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Fourth Quarter 2013

Mobile Customer Engagement Top of Mind for SCENE EU eBay Stays on Top of Customer-centric Model Beauty Resonates With Sephora Clients

Changes in Travel, Orbitz Leads the Pack




Getting customers to buy is easy when you know how they spend.

A MasterCard Company

Our transaction analytics helps see a true picture of consumer behavior.

Truth is, the transaction data collected from participating financial institutions is the most accurate way to predict consumer preference. Its at the heart of our loyalty platform, Truaxis, which uses industry-leading technology to deliver personalized rewards and money-saving offers to the debit and credit card customers of these financial institutions. Take advantage of this new channel to drive incremental business from your existing customers, and to help find new ones all in a cost-effective, turn-key solution. After all, its whats inside that counts. Find out how to reach more customers at truaxis.com.
MasterCard and the MasterCard Brand Mark are registered trademarks of MasterCard International Incorporated. 2013 MasterCard. All rights reserved.

In this Issue...


Mobile Customer Engagement Top of Mind for SCENE
Jim Tierney | Loyalty360


4 Letter from the Editor 6 Loyalty 360 on the Web 8 Your Voice 10  Behind the Brand
with Scott Lazear, Connexions Loyalty

14  360 Insights: The Challenge of Data

Commitment, Engagement, Personalization and Loyalty Lift Iron Tribe Members to Life-Changing Experiences
Jim Tierney | Loyalty360

Mark Johnson, Loyalty 360

16 By the Numbers: Digital Customer Experience 18 Q & A: Ask the Experts 30  Behind the Brand
with Nicola Saraceno, Luxottica Group

32 Loyalty Innovation 34 Trending Now 50 Loyalty Reads 58 By the Numbers: The State of Digitally
Engaged Moms

Changes in Travel, Orbitz Leads the Pack
Erin Raese | Loyalty360

Conference Highlights


4 Reasons Your Brand Needs SOCIAL MEDIA Customer Service
Todd Spear | Freelance Blogger

Customer Intimacy
Loyalty Management FOURTH QUARTER 2013


6 in 10 business leaders need relationship help.

s 2013 wanes toward completion where does the time go?! its time to reect on a truly amazing and resurgent year. Brands laser-focus on the customer supersedes all other strategic initiatives.

My personal favorite is the renewed focus on the customer experience aha! How did we ever lose sight of the importance of unique, personal experiences when working to build long-term relationships with our customers - or with anyone frankly?!

We were fortunate to explore the how-tos of building these experiences at the Engagement & Experience Expo in November. Led by the estimable J.D. (Dave) Power, we learned that guessing doesnt work; you need to really listen to your customer. You need to ask the hard questions and be open to the answers you receive. Following J.D. Power was Jamie Warren, CMO for Iron Tribe Fitness - by some standards a small, yet strong and fast-growing organization driven by a customercentric mission: Helping you (customer) become a better, stronger person. We share the fascinating Iron Tribe story with you on pages 22-24. A special thank you to all who participated in the event, for sharing their stories, and networking. In this issue we share stories of how other brands successfully elevated their respective customer experiences. On pages 42-44 read how Sephora stepped up its customer-centricity by focusing on its best customers, giving them extra special benets and opportunities. On pages 26-27 learn about Orbitz and how its taking the travel industry by storm - bringing its customers what theyve asked for (among other things)- immediate gratication! Who doesnt want that! Whats more, throughout the issue we take a look forward. What have we learned in 2013 that will help us be bigger, better, and stronger in 2014? Loyalty360 CEO/ CMO Mark Johnson shares his predictions/trends for 2014 on pages 14- 15. Moving into 2014, Loyalty360 will be working to enhance our customers experiences as well. Be on the lookout for enhanced website functionality, more stories from your favorite brands, plus well be tracking these brands through their journeys, sharing their ups and downs, their milestones, and next moves. Were also launching the Loyalty360 Awards. Weve heard from many of you over the years that youd like to be recognized for the work youre doing - recognized in an unbiased fashion by the marketplace and your peers. Learn more about the inaugural Loyalty 360 Awards on page 7. If you have any questions, dont hesitate to contact me: erinraese@loyalty360. org. Winners of the rst-ever Loyalty360 Awards will be announced on March 17th at the Loyalty Expo in Orlando, Florida. Cheers! Erin

Discover the 5 keys to building successful customer relationships in our latest executive report.

Download the free study merkleinc.com/crmstudy

Erin Raese Editor-in-Chief Loyalty Management

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A4R4 BigDoor BrandIntegrity Brierley + Partners Conrmit Hanin Loyalty


Hawkeye Hilton Proviner Suite Seven Symphony EYC Truth In Loyalty

Loyalty Management LOYALTY360.ORG

In this Issue...


36  Creating an Appetite for Loyalty Milen Mahadevan | dunnhumbyUSA 40  EU eBay Stays on Top of Customer-centric Model Jim Tierney | Loyalty360 42  Beauty Resonates With Sephora Clients Jim Tierney | Loyalty360 46  Luxury Rewards Build Millennials Loyalty Kristen McGowan | Rymax Marketing Services


48  Big Data in 2014: From Collecting All the Data You Can to Collecting Only the Data You Need Evan Makela 52  What Airlines Can Teach Marketers about the Potential of Tiered Loyalty Programs David Andreadakis | Kobie Marketing 54  Retailer Loyalty: Bring on the Big Data! Margaret M. Lewis | Catapult 56  Making Health Cares Customer-rst Vision a Reality Kristen Vennum | Ernst & Young LLP


EU eBay Stays on Top of Customer-centric Model

Beauty Resonates With Sephora Clients Retailer Loyalty: Bring on the Big Data!


Loyalty Management Editorial & Production Team

Erin Raese - Editor in Chief Mark Johnson - Contributing Editor Christopher Schatzman - Design Director Jim Tierney - Senior Writer Crescent Printing Company - Print Production

Article Submissions & Advertising: Erin Raese erinraese@loyalty360.org or 513.800.0360, ext. 210

54 7

2013 Loyalty360, Inc. and/or its Afliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Loyalty 360 disclaims all warranties as to the accuracy, completeness or adequacy of such information. The opinions shared are those of the contributing authors and not necessarily reective of Loyalty 360 and/ or its afliates. Loyalty360 shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

Loyalty Management FOURTH QUARTER 2013


A passionate group of loyalty marketing professionals convened in November at the Westin Galleria in Dallas, TX for the 2013 Engagement & Experience Expo, powered by Loyalty360. Loyalty360.org features coverage of the sessions, with key takeaways from presentations by industry leaders such as Tracy Altman of Wholly Guacamole, Jamie Warren of Iron Tribe Fitness and Jonathan Pettus of Hilton Worldwide. Plus, Loyalty360 members have access to videos of the presentations!


Recent research papers from our members cover cutting edge topics, providing real, actionable insights and advice to incorporate into your loyalty strategy. Be sure to check out Provenirs paper on guidelines for social engagement and a report from SAS on how to cultivate customer relationships. Learn from marketers from brands such as GILT and Luxottica who share in video interviews some of their unique approaches to loyalty marketing that have led to success.


Loyalty360s Industry Brief series continues with a thoughtprovoking paper on Content. Download the brief at Loyalty360.org to hear how industry leaders are approaching Content in a way that drives revenue and encourages customer loyalty. This rst-of-itskind Industry Brief for Loyalty360 also includes research on the budgets, metrics and objectives associated with content marketing, as reported by the marketers who are in the trenches.

Loyalty Management LOYALTY360.ORG

Whats New


WHAT ARE THE LOYALTY360 AWARDS? Loyalty360 is excited to announce the inaugural Loyalty360 Awards - an annual celebration of loyalty marketing! By scoring loyalty programs across a series of six categories, the Loyalty360 Awards will rank loyalty programs in an objective and unbiased way. The Loyalty 360 Awards will recognize innovations that are truly advancing customer loyalty. WHO SHOULD ENTER? Any company with a strong customer loyalty strategy is encouraged to enter. We are accepting nominations from all industries and companies of all sizes, operating in North America. WHY SHOULD YOU ENTER? The Loyalty360 Awards are an unbiased ranking to showcase proven success in creating customer loyalty. Marketers can gain industry recognition as accomplished leaders in overall customer loyalty and/ or within categories that impact customer loyalty. The Loyalty360 Awards will be awarded during a luncheon on March 17, 2014 during Loyalty Expo 2014, taking place at The Hyatt Regency Grand Cypress in Orlando, FL.



Loyalty360 Awards

The 360 Degree Loyalty Award will rank each entrant based on a summation of scores for each of six categories that impact loyalty. The winner of the 360 Degree Loyalty Award will have the highest total score. To achieve a truly objective and unbiased ranking, judges will score entrants performance in each of the six categories on a scale of 1 to 10; the categories are Reward Program, Customer Experience, Customer Engagement, Use of Technology in Loyalty Marketing, Creative Campaign in Loyalty Marketing, Use of Customer Insights/ Voice of the Customer in Loyalty Marketing. HOW DO YOU ENTER? Please visit www.loyalty360.org to enter. The call for entries starts on December 1, 2013 and closes on January 19, 2014.

Thank You everyone and, thanks for attending.

Engagement & Experience Expo 2013 Sponsors & Exhibitors

Loyalty Management FOURTH QUARTER 2013


Marketing Your Corporate Social Responsibility Initiatives:

In a recently-released Industry Brief on Corporate Social Responsibility (CSR), Loyalty360 examined the intricacies and implications of marketing your companys socially responsible initiatives. We found evidence that if companies arent marketing their Corporate Social Responsibility efforts, they may be missing out on a big opportunity. Not only did the Loyalty360 members we surveyed say that socially responsible efforts should be marketed, but our Twitter community says they are likely to be more loyal and spend more money with a brand that they know is giving back to society. More than two-thirds of people who responded to us on Twitter said they are likely to be more loyal and spend more money with a brand that is socially responsible.

We asked our members:

Should CSR be marketed or should it be a subtle brand equity play?

It would be a risky situation for a brand to have CSR as key component of its brand perception if, in fact, its actual performance is not that strong. On the other hand, it would be a missed opportunity to perform well in CSR and not leverage it to build your brand. To minimize reputational risks and optimize value, brands should aim for an alignment between their CSR performance and its contribution to the brand perception. If you perform well in CSR market it! If you market too much and you have a poor performance be careful, you may be greenwashing - which will only increase your reputational risks!

-Anne-Josee Laquerre, Director Social Purpose, AIMIA

Leading by example and offering success models are at the heart of Corporate Social Responsibility.
If a companys CSR program is authentic and seamlessly integrated into their culture and brand, the marketing of that program should be a natural extension. Consumers and employees want to be a part of something bigger and associate with companies who really care. The authenticity around how a brand shares their story can eliminate the common fear that marketing a CSR program will be seen as bragging. Typically a companys CSR program fundamentally focuses on philanthropy. However, marketing a CSR program is fundamentally about customers. Smart marketers will use these marketing efforts as a way to help customers participate in philanthropy and as an extension of their brand platform where they can share their CSR narrative. The research and experience weve gained from brands we work with has validated this approach. PlanG was built to address the challenges of easily and authentically enabling customers to participate in a brands philanthropic mindset.

-Marti Beller, EVP Product Marketing, PlanG

It can be a tough decision for a brand whether or not to market CSR efforts. I think if done properly, however, there is no reason not to market a brands efforts. Obviously, help during disaster relief is much needed, but as an ongoing effort everyday giving is just as important to causes and the people that give. So effective marketing and consumer engagement are important, but brand equity can increase through advocacy and word-of-mouth created by consumers that are engaged in the giving experience that is enabled through your program.

Download the full Industry Brief at: www.loyalty360.org

-Mark Dority, Director of Marketing, Kula Causes

Marketing is denitely required for large conglomerates (like GE) who need to make it clear that they are good corporate citizens through highly visible means, if their customers are ever to connect their products to social responsibility. Companies (like McDonalds) with products that will never be considered socially responsible need to make consumers aware of their efforts to at least mitigate the least palatable social impacts of their business. And companies with products that have little obvious connection to social or environmental issues may need to market heavily their CSR investments for them to be noticed or appreciated. Microsoft has invested for years in philanthropic efforts because, unlike a coffee company for example, little can be done to subtly align product positioning, packaging, or user experience with customers social values. -Marc Steiner, Principal, Lenati

Leading by example and offering success models are at the heart of Corporate Social Responsibility. Good news stories hold a lot of power as they inspire a ripple effect of social and environmental change, which is much needed. Care must be taken to ensure that celebrating great work is not confused with business development or advertising, rather the good works must remain altruistic and genuine. -Scott Robinson, Senior Director of Loyalty Consulting & Solutions, Maritz

We asked our Twitter community: Are you more loyal to a brand that is socially responsible?
Loyalty360 on Twitter

Sure! Yes, I am. Giving back to society gives us more satisfaction and solidies values. - @ariadnaecosoc Yes i am more likely to be loyal as i believe that this brand is not only about making prot but about offering services. - @arte_italiana: It depends on the Brand...some brands I am loyal to simply because they give back to society, while others I am loyal to because of quality. - @auraatelier Yes. Brands that give back become human and come down to my consumer level to reveal that there are people and hearts behind that name - @gabrielleshirdn A brand that gives back to society is always worth loyalty. Providing it continues to give back and not just use giving while it is growing - @jhmltd

Absolutely. While its not the only factor it may sway my choice. Especially if the competition doesnt. - @katrinajaye Yes because it creates a relationship with the society which can be both benecial for the company for the brand and the society - @mellyrochellece Yes! It is so important to not only serve as a business to make the world a better place but to do what you can in the community as well - @onward_ms Yea because it shows social responsibility and that they care about the environment. Nowadays thats the best way to do business. - @vrodriguez219 If the company gives back to the society and keep the quality and price of course, I will continue being loyal. - @xtrategika

Loyalty Management FOURTH QUARTER 2013



s President of Connexions Loyalty, Scott Lazear is responsible for the overall growth and strategic direction of the organization, including the product roadmap, global expansion and core business relationships. Scott joined the company in 1991 and has over two decades of experience in loyalty and customer engagement solutions. In 1994, he developed the strategy of launching points based programs to the nancial industry. Before being named president of the loyalty division in 2010, Scott held senior positions in sales, marketing and account management. Throughout Scotts tenure, he has worked with the membership and insurance divisions driving the groups sales strategies to grow revenue throughout the organization.

WHAT DO YOU SEE AS THE NEXT BIG TREND IN CUSTOMER ENGAGEMENT AND LOYALTY? The new mantra is Every Customer Experience Matters. In the old paradigm, 95 percent was an acceptable target, but in our age of hyper-connectivity, that expectation has become 100 percent. Every interaction or customer touch point is a part of the overall experience, and to be memorable and engaging, perfection is expected. Through technological advances to drive continuous availability, the evolution of our e-commerce sites, and the improvement of our contact center training and management tools, we are working hard to meet that goal. The artifact or end product may be forgotten over time, but the experience lasts forever.

WHAT IS THE BIGGEST CHALLENGE YOU ARE CURRENTLY LOOKING TO SOLVE? In our multi-screen world, its common for customers to simultaneously interact with a smart phone, a desktop, a tablet, and a television. We are working to understand how consumers engage and behave using their different screens.

