The futures bright – the futures open

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

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

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

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

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

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

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

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

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

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

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

Air Miles is on the right track

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

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

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



Obviously the strap line "Make your money fly" fits in nicely with the current climate, but it's the other messages in the advert which interest me. The advert has 3 main themes which are:-

• Reassurance - Everybody is doing it / you don't need to do anything different
• Everyday Spend - Earning miles on your grocery and fuel spend (encouraging frequency usage)
• No Hidden Extras - All flight taxes/fees included (previously an issue for many collectors)

The Air Miles member base is ageing and it needs to inject some new blood and this advertisement is designed to do just that by using messages you would typically see when on-boarding or looking to recruit new members to a loyalty scheme. The focus shouldn't be on the rewards but on how you get to the rewards and re-assurance that you're making the right decision.

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

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

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

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



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

It takes two to Tango

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

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

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

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

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

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

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

These disciplines should also be applied within loyalty marketing.

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

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

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

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

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