RESEARCH & INSIGHTS
Four key trends are converging to reshape the loyalty marketing world in 2014. Today’s consumers are demanding a variety of choices via fast and seamless global, online and in-store experiences. The rise of the peer-to-peer economy threatens to bypass traditional businesses. Shoppers increasingly recognize that sharing their data should earn them something valuable in return, but loyalty marketers are still fixated on discounts. The resulting commoditization of the value exchange demands an increased emphasis on surprise and delight for program differentiation.
These four trends are driving rapid change, and the loyalty programs that will win big in 2014 are those who mobilize now. Those that don’t respond will fall far behind.
Download this whitepaper to discover the converging trends that could potentially threaten your business this year and beyond.
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Nike is the latest player to take the field in the game of rewarding consumers for fitness activity. There are a plethora of smartphone apps that offer users points for tracking exercise, but Nike upped the ante this week with its “secret” vending machine in New York that doles out branded clothing in exchange for FuelBand points. It appears that the retailing giant is testing the power of fitness-based rewards to engage customers. They’ll discover that it works – and not just with customers, but with employees too.
There’s nothing but upside for companies that pursue the “triple bottom line” of positive financial results, social payoffs, and environmental action. Today’s innovative companies are pursuing this strategy through creative partnerships and the emerging sector of non-transactional loyalty.
Transformative cause marketing offers rewards that motivate people to try a new activity, often with some sort of social or personal health usefulness. These efforts are igniting powerful social change by creating what we call “shared value” — with success for the customer, the organizations involved, and the cause.
In our new whitepaper Triple Play, we detail some of the payoffs. Here are three:
- New revenue. Innovative initiatives drive revenue from new sources. Consider the four-way Canadian partnership between a grocer, a provincial ministry of health, the nonprofit Heart & Stroke Foundation, and the AIR MILES Reward Program. The partnership was designed to battle cardiovascular disease, cancer, and diabetes by encouraging people to eat more fresh produce and low-sodium foods. The Eat Healthy initiative awarded shoppers with AIR MILES reward miles for their healthy food purchases. In addition to creating millions of targeted impressions for the Heart & Stroke Foundation, the grocer saw a significant increase in produce sales.
- Brand halo effect. The Eat Healthy initiative let the both the grocer and AIR MILES show customers a commitment to goals that go beyond the bottom line. Companies have discovered that the visibility of launching a cause-centered program pays off in building loyalty with their customers. We saw this when AIR MILES partnered again with the Heart & Stroke Foundation. This time, the partnership awarded miles for using information resources such a healthy living mobile app, an online risk assessment, and a Heart Smart family e-newsletter. Reaction was phenomenal: customers signed up in droves. Over 14,360 people signed up for the Blood Pressure Action Plan in one month, and 14,078 of them were AIR MILES Collectors. That kind of positive interaction from current customers is powerful.
- Greater employee engagement. Studies show that being part of a company committed to social causes boosts employee morale, productivity and innovation, retention and recruitment. A survey by the San Francisco nonprofit Net Impact found that 53% of workers said that “a job where I can make an impact” was important to their happiness — and 72% of college students said the same thing.
If you will be attending Loyalty Canada July 23-24, come join my session on “Driving Behavioral Change Through Innovative Incentive Programs” to learn more. You don’t have to be as big as Nike to win at this game. Shared value contributes to your bottom line while also building powerful brand engagement with both customers and employees. Just do it!
When a person’s actions decide the fate of future existence, we call it Karma. When the sum of a company’s data is used to improve the future existence of both its customers and itself, we can call it Kimpton.
The boutique hotel chain, long known for delivering personalized experiences, has reincarnated its loyalty program, InTouch, to one that better reflects the kinds of relationships it strives for with its guests. The program, introduced July 16, is called Karma.
Hotel stays still count, but the greater focus now is on interactions and experiences with the hotel – events that actually reinforce an emotional bond. These activities range from what Kimpton calls “good deeds,” such as conversing with the hotel via social media, to activities it calls “random acts of Kimpton” – dining at a Kimpton restaurant or renting a Kimpton bicycle. Specifically, it is Kimpton Karma Rewards, and it is an apt example of the mutual benefits that can be derived from using data smartly and responsibly. After surveying its loyalty members two years ago, Kimpton found they put a higher value on experiences, such as its morning coffees, its daily hosted wine hours when guests gather to try new wines, and the ability to travel with pets, than on the points or miles they earned through hotel stays. So Kimpton changed its earnings model.
The more guests participate with the hotel, the higher they progress through its tier system, earning access to a wider spectrum of perks.
“We have to give first in order to get back. We have to be loyal to our guests before we can expect loyalty,” Maggie Lang, senior director of guest marketing at Kimpton, told COLLOQUY.
That said, Lang pointed out there is a payoff to such generosity: “There is definitely a strong revenue strategy behind what we are doing.”
Her example to COLLOQUY involved an ongoing perk called “Raid the Bar,” through which members receive $10 vouchers for use at the mini bar or hotel bar. Members who redeem these vouchers at the hotel bar typically generate $100 in additional spending, 40% north of the average bar bill.
The cherry in that experiential cocktail is the good karma associated with the friends and memories made at the bar. Even better, that good karma actually generates more Karma, because that is the name of the program’s earning currency. And so the cycle continues. Pretty clever.
Key to the program working well is that Kimpton gives each hotel and its employees the freedom to delight members as they see fit. Hotel computer screens reveal, along with guest history, whether a prize is recommended for a past good deed. The employee can use his or her discretion to provide that prize, maybe a room upgrade, based on availability and other factors.
This is a spot-on example of mobilizing data in ways that empower every participant to achieve benefits. In turn, the data itself should improve as a result. Based on what it is doing today, I am encouraged to see what Karma becomes in a few years.
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THE LOYALTY LEAP
In his bestselling book, LoyaltyOne President Bryan Pearson draws on more than 20 years of first-hand experience. His expertise in building emotional loyalty in the information age is demonstrated through insightful stories from the trenches of the data-gathering and marketing communications fields.