Focus on what gets you up in the morning instead of what keeps you up at night.
WHAT MARKETING INNOVATION DO YOU WISH YOU HAD COME UP WITH FIRST? I like to call it the elegant invasion of privacy. Social networking companies like Facebook are able to get their customers to happily share details of their lives to create more personalized experiences. WHAT TREND OR TECHNOLOGY SHOULD MARKETERS EXPIRE AS A FAD OF THE PAST? The VRU or Voice Response Unit. We are in an age that demands real customer service. When polled, most folks say they would be willing to pay a few dollars more to speak with a live person. As marketers, we need to be more creative in how we service customers. WHAT DO YOU BELIEVE IS KEY IN DRIVING TRUE CUSTOMER LOYALTY? The key to driving true customer loyalty is advocacy, and sometimes thats hard to measure. While delivering a great experience may not always have a direct nancial return that can be entered into a spreadsheet, the WOM (Word of Mouth) factor, social referral/ inuence factor, ACSI (American Customer Satisfaction Index) or NPS (Net Promoter Score) factors are very important in measuring success and loyalty. WHO HAS HAD THE GREATEST INFLUENCE ON YOUR CAREER? It is a traditional answer my Dad. He instilled in me a strong work ethic. He stressed the importance of being passionate about what you do and working with bright, motivated people. He urged me to understand and weigh many different perspectives before making a decision. When I was growing up, he shared his work stories. I remember knowing I was destined for the business world. He had some of his best work ideas when he was relaxed and focused on something he loved outside of work. He taught me the importance of pursuing my passions. WHAT IS YOUR PERSONAL MOTTO? Focus on what gets you up in the morning instead of what keeps you up at night. WHAT PROFESSION OTHER THAN YOUR OWN WOULD YOU LIKE TO ATTEMPT? I would love to run a sports team/organization. It wouldnt matter which sport. It would be awesome to be part of the strategy, planning and competition; to pursue a championship. WHO IS YOUR FAVORITE TEAM? Unfortunately, I have been a long- time Dallas Cowboy fan; it has denitely been a tough couple of decades. In terms of a favorite player, people would naturally think of Staubach, Aikman or Emmitt Smith, but mine has always been Darren Woodson. He was the defensive back for the Super Bowl team of the 90s. He directed his teammates into the right position and simply knew how to cover. WHICH BOOK(S) ARE YOU RECOMMENDING AND WHY? The 2020 Workplace, by Jeanne C. Meister & Karie Willyerd. By 2020 there will be ve different generations in the workforce, each with their own views and expectations. This book helps you understand their different needs and how to integrate them into your corporate culture. FAVORITE LEISURE ACTIVITY? Boating on Smith Mountain Lake with family and friends. FAVORITE MOVIE? Shawshank Redemption EARLY MORNING OR LATE NIGHT? Early morning WORDS OF ADVICE FOR THE NOVICE MARKETER? Choose and know your audience select your target market intelligently. L

This is our annual trends issue. As part of this issue were asking each contributor to share their 1 3 trends or predictions. Please share yours: Mobile wallets There has been a lot of talk and speculation about who will win the race in developing the mobile wallet. I contend that its really just your phone, and the apps are just pockets in your wallet.

Social loyalty The construct of being a member of a program is being challenged; brands should be listening to what is said about them and rewarding advocacy.

Loyalty Management FOURTH QUARTER 2013


M O T I VAT E . R E WA R D . C O N N E C T.
We know how to motivate your audience to take the profitable behaviors you desire. We provide the power to reward your audience with the rewards they want, when they want, creating loyalty for your brand. And, in the end,

cxloyalty.com 800.622.4863

we connect your brand to the lives of your audience, ensuring they choose you over the competition time and again.


Predictions for
Mark Johnson

Marketers in


2014 will be an interesting year for marketers and, unlike other prediction
pieces you may have read for next year, this one takes a slightly different tack.
Here are my eight predictions for marketers in 2014:
RELEVANCE WITH/FROM THE BRAND This is an idea that is quite simple, yet the challenge of being relevant is very difcult. We see Millennials buying fewer cars and spending less in traditional retail environments, but they are also more patient with some of the new technologies regarding how the brand may communicate with them. The challenge of relevancy is brands now have an array of technology and media by which to communicate to their consumers, yet their consumer is now more informed. We see automobile salesmen now taking the role of greeters within a number of large automobile dealerships, trying to set the proper tone for effective communication. Some brands have had the ability to create more relevance, but the challenge becomes how to funnel volumes of data and customer insights into actionable and personalized relationships. SIMPLICITY IN A COMPLEX WORLD With increasing complexity, there is an increase in stress on the individuals as well as participants. Brands will focus on the complexities of data, disparate technologies integration, and look at ways to simplify the engagement process for consumers and frontline employees. Organizations like Apple and Amazon succeed in creating simplicity and, in 2014, companies that can do that will succeed nancially. LISTENING AGAINST THE DIN OF THE CACOPHONY Many of the provisions I read about for 2014 talk about the challenge of data, of mobile, and of customer experience thereby increasing the complexity and potentially lessening the relevance of the opportunity with consumers. Weve spoken numerous times in the past about the challenges of listening to your customers. Now with an increase of social media, data-driven analytics, and insights, the opportunity to listen has never been greater. Yet brands continue to struggle with hearing what the consumers want from them and being able to match that expectation with relevant listening. Listening also is a challenge because brands may not necessarily like what they hear. But when brands start to truly listen is when they will be able to give credence to what their customers are really saying.

e all are conscious of the current economic environment and some of the uncertainty in the political environment and, therefore, these impacts will ow into the marketing and corporate environments. Yet 2014 has the opportunity to be a watershed year for marketers - given the fact that the importance of customer loyalty, customer experience, and customer engagement has never been greater, and because brands are interested in truly creating a unique paradigm with the consumer. We all have read about and are cognizant of the new consumer. The new consumer is educated, informed, and wants to engage with brands based on his or her terms and wants to have some control. I have a unique opportunity in my position at Loyalty 360 to really see the conuence of marketing that many may not see. We hear about the daily challenges for marketers who want to increase customer loyalty and forge unique relationships with their consumers. Yet these challenges and the ability to achieve this amid the inux of mobile, social, Facebook, and Twitter data along with other rapidly proliferating new media - has made the job of a marketer increasingly difcult.

...the challenge becomes how to funnel volumes of data and customer insights into actionable and personalized relationships.


Loyalty Management LOYALTY360.ORG

Now with an increase of social media, data-driven analytics, and insights, the opportunity to listen has never been greater.

THE CHALLENGE OF CONTENT Content will be critical for brands. In 2014, community-driven content will increase and brands should endeavor toward engaging content that is simple and relevant. They will accomplish this by listening to their audience, asking and understanding what content their customers want and are interested in, and making it relevant and actionable. THE NEW MODELS OF EXECUTION AND MEASUREMENT 2014 will be unique in a number of ways around measurement and execution. Brands now are measuring customer sentiment, customer loyalty, and customer engagement in the short and long term. The challenge of measurement will be there because there is a realization now that it should be very, very important for brands to understand the baseline customer behavior. The focus on short form nancials can also impact long-term institutional deciencies. We hear on a daily basis from brands that want to create more measurement and want to understand customers better. Being able to execute on the consumer behavior side and the content side will create a unique brand-customer relationship and should and will be an area of priority in 2014. KEEPING UP WITH THE JONESES (TECHNOLOGY) OR NOT SO MUCH We are all aware of this longstanding and popular phrase, yet how will it relate to brands, merchants, and retailers in 2014? The paradigm principles at work here and the ability to successfully integrate disparate technologies can lead to very effective insights on the consumer. But just because others are increasing exponentially their investment in technology doesnt mean that all brands will have the ability to do the same. The key will be for brands to make sure the technology they invest in helps to engender the customer relationship and that they have the staff and the ability to effectively execute these technologies.

A COMMITMENT TO LOYALTY, EXPERIENCE, AND ENGAGEMENT The most important thing weve seen in 2013 is a monumental shift toward the huge importance of customer loyalty, customer experience, and customer engagement. Brands realize that loyalty and commitment is needed from their consumers so those who focus on creating the experiences and the engagements -- both short- and long-term can help the company gain an immeasurable shift in the behavioral-based aspects of loyalty. Brands can succeed in creating loyalty by listening, understanding, and putting in place the processes that empower employees to help consumers and distinguish them from the laggards. A FOCUS ON THE EMPLOYEE? 2014 will be the Year of the Employee. Brands will focus on their employees more than ever to create an internal culture that permeates externally to their customers and all touch points. Happy employees perform better for the customers and their brands. Brands that are able to understand their employees and empower them to cultivate meaningful relationships with customers will be ahead of the pack. The brands that succeed with their employees in 2014 will succeed with their consumers as well. L

Mark Johnson is CEO & CMO of Loyalty 360. He has significant experience in selling, designing and administering prepaid, loyalty/CRM programs, as well as data-driven marketing communication programs.

Loyalty Management FOURTH QUARTER 2013



The majority of U.S. Adults consider themselves condent or expert online shoppers (72%)1

Digital Customer Experiences

...but most also say that comp anies nee to improv d e integrati on of online wit h in-store and mobile sh opping experienc es (50%) 2

The Majority Has Spoken On


...but most companies arent yet engaging with customers at scale on social networks before, during or after a sale (74%)4

The majority of U.S. Adults use social networking sites (72%)3

The majority of U.S. Adults are very receptive to having personalized online shopping experiences based on transactional and behavioral data (51%)2


...but most companies havent ye t fully deployed consistent messaging and brand ing across online and ofine channels (63%) 4

...but most companies havent fully deployed making personalized information or targeted offers available online (72%)4

The majority of multichannel shoppers (58%) spend more with their favorite retailers since they started shopping on multiple channels5

1. http://www.pwc.com/en_us/us/retail-consumer/publications/assets/pwc-us- multichannel-shopping-survey.pdf 2. http://www.accenture.com/us-en/Pages/insight-shopper-preferences.aspx 3. http://pewinternet.org/~/media//Files/Reports/2013/PIP_Social_network ing_sites_update.pdf 4. http://www.mckinsey.com/insights/business_technology/bullish_on_digi tal_mckinsey_global_survey_results 5. http://www.pwc.com/en_US/us/retail-consumer/publications/assets/pwc- multi-channel-shopper-survey.pdf


Loyalty Management LOYALTY360.ORG

The Reward Experience is a Direct Reection of Your Program and Your Brand
Create remarkable reward experiences that deepen the relationship with your brand. At Maritz, our reward approach is designed to build emotional connections with people the people in your program. How we select your rewards, display them, promote them and fulll them thats all carefully orchestrated based on a deep understanding of what For more information | 1-877-4MARITZ | excites, inspires and motivates people. With over 100 years of experience in the United States, and over 20 years of experience across the globe, Maritz will help you delight your program members. Deliver a personal, positive and memorable reward experience each and every time to grow a lasting relationship with the people you count on. info@maritz.com | www.maritzmotivation.com



Ask the Experts:

The value of data may not be easy to identify in a single source, rather the insights and capabilities that can be gained when sources are used together.
Collect everything! Valuable data can come from anywhere regardless of source, structure, or format. The smartest organizations work to capture every customer interaction, and leverage data experts to identify and extract the valuable pieces into permanent data structures. The value of data may not be easy to identify in a single source, rather the insights and capabilities that can be gained when sources are used together. The second piece of advice I can give is to invest in analytics expertise before you invest in technology. Learn what is important before you invest in database technology, cloud solutions and applications. Good data scientists can make even the most disparate data sources talk to each other. Our companys expertise has its heritage of over 20 years of data analysis and sophisticated statistical modelling and predictive sciences. This experience means we are able to quickly discern the numerous possibilities of raw data use, as well as utilize proven tools and insights to identify the value of information.

Marketers are tasked to be more data centric than ever before, yet the challenge of creating actionable insight from data is more challenging than before. Advice for marketers?

Brad Rukstales President & CEO | Truth in Loyalty

Getting great nancial value from your data is an on-going process that allows you to get more and more personalized and targeted over time. Data leverage requires a strategy to consume meaningful insights, a willingness to test new and different execution strategies and the ability to demonstrate meaningful ROI on executed strategies. The best approach is to start with initial analysis that produces larger customer segments and create targeted messages that will deliver quick wins. I suggest creating customer segments based on value, frequency and lifecycle status. Continue gaining value by layering in specic purchase patterns to create rened target groups. Increase

your offer relevancy for each segment. Further rene targets with customer channel use or preference, cadence and other customer attributes within your data. Overtime your ability to leverage data to become more and more targeted will increase and enable you to deliver improved marketing ROI every step of the way.

Connie Hill President | VeraCentra


Loyalty Management LOYALTY360.ORG

Big data offers both the biggest challenges and the biggest opportunities for marketers since the emergence of the UPC code. We now have more data on what our customers what, when they want it and how they want to be told about it than ever before. And theres more to come. Lots more. However, these insights and opportunities become incredibly daunting when you dont know where and how to start. The task is made more challenging by the fragmentation of data, analytics, marketing execution system and communication channel solution options. My advice to marketers would be 3 fold: 1. Start Small and Go for the Low Fruit Theres low hanging fruit in every company. Develop a variety of use cases you think make sense for your business. Develop a clear sense of the opportunities, returns and costs associated with each use case. Then develop a digestible roadmap that can be sold to the organization. 2. Find a Trusted Partner with a Shared View There are big promises with big data, but also big pitfalls. Dont try to learn how to leverage big data from scratch. It takes too much time that you dont have.You should leverage learnings from advisors that have been down the path before and have strong reference cases. Not every solution provider is right for your vision and objectives. Pick someone who is fast, reliable and thinks about the opportunities and problems the same way you do. 3. Make Sure Your Solution Is Fast and Flexible You must drive rapid speed to value including:

Fast Deployment Most traditional data warehousing approaches take 12-15 months or more to deploy. Ensure you can develop a 3D view of your customer in 3-6 months. Rapid Access to New Data Sources Youll be able to harness many data sources including loyalty, CRM, call center, eCommerce, clickstream and a myriad of social media data sources. Make sure your data model is exible. Make sure you can add new data in hours and minutes not days and weeks. Improve Your Analytics Productivity by 5x Change the Data Preparation and Analytics Paradigm. Your analysts spend far too much time preparing big data for analytic routines. Make sure your solution inverts the data preparation analytics paradigm ensuring data preparation is minimized and analytic time is maximized. Get Business Users Involved Quickly Ensure your business users can leverage customer analytics in their day to day use create smart practical use cases and drive real data intimacy. Ensure you can Accommodate New Solutions We are witnessing a rapid proliferation of new data sources, new analytic tools and analytic approaches, smarter marketing execution systems and real time communication. Make sure your architectural solution incorporates the right connectors. You do not want your solution obsoleted.

