting customer data and interactions may have to take a leap of faith and empower the customer for the greater benefit of both the customer and the brand.

    As Doc Searls said in his earlier thinking within the Cluetrain Manifesto:-

    We are not seats or eyeballs or end users or consumers. We are human beings—and our reach exceeds your grasp. Deal with it."

    Sunday, 12 June 2011 washes away points based loyalty


    Sometimes it's good to remember that loyalty marketing doesn't necessarily mean points marketing. Whilst points provide a great way of letting customers track their progress over time and link multiple purchases into a continuous journey, they are not the only way to execute a loyalty programme.

    Within a loyalty programme, what we're trying to do is link one purchase to the next - to build a context around the purchases. Sales promotion tends to encourage a single purchase, typically rewarding customers instantly with a discount or premium. This is normally aimed at customer acquisition or as a way of lifting short term sales. Loyalty on the other hand tends to recognise behaviour over a number of transactions to create repeat purchases. Ideally it recognises and rewards regular custom without discounting products and services to new customers.

    A good example of this is, an online retailer of cleaning, health and beauty products. They have developed a programme which allows customers to nominate 5 products for which they want to receive a discount on with future purchases. The customer can then change these nominated products every 90 days.

    Whilst on the face of it this may not be considered a traditional loyalty programme, there are in fact a number of interesting loyalty mechanics at play here:-

    • Scarcity Dynamic - By limiting the discount to just 5 products, it forces the customer to really think about the products they buy (and the ones sells). The limited number will make it more valuable for customers and something they'll want to use wisely.
    • Commitment - By getting customers to select 5 products, they essentially get the customer to psychologically commit to buying these before they actually purchase. Research in this area would suggest customers committing for a small thing (creating a favourite) then go on to commit to a bigger thing (the purchase).
    • Appointment Dynamic - The change every 90 days means a customer keeps the discount front of mind. They know they have a window of opportunity to "re-stack the decks" and so this forces them to think about their purchases (and

    Discounting would not be a traditional loyalty mechanic. Points are normally used to provide price differentiation without actually changing the price. However, this programme design is clever in that it limits the discounts, personalises them and gets full price for the rest.

    There are some other levers which could have been used such as a Progression Dynamic which could have allowed a customer to unlock more discounts over time, but it's still a strong design.

    An online retailer like doesn't need a loyalty programme in order to identify their customers, they need one to change behaviour. Their programme design would seem a great fit for their audience and a clever use of loyalty mechanics.

    American Express provide another good example of this in what could be described as both a sales promotion or a short term loyalty programme. The programme, called "25" encourages customers to use their card in 8 out of a possible 18 outlets. In return, the customer is awarded a £25 statement credit.

    As with there are a number of mechanics used within the programme design that make this effective.

    • Appointment Dynamic - The programme is time limited meaning customers have to do something now in order to benefit.
    • Repeat Purchases - It encourages multiple purchases, reinforcing the right behaviours that Amex are looking to promote.
    • Behaviour Change - Not only are Amex trying to get customers to use their card, showing their wide acceptance, but they are also trying to get customers to understand that they can use their card for smaller purchases, with brands such as McDonalds or Pret.
    • Collection - The programme materials include a reminder card which shows the 25 participating brands and a visual cue to the 8 needed to collect. Customers can tick each brand off as they shop.
    • Recognition - The reward on offer is motivating enough for most customers to at least think about taking part.
    • Customer Identification - Whilst Amex already know who their customer is, the programme requires an email address to take part, helping to make it easier to communicate with them in the future.

    Again, this isn't a traditional loyalty programme; however, the loyalty mechanics are still clearly in operation. This is a great example of targeting specific behaviours with a targeted programme.

    When we think about loyalty we need to make sure that this isn't limited to an always on points programme. There are many different ways of engaging customers, creating repeat custom and recognising changes in behaviour.

