VOLUME 11 NUMBER 2 | SECOND QUATER 2018

The
Priorities
Within
Firehouse
Subs ®

IN THIS ISSUE:

Loyalty is More Than a Pandora Steps Beyond Music Sling Stays True to its Promise and
Big Game for Ally Financial and Into Making Connections Helps People Cut the Cable Cord

PLUS: 2018 LOYALTY EXPO CONFERENCE REVIEW

 It’s Back
The 2nd Annual Customer Expo
is coming to Nashville this October,
and we want to see you there.
Join us for three days of sessions, networking,
and the wealth of insight that has come
to define Loyalty360 conferences.

October 24-26, 2018

Nashville Airport Marriott Hotel

For more information, visit

CustomerExpo.com
 In this Issue...
Q2 2018 | VOLUME 11 NUMBER 2 | LOYALTY360.ORG

FEATURES

10 18
The Priorities within Loyalty is More
Firehouse Subs Than a Big Game Conference
for Ally Financial
Fireshouse Subs Ally Preview

40
Chris Brosey | Loyalty360 Mark Johnson | Loyalty360

14 22
Pandora Steps Beyond Sling Stays True
Music and Into Making to its Promise and
Connections Helps People Cut
Pandora Sling the Cable Cord
Chris Brosey | Loyalty360 Mark Johnson | Loyalty360

LOYALTY FORUM: IN EVERY ISSUE

14 LOYALTY360 ON THE WEB 30 STATE OF THE INDUSTRY Loyalty Management Editorial

What’s New Simplicity in Loyalty Programs – & Production Team
Not as Simple as it Sounds Mark Johnson - Contributing Editor
15 FROM THE EDITORS Kate Baumgart Hogenson | Kobie Carly Stemmer - Contributing Editor
Chris Brosey - Content Manager
Loyalty360 Patrick Barney - Contributing Content
32 BEST PRACTICES Corey Brueggemeyer - Proofing
16 360 INSIGHTS Customer Loyalty that Stands the Shawn Cunningham - Design Director
A Challenging Environment Test of Time Elizabeth Shular - Design
Meg Tronquet & Laurie Meek | Lenati Crescent Printing Company - Print Production
Calls for Personalization
Mark Johnson | Loyalty360
34 TECHNOLOGY, TRENDS & REWARDS Contacts
18 FEATURED TECHNOLOGY Customers are not coming back? Article Submissions & Advertising:
Featured Technology & Services Try out 10 customer retention Loyalty360
strategies that actually work info@loyalty360.org
Comarch 513-800-0360
19 Q&A
Brand Vision
36 STATE OF THE INDUSTRY © 2018 Loyalty360, Inc. and/or its affiliates.
Moving from a loyalty program All Rights Reserved.
26 TECHNOLOGY, TRENDS & REWARDS
to a loyalty strategy Reproduction and distribution of this publication in any form
Layering Digital Promotions
Marlon Bowser | HTK without prior written permission is forbidden. The information
into Loyalty Programs contained herein has been obtained from sources believed to be
Gina Fleck | HelloWorld, A Merkle Company reliable. Loyalty360 disclaims all warranties as to the accuracy,
38 BEST PRACTICES completeness, or adequacy of such information. The opinions
shared are those of the contributing authors and not necessarily
Loyalty Programs In Question
28 BEST PRACTICES reflective of Loyalty360 and/or its affiliates. Loyalty360 shall
by Certain Industries have no liability for errors, omissions, or inadequacies in the
Increasing Foot Traffic and Sales
Louis Ramery & Martin White information contained herein or for interpretations thereof. The
Through Multi-Channel Loyalty opinions expressed herein are subject to change without notice.
East|West marketing group
Ann Olinger | Xenial

Loyalty Management™ | Q2 2018 | loyalty360.org 3

 What’s New
LOYALTY360 ON THE WEB

ON LOYALTY360.ORG

Loyalty360 Member-Only Digital Roundtables

Loyalty360’s brand member digital round tables allow marketers the opportunity to meet regularly
outside of our conferences and events to discuss current trends, challenges, and opportunities. Each
presentation is led by a senior-level Loyalty360 brand member on a topic pertinent to their position
and organization – for example, employee engagement, loyalty program redesign and evolution, and
personalization. All Loyalty360 brand members are invited to attend the round table discussions and
ask questions of or give feedback to the presenter. We look forward to our upcoming meetings
featuring Red Lion Hotels Corporation, Caesars Entertainment, AARP, and MassMutual!