Mike Blyth COO | Aginity


Top of Mind for SCENE

Shawn Bloom, General Manager for the SCENE loyalty program movie rewards program, told Loyalty 360 that mobile customer engagement is top of mind for his company. your email address, and updating your prole information. Bloom said the Cineplex app launched in December 2010 and SCENE has received a substantial number of members downloading membership cards onto their phones. The next step is giving members the option of opting out of plastic cards, Bloom explained. When members put their cards on their phones, it is linked with membership accounts. The opportunity going forward is sending messages that are relevant and targeted based on what we know about you and building out our communications. Bloom said SCENEs mobile focus is on Millennials. There is a high penetration of smartphones in this segment and its certainly something thats been well received, he said. For us, lets communicate to our members where they are on the device that they prefer to receive their messages, and make sure were leveraging the information we have on them. Mobile has become one of SCENEs largest channels from an acquisition perspective. We started to focus on mobile 18 months ago by looking beyond our walls, Bloom explained. The rst few years of the program focused on

Mobile Customer Engagement

Engaging customers is an ongoing quest for brands and for SCENE a Canadian-based entertainment loyalty program jointly owned and operated by Cineplex (Canadas largest national movie theater operator) and Scotiabank going mobile isnt just a classic tune from legendary British rock band, The Who.

Weve certainly embraced mobile as a platform to provide convenience for our members, Bloom said. The next level is to leverage mobile as a communications tool. We send mobileoptimized emails. The majority of our membership is viewing emails on their mobile devices. Cineplex is ranked 11th among Canadas Top 20 Mobile Brands, reaching 14.5% of Canadian Mobile subscribers in June Q2 2013. This mobile penetration rate is higher than the PC reach at 7.4%. The app allows customers to look up show times and book tickets. The SCENE card can be integrated on a customers phone so they dont have to remove a plastic card from their wallets, Bloom said. Its really just a matter of convenience for members. No one goes out without their phone anymore, but people forget their cards. Its really easy to use. The app allows a customer to sign up for SCENE and get a card loaded in a minute. If you join the program and get the card loaded on your phone, you receive 250 bonus points. From SCENEs perspective, Bloom said the company has tried to leverage mobile to make the program more convenient checking points balance on your phone, updating


Loyalty Management LOYALTY360.ORG

Bloom said the ongoing challenge to make the program more visible in the marketplace. We dont do any television, so for us our focus is digital, he said. We have partnered with Scotiabank and sometimes theyll do TV and radio. We focus on entertainment-based properties. SCENE recently reached a signicant milestone 5 million members.

Bloom expects more progress from mobile in the loyalty space. One of the issues is the legacy infrastructure at pointof-sale might be slowing down some companies, he said. Our theaters can read 3D barcodes - which isnt attempted in a lot of retail formats. Were kind of at the mercy of POS technology. Some will sit and wait until the POS software and hardware will allow them to get there with mobile. Bloom said that many loyalty programs are also trying to gure out how to apply gaming rules to their businesses. Weve been working on it as well, he said. For us, to inject fun in the program is consistent with our brand. If we can create opportunities that create some fun, it would be a great way to drive engagement. Bloom said SCENE offered an incentive called SCENEtourage, whereby members can form groups and if they go to movies together, they can all earn bonus points. Groups compete against other groups for prizes and it creates a competitive space, Bloom said. We have seen some good success in terms of getting people to go to movies together. We spend a lot of time working on our engagement lifecycle, making sure we keep our members happy and satised. L


Maritz & Loyalty360 Would Like to Congratulate SCENE on Reaching the 5 Million Member Milestone

Million 5

trafc. Now we started looking beyond four walls. We looked for ways to leverage digital media to drive new accounts. Were out there with digital ads with strong calls to action that take them back to our site. I dont think any of us expected to average 15,000-20,000 new members per week.

Its one of the largest programs in Canada and has surpassed our expectations, Bloom said. There is real value in SCENE because its a simple program to use and youre effectively getting a free movie for every 10 visits. Our debit card with ScotiaBank earns points with all transactions and has been very well received.

Loyalty Management FOURTH QUARTER 2013


Commitment, Engagement, Personalization and Loyalty

Lift Iron Tribe Members to Life-Changing Experiences

All brands could learn a thing or two about commitment, ongoing engagement, personalized experiences, a sense of community, and erce loyalty from Birmingham, AL-based Iron Tribe Fitness. South Birmingham, AL the name worked. Fast forward to the present and Iron Tribe Fitness has sold 53 franchise locations, in addition to six corporate gyms. Walden opened the rst Iron Tribe gym in 2010, and Cavale opened the companys second gym a year later. Memberships cost $250 per month -- $271 including products and fees. Each gym has ve full-time employees who lead scheduled group workouts. When I joined as a client, I was getting results and meeting people who were my friends, Cavale explains. When Cavale opened the second Iron Tribe Fitness gym, he and Walden wanted to see if it was scalable. My store was just as successful, Cavale said. Each Iron Tribe Fitness gym has a hard cap of 300 members. Many Iron Tribe gym managers, Cavale says, aspire to owning their own franchise. The engagement with clients goes beyond classes, Cavale says. Our attrition is very low less than 3% of clients leave on a monthly basis. Were getting them results and, in turn, theyre referring us to friends 75% of our clients come from referrals. Cavale says when people join an Iron Tribe gym, we want to know what their goals are and tell them stories of clients who had similar goals. The athletic range of members is considerable, Cavale says. There are people who join who havent been active in 20-30 yeas, he says. Beyond someones personal goals, age is big thing for us. We have an age span of members from six to 73. Ultimately, youre in a class with 20 people of different ages and capabilities. But the members who nish their workouts rst will help the other members nish theirs. Iron Tribe conducts personality tests for its coaches. We try to hire based on certain proles and its very intense, Cavale says. Were very introspective to see what your purpose is, what your values are, and what your personality wiring is like. Youre working 30-hour weeks and also doing administrative duties outside of class time. Every quarter there are promotion

Iron Tribe denes loyalty as clients behavioral choices that consistently keep them engaged with the brand and product in the face of competing, less expensive - and seemingly similar - options.

Iron Tribe COO Jim Cavale, who was one of the companys rst clients nearly four years ago, says there is a social currency at Iron Tribe that stems from a persons physical and mental transformation. It really translates into a cult and the members feel like theyre a part of this tribe in this community, Cavale says. In Birmingham, we hold four big events a year and there is that tribe aspect. The social currency is part of something bigger than yourself, and thats where the loyalty really comes in and they feel theyre getting way more than what theyre paying for. So just what is Iron Tribe Fitness and how did it begin? Four years ago, Iron Tribe Fitness founder/CEO Forrest Walden invited a group of close friends to work out in his small detached garage, according to Iron Tribe CMO Jamie Warren. The dozen or so athletes bonded closely as they got into amazing shape while having more fun with tness than ever before, Warren recalls. People would see them running up and down the street or performing unusual movements in the driveway. The group ate a certain way to support their tness regimen and wore special exercise apparel. While outsiders began to refer to the group as a ght club or a cult, Walden knew those words didnt accurately describe what was happening, Warren adds. It was more like a tribe - a small, socially tied community with a common culture, dialect, and a recognized leader, Warren says. They were lifting heavy metal weights - iron. But the group aspect of the workouts brought a heightened level of accountability, competition, and performance. The members of the group pushed each other. Iron is unique in that heat is created when struck by another piece of iron - it changes. Iron sharpening iron. And, considering that Iron Tribe Fitness was founded in the Iron or Steel City of the

Outside the four walls, each athlete has his or her own online prole dashboard on Iron Tribes site. Here, the athlete can register for classes, watch videos, read social sharing streams, track their performance and personal records, and much more. The same online dashboard has an iOS application used by over 50% of our members.

opportunities and were very intentional in creating a leadership process. We have weekly, monthly, and quarterly meetings to nd out how Iron Tribe relates to your personal life goals. Cavale explains that his company has attracted a few lawyers who wanted to become coaches at Iron Tribe. They enjoyed the experience so much that some decided to leave their legal careers behind. People are coming to us for the opportunity to coach and live out a purpose, Cavale says. Warren says that Iron Tribes biggest focus is on one word: commitment. You need to be committed, he says. Commitment is the No. 1 thing in Iron Tribe. It doesnt matter what your physical shape and limitations are. If youre not committed, we cant work with you. Weve had a very strong culture of feedback and accountability. Warren says Iron Tribe has conducted customer modeling, and can have 50-150 data points for each member. To achieve results, it requires constant engagement and they have to experience the brand and that community feel behind it three to ve times a week, Warren explains. We get feedback and rene our product based on members experiencing this. Members can check and see the next days workout on a custom app. Were keeping that touch point with them, Cavale says, that will keep them engaged. With technology, you can create your own media that only your own people are on. We communicate with members on a regular basis through that. Its a very powerful thing were trying to hone. Iron Tribe has sold 51 franchises, 18 of which are expected to open by the end of 2013. Eight franchises are currently

in operation, in addition to six corporate-owned clubs. New members must complete a class called Iron Tribe 101 which teaches all of the basic movements involved in the programming as well as the diet that will elicit the fastest and most efcient tness gains. This is a three-time-a-week class, for four weeks, and is a requirement for all beginners. Iron Tribes website says its sole purpose for being is to live a life of action by actively serving God, our families, our members and our community at large. Warren explains what differentiates Iron Tribe Fitness. Many tness clubs and gyms are built on volume business models that assume that a small percentage of the members will participate regularly, he says. In contrast, Iron Tribe limits its membership to only 300 people per location -- not 301. Its often said around Iron Tribe that anyone can do it, but not everyone will. Commitment is required because so few spots exist. All training is delivered in a group format with a 10:1 client-to-athlete ratio. Everyone performs the same workout each day and scales it for his or her own ability. Teaching and promoting healthy lifestyles and leading the industry with results-based tness is a mission for Iron Tribe. But, the members really are buying transformation. That change in their physical bodies echoes in several other areas of their lives. The community formed in an Iron Tribe gym is the major contributor to the loyalty of our members. Customer engagement is a massive topic for Iron Tribe, and common thread among its members. The workout experience in the gym is immersive and intense without the often-associated intimidation factor, Warren explains. Iron Tribe coaches genuinely care about the results of each athlete regardless of their history or ability. Athletes form tight
Continued on page 24

Loyalty Management FOURTH QUARTER 2013


Iron Tribe continued...

personal relationships with their coach and each other in this small group setting. Many of our athletes describe it like playing on a team again. There are point-of-purchase opportunities for a catered food program, snacks, supplements, and merchandise that helps drive the tness results and brand pride after the workouts are over. Outside the four walls, each athlete has his or her own online prole dashboard on Iron Tribes site. Here, the athlete can register for classes, watch videos, read social sharing streams, track their performance and personal records, and much more. The same online dashboard has an iOS application used by over 50% of our members. Ultimately, these innovations have been pooled together as Iron Tribes own media channels where we can consistently engage with our clients, and they continuously engage with one another. Iron Tribe denes loyalty as clients behavioral choices that consistently keep them engaged with the brand and product in the face of competing, less expensive - and seemingly similar - options. We track the percentage of new athletes that come from referrals which averages approximately 75% across our locations, Warren

says. We also work to keep monthly attrition numbers low which average 3% or less across our locations. There are also net promoter scores we track on our coaches, renewal percentages as well as the standard metrics of online engagement for our websites and iOS platforms. We observe loyalty in more abstract ways in the countless testimonials offered and socially shared by our member athletes as well as from merchandise sales and brand marks on vehicles. One of Iron Tribes main objectives is to serve clients with a personalized group tness experience at every Iron Tribe gym. This means that they have the benets of their communal tribe of fellow athletes, which provides them with everything from irreplaceable fellowship to motivating accountability, Warren explained. However, the personalized aspect comes from their rst-class Iron Tribe gym coach, who provides each client with the expert status of tness, nutrition, and life coaching needed to reach their goal of a total life transformation. L

XS Magazine print ad- CEO Love.pdf


3:52 PM


Changes in Travel,

Leads the Pack

Erin Raese
TIMES ARE A-CHANGING IN THE WORLD OF TRAVEL! AND ORBITZ IS LEADING THE PACK. Over the last year, weve seen many changes to all of our favorite travel loyalty programs; many of which were not too happy about. In October, Orbitz gave us travelers something to be excited about: Orbitz Rewards. Its not a program. Its the underlying Orbitz experience. Using Orbitz? You will be rewarded, right here, right now. The dynamic team at Orbitz, part high-tech, part traditional travel, has brought the best of both worlds to its customers. As expected, the tech side demanded a seamless experience throughout and across any channel; not expected were the expectations for a more traditional travel loyalty scheme. The travel side, having been there and done that for so many years, and knowing the challenges and pitfalls, lobbied for a unique approach: A strategy based on the voice of its customer. Through months of talking to, listening to and really watching its customers, the team at Orbitz learned the following: ITS CUSTOMERS ARE FED UP WITH TRADITIONAL LOYALTY PROGRAMS FOR A NUMBER OF REASONS: Often difcult to understand the true value proposition Challenging to actually redeem Takes too long to earn enough points/miles to redeem

ITS CUSTOMERS KNOW WHAT THEY WANT: They like the idea of being rewarded and said that theyd frequent/purchase more with a loyalty program They want the program to be easy to get involved in, easy to remember, easy to use They dont want to guess at which redemption item has the best value They want immediate gratication or at least close to immediate They want to purchase, earn and redeem through any channel they prefer


Loyalty Management LOYALTY360.ORG

In October, Orbitz gave us travelers something to be excited about: Orbitz Rewards. Its not a program. Its the underlying Orbitz experience. Using Orbitz? You will be rewarded, right here, right now.

ENTER ORBITZ REWARDS Ease of Use: Fully integrated throughout any Orbitz experience, Orbitz Rewards is there to give each customer a chance to earn or redeem (Orbucks) with every purchase. While there are many ways to earn Orbucks, there is no need for a customer to remember values, options, etc. With every option the customer selects, Orbitz Rewards is there calculating that customers earnings or savings. Transparent Value: The Orbitz Rewards program allows customers to earn a percentage of Orbucks for every booking - $1 equals 1 Orbuck. If a customer earns 3% on a $500 booking, the customer earns $15 in Orbucks. Instant (or close to instant 3 milliseconds) Gratication: The customer who earned that $15 can immediately use that $15 as a discount on their next hotel booking. Any Channel: Customers can purchase and earn through every channel. Plus when booking via mobile, customers receive even more Orbucks. Also, via mobile, customers can see the Orbucks in their accounts. They can apply their Orbucks immediately, reducing the room cost automatically. Like many brands, the Orbitz team struggled with the value proposition for the program. Was a base offering of 1% enough to get people (customers) excited? Was it enough to drive incremental purchases? Orbitz ofcials tested it - Orbitz Rewards was available to a small group of customers for six months prior to the ofcial launch. During that time, the team tested messaging and offers, and then they watched. They saw customers signicantly change their behavior. A customer

who only purchased air before the program was now purchasing hotel stays with their air, plus stand-alone hotel stays. Orbitz ofcials saw this behavior change across many different types of customers. A signicant advantage of a 1% base offering is the ability to add on. Orbitz Rewards takes the add-on concept to new levels. Customers earn more when booking hotels and they earn more when booking via a mobile device. Plus, Orbitz Rewards offers special promotions that are stackable with the existing infrastructure. Whats more, there are bonuses when you refer friends and when you attain VIP status. And if thats not good enough, you can also double dip. With every booking, you can still earn points and miles with the travel programs youre enrolled in. Making this even easier for the customer, Orbitz Rewards will be fully integrated into the Google Wallet app for both Android and iOS, which allows users to browse loyalty programs and join them right away from the Google Wallet app as well as manage all of their existing loyalty programs from a single app. After meeting with Orbitz, I had to try it out. The verdict? It is everything they promised! Orbitz Rewards was with me every step of the process. I didnt register prior to making my booking. After booking, there was a link to register. I clicked the link, expecting to have to ll out some information. Much to my surprise and delight, there was no information to ll out. Just clicking the link registered me into Orbitz Rewards and I earned my $12 Orbucks instantly! L

Loyalty360 Would Like to Congratulate ORBITZ on Reaching the 1 Million Member Milestone

Orbitz Rewards reached 1 million members within 1 month of launch. To celebrate Orbitz is giving travelers "Bags of Swag" with over 100 travel prizes. Play Bags of Swag now through December 15 and access complete game rules at www.orbitz.com/bagsofswag.