    Wednesday, 25 May 2011

    Can't judge a book (or a customer) by it's cover

    Sony reader mb edition

    As marketers we're always keen to put customers into specific groups or segments. Typically creating personas for these segments that attempt to describe the customer - detailing where they shop, what they watch, what they read or how much they earn.

    Sometimes this is based on research; many times it's embellished with our own "insight".

    So if asked to describe a typical consumer in Windsor - one of the most affluent areas of the UK - and the stores they frequent, you probably wouldn't be including the discount store Poundland amongst the profiles.

    However this hasn't stopped them from opening a store in Windsor and according to reports in the Daily Mail

    There are women in pearls elbowing each other out of the way, and a couple of smart old ladies are having the most awful row over a gardening fork.

    Ok - so this is an article in the Daily Mail which may mean there is a little creative licence in the reporting. However Poundland state within the Financial Times that 11% of their customers are from AB social-economic groups.

    Research from Nielsen last year on coupon usage in the US also demonstrated this apparent mis-match with affluent customers by showing how those earning more than $50k per year actually represent 60% of the top coupon users - something most people would naturally assume would skew to less affluent customers.

    Google's recent announcement about bringing coupons to the mobile phone via NFC further back this up. With 64% of Android users being on incomes of $50k or above this is something they clearly see a market for within a more affluent customer base.

    Another example of how we can misjudge customers is shown within ebook sales.

    Sales of romance and erotica books have apparently exploded within the e-book format with the main reason thought to be the lack of the embarrassment factor associated with these books in hard copy format (such as reading them on public transport).

    Looking at the raw sales numbers you could assume that customers no longer enjoy the romance genre; however, understanding customer motivations as to why they aren't purchasing the books allows for a new channel to be utilised and sales revitalised. Research from Tesco for example indicated that 31% of customers said they prefer not to be seen buying the books due to their association with an older demographic. A spokeswoman for Tesco is quoted as saying:-

    Some bashful customers prefer to use e-readers so they can access stories privately. However, there is no reason why reading Mills & Boon should have to be a guilty pleasure

    A report I heard recently about a European bank who were trying to encourage customers to shop online also demonstrates this.

    They attempted to utilise points promotions to over reward this specific behaviour of online shopping but this had little effect. Instead, what finally worked and significantly increased online card usage was in fact the introduction of an online fraud and delivery insurance. Not taking things at face value and instead trying to understand customer motivations around risk allowed them to unlock a new category of spend.

    As the saying goes, you really can't judge a book by it's cover. Whether trying to second guess which customers shop at discount retailers or why certain customers won't shop online, it's important to look at all the angles as customers really aren't one-dimensional.

    Monday, 16 May 2011

    GOOGLE: Legacy - The Game Has Changed


    In film Tron Legacy apart from some fantastic music from Daft Punk, there is an underlying story of the online world trying to break out into the offline world. They come close but with the risk of spoiling it for those that haven't seen it - Kevin Flynn (Jeff Bridges senior) manages to hold back Clu (Jeff Bridges junior) and his armies of "programs" - and in the process saves the free world.

    However fantasy is great, but when fantasy starts to become reality things get a whole lot more interesting.

    Google has steadily been taking control of the online world; beginning with search they have increasingly permeated all aspects of our online interactions from browsers, tablets, mobile, mapping and online tools.

    You can almost imagine them uttering the words of Kevin Flynn in the film when he says:-

    In there is a new world! In there is our future! In there is our destiny!

    But things are changing.

    Google are apparently looking to trial the use of coupons at till with retailers using NFC Android phones. Working with eftpos terminal manufacturer Ingenico they will look at a series of trials at retailers in New York and San Francisco.

    Philippe Lazare, CEO of Ingenico was quoted as saying:-

    Google wants a system where, when you enter a shop or supermarket, you receive a special offer on your telephone. At the checkout, you can take advantage of this offer" by touching your phone to the Ingenico POS terminal, which will be capable of reading the coupon and will automatically apply the discount to the shopping bill.