Executive Perspectives Papers & Webinars

As a market thought leader in loyalty and a trusted advisor for brands and marketers, Loyalty360
regularly asks open-ended questions to a wide spectrum of brands and senior-level marketers to help
determine what challenges and opportunities are top of mind today. These questions and interviews
are the essence of the articles found in Loyalty360’s print and online publication, Loyalty
Management. We then use these answers as the basis of our Executive Perspectives reports. We
hope the reports serve as a snapshot of the challenges in the market today and how they’re being
handled across a variety of industries. We believe that this voice-of-the-customer, market, and
member-driven approach creates a community of peers and offers a powerful, and honest
way to open the dialogue between organizations and their customers. This year, we have released
a number of reports focused on the topics on personalization, listening to customers, measurement,
the changing nature of customers, and disruption. Be sure to join us for one of our upcoming
Executive Perspectives webinars this summer and fall!

Loyalty Expo Networking Events

& Loyalty360 Top 10 Awards
During May’s Loyalty Expo, we held a number of new networking events
for our attendees, including a pre-conference trivia contest, our first
“Loyalty Luau”, and a late-night hypnotist show. Additionally, during the
conference, we recognized the winners of our first Loyalty360 Top 10
Awards at a special luncheon and awards ceremony. See page 40 for
a list of the winners of this year’s awards.

4 Loyalty Management™ | Q2 2018 | loyalty360.org

FROM THE EDITORS
Our features in this volume of Loyalty
Management range from stories of social
commitment and technological innovation
to unique customer engagement styles and
disruptive platforms. Common to all of them is
the sense that customer loyalty is fostered by
involvement in specific communities.
These communities include members of a
city devastated by a hurricane, music lovers,
football fans, and avid video streamers. Each
feature describes how the experience of one
of these communities has been uplifted by a
brand’s actions.
Firehouse Subs (page 10) has tapped
into consumer desire for brands to make
socially responsible commitments. This
desire has taken a strong grip on the popular
consciousness in recent years. Devastating
hurricanes, massive heat waves, tsunamis, and
other natural catastrophes have made people
more aware of climate change and its effects.
In the midst of these tragic occurrences, Fire-
house has dedicated itself to philanthropic
concerns.
In order to provide much needed equipment
and resources to first responders and public
safety organizations, the company has formed
the Firehouse Subs Public Safety Foundation,
a charity that has donated $35 million in grants
to fire departments, rescue organizations, and
schools in 46 states, Puerto Rico, and Canada.
It has helped purchase defibrillators, thermal
imagining cameras, extrication tools, and all
terrain vehicles for police departments and
EMT responders. More organizations should
follow Firehouse’s example.
Pandora (page 14) has improved the way
music lovers listen to music. In the late 80’s
and early 90’s, when cassette tapes became
“ Brands with any interest in
improving customer loyalty
should look to these four stories
for advice. Each featured brand
has contributed to its respective
community by providing service,
support, and convenience.
obsolete with the invention of CDs, music
listening was revolutionized. Listeners no longer
had to fast forward a cassette tape to listen to a
specific song or rewind the tape to listen to an
album from the beginning. Instead, CD listeners
could skip to any song they wanted with a few
clicks of a button, and when they took the CD
out of the player and put a new one in, that
one started from the very beginning, not in the
middle!
Pandora has made the CD revolution seem
trite. In 2000, the company gave music lovers
the ability to create their own personalized radio
stations. Using a “thumbs up, thumbs down”
button, listeners could indicate which songs
they liked and which they didn’t. This feature is
made possible by a data analytics technology
the company calls the Music Genome Project,
which enables experts to identify music lovers’
preferences across a variety of metrics. Music
hasn’t been the same since.
Ally Financial (page 18) created a unique
application to engage football fans during the
Super Bowl. The app featured a game that
emphasized the necessity of establishing a
decent savings account. Players saw dollars
falling from the top of their mobile screens,
and they had to slide as many as possible into
piggy banks at the bottom. Due to real-life
prizes for game winners, 24,000 people on
average played the game during each Super
Bowl commercial. Given the small percentage
of voice that Ally Financial has in the financial
sector, 24,000 users engaged per commercial
is an astonishing feat. Clearly, this company has
figured out a customer engagement strategy
that competitors haven’t.
Sling Television (page 22) has contributed to
the disruption of the old video-viewing trifecta:
cable, DVDs, and theaters. With the advent of
Loyalty Management™ | Q2 2018 | loyalty360.org
“
streaming technology, paying for a cable service
that came with hundreds of unused channels
or leaving the comfort of the home to go to a
movie rental store that had a limited selection
just didn’t make any sense. Movie theaters
have been able to adapt to the disruption
represented by Sling TV by offering enhanced
services, but rental stores have mostly become
extinct, and cable’s relevance seems to be
falling far behind.
Sling enables viewers to take control of their
watching experience, usually from the warmth
of the living room couch or the soft mattress in
the bedroom. Instead of paying for hundreds of
irrelevant channels, Sling viewers can choose
the specific movies and shows they want to
watch for a subscription fee, much smaller than
that charged by cable. In addition, Sling offers
viewers the ability to pay for premium films and
shows that can be watched instantly, which is
a big upgrade from driving to the rental store,
or ordering online and waiting a week for the
DVDs to arrive. This disruption represents real
value to the customer.
Brands with any interest in improving customer
loyalty should look to these four stories for
advice. Each featured brand has contributed to
its respective community by providing service,
support, and convenience. This seems like a
great way for brands to operate, especially
when customers have come to expect it.
Loyalty360
info@loyalty360.org
5
LOYALTY FORUM: 360 INSIGHTS