Loyalty Management FOURTH QUARTER 2013



Customer Service
Todd Spear
Journalist & Freelance Blogger

4 Reasons Your Brand Needs

Social media customer service isnt exactly a new idea, but it is something that many companies are starting to seriously utilize. More importantly, its something customers are starting to expect. Keenly aware that most of the brands they do business with have a social media presence, customers are turning to places like Twitter and Facebook to get direct responses to their questions and concerns - especially, weve found, for technical support. Though it ostensibly started as an extension of marketing, social media engagement has naturally become a customer service hub.

he constant connectivity of social media inspires an almost implicit expectation that, if you have a question, someone will respond to it. Customers are watching social media feeds in real time, leading them to logically conclude that, should they need to ask something, they should get a response in real time. Thats not always the case (or even possible.) But brands are getting there, with recent studies tracking social media customer service response time. You can bet that if its a metric worth tracking, its a method worth tweaking for better results.

Twitter search box and youll instantly be hit with brands that have dedicated customer support Twitter accounts. Twitter itself has such a page, as does Activision, Nike, and Verizon, among many others. If youve got customer service representatives clocked-in and online, why not have them multitask a bit by monitoring your social media accounts? If youre a small-to-medium business, you can probably forgo the dedicated support page (as we do.) But if youre getting bombarded with customer service inquiries via social media, its something to think about. Either way, social media is frequently a support resource for your customers as much as it is a branding resource for your business. 2. SOCIAL MEDIA AS A DIGITAL BULLHORN If your business affects customers in real time events, departures, or ash sales you can use social media to broadcast changes, updates, or last-minute warnings. One brand that gets things right consistently, is JetBlue Airlines. In the wake of the unfortunate events at Los Angeles International Airport (LAX) on Nov. 1, 2013, JetBlue shifted all ights in and out of that airport to nearby Long Beach and tweeted about it. To JetBlues credit it also addressed the tragedy, using its Twitter account to acknowledge that all of their crew members were accounted for. Understandably confused passengers were given some instructions; and worried families were given reassurance, all because JetBlue successfully used social media as a bullhorn.

So, with our eyes on the future (as always), lets take a look at four reasons your brand should be rocking social media customer service.
1. SOCIAL MEDIA AS A SUPPORT RESOURCE Its a good idea to empower your customer service team to respond directly to questions that pop up on social media outlets. This can be your social media maven, so long as he or she has the right tools to accurately answer questions, or the ability to redirect the issue to someone who can answer the question. You would probably like your brand to be able to engage in the fun and lighthearted work of sharing via social media. That means keeping your main social media feeds free from behindthe-scenes customer service issues, which can sometimes be hard to do. Dont worry because theres a solution to that problem. Try typing the word support into the


Loyalty Management LOYALTY360.ORG

And thats a bullet that social media can help you dodge. No one necessarily expects you to reply instantaneously to every question, but come on, three days before they even start reading new emails? Get out! Social media is always on and response time matters - the shorter the response time, the better you look, not only to the customer doing the asking, but also all the prospective customers who might be taking note of the timestamps of your social media posts. ARE YOU USING SOCIAL MEDIA FOR CUSTOMER SERVICE EFFECTIVELY? One recent Australian-based study shows that the telecommunications industry (perhaps unsurprisingly) has the fastest social media customer service response time at around three minutes. Thats pretty fast. You dont have to be that fast, but another report tells us that 42% of social media users expect to get a response within an hour. That means that a lot of businesses have a long way to go. Want to get ahead of the competition? Check out how fast they respond to social media inquiries. If you can beat their response time, youve got a leg up on them. That being said, as more and more users ock to social media sites and start to ask questions of the brands they love, look for industry standards for social media customer service response time to adapt accordingly. Sooner - when it comes to social media response time - is much better than later. L

3. SOCIAL MEDIA = THE COMPLAINTS DEPARTMENT Are you monitoring the #hashtags associated with your brand? Dont know how? Theres an app or two (or 50) for that. What you might nd is that youre getting mentioned more than you realize - even in unofcial (read: vulgar) hashtags. You might want to start paying some attention to that, if youre not already. Youve probably noticed by now that some people out there only emerge to lodge a complaint, however colorfully they may be inclined to do so. This is where putting a nger on the pulse of social media pays off. You wont know whats being said, unless youre monitoring it. When nasty complaints do come through, its a breach of public relations protocol to delete the comments unless theyre particularly vulgar or inciting. You cant sponge the social media record. If you do, itll just bring the complainers back to complain some more about deleting their comments. Its best to deal with legitimate grievances as they come, and move on to greener pastures as soon as possible. Your feed will be ooded, once again, with love, soon enough. 4. SOCIAL MEDIA IS ALWAYS ON, SO ARE YOUR FANS Your customers are around the world. They dont like to be made to wait when they have a question. As a personal example, I was recently looking to buy an upgrade for a piece of software on my computer, the maker of which shall remain nameless. I own an older version that still qualies for upgrade pricing, according to the developers online store. When I tried to log in and buy the item with upgrade pricing, I was hit with a message that said, Additional purchase verication needed. Please contact support. Okay, so I mosey over to the support page. What do I discover? The customer service team only works from 1 p.m. to 6 p.m. Monday through Thursday. They have an email address, but emails are answered in the order they are received - during their normal business hours. Oh, and they have no social media support. It being a Thursday at the time, and me being itching to spend some money, their (lack of) real-time support cost them a sale. I spent more money on a competing product that was ready to go, right on the spot. If only theyd had a social media account!

Todd Spear is a freelance blogger and journalist. He helps media outlets and brands alike connect with their audiences. Hes a regular contributor to Anthill Online, the Quote Roller business proposal blog, and Naluda Magazine, among many other sites. You can connect with Todd via his website www.toddspear.net

1. More businesses will be thinking mobile rst. 2. Social media customer service will become the new standard. Look for brands to increasingly monitor, measure, and work to improve response time. 3. Facebooks popularity will continue to zzle as users ock to lighter, less perceptibly invasive platforms. But its still far from dead.

Loyalty Management FOURTH QUARTER 2013



AS GROUP DIRECTOR AND VICE PRESIDENT FOR SUCH A LARGE RETAILER, WHERE DO YOU FOCUS MOST OF YOUR TIME? WHERE DO YOU SEE THE GREATEST OPPORTUNITIES? At the moment most of my time is on creating the CRM team and building the capabilities we need to support our future CRM practices. IF YOU WERE GRANTED 3 WISHES TO HELP YOU REACH YOUR OBJECTIVES WHAT WOULD THEY BE? Recruit the right talent Create CRM Best Practices within the company and the industry Establish a diffused Customer Centric culture

WHAT TRENDS ARE YOU SEEING IN THE MARKETPLACE TODAY? Need for a 3D view of your customers Leveraging smarter analytics to drive conversion growth Driving true omnichannel engagement Lots of talk, but no real action on the Big Data front Shortage of analytical talent Real commitment to the mantra that the Customer is King

IF YOU COULD PICK ONLY ONE THING, WHAT DO YOU BELIEVE MOST INFLUENCES A GREAT CUSTOMER EXPERIENCE? Being fair, transparent and relevant. In Italy we dont believe in only one thing.

WHAT WAS YOUR LAST AH-HA CUSTOMER EXPERIENCE? WHAT MAKES THIS MEMORABLE? Amazon refunding a malfunctioning product no questions asked, almost a year after having used it, and after the manufacturer (Philips) had refused to honor the warranty: have since decided never to buy another Philips product, have quadrupled my Amazon purchasing rate. Nicola Saraceno serves as the CRM Group Director and VP for Luxotica Retail North America. His group is responsible for customer relationships, loyalty, and customer analytics. Prior to joining Luxottica, Nicola has worked for several years in the Media Industry (Sky Italia) where he contributed in standing up and developing their CRM and customer marketing and customer experience team. Earlier in his career, Nicola worked for the Boston Consulting Group where he focused on marketing projects for media, telco, and retail industries. Nicola holds an engineering degree from Politecnico di Milano and studies for his MBA at the Rotterdam School of Management and the University of Michigan.


Loyalty Management LOYALTY360.ORG

WHAT WOULD YOU LIKE TO SEE CHANGE IN THE MARKETS APPROACH TO EMPLOYEE EXPERIENCE, ENGAGEMENT AND LOYALTY? Committing to customer centricity, ensuring speed to value, faster best practices deployment, making sure senior management can relate to true metrics driven performance. WHAT IS YOUR PERSONAL MOTTO? Carpe Diem. Live as if you were to die tomorrow, learn as if you were to live forever.





WHO HAS HAD THE MOST INFLUENCE ON YOUR PROFESSIONAL LIFE, AND WHY? Too many to mention, too difcult to pick one, too personal to tell you.












* Inspired by James Lipton on Inside the Actors Studio we asked Nicola to share his quick re response to the questions originating from the French series, Bouillon de Culture hosted by Bernard Pivot.

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Loyalty Management FOURTH QUARTER 2013



Loyalty Innovation
Retention Science is the leader in Retention Marketing. Its Customer Proling Engine, a decision engine thatanalyzes the customer lifecycle and predicts the optimal time periodsand best course of actions to re-engage customers. Retention Science makes individually-tailored campaign recommendations on timingof engagement, promotional offers, and products to increase repeatpurchases. The company leverages data analytics to automatically design multi-channelretention marketing campaigns to help businesses maximize customerlifetime value and retention. More importantly, Customer Proling Engine aggregates massive data sets to improve its predictive models and algorithms. As the prediction accuracy increases, it adjustscampaign recommendations dynamically based on customer behavioral feedback. It noties businesses when their customers are likely to churn or unsubscribe, givingbusinesses the intelligence to proactively retain them. Based in Santa Monica CA, Retention Science was founded in 2011 by e-Commerce operators, Ph.Ddata scientists and statisticians. Our team brings years of expertisefrom Amazon, eBay, Nordstrom and AT&T. Our founders have received theprestigious E&Y Entrepreneur of the Year award and were named anInnovation Agent by Fast Company. Not only has Retention Science beenrecognized as a Top 10 New Big Data Company of the Year and a Top 10Software Company in Southern California by SocalTech, it has beenfeatured on Forbes, WallStreet Journal, Fox News, Los Angeles Times,Practical E-Commerce and CMO.com.

Products, Advancements & Technologies

Moblico is a mobile engagement and loyalty platform that combines cloud-based backend services for mobile developers and system integrators with content, communication and loyalty management tools for application marketers. We make it our mission to provide products and services that are best in class, easy to use, simple to manage and very affordable. Hundreds of customers and hundreds-of-thousands of users rely on Moblicos platform for one of the most comprehensive, scaled and robust suite of mobile support services available anywhere. A number of industries, from Sports and Entertainment, Media, Events,Retail/Franchise, Enterprise to Chambers of Commerce and Convention and Visitors Bureau are using Moblicos Mobile-Backend-as-aService to power websites, mobile websites, mobile native applications and other networked devices such as a in-venue LEDS. Moblicos marketing partners, including those in Consulting/Technology, Publishing, Events Management, Development, Retail and Agencies, have integrated their products and services with Moblicos platform to generate customer loyalty and new revenues for their organizations. Contact: Pierre Barbeau, CEO (913)219-4606 pierre@moblico.com / www.moblico.com

Symphony EYC, a global leader in delivering ROI for retailers and manufacturers using customer insights to drive execution, recently launched Symphony EYC Engage, a next generation targeting analytics and loyalty campaign management platform. Symphony EYC Engage enables retailers to engage the right customers at home, in store, at the checkout or on the go. With purchase history, preferences and interests centralized, the platform delivers a quick, cost-effective way to improve customer retention, increase frequency of purchase and ensure a single view of the retailer for each and every customer. The Symphony EYC Engage offering includes: Targeting analytics Sophisticated software tools help better understand and group customers for tighter segmentation and more effective offers. Congurable customer information management Flexible, customizable tools manage any customer information deemed important so that any or all information can be used for targeting. Real-time or asynchronous transaction processing and analysis All analysis, promotions, and loyalty rewards can be offered in real-time at any customer touch point, providing a seamless and uniform omni-channel customer experience. Broadening the loyalty experience through omni-channel communication Going beyond checkout-only or mailed loyalty rewards, Engage allows retailers to connect with their customer at any time through any communication channel, even while they are shopping. Reporting, analytics, visualization, and actioning tools In addition to tools to understand what is happening with customers, product, categories, brands, and stores, Engage also delivers visualizations coupled with tools to act on these insights in real-time.

SparkBase, Inc. a loyalty software and gift card platform recently launched its new app, LoyaltyOS, for ExactTarget HubExchange. LoyaltyOS enables marketers to reward customers for engaging with their brand across channels. LoyaltyOS leverages ExactTarget capabilities to deliver brand experiences to customers and reward them for engaging. Through the app, brands gain an integrated, omnichannel loyalty solution that increases email performance, collects customer data and drives purchase frequency. With LoyaltyOS, marketers may reward customers for engaging in the following ways: Completing a purchase Forwarding an email to a friend Updating a customer prole or preference center Liking the brand or sharing a post on social media Reviewing a product Playing a game Answering a survey

Zulde has developed a new integrated mobile marketing platform called TribeFind Pro that allows any business to create their own mobile app in minutes which is then instantly available for download by consumers. One very important aspect of the integrated marketing platform is its focus on loyalty. Now every business can have a loyalty program that runs on their customers phones rather than on cards that the customer must carry with them in order to use. Some of the benets of the TribeFind Pro mobile loyalty program are: 1) The consumer always has the loyalty program in their hand, making it easy to see their point balance and to accrue and spend points. 2) A consumer never loses their points like they lose physical cards, because the points are stored on the TribeFind cloud and are always available. 3) The TribeFind Pro mobile loyalty program includes automatic reminders which remind consumers of their points balance and encourages them to accrue and spend their points. 4) Another key aspect of the TribeFind integrated marketing platform is the built in electronic security. This helps to eliminate fraud associated with physical cards such as counterfeit punches or stamps. In addition to its robust mobile loyalty program, TribeFind Pro includes a customizable mobile app, mobile coupons, event notications, and customer referrals. The app itself, along with deals, events and notications can be created or changed using the self-service portal and pushed out instantly to consumers.

cVidya has launched Enrich, a marketing analytics solution aimed at helping mobile operators maximize revenue from existing services, improve customer acquisition and retention, and break into new markets. Enrichs goal is to provide a 360-degree view of cross-business key performance indicators, as well as packages of pre-modeled customer data analytics designed to address specic challenges faced by mobile operators. These include accelerating the penetration of data services and maximizing data revenue, improving customer acquisition and retention, managing LTE migration, optimizing price plans, and identifying opportunities for collaboration with third parties. The new solution also enables marketers to detect new business opportunities independently, identify undeserved customer segments, detect and address negative trends in customer behavior, and monitor the impact of marketing initiatives.