    This may seem like a small piece of news but what's interesting here is the combination of online and offline services from search to location based services through to NFC and POS integration. In theory a customer could search for a product online via Google, be presented with an offer which they can then immediately use to purchase that product when walking into a store.

    This ability to track online interactions through clicks and onto online purchases is something that Google and affiliate networks have been doing for years. However the ability to track these right through to offline purchases in-store really brings multi-channel retailing to life.

    It also promises to change how loyalty programmes operate. You only have to looking at the number of loyalty programmes with online shopping malls to understand that these programmes really benefit from the affiliate revenue generated when they get members to shop in partner stores. Being able to drive these purchase decisions into everyday transactions however is the real key here.

    But Google isn't the only player. Facebook is increasingly linking online and offline with Facebook Deals allowing offline merchants to create deals for online members. While this doesn't (yet) directly link the interaction to the transaction you can bet Facebook will be looking at how they increasingly make it relevant within bricks and mortar retailers.

    There was an interesting blog by Adrian Hon in the Telegraph recently about the battle between Google and Facebook and while on the face of it they would seem to have very different businesses, in reality as Adrian points out:-

    Google and Facebook are increasingly set up as competitors [for] sorting through the material on the Web.

    While each has a very different approach; Google with its highly sophisticated search algorithms and Facebook with it's personal recommendations from friends they are both in the same business - namely monetising interactions between consumers and brands.

    Google has done well in providing a more direct and accountable channel for marketing budgets but if Facebook can demonstrate better "bang for buck" through the power of personal advocacy they could see their revenues slowly eroded.

    Not one to sit back and accept the status quo Google are firing on all fronts. From taking ownership of the channel itself (mobile/tablet via Android / PC via Chrome) to trying to develop their social strategy (and tying their employees bonuses to the success of this).

    This latest effort of linking offline and online through POS is another step in this battle. Making marketing budgets increasingly accountable and in the processes owning the consumer interaction from search to purchase.

    As Clu says in the film when looking to break out from the online world to the real world:-

    Out there is a new world! Out there is our victory! Out there is our destiny!

    While the battle for our attention online is intensifying, Google making a move offline suggests a whole new game and one worth keeping an eye on.

    Monday, 25 April 2011

    Apple tracks your location - who cares?


    Last week the world was rocked by the discovery that Apple iPhone users were being tracked. Apparently a users co-ordinates were being stored along with a date/time stamp on both the users phone and their desktop when synced. Even worse, it was then reported that this information was being sent back to Apple. Like something from a Bond novel, Apple was tracking the activities of millions of people, just waiting for when it could... well therein lies the question.

    What exactly was Apple doing with this data and why were they collecting it? In fact, why do we care so much when we're all giving away our data every day. Was this just a slow news day or is there really an issue here?

    Data privacy is a strange beast. On the one hand people are getting all worked up about Apple collecting location data (despite indicating this within it's terms and conditions) and on the other people are using the very same devices to check into Facebook Places, Foursquare or Color providing a wealth of location information (and photos) for all the world to see.

    It seems that people don't have a problem with the data itself being collected or shared, its the fact that they didn't seem to know about it that is at issue and that they don't know why.

    Google had the same issue when it was mapping it's Street View product. As well as collecting images of the streets it was mapping, it was also collecting WiFi information on the networks it came across. This has caused outrage at a national level with governments (and the EU) clamouring for an explanation, yet as F-Securereported, Skyhook has been doing this for years and nobody bats an eyelid. Indeed, it was recently reported that Google has stopped collecting WiFi data from Street View as it can now do this via the handsets (just like Apple)

    BT also fell foul of this public feeling when its "service" Phorm started tracking users web visits (initially secretly) to provide better targeted advertising. There was an online privacy backlash which resulted in a European commission investigation and the service being pulled. At almost the same time however, Nectar was announcing a new service which seemed to do a similar thing, targeting advertising to people based on their behaviour. Called Consumer Connect, it serves up online adverts through Yahoo to opted in customers based on their offline shopping habits with Nectar. There was however no consumer backlash and it was reported positively in the media.