A Challenging Environment
Calls for Personalization
Mark Johnson
CEO/CMO
Loyalty360

In the current marketing environment, brands must employ
analytical skills that weren’t required just a couple years ago. Data
breaches and increased scrutiny around data access have led to
the creation of complex regulations by which brands must abide.
In addition, customers have come to expect the personalized and
convenient experiences offered by leading businesses from every
organization and throughout every channel. Brands also need to
collect rich customer data, derive actionable insights from it, and
leverage technology that allows for scale. They need to design
and develop customer engagement strategies tailored to their
customer bases and make sure the importance and impact of
those programs are understood. The need for objective insights,
best practices, and a community focused on customer loyalty
grows day after day.
In addition to individualized experiences and offers, customers
have also begun to clamor for a return to the simple “corner
butcher store” mentality of earlier times. They want brands to
participate in their communities and foster social commitments.
To create this simplicity and meet the needs of customers, brands
realize they must understand their customers more effectively and
use personalization strategies and technology to get there.
Implementation of such technologies, however, will not happen
overnight. Regardless of the brand or vertical, or even the overall
level of sophistication, the most successful organizations realize that
harnessing any personalization strategy resembles a journey that
happens over time. Fortunately, the Customer Expo in Nashville this
year will feature presentations from a variety of brands that have
managed this journey well.
Firehouse Subs, Loblaws, J. Lohr Vineyard & Wines, Lids, Herbalife,
Luxottica, and MassMutual all have intriguing stories to tell about
the strategies they’ve designed and how they’ve implemented the
processes surrounding those strategies. Many other organizations
will present their success stories as well. For this reason, I feel
confident in saying that the Nashville Expo, coming up in October,
will be an excellent one, and no brand seeking to improve its
customer engagement and loyalty should miss it.

Unfortunately, technological processes aren’t quite where

organizations want them to be. According to a recent study of
customer loyalty programs conducted at Loyalty360, 73 percent
of responding brands said that a lack of competitive benchmarks
hindered their ability to effectively implement personalization
strategies. In addition, 57 percent said that technology metrics
weren’t accurate enough, and another 42 percent said that
objective technology assessments weren’t strong enough.
Without successful technological processes such as these,
customers will receive, more often than not, irrelevant offers after
making purchases. Worse, sometimes customers will even leave
loyalty programs or organizations altogether because they offer
nothing of individual interest.