Trending NOW
Three out of ve mobile subscribers in the U.S. are smartphone users. Those consumers are becoming increasingly savvy about using smartphones to access content in a way that supports and enhances their shopping experiences, by accessing coupons, promotions, product research and price comparisons. Brands that tap into mobile as a channel to connect with customers can strengthen the customer experience and customer relationships.


Whos Leading the Way?

Swirl Networks Inc. CVS and Walgreens Outback Steakhouse


With the seemingly unending list of new technologies and platforms that are available for customers to use today, some CMOs are easily dismissive while others jump in with a new program before fully understanding the technology and its functionality. All marketers young and old, senior-executive and junior-staffer should think of themselves as technology explorers. Only by becoming fully-edged members of communities and users of technology can a brand realize what consumers expect from them in such a setting, and then design a program that reects that.

Sources to Learn from :

Mashable.com Techcruch.com Wired magazine and wired.com

A recent study by The Nielsen Company showed that consumers are willing to spend more money on brands that are socially conscious. Young people those under 30 are the most willing to increase share of wallet with socially conscious brands. Forward-thinking brands are breaking down barriers between employees and corporate foundations to engage employees, customers and integrate social causes into the brand promise. With buy-in from Millennials, this trend is not likely to go away.


Brands to Check Out:

Boeing LUSH Gap, Inc.


Loyalty Management LOYALTY360.ORG

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Creating an Appetite for

Milen Mahadevan
Loyalty programs are everywhere, making it a challenge to create a program that is unique, relevant, customer centric and able to gather data for keen customer insights. Customers demand more relevancy and exibility in any program being presented to them.

It is the age-old question: Whats for dinner? Restaurants want the answer to be their place.

Restaurants must demand more from their loyalty programs than just the ability to deliver incremental value to the business. The true power in loyalty programs for any retailer, restaurant or service provider is in collecting data longitudinally about what their customers are doing over time. Secondarily, the best loyalty programs collect contact information to create a communication channel to connect one-to-one with the customer. Food service organizations in particular face unique circumstances, including how to collect consumer information, behaviors and attitudes in a highly competitive environment, while not impacting the operations of the business or the day-to-day expectations of the customer. These organizations must use loyalty insights to deliver greater value to customers and inuence the operations of the business. Using an outside-in approach coupled with a well-designed and well-executed loyalty plan, food service organizations can create a customer-centric strategy: 1) Consumer perceptions. Using the dunnhumby Customer Centricity Index (CCI) retailers can gauge customers perceptions against seven pillars or primary business areas most critical for achieving long-term customer loyalty. 2) Retailer capabilities. Evaluating the CCI seven pillars against internal capabilities (both what the customers deem as valuable and what capabilities are strongest for the restaurant). 3) Customer behavior. Bridging the gap between consumer perceptions and an organizations internal capabilities by evaluating actual customer behavior will help food service retailers uncover meaningful insights that allow them to create a strategic roadmap for business growth and differentiation. Using this approach, food service operators can understand how a loyalty approach delivers value to the business and how a loyalty program can t into that construct. As a result, they can gain loyalty in one of the most difcult industries for differentiation.

Quite simply, they want loyalty.


Loyalty Management LOYALTY360.ORG

THE ART OF LISTENING Differentiation needs to go beyond good customer service or marketing; it requires a fully relevant and personalized customer experience. The rst-ever dunnhumby Customer Centricity Index investigated how well retailers are responding to their customers needs and wants using seven pillars of customer centricity: experience, loyalty, communications, feedback, assortment, promotions and price. The rst two pillars are fairly straight-forward: how does a customer view his/her experience at a restaurant and how is he/she rewarded for consistent business? According to the CCI, food service organizations must ensure the customer experience is easy, enjoyable and convenient and that a loyalty program is rewarding and recognizing customers in a consistent, meaningful way. Ongoing, two-way communication is the foundation of any good relationship. Accordingly, food service retailers must personalize the message based on what customers buy and in the medium they prefer. Additionally, they must be open to having dialogue with their customers and receiving feedback. Hearing and recognizing customer concerns can help create an emotional connection. Assortment and promotions, the fth and sixth pillar of the CCI, are about selectivity and choice. Strong-scoring businesses understand not only how variety plays a role in their customer experience, but how customer needs play a role. Rather than being able to have a salad its about healthy alternatives that are grab and go. Likewise, the high-scoring companies in the CCI are promoting the products that matter most to customers, not using a shotgun approach. Finally, food service retailers must provide prices that are perceived to be in line with what the customer is looking for on the products they purchase most often. High-scoring companies dont have to be the price leaders, but need to have the pricing customers perceive as fair and a good value. Outback Steakhouse was the top-scoring food service retailer, which received strong ratings in assortment and feedback, but truly stood apart from the rest of its competitors in its experience rating. Additionally, Outback Steakhouses CCI score for price was slightly higher than competitors with a similar or lower price point, which indicates that Outback customers perceive a stronger value for their purchases than at competitive restaurants.

LOOKING INWARD The next step in developing a customer-centric operation is evaluating how the organization is scoring against the seven CCI pillars. This assessment should be two-fold: 1) determining the pillars that are most important to customers to determine the most signicant opportunity areas for business; and, 2) reviewing the operations to determine areas of strength and improvement. First, understanding which pillars offer the most opportunity should set the stage for the internal evaluation. For example, an organization may rank high in communication, but nd that price and assortment are most important to its customers. Why is this important? Companies with a high customer-centricity score often have stronger sales growth over the long term. In a social world, opinions about their loyalty can drive sales with other potential customers. If a customer has a positive experience, they are likely to spread positive word of mouth that drives additional loyalty and nancial growth. The CCI underscored this point and found that experience attributes are most inuenced by the interaction customers have with store employees. For example, Outback Steakhouse servers are known as Outbackers and are trained to create a warm, inviting environment and treat customers like guests in their own home. By determining what pillars are important to customers, an organization can then evaluate its internal capabilities its data, infrastructure, training, technology, pricing, store locations and other components to determine how it is performing and what changes can or should be made.
Continued on page 38

Seven Pillars of Customer Centricity:

Experience Loyalty Communications Feedback Assortment Promotions Price

Loyalty Management FOURTH QUARTER 2013



Appetite for Loyalty continued...

REWARD ME FOR HOW I BEHAVE Before an organization makes changes, it must evaluate the third and arguably the most important component to creating an on-target, strategic plan: actual customer behavior. Heres where the organizations internal data really proves its worth. Customer behavior must be evaluated longitudinally to gain insight into how business and loyalty programs are being managed. Loyalty programs, in particular, give insight into a customers buying behavior. However, a loyalty card must be used consistently to provide this valuable data. This can be especially difcult in a fast food or even fast casual environment, where speed is often one of the key factors in the customer experience. Therefore, customers may be less inclined to use a loyalty card if it will slow down their experience; the reward must be worth the customers and the stores valuable time. One fast casual chain worked to overcome this obstacle by creating a program built on the premise of surprise and delight for the customer. Instead of a point-based reward system, customers learn that by continuously swiping their frequent buyer card, they randomly earn rewards tailored to their preferences. As a result, customers are motivated to swipe as frequently as possible, resulting in consistent data for the fast casual chain and rewards that are coveted by the customer.

DRIVING THE OVERALL CUSTOMER EXPERIENCE Food service loyalty programs are becoming increasingly innovative to differentiate themselves in an incredibly competitive and crowded environment. Using an outside-in approach to operations and customer centricity, restaurants can develop loyalty programs that best meet the needs of their organizations and their customers in the long term. By implementing a loyalty program that generates valuable customer data, delights customers and creates an ongoing communications channel, the program can deliver as much value as the investment to create it. L

Milen Mahadevan, Senior Vice President, Client Solutions, dunnhumbyUSA concentrates on shaping and driving dunnhumbyUSAs foundational capabilities, solutions and talent across the business. As head of Client Solutions and the Service Line organization, Milen is responsible for cultivating and expanding the companys solutions expertise, including data, insights, communications and media that provide comprehensive solutions strategies for dunnhumbyUSAs clients. Milen leverages an extensive understanding of dunnhumbys services and capabilities, including data management, analysis, pricing, promotion, communications and media, to add meaningful and relevant value to those client businesses. Milen has spent more than ten years with dunnhumby and frequently lends his expertise to trade organizations within the marketing space, speaking on dunnhumbys behalf at events such as the L.E.A.D. Marketing Conference, among others. He holds a Master of Engineering in Chemical Engineering and Bachelor of Engineering in Chemical Engineering from the Imperial College in London, England.


EU eBay

Jim Tierney

EU eBay Stays on Top of


For Eben Sermon, Director Relationship Marketing and Loyalty (EU) at eBay, maintaining and enhancing a companywide customer-centric focus is a daily and ongoing goal. Sermon says brands also need to stay on top of challenges associated with tracking mobile and social interactions, and using social data in an effective fashion.
Its a pretty customer-centric culture, Sermon says. We have a huge customer-centric focus in the company related to whats expected of every employee. We use outside/in research speaking to customers. Were strong on innovation and testing new boundaries with customers. The cultural piece is very important. With technology changing so rapidly, companies need to do their best to stay abreast of all of the countless possibilities out there. Its pretty overwhelming, Sermon says. We have teams that monitor the landscape and look at the emerging players in loyalty. The speed of change is just stunning. Large companies are desperately trying to innovate and startups are doing things on the edge that provide good experiences. You have to keep on top of it. Testing in various areas is critical, Sermon adds. We have already embarked on 30-40 new partnerships involving crowd-sourcing, video, display, and analytics, Sermon explains. My main advice for brands is to pick the areas you want to work in differentiation and you need a fairly decent proportion of your organizational focus here. Test new channels and partnerships and pick the ones you really care about. For us, its been about the customer experience offering customer control, and mobile investments. Content is another priority area for eBay, Sermon says. Were working harder to showcase our inventory through Facebook and Pinterest in more of a targeted, elegant way we think is relevant for them, he says. Weve worked pretty hard in a push and pull way with our content and your ability to pivot on that data and ex it in the way you want that helps guide us. We try to provide moments of inspiration with compelling content and wit user-generated crowdsourcing. With content, including social and mobile, the task of tracking can be a bit laborious to say the least. Tracking is a nightmare, Sermon says. We have spent hours and hours on tracking. We have highly engaged postings. I believe engagement rates are a good indicator that were doing the right thing and getting closer to more difcult tracking measurements like for mobile. Tracking generally on mobile and social has been extremely difcult. The challenge we nd is trying to attribute across that single purchase, and which part of that journey do you attribute

At the end of the day, customer-centricity means communication has to be thorough


Loyalty Management LOYALTY360.ORG

to what. Weve tried many, many methodologies to try and triangulate around a series of methods and get a better understanding of each channel. Its extremely tough. Sermon wants to measure the brand impact of social media to produce great editorial content. The ip side is getting tighter mechanisms proving ROI on those activities, Sermon says. I end up being pushed in both directions. Its super important to have your hand on the tether of day-to-day operating statistics regarding whether consumers are engaging with you more than with competitors. Sermon says eBay hatched an idea surrounding the future of shopping being data-led, but the customer is in control, receiving a personalized shopping experience anytime, anywhere, and however they want to shop. To that end, eBay launched Feed. With the launch of Feed, it gives a highly personalized shopping experience, Sermon explains. Everyone has an individualized home page and it gives us the ability to follow interests, people, places, trends. Its one of our most exciting things right now. Its a curated list of items that eBay thinks would interest a particular shopper. Whats more, eBay EU recently announced its relationship with Argos. For the U.K. market, its our rst step into a space where you can buy on eBay and pick up merchandise at an Argos store, Sermon says.

Ebay shoppers will be able to pick up items at local Argos stores in the U.K. It will initially be run as a six-month trial. Ebay will allow products from at least 40 eBay merchants to be picked up at about 150 Argos stores. Argos will have catalogs available for customers to select items, place orders, and pick up immediately from the stock. At the end of the day, customer-centricity means communication has to be thorough. You have to live up to it and the day-to-day experience when you get people hitting your pages or your apps, Sermon says. You have to live up to delivering that level of personalization that is compelling and intuitive that will drive more engagement. Brands not delivering on that I can see people unplugging from those experiences and stop engaging. We have a load of metrics that target great visits, more session time. Every experience is tested incredibly deeply. Then we do a fair amount of research with users whether it pertains to marketing, merchandising, or social to see if were enriching the overall experience. Regarding best practices, Sermon believes mobiles potential as immense. Mobile is a key thing, he says. We call out the importance of mobile incredibly clearly. The device piece is hugely important. The experiences are all really different. But they have to be tailored to a particular person to act in three minutes when they might be waiting for a bus. L

Loyalty Management FOURTH QUARTER 2013



Sephora Clients
EAUTY INSIDER launched in 2007 as a way of thanking clients with special products, exclusive events, and an all-access pass to personalized beauty. In 2009, Sephora launched V.I.B. [Very Important Beauty Insider], a premium level for Beauty Insiders giving clients access to exclusive gifts, event invitations, and early access to select products. Sarah Choi, VP of BEAUTY INSIDER, told Loyalty360 that she wanted to re-imagine the loyalty program for the next generation of BEAUTY INSIDER. When we started the BEAUTY INSIDER program, it was with the idea that women loved product and it was built around product,

Jim Tierney

Beauty is in the eye of the beholder, and for those passionate and loyal fans of cosmetics retailer Sephora, it has taken on new meaning in the form of the re-launched and revamped BEAUTY INSIDER loyalty program.

not promotion, Choi explains. No one in the industry was doing sampling in stores the way we were. It touched upon a consumer insight about passion for product. But Choi felt Sephora hadnt pushed the envelope with BEAUTY INSIDER. We feel like theres a lot happening and want to go back to the core of what she loves, Choi says. We want to focus on the creative look and feel of the program. We launched a third tier, which is huge for us, and we reworked the benets to truly differentiate our tiers.


Loyalty Management LOYALTY360.ORG


Resonates Beauty With

Lets take a look at the new, revamped BEAUTY INSIDER program that launched Aug. 12, 2013:

PREMIUM NEW MEMBERSHIP LEVEL - SEPHORA has added a new rewards level, VIB ROUGE, for the most fervent product junkies. The ultimate in bragging rights, this level is reserved for those who spend $1,000 or more in a calendar year and offers unparalleled insider access to one-of-a-kind experiences and rewards. The chic red VIB ROUGE card opens the door to private, limited-list events with brand founders and celebrities, advance access to new products, unlimited complimentary services at the SEPHORA Beauty Studio and a personal beauty concierge hotline. For more information, visit: Sephora.com/Rouge. ULTIMATE DIGITAL BEAUTY HEADQUARTERS - View the latest rewards and exclusive offers, check point balances and get access to members-only products and events at the new BEAUTY INSIDER digital hub, Sephora.com/BeautyInsider. Plus, keep track of past purchases and products you love, with the digital makeup bag, My Beauty Bag. REVAMPED REWARDS FOR ALL TIERS - BEAUTY INSIDER tiers and benets received a makeover. The program now features new ways to use your points, members-only beauty classes, rst access to the most coveted new products in beauty and more, plus all the benets members currently love - like the free birthday gift! BEAUTY INSIDER members earn a point for every dollar spent: They receive a deluxe sample for 100 points; a curated set for 500 points; and access to experiential events for 750 points.