    It seems then that our reaction to data privacy is based on the context of how the data is obtained and used, not just the data itself:-

    • Value Exchange - Do we understand why the data is being collected and what we get from it. Skyhook collect data to provide location based services which work in tandem with other technologies to map your location - thats useful. Both Google and Apple may have had the same intention but this isn't obvious. Increasingly consumers understand the value of their information and are willing to "trade" it in order to receive other benefits.
    • Clear Boundaries - With BT Phorm all web usage would be tracked to serve up better ads. This feels a little too broad and unecessarily intrusive. With Nectar Consumer Connect, users are clear about what data is being utilised, it's their shopping details, something most people realise is already being used for offline targeting of offers already.
    • Permission - Consumers like to do things on their terms. I can choose to share that dodgy photo on Facebook (although I may regret it later), I can choose to share my location when I check-in and increasingly I can choose to share this through services like Facebook Connect. However, when this information is simply taken without permission we feel aggrieved.

    With data increasingly being monetised across many organisations, whether it is credit card transactions, loyalty programme transactions, web visits or phone calls, all of this information says something about us and has real-world value to many others.

    This also means that increasingly companies may be collecting or using information in a way which consumers didn't expect. It doesn't matter if this usage is buried in your terms and conditions (Apple clearly stated they were collecting GPS information) - if it's not obvious to your customers then you risk a backlash from them when they find out.

    This isn't hard though; just take a look at the Tesco Clubcard Customer Charter and Privacy Policy. This isn't pages of small print. Instead it's a plain English explanation of what Tesco will do with your data, how this benefits you and what to do if you don't want it.

    If we want the benefits that come from increased usage of customer data we need to remember that ultimately it's the customer's data. Always ask permission as begging forgiveness rarely works.

    Sunday, 17 April 2011

    Forget your competitors - focus on your customers

    Breaktherules"Today, you're no longer trying to keep up with the competition... you're trying to keep up with your customers!"

    This was a recent tweet by Mari Smith (@marismith) on a comment by Bryan Eisenberg (@thegrok).

    It might only be a tweet, but it's a very interesting insight.

    Our marketing efforts have traditionally been about the competition. We've got a better widget, better pricing or more outlets. We clean whiter, have greater coverage or reach parts others don't - probably.

    The message is clear. It's better, faster, more - always about beating the competition.

    There are very few unique products. Companies like Apple who create a brand new market with a brand new product like the iPad are rare. Typically you're selling a different version of something that already exists and trying to set it apart from the competition.

    Loyalty marketing is no different. It's focused on building relationships that make doing business easier and more rewarding - the aim is to keep customers and by definition keep them away from competitors.

    But if it's now less about the competition and more about keeping up with your customers, should this change our approach?

    Well this is something that the book Blue Ocean Strategy discusses when it says:-

    The only way to beat the competition is to stop trying to beat the competition. In red oceans, the industry boundaries are defined and accepted, and the competitive rules of the game are known. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Instead of focusing on beating the competition, they focus on making the competition irrelevant by creating a leap in value for [customers].

    Blue Ocean Strategy talks of shifting your strategic focus from competitors to alternatives and from customers to non-customers. Focusing on alternatives - on how a customer may achieve the same overall outcome without using you or your industry forces you to think about what customers actually want and how well they are being serviced today. When you focus on customers you're free to break the rules and free to create them.

    Apple broke the rules. They created something new that did the old things better. Browsing the web, reading books, playing games. The iPhone, iPod and iPad don't compete, they create new rules.

    Groupon broke the rules. They focused on the little guy - the under-served small retailer to get deep and local discounts while everyone else was hawking the same coupons and discounts from the big boys.

    Interestingly though you don't have to be Apple or a new start-up to do something different. A recent blog on netbanker shows how easily credit card companies could add value by just thinking differently about the competition - in this example the competition isn't another issuing bank, it's another way to reach customers spend decisions - namely Groupon!

    Don't focus on the competition, make them irrelevant. Go break the rules.