What prompted the VIB Rouge tier? We listened to our clients, Choi says. We spent a ton of time with BEAUTY INSIDERS and what we heard loud and clear was there was a signicant opportunity to create a third tier to serve clients in a very different way, and drive a signicant part of our sales because these clients love Sephora. They know beauty really well. We wanted to be able to feed that obsession and that passion in a way we hadnt been feeding it through other tiers. Choi says Sephoras avid social users offer tons of feedback and are highly engaged. We saw this as a big opportunity to tailor to this group in a different way, she explains. Catering to Sephoras best clients was a big reason why the VIB Rouge tier launched, Choi says. We havent really capitalized fully on the potential of our best clients, she says. We want to make sure we differentiate those who are clearly our best clients. They love beauty and they love Sephora. Its just a matter of harnessing that and optimizing that relationship with them even further. It felt like an absolute no brainer to be able to do that.

Since the VIB Rouge tier was added, coupled with Sephoras efforts to offer comprehensive upgrades to the other tiers, it created a halo effect, Choi explains. All of a sudden, theres that level of intrigue, she explains. Overall, it feels like the right thing to do. Theyve done so much for Sephora and this has created a great halo effect on rest of the program. Whats more, Choi says BEAUTY INSIDER is using existing technologies and dialing up other burgeoning technologies such as Passbook and mobile. Our organization is digitally savvy and we are condently leveraging those technologies and touch points, she says. Choi says a monumental reason for the success of BEAUTY INSIDER is the corporate buy-in of the program adopting a culture that permeates from top to bottom.
Continued on page 44


SEPHORA continued...

Loyalty, Choi says, isnt a program, but a commitment a company makes about driving relationships and increasing that love, making sure were not staying status quo. At the end of the day, its all about that client touch point.
For the company itself, everything is Beauty Insider, VIBs, and Rouge clients, Choi says. Its part of the normal language. This has just been part of the DNA of the company. Its reinforced and the relaunch invigorated the whole organization. Its about everything we do in every aspect of how we think. Choi says the company has always done a good job of acquiring clients our stores do an amazing job of signing up clients but didnt do a good job of deepening those relationships. We truly want to maximize our engagement and wallet share with them, Choi says. We want it to become a no-brainer that Sephora is their choice for beauty. Loyalty, Choi says, isnt a program, but a commitment a company makes about driving relationships and increasing that love, making sure were not staying status quo. At the end of the day, its all about that client touch point. Choi refers to it as our stage and Sephoras employees as cast members because she says a true differentiator for BEAUTY INSIDER is the store associates high engagement levels. We make sure our store employees understand all of the program benets and that they recognize different clients in a special way, she says. That is a very big part of the program. How clients feel the program come alive is through interaction with store staff. Regarding client complaints, Choi says clients will call or write notes in Facebook. We have an amazing response team and they are able to address callouts quickly, Choi says. Our clients are very vocal. We do surveys regularly. We continuously get client feedback and were very, very client-focused. Internally, we are on Facebook and we pore through metrics and comments regularly. Its very important to us. If someone is vocal enough to complain, that means theyre highly passionate for the brand and you can turn that passion into something positive. Brand advocacy is a challenge for many companies. Choi believes it depends on the various business models used by companies. Category, product, and type of business model factor into brand advocacy and whether youre able to create this fanaticism, she says. Loyalty is a whole ecosystem that has to work together. Different facets need to be in motion together and synchronized. Beauty is a category and women are highly engaged. Our stores are very engaged through service levels and merchandising. Choi sees content and commerce going hand-in-hand. Were educating and servicing her, she says. Content goes hand-in-hand with the merchandise were trying to sell. Women love product, but they always want to be learning more about it. Were deepening that relationship and making it more authentic. L


Loyalty Management LOYALTY360.ORG


Millennials Loyalty
Kristen McGowan

Luxury Rewards Build

Rymax Marketing Services

illennials are different from the generations that came before. From their world outlook, the way they use technology, to the retail products they purchase, this generation is breaking all the traditional engagement rules and changing the way brands are garnering and keeping their loyalty. Powerful and demanding consumers, Millennials expect their favorite brands to have a loyalty program that provides personalized offers and in-demand luxury rewards.

Smart brands understand that to attract the coveted 18 32 year old demographic and keep them loyal for life, they must apply segmentation strategies to truly understand what drives this generation. REWARDS WITH TROPHY VALUE Often referred to as HENRYs (high-earning not rich yet), Millennials are earning higher starting salaries than their Gen X counterparts but spend their discretionary income on wants rather than needs, which for many brands is helping to drive their business. A combination of helicopter parents and a childhood spent receiving trophies for participation has led to an overinated sense of self worth. Millennials dont want a lower priced item such as a pen or t-shirt for signing up for a new loyalty program. They expect a high-end thank you gift with a perception of luxury such as a Michael Kors handbag. This generation believes luxury is synonymous with loyalty, and wants a brand such as Hearts on Fire to complete their image of success. Remember, rewards must be aspirational and fulll their need for immediate gratication. FASHION STATUS Millennials use fashion brands to communicate their success. In the incentives industry, we are seeing the rise of fashion category redemptions as Millennials redeem for the same handbags, watches, jewelry and sunglasses that their favorite celebrities wear, sell or endorse. Diving further, fashion also inuences technology as Millennials want to redeem for accessories in the hottest colors and styles to transport their electronics. They are the digital generation, wanting smarter electronics such as TVs, phones and tablets with embedded Wi-Fi and Bluetooth capabilities designed for their mobile and fashion forward lifestyle. With electronics ranking number one and apparel and accessories now second in terms of overall merchandise category redemptions, you can drive loyalty with Millennials by offering in-demand brands such as Skullcandy, Versace and Ferragamo. GIVE THEM WHAT THEY WANT In order to optimize Millennials participation in your loyalty program, its important to stay-up-todate on the latest trends and offer the rewards this generation truly wants. A bit of research into which products your program participants desire and how celebrities, social media and technology inuence their choices will help to keep your program top of mind. Familiarize yourself with whats trending in fashion and electronics to ensure the products in your assortment are current, grab their attention and keep their business. Take a look at what celebrities are endorsing. Work with an incentive provider that can customize your rewards selection, incorporate products that are perceived as musthaves by this targeted demographic segment and provide real-time reporting on whats redeeming. By reaching Millennials today, youll be sure to drive engagement, increase those redemption rates and keep your program successful for years to come.

THE CELEBRITY CONNECTION Celebrity endorsements evoke consumer engagement and drive purchases, similar to redemption patterns in the loyalty marketplace. Celebrities wield considerable inuence over this groups shopping decisions along with their peers especially through social media, as their interest in celebrity culture is at an all-time high. To help your loyalty program stand out from the competition and keep Millennials engaged its vital that your reward selections reect the connection between your programs audience and the appeal of aspirational celebrity driven brands such as Beats by Dr. Dre.


Loyalty Management LOYALTY360.ORG

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Big Data in 2014:

Evan Makela
Marketers have always seen great opportunity in combining demographic data about a consumer with data about that consumers behavior to create a more effective marketing message. The era of Big Data, characterized by technologies that make it cheaper than ever to collect, store and analyze massive amounts of data, enables marketers to collect as much consumer data as possible in hopes of making marketing messages more relevant. And since the costs of collecting and storing data are falling, marketers understandably feel it is better to have too much data about consumers than too little. The trend toward collecting as much data as possible is balanced by increasing public concern about all of the consumer data held by various companies. Politicians and regulators have taken notice of these public concerns, and we can expect the trend toward increased regulations regarding consumer data to accelerate in 2014. Costs of complying with new and potential regulations are taking the place of the costs of data collection and storage in a companys cost/benet analysis of collecting and storing large amounts of consumer data. tor can pursue a company under theories like deceptive trade practices or fraudulent marketing claims. In order to lower the risks of a regulatory action, companies have kept their privacy policies relatively vague so as not to be found in violation of any commitments made in the privacy policy. However, regulators are putting pressure on businesses to be more explicit in what the privacy policy says about a companys data practices. Regulators have reached out to industry players to develop best practices for what to include in a privacy policy. It is a best practice for a privacy policy to include an explanation of: (1) what data is collected, (2) how the data is used, (3) who has access to the data, (4) how long the data is stored, (5) how data is disposed, and (6) how the data is protected. FROM BEST PRACTICES TO REGULATORY REQUIREMENTS The next step in the development of best practices is to move from disclosing what a company does with data to limiting what a company does with data. For example, it is a best practice to disclose the types of data collected by a company. If a company wants to retain exibility in the types of data it collects, it could simply state in its privacy policy that it collects a variety of data about consumers without stating any specic limitation on the types of data it collects. Since this disclosure does not put any limit on the companys data collection practices, the next step pushed by regulators is to have a best practice that says data collection should be limited to data that a company needs for a specied business purpose. However, a company has

BEST PRACTICES The rst step that we have seen in consumer data regulation is disclosure. Various governmental entities now require companies to disclose to consumers the basics of a companys data collection, use and storage practices in a privacy policy that must be made available to consumers. By requiring disclosure about data collection, use and storage, regulators create accountability because if a company fails to live up to its privacy policy, a regula-


Loyalty Management LOYALTY360.ORG

From Collecting All the Data You Can to Collecting Only the Data You Need


1. We will see simpler privacy policies that present privacy practices in a graphic or table format to make them easier for consumers to understand.

2. Consumers will become more aware about limiting the collection of their data and we will see more consumers opt out of data collection where they can.

a lot of leeway in determining what data the company needs and for what purposes. It is possible that regulators may push to turn the best practice of limiting data collection into a requirement. The effect of moving from a best practice to a regulatory requirement is that the companys determination that it is properly limiting the types of data it collects will become subject to second-guessing by a regulator. A company may nd itself needing to justify to a regulator why the data collected by the company is necessary for the company to conduct its business. Similarly, we can expect limits on data use, access, disclosure and retention, along with requirements regarding data disposal and data security, to become the next battleground between companies that want to retain the exibility to determine data practices for themselves and government regulators seeking to create regulatory requirements on behalf of consumers to protect their interests. GETTING AHEAD OF THE TRENDS The rst step you can take to get ahead of the trends on disclosure and best practices is to ask yourself if you need all the data you collect. Consider what will happen if the data you collect is exposed or lost, perhaps due to hackers breaking into your computer systems or an employee losing a laptop. Responding to a data loss is complicated, but you can assume that some costs will be incurred, and the costs may be signicant. In a data loss scenario, you will want to avoid a situation where you wonder why you ever had the data that was lost. Going through the painful process of notication and breach remediation will be viewed as a cost of doing business if the data you lost was

important to your business. However, if you were not deriving any value from the data, you may nd yourself in the position of explaining why the company is incurring costs related to the loss of data that was not valuable to the company in the rst place. In considering whether the data you collect is valuable, ask yourself whether you are analyzing all the data that you collect and, more importantly, taking valuable actions based on that analysis. If you do not use the data now, but think you might in the future, ask whether it makes sense to simply start collecting that type of data in the future when you can use it. Also be sure to consider how long you keep data. If you no longer use two-year-old data in your analysis, then get rid of data that is older than two years. Generally speaking, replace the mindset of collecting all the data you can with collecting only the data you need. Once you are sure you are collecting and storing only the data that you need to provide value to your business, the next steps you should take are to work your way through the other best practice privacy policy disclosure areas to make sure your business has considered all of those points, disclosed them in your privacy policy and lives up to your privacy policy at all times. These steps should keep you ahead of the curve as regulations on consumer data develop during 2014. L

Evan Makela has practiced law since 1999. He was most recently General Counsel of Rewards Network, which powers the leading dining rewards programs in the United States.

Loyalty Management FOURTH QUARTER 2013



Loveworks: How the worlds top marketers make emotional connections to win in the marketplace
Brian Sheehan
powerHouse Books | June 2013

In 2004 Kevin Roberts wrote Lovemarks: the future beyond brands. It was admired by many as a breakthrough in marketing thinking but was also controversial because of its surprisingly obvious thesis: that emotional connections are at the heart of sustained relationships between producers, retailers, and consumers. While many companies were using the language of war in their marketing (target, penetrate, ambush), Roberts was using the language of love (mystery, sensuality, intimacy). He explained in simple terms what people are often loath to admit: we make decisions with our emotions over our reason. Lovemarks described the journey by which brands could move from consumer respect based on intellect, to consumer love based on emotionand in return gain loyalty beyond reason. In 2010 Advertising Age magazine named Lovemarks one of their ideas of the decade, while noting that the roadmap for brands to achieve Lovemark status was still not entirely clear.

Loveworks: How the worlds top marketers make emotional connections to win in the marketplace adds to the original Lovemarks by showcasing realworld business examples and outlining the roadmaps followed by several world-renowned brands to achieve Lovemark status: Procter & Gamble, Toyota, Visa, General Mills, Miller, T-Mobile, and Lenovo are just a few examples of businesses winning in the marketplace through the application of the Lovemarks theory, maintaining laser-like focus on making and sustaining emotional connections with consumers. Loveworks features 20 case stories from clients and markets worldwide in widely varying categories. My book shows that Lovemarks thinking worksanywhere, anytime. All it takes is having the brains to implement it, the guts to see it through, and an abiding faith in emotion as your compass, says Brian Sheehan.

...emotional connections are at the heart of sustained relationships between producers, retailers, and consumers.

Smart Customers, Stupid Companies: Why Only Intelligent Companies Will Thrive, and How To Be One of Them
Michael Hinshaw & Bruce Kasanoff
Business Strategy Press | May 2012

Last decade, companies strove to be great. Now they need to act as smart as the customers they wish to serve. Why? Because acting dumber than your customers is not a sustainable business model.

This visually arresting book not only challenges business leaders to prot from the wave of disruptive innovation making customers smarter, but it also presents an actionable ve-step plan for doing just that.

The Human Brand: How We Relate to People, Products, and Companies

Chris Malone & Susan T. Fiske
Jossey-Bass | October 2013

Why we choose companies and brands in the same way that we unconsciously perceive, judge, and behave toward one another

People everywhere describe their relationships with brands in a deeply personal waywe hate our banks, love our smart- Features in-depth analyses of companies such as Hersheys, phones, and think the cable company is out to get us. Whats Dominos, Lululemon, Zappos, Amazon, Chobani, Sprint, and actually going on in our brains when we make these judg- more ments? Through original research, customer loyalty expert Draws from original research, evaluating over 45 companies Chris Malone and top social psychologist Susan Fiske discovover the course of 10 separate studies ered that our perceptions arise from spontaneous judgments on warmth and competence, the same two factors that also The Human Brand is essential reading for understanding how and why we make the choices we do, as well as what it takes determine our impressions of people. We see companies and for companies and brands to earn and keep our loyalty in the brands the same way we automatically perceive, judge, and digital age. behave toward one another. As a result, to achieve sustained success, companies must forge genuine relationships with customers. And as customers, we have a right to expect relational accountability from the companies and brands we support.

Applies the social psychology concepts of warmth (what intentions others have toward us) and competence (how capable they are of carrying out those intentions) to the way we perceive and relate to companies and brands


Loyalty Management LOYALTY360.ORG

Wired and Dangerous: How Your Customers Have Changed and What to Do About It
Chip R Bell & John R. Patterson
Berrett-Koehler Publishers | June 2011

In an era of economic stress, rapid change, and social networking, customers are distracted, disgruntled, and harder to please than ever. Picky, Fickle, Vocal, Wired, and Vain they have very little tolerance for error and are ready to spread the word quickly over the internet when things go wrong. If a companys customer service doesnt adapt to these new conditions, they will get burned by bloggers and viral videos that can severely damage their reputation This book describes exactly what todays customers expect and how to give it to them. In Wired and Dangerous, Bell and Patterson provide a tested formula for restoring balance to the customer relationship by establishing what they call Service Calm. The three steps to Service Calm sound simple, but they draw on sophisticated psychological principles and are profound in application: 1) Deal with Self, 2) Deal with Customer, 3) Deal with Context.

The Most Powerful Brand on Earth

Chris Boudreaux and Susan F. Emerick
Prentice Hall | September 2013

Leverage the surprising dynamics of online inuence Plan, execute, and manage the development of key relationships Measure outcomes and performance in effective and useful ways Resolve crucial security, privacy, and regulatory issues that arise when others represent you online Gain crucial support from leaders, participants, and other stakeholders Empower the people and teams you attract, hire, and support Navigate cultural and process changes that will make or break your program Preview trends that will shape your social empowerment programs in coming years

Brands that thrive and prot from employee and customer empowerment generate signicantly greater awareness and revenues, while also decreasing the costs of marketing, selling, and customer service. However, employees must engage in public, real-time conversations. And most people are not professional communicators. Achieving those outcomes requires new skills, business processes, governance, measurement, and infrastructure. In addition, leaders must learn new ways of managing risk, while helping employees build and manage external relationships in real time. Now, in The Most Powerful Brand on Earth, social business pioneers Chris Boudreaux and Susan Emerick help you successfully manage all these changes. Drawing on their experience leading social media transformations at IBM and other top companies, they present frameworks and case studies from key innovators that show how to

Against the Grain

Brian Tracy
CelebrityPress | June 2013

The phrase Against The Grain has been in known written use since the early 17th century, but its meaning has not changed over the years. In 2013, we apply this phrase to non-traditionalists who work outside of the norm or commonly-accepted thought patterns. Entrepreneurs, in particular, are well-known for using this non-traditional approach to attain success in their unique endeavors, and the Celebrity Experts in this book have survived and thrived in the midst of the constantly-changing marketplace - going Against The Grain. Successful entrepreneurs, including our Celebrity Experts, have often made decisions that appear unusual and go Against The Grain. They carefully assess

the conditions and make decisions that many would claim foolhardy, risky or illogical. However, they are not bystanders - they have achieved their goals! Have you? The Celebrity Experts in this book include entrepreneurs, mentors and coaches. They go a step further and empower you with the secrets of their success. To the reader who wants to enjoy success, these Celebrity Experts will share proven ways to move forward with their plans, the mindset required and the way to do it. They will be formidable guides. So, to move forward, follow the Celebrity Experts and go Against The Grain....

Loyalty Management FOURTH QUARTER 2013



Tiered Loyalty Programs

Heres a bit of loyalty news that will perk up your ears: airline frequent ier programs are increasingly adopting a rewards point structure that includes the family pet.

What Airlines Can Teach Marketers about the Potential of

David Andreadakis
Kobie Marketing
Earlier this summer, Virgin Australia became the latest airline to reward travelers for ying with their furry friends as part of its Velocity Frequent Flyer Program. And just like people programs, the airline pet incentives include loyalty tiering. Entry-level participants (Red members) earn up to 300 points per ight taken with Fido or Fluffy while Platinum members earn up to 600 points. Silver and Gold members earn 450 and 525 points per ight, respectively. Although multi-tiered loyalty is already a familiar component of many airline and credit card rewards programs, I feel loyalty marketers arent applying this valuable structure across other verticals (like retail and entertainment, for instance) with the same dedication. It may not be a loyalty programs silver bullet, but tiered loyalty programs are an excellent way to glean enhanced business intelligence from your customers habits, thereby improving the quality of your loyalty programs offerings.


Typical Purchases:
e.g., are their purchases out of necessity, impulse buys or luxury?


Tiered Loyalty Groups Consumers into Segments Based on a Variety of their Behaviors, Including:

Level of Brand Engagement:

e.g., do they shop often and tell their friends and family?

The Amount They Spend:

e.g., does that amount uctuate or differ between channels?


Loyalty Management LOYALTY360.ORG

These groupings help brands visualize where customers are throughout their purchasing lifecycle. The information also helps brands gauge customers level of brand loyalty. This is especially true when you have a high volume of customers from diverse socioeconomic backgrounds.

While there is one main goal-oriented currency, there are usually others to help engage the user between levels with sometimes three, four or ve concurrent currencies. In-game rewards distinct from achieving a new level, nding new ways to attract, engage and retain customers with short attention spans. This is what I like to call bilateral tiered loyalty. Ultimately, whatever loyalty and gamication details the brand in question considers, loyalty program structure is personal to that brand and depends on the original brand image and promise. Too often tiered customer rewards programs today are focused on a single activity. But if such programs and their brand adopters really want to evolve and have a 360-degree customer view and omnichannel loyalty approach, they must engage loyalty members in many different ways. They also need to accurately understand what each customer wants. Its true that tiered loyalty wont win over all customers all of the time. But I am certain that, for many brands, a carefully thought out tiered loyalty program will be just the engagement push that customers are eager for. The bottom line is that customers want to be treated as individuals. They crave the genuine person-to-person experience that older generations say came with their brand engagement as a matter-of-fact. In the above example, the airline that recognizes a travelers pet as a vital part of their ying experience speaks to that personalized need, but airlines shouldnt be the only industry embracing tiered loyalty trends. At its core, tiered loyalty consists of brands directly marketing to customers and taking advantage of granular data to give those customers what they want when they want it. For Virgin Australia passengers, that means being able to bring their pets on board and earning mileage points at varying rates within different tiers. What tiering can do for additional brands in other verticals is entirely dependent on that brands unique needs and their customers desires. Yes, tiered loyalty may be costlier to implement (as a function of time and money) but the long-term gains are far more signicant. Customers at all levels (very good, fair, and less frequent) have brand worth and tiering helps measure their incremental value, improving brand ROI and driving a positive customer experience. In fact, a best-case scenario would have less frequent customers advancing in their level of brand engagement and moving into new loyalty tiers.

Clearly tiered loyalty programs, when welldesigned and applied, can be vital to earning and nurturing customer engagement by inspiring those customers to achieve higher rewards levels driving greater ROI that lasts. L

In general, customers are divided into three types: very good, fair and less frequent customers.
Less frequent customers are those who are on the long tail portion of customer distribution they trail off slowly and are marginally engaged. These arent the members around whom brands are likely to create a huge rewards system. Most companies would be surprised, however, to nd out that these customers make up a third or more of their total revenue. Very good customers are those who shop frequently, are high spenders and are likely to recommend the brand to their friends and family via social media or word of mouth. Fair customers are in between. Maybe, as it relates to airlines, they only y during the holiday season. Or perhaps its the odd email or social media shout-out that gets their intermittent attention. Likewise, their commitment to the brand is variable and unreliable. Of course, deciding on a tiered loyalty program is only the rst step. How you divide and subdivide your tiering structure and whether its a consumer-facing or a back-end tiered program (segmentation occurring after the transaction is nished) can have signicant brand impacts. STATE OF PLAY: TIERING AND THE BENEFITS OF GAMIFICATION Tiered loyalty has other benets too, particularly when considering gamication. Tiered loyalty offers different playgrounds where customers are interacting in a game-like environment and incentivized to play with their status. In other words (and this is central to human nature), they want to see their pile of stuff get bigger. Great gamication elements, like great loyalty tiering, work well because games arent single-target focused. There are multiple events happening simultaneously, with the most basic elements including: Scoring, multiple levels, extra lives or other special in-game character abilities that motivate further play.

David Andreadakis is the Vice President of Loyalty Strategy, responsible for the loyalty strategy and business development at Kobie Marketing. Andreadakis has extensive experience providing insights that help enhance program design, analytical, behavioral and platform offerings.

Gamications Importance and Growth With brands worried about decreases in customer engagement, trends like gamication are increasingly popular among loyalty programs. By 2014, 70% of Global 2000 businesses will be managing at least one gamied application. Gamication sets forth an environment that leverages consumers natural instinct to compete and achieve, providing loyalty marketers with an excellent opportunity to drive more interactions with their customers and better engage with customers looking to use their earnings toward lesser or incremental rewards. Prepare for Tiering 3.0 As personalization becomes more critical for loyalty marketing effectiveness, 2014 will see an increase in another type of loyalty program tiering known as stealth or hidden tiers. Membership to these emerging tiers is invitation-only, with accompanying perks hidden from public view to create a greater feeling of exclusivity and elevated status. Expect to see brands utilizing this tool to drive engagement and heighten the customer experience. Look for the Evolution of Integrated Multi-tender Loyalty Solutions More brands will move away from single-tender programs to an integrated multi-tender approach so that all loyalty transactions can take place under the same spread of processing and platform. Ultimately, brands will want their loyalty offering to drive incremental behaviors so a multi-tender program can protect and enhance their core credit card revenue, and increase the value of the credit portfolio while serving a broader consumer base.
The Engagement Economy, Deloitte 2012

Loyalty Management FOURTH QUARTER 2013



Retailer Loyalty:
Bring on the Big Data!
Margaret M. Lewis
No two retail loyalty programs are alike which is no surprise. No two consumers are alike, not every consumer shops every retailer the same way, and not every retailer has the same belief in data as a guide to its marketing strategy, at least not yet. What is crucial for shopper marketers is understanding that what motivates shoppers at Walgreens (points) is very different from what gets CVS shoppers to return regularly (discounts / dollars off). That Kroger shoppers come back because of targeted direct and email offers, but Target shoppers like 5% off their purchases, which they get only by using Targets private label REDcard at checkout. And Walmart doesnt even have a loyalty card all evidence that each retailer, every shopper, and all loyalty program experiences must be different. Lets sample a few: CLASSIC LOYALTY Kroger, CVS and Walgreens use the tactics that are most often associated with loyalty programs: member cards; key fobs; website access; mobile apps on which to upload coupons or redeem accumulated points; in-store bucks, or special member deals; and of course, opt-in information-sharing to give the retailer data and insights to better the shopper experience. Data is playing a key role in helping to differentiate these programs. Example: one of Krogers LCM (loyal customer mailing) programs last year sent over 11 million households a set of coupons. Ninety-seven percent of those households got customized offers based on their purchase history; and according to the companys 2012 Annual Report, almost no two were alike. Why invest that amount of time and money? Krogers VP of Loyalty, Ted Sarosy, has said hed rather try to inuence Krogers loyal shoppers to buy more than spend on attracting new shoppers. One of the rst insights Kroger learned from its dunnhumby data over a decade ago was that discounting top brands items as loss leaders to increase trafc was not effective. Instead, they targeted the most frequent and price-conscious shoppers with discounts on higher-margin lower-priced and/ or private label items. CVS uses its Big Data ndings to drive trafc and to sell specic brands. Deals arrive via use of the ExtraCare card, register receipt or mobile app. Personalized coupons are printed in-store from kiosks or stored on cards. Members get lower prices on selected items, and bonus rewards for prescriptions. CVS shopper marketing strategy aims to cut the number of general contacts with memberse-mail blasts, direct mailing in favor of relevant messages based on purchasing history. Recently, CVS persuaded Hispanic mothers with bonus ExtraBucks rewards for buying select Colgate-Palmolive and Kimberly Clark products, a promotion called Pick Up The Values, based upon demographic information and shopping behavior data. The program was supported bilingually online and in social media, and by using FSIs and endcaps, and coupons in targeted e-mails and direct mailings. CVS competitor, Walgreens, arrived late to the loyalty party it tested its Balance Rewards program from 2009 to 2011 before going live in September 2012. And Epsilon data is driving the success of the program.

No two consumers are alike, not every consumer shops every retailer the same way, and not every retailer has the same belief in data as a guide to its marketing strategy, at least not yet.


Loyalty Management LOYALTY360.ORG

Its more about understanding patterns of behavior and how you respond to them than it is about the reams of information being gathered, says Mulkey.

A recent Johnson & Johnson promotion Froseths team developed enabled consumers to build a personalized rst-aid kit with J&J products and a free bag when any three rst-aid items were purchased. The campaign spread to other retailers, but Target and J&J still differentiated the Be Prepared Everywhere theme with a unique bag design and promotional tools that focused on lifestyle activities like summer sporting events, camps and weddings. Data-based insights fueling creative shopper marketing programs is what we call The Art of Conversion at its best.

One unique facet of the program is its Steps with Balance Rewards plan. Users get points for each mile they walk or run as well as for tracking weight and setting goals. Synching tness devices with mobile apps earns points; there are badges for those reaching milestones. They dont want to be just a pharmacy and they dont want to be just a retailer. They want to be a wellness destination, says Jeff Mulkey, VP/ GM at Epsilon, which handles transactional data and the rewards program points bank for Walgreens. At Walgreens Corner of Happy & Healthy, the Steps program gathers information with the objective of helping people be rewarded for obtaining their personal goals. Manufacturers can use these insights to increase trafc and boost transactions. For instance, Steps participants might be partial to offers from Nature Made vitamins, Aleve pain medicine, or Dr. Scholls insoles for walking shoes. Additionally, if data shows that shoppers have bought this category of products before, shopper marketing programming can be even more focused. Undoubtedly, Big Data drives the sales for retailers, but also provides insights manufacturers need for sell-in. The key is the use of the information. Its more about understanding patterns of behavior and how you respond to them than it is about the reams of information being gathered, says Mulkey. LOYALTY BY DESIGN AND DESIRE Targets REDcard with 5% savings on purchases in-store and on Target.com, along with other benets, such as free shipping for online orders and extended return policy, has had similar effects on trafc and sales. This simple and straight forward value proposition for the guest encourages larger baskets, bundling and an increased tolerance for including the wants with the needs. More importantly, it arms Target with big data aiding a deeper understanding of guest purchase behavior and consumption patterns, thereby enabling them to reach their demographic in the most relevant and effective way possible, says Heidi Froseth SVP, and Target Team Leader in Catapults downtown Minneapolis ofce.

NO LOYALTY PROGRAMS (BUT LOYAL CUSTOMERS) Walmart, Whole Foods and Aldi have chosen to go cardless, building loyalty with either niche offerings or consistently low prices. Walmart, and the Albertsons family of grocery stores that dropped their loyalty program in 2013, say the low prices for all their shoppers should keep customers returning, and the savings they realize from not operating a loyalty program helps ensure those low prices. Critics say an everyday low price strategy is a race to the bottom. How low can you go? LOYAL TO LOYALTY? Recent research showing a decline in loyalty programs popularity is concerning to those with loyalty programs. Retail observers laud those using Big Data gathered from their loyalty programs in creative and mutually benecial ways, but acknowledge that consumers may be tired of keeping track of cards, and trading privacy for deals while knowing their information is not only for their benet. Will retailers without a loyalty program suffer eventually? Will customer apathy derail once-successful programs? Will the constant buzz of personalized communications deafen once-receptive consumers? Hard to say, because the one right way for retailers to do it will not be proven for some time to come. Until then, shopper marketers say Bring on the Big Data. L

Margaret is Executive Vice President and Sr. Group Director of Catapult Marketing, an integrated marketing services agency that specializes in identifying data-driven, actionable insights and crafting them into powerful creative ideas to drive sales among todays always-on shoppers.



Kristen Vennum
Ernst & Young LLP

Making Health Cares

Its the dawn of a new era in health care. The introduction of government-sponsored health insurance exchanges is accelerating a consumer-oriented marketplace. Payers and providers accustomed to operating primarily as B2B entities now have to engage eligible consumers directly amid a frenzy of intense competition to serve millions of new customers.
In a scramble to shift their operating model from B2B to B2B2C, or B2E (business to everyone), health care organizations are hiring marketing executives and analytics experts from consumer products and retail industries with the experience in building the ultimate customer experience. Yet, their back ofce operations remain internally focused. Product design, operations, pricing and billing all still operate in silos disconnected from the marketing, sales and service functions that are now the customer face of the organization. As it stands today, few health care organizations are agile enough to listen to the customer and then translate the insights they learn into actionable change that they can test, improve and scale. Many organizations may have a strategy for transformation. Where they fall short is in how they make that strategy a reality from brand through billing. Health care organizations that can retool their operating models the fastest and drive value from their strategies will be the clear winners in this new health care environment. If health care organizations were to peer through the customer lens, they would see six key trends emerging: 1. Digital everything. Instead of going to health care, patients are beginning to look for care on demand. They want health care that ts into their life, anywhere, anytime. 2. The super consumer. Todays patients are far more informed. They seek more information before making a decision. According to a recent mHealth and EY survey, 30% of consumers report that they always or frequently turn to the Internet for answers to medical questions. And when they are ready to make a decision, they want to design their experience, just as they would get if they were booking a vacation. 3. Navigation. Patients that receive advice or direction from multiple sources can become confused and frustrated. Patients want their health care experience to be easy, with clear direction, especially when it gets complicated. 4. Value. Often, there is little transparency in terms of health care costs. Patients want to understand what they are paying for and the value they are getting from the care they receive. 5. Consumer engagement. Consumer behavior can be a key driver of medical costs. According to the chief medical ofcer at one health care organization, approximately 70% of health care costs relate to chronic conditions brought on by lifestyle choices. Consumers want wellness programs that work. Engaging patients with their health care may have the single biggest impact on reducing costs and improving outcomes. 6. Employee engagement. Organizations need to do more than talk about making customers their central focus. They need to live it by making it easy for employees to do the right thing for customers. They have to nd a way to empower employees to adopt a customer-rst mindset. Health care organizations can use these trends to gain insights into what their customers want and how best to deliver the unique experience they seek. Some leading organizations are even going as far as turning their analytics and market research team into an insights function that can analyze and measure what they learn from their customers, collaborate with stakeholders across the business, bridge the gap between business needs and market research and use the data to create a compelling story. Ultimately, the goal is to identify the insights that matter and apply them to the organizations strategy to produce active, measurable change.


Loyalty Management LOYALTY360.ORG

The seismic shift in health care toward a customercentric, outcomes-based model means that health care organizations must fundamentally alter the way they do business.
There are ve steps health care organizations can take to identify the insights that incite customer-centric change: Although each organizations journey toward customercentricity and creating the ultimate customer experience will vary, the singular driving force behind the need to change remains the same: its all about the customer. L
The views expressed herein are those of the authors and do not necessarily reect the views of Ernst & Young LLP.

Secure commitment from the top. This rst step is critical. Organizations need executive support to establish a clear charter for creating the ultimate customer experience and a long-term strategy for its success. They also need it to secure sufcient investment to give the program its best chance for success. Create organizational alignment and identify business objectives. The most important step is to dene the business objectives. Business leaders must take accountability for this step directly, in consultation with marketing. Once the organization has clearly dened its business objectives and metrics, the insights function can dene the customer-centric research and analytics support needed.

Identify the insights. This is where the insights function takes center stage. This team designs the research methods and analysis, collects new and existing information, analyzes the information and draws insightful conclusions.

Healthcare anywhere: Bricks and mortar healthcare is dissolving... the analog to digital transformation so many other industries have already experienced. Health will be accessible anywhere via any device, anytime. Winning companies will enable this consumer led revolution by making healthcare easy, fun, social and personalized. Trust is the competitive currency of the future. Organizations who deliver experiences that build net positive trust for customer, employee, partner and regulatory relationships will win in the competitive battleeld of the future. Purpose replaces digital on the marketing hype cycle. Experiences and products absence of meaning are commodities. Brands lacking purpose are undifferentiated. Marketers become the stewards of the brand story, and bring meaning to employees, shareholders, partners and customers through curating stories that communicate their brands vibrant, resonant purpose.

Turn insights into business actions. This is where many organizations fall down. From the insights and conclusions identied, organizations need to create an action plan. This may involve realigning operating models, adjusting processes, implementing new or making better use of existing technologies and engaging employees to be an integral part of the change. Measure the results. Theres an oft-said saying: You need to measure it to manage it. Repositioning an organization to take advantage of the new, customer-centric health care landscape is no exception. The best way to prove value to the business and drive continual improvement is to deliver measurable results. At a minimum, organizations will want to measure the business impact, scale successful projects and rene business objectives to drive sustained success.

Kristen Vennum is a Principal in the Advisory Services Performance Improvement Customer Practice of Ernst & Young LLP. Kristen helps companies achieve profitable growth through business transformation efforts focused on acquiring, developing and retaining valuable customer relationships. Kristen has extensive experience in customer strategy development, customer experience design and execution, sales and marketing effectiveness, customer-focused process improvement and the people and organizational change components that support successful business transformation outcomes.

Loyalty Management FOURTH QUARTER 2013




The State of


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Loyalty Management FOURTH QUARTER 2013


Customer Intimacy
Critical for Brand Engagement, Experience
Jim Tierney
If there was a buzz-phrase that resonated more than any other at the 3rd Annual Engagement & Experience Expo, presented by Loyalty 360 The Loyalty Marketers Association, it was customer intimacy. When brand executives delivered their respective stories during sessions at the conference, many discussed how they had accumulated volumes of customer data, but needed a way to consolidate it in such a way that they could personalize communications and create an engaging intimacy. Here is a look at some brand stories offered at the Engagement & Experience Expo: Luxottica Were a company built on amazing brands, Maya May, Senior Director of CRM & Strategy Analytics, Luxottica Retail North America, says. We wound up going down this path because we had a need for customer intimacy. Our DNA is products exclusive, high-end, premium products. Launched in Italy, Luxottica is a 50-year-old company that holds a reverential attachment to the craftsmanship of its frames. We serve the end consumer and we care about loyalty over time, May explains. Customer loyalty and customer satisfaction is very important to us. Our customers want more personalized interactions. We can serve them better if we know our customers online and in stores. Luxotticas data had been outsourced, May says, including multiple partnerships with different brands with minimal internal data intimacy. Through its partnership with Aginity, Luxotticas company shift resulted in substantially raising the company proles for data and analytics. The creation of a real-time Customer Experience Hub was profoundly impactful. There was a decision made to in-source data and personalization capabilities. The key was guring out how to de-silo and de-fragment data across eight brands and 7,000 retail locations, while coordinating a single view of the customer. This data integration paved the way for Luxottica to add the personalized touch customers crave and provided the company with valuable, actionable customer insights. For Luxottica, the data consolidation and integration is less about segmentation and more about identifying the critical attributes along the customer purchase path. That hub brought it all together in one spot and its been very powerful for us, May says. Its put us in a more customer-centric model. Luxotticas growth in the data/personalization area will be based on predictive modeling. In the optical category, we want to be more predictive about when someone will repurchase, May says. Lifecycle cross-selling has successfully increased loyalty. Were trying to nail down the right time to target repurchases. May says some plans for the future include real-time website personalization; developing an analytics playbook to democratize usage and be highly extendable; smarter demand forecasting and assortment planning; and the new approach provides for global scale-up capabilities. We also want to use customer data to inform product decisions, and move away from pure product intuition, May says. We will be more grounded in customer insights. We have to invest in the tools and the talent.

Iron Tribe Fitness If someone signs up to become a member at Birmingham, ALbased Iron Tribe Fitness, he or she not only receives an excellent opportunity to lose weight and tone up, but also a chance to enhance their lifestyle. Life changed is a promise everyone can expect after signing up at Iron Tribe Fitness, Iron Tribe Fitness Chief Marketing Ofcer Jamie Warren says. During his keynote session titled, Loyalty as a Side Effect: Impacting Your Customers Lives First, Warren refers to raving fans created from the companys culture. We focus on changing their lives, We set out to have people transformed and loyalty has driven this. We focus on changing their lives. Warren explains what differentiates Iron Tribe Fitness. Many tness clubs and gyms are built on volume business models that assume that a small percentage of the members will participate regularly, he says. In contrast, Iron Tribe limits its membership to only 300 people per location -- not 301. Its often said around Iron Tribe that anyone can do it, but not everyone will. Commitment is required because so few spots exist. All training is delivered in a group format with a 10:1 client-to-athlete ratio. Everyone performs the same workout each day and scales it for his or her own ability. Teaching and promoting healthy lifestyles and leading the industry with results-based tness is a mission for Iron Tribe. But, the members really are buying transformation. That change in their physical bodies echoes in several other areas of their lives. The community formed in an Iron Tribe gym is the major contributor to the loyalty of our members. Iron Tribe denes loyalty as clients behavioral choices that consistently keep them engaged with the brand and product in the face of competing, less expensive -- and seemingly similar -- options.

Iron Tribes referral rate is an astounding 75% while its monthly attrition rate is less than 3%. One of Iron Tribes main objectives is to serve clients with a personalized group tness experience at every Iron Tribe gym. This means that they have the benets of their communal tribe of fellow athletes, which provides them with everything from irreplaceable fellowship to motivating accountability, Warren explained. However, the personalized aspect comes from their rst-class Iron Tribe gym coach, who provides each client with the expert status of tness, nutrition, and life coaching needed to reach their goal of a total life transformation.
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Engagement & Experience Expo 2013 Sponsors & Exhibitors

Ascena Retail Group Stanley Lucas, AVP, Customer Intelligence & Insights, Ascena Retail Group compared his companys transformation to the 1989 Kevin Costner lm, Field of Dreams. During his session titled, Build It and They Will Come: Creating a Customer Experience Hub, Lucas told attendees how Ascena Retail Group has evolved into a customer experience hub. Ascena Retail Group includes the following brands: Justice, maurices, Lane Bryant, Catherines, and dressbarn. It has 4,000 stores, $5 billion in annual sales, 22 million annual transactions; and 600,000 annual calls (but not transcribing them into text). We needed to be champions of this data, Lucas says. We had data that could easily inuence what we did in our stores and marketing departments. Ascena Retail Group gathers feedback from customers and from a variety of places such as tech support questions and product feedback. Each of these areas on a website alone can help brands collect a plethora of feedback about different aspects of their businesses. The idea for a Customer Experience Hub is to integrate all of these feedbacks so different departments arent looking at different elements of this data. Customer Experience Hub is the integration of all of these different data points. Lucas says the Customer Experience Hub can help break down department silos because it encourages collaboration among different departments, awakens people to the value of their own data, and creates true intimacy. Three years ago the customer insights team at Ascena Retail Group comprised ve people. Now, the Customer Insights & Intelligence team comprises the following departments: Customer Insights, CRM & Analytics, Data Warehouse & Offshore, and Customer Care. Weve absorbed the contact center, were closing the loop, and providing resolution, Lucas explains.

Wholly Guacamole For Tracey Altman, Vice President of Marketing and product Development for Wholly Guacamole, her work life is about passion: passion for her brand, passion for her category, but foremost, passion for her customers. Wholly Guacamole not only listens to its customers via social media, its important for company ofcials to respond to customers in a timely fashion. Sparked by its comprehensive use of social media, Wholly Guacamole has soared to new heights in the past six years amid a rebranding process that has resulted in superior name recognition, scal success, and Americas No. 1 selling refrigerated guacamole. During her session, Wholly Guacamole: 10 Things We Learned About Social Media (hint: its not about guacamole),Altman captivated attendees with her unabashed passion for her company and its loyal customers. Placing the customer rst is the most important thing a brand can do in todays omni-channel marketing world and this approach can result in extraordinary two-way conversations with customers, resulting in invaluable insight that can be implemented and boost your bottom line. Creating memorable and lasting customer experiences can only be achieved if brands rst listen to their customers effectively, take those invaluable insights, and incorporate them into actionable marketing plans that lead to relevant and personalized connections with customers. Altman didnt have loads of experience in social media six years ago, but today as it relates to Wholly Guacamole it consumes her and her colleagues many of whom attended her session. Not only do brands crave loyalty from their customers, a major trend now is for brands to show that same loyalty to their customers. And that is what Wholly Guacamole is all about. Interacting with customers via social media doesnt always have to be about the product, Altman says. Altman shared a David Lettermanlike Top 10 list of core social media priorities at Wholly Guacamole.

Engagement & Experience Expo 2013 Sponsors & Exhibitors

10 -- Its not about money, its about time: Its a big time commitment and we feel we should answer every customer comment within 12 hours, she says. Its about taking the time to engage with consumers in a meaningful way. We want to be transparent. Consumers should receive a well thought out response because Im sharing my brand with consumers. That relationship has made us No. 1. 9 -- Its not about likes, its about engagement: Its about how people are responding to you, Altman says. Communication is a two-way street. Were very sensitive about not being about ourselves. Engagement has to have value. 8 Its not about schedules, its about being relevant: We want to be where the conversation is happening even if its not related to Wholly Guacamole, she says. Altman says often times through social media her company will engage in conversations related to national or international events on the minds of their customers. Relevancy to your consumers is relevancy to your brand, she said. 7 Its not about giving information, its about exchanging information. 6 Its not about studies, its about focus groups: With social media, Altman says, its like every day is a focus group. 5 Its about creating a dialogue: Understand your audience and know where theyre coming from, Altman says. Think of brands as people. Our job as marketers is to be a part of their daily lives. We dont want it to be about us. 4 Its not about Facebook, its about all social media: Last year Altman said her boss asked her to illustrate the positive impact of social media on the brand. It didnt take long for Altman to prove her point. I did a chart of how our revenue went up each year, Altman explains. Then I drew the same kind of line for our social media growth. I told him I can stop doing social media for a year and see what happens, and he said he didnt want to do that. He decided it wasnt a good idea to test it. 3 Its about loving your fans. 2 Its about being part of the conversation: This is about real people and real things, Altman says. And we all need that inspirational message every now and then. 1 Its not about us, its about them: Altman says Wholly Guacamole wants to do three things with its customer base via social media: educate (how to clean your closets), entertain (funny, engaging videos), and excite (ll in the blank questions).

Since the brand is all about fun, Altman said that lends itself perfectly to involving your customers and social media using things like sharing recipes, party ideas, and asking customers to take pictures of the insides of their refrigerators and submit them. Using social media to help build and drive your brand makes us all smarter marketers, Altman says. This is about a friendship. L

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