Good companies will survive this ebb and flow of customer

preferences. Great companies, however, will thrive on it, building
WE HERDED THE CATS.
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with the product, customer focus, and overall company mission.
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for customer engagement and loyalty, and they will create
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6 Loyalty Management™ | Q2 2018 | loyalty360.org

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Loyalty Management™ | Q2 2018 | loyalty360.org 7

LOYALTY FORUM: FEATURED TECHNOLOGY

What are Loyalty360 Analyst Reports?

Designed to help brands and marketers navigate vendors and providers

Featured
in the market that support customer loyalty, customer experience, and
Products, customer engagement strategies in any capacity. With a focus on
Advancements & objectivity, rigor, and transparency, the Analyst Reports help brands

Technology
Technologies narrow down to core competencies, strengths, and industry expertise.
If you are a vendor or provider interested in learning how Loyalty360’s
Analyst Reports can help you reach new prospective clients, please
contact Mark Johnson at markjohnson@loyalty360.org

& Services To view Analyst Reports please visit

loyalty360.org/resources/analyst-report

Virtual Incentives offers a prepaid loyalty
platform that helps clients provide an array of
online rewards to members. The platform,
Virtual Incentives Now, enables clients to
manage, track, and deliver a customized suite
of incentives to consumers, employees, and
market research participants. Rewards are
offered through MasterCard, Visa, Amazon,
eGiftCards, and Gift Card PASS.
VI Now offers a user-friendly interface which
gives clients a flexible and agile loyalty platform
option. It delivers personalized rewards instantly
and securely and includes integrations with a
variety of market research applications. It also
enables future scheduling to order and can
handle programs of nearly any size or
complexity. With it, clients can track customer
purchase history and reward recipient
information.
The VI Now platform also includes several
standard reporting metrics. These metrics give
clients comprehensive details about how
rewards are delivered to members. A web-
based dashboard enables clients to add
programs and deliver rewards with no IT
investment, and an independent administration
feature offers clients a way to organize program
functions with minimal effort.
For ten years, Virtual Incentives has sought to
close a major gap in the customer loyalty
industry. To this end, it has used technology and
incentives experience to build a simple,
customizable platform that delivers the virtual
rewards that customers have come to expect.
Through this platform, clients of Virtual
Incentives have the capacity to provide millions
of rewards to customers around the world.
Baesman Insights & Marketing offers marketing
services based on data-driven insights. Its team
of former brand-side marketers helps clients
design and develop loyalty program strategies
and technologies. It also works with clients to
implement the loyalty platforms they’ve created
and offers ongoing program management
services.
To provide these solutions, Baesman conducts
a four-phase study of its clients’ operating
environments. First, it works with its clients to
evaluate the strengths, limitations, and
opportunities of existing structures, technology,
and KPIs. Then, the company explores client
data amassed from earlier years to come to a
better understanding of each client’s customer
base. Next, it designs a loyalty platform based
on data analysis. In the final phase, it validates
that platform with a customized plan for
financial modeling, measurement, and
implementation.
The company provides customer segmentation
breakdowns that enable personalized offers. In
addition, it offers its clients easy to use
dashboards customized from a library of
metrics, including visualization of enrollment,
redemption, sales, and engagement by channel.
Baesman offers persistent monitoring and
optimization of KPIs as well.
Baesman believes that the best solutions come
from a deep understanding of the client and its
customer base. To design these solutions,
Baesman searches for the opportunities that are
hidden within client data. It develops these
opportunities into marketing strategies, and
delivers them rapidly across multiple channels.
HapYak provides an SaaS platform for creating
personalized interactive videos. The platform
features tools that users can employ to enhance
videos with interactive elements such as links,
quizzes, and chapters. These tools enable the
creation of training, lead generation, and
ecommerce videos. The HapYak platform also
offers APIs and analytics.
The platform’s key functionalities include fillable
forms, clickable hotspots, in-video chapter
menus, image overlays, in-video quizzing,
playlist branching, text overlays, link overlays,
CTA buttons, and I-Frame widgets. The
platform also offers core reporting functions,
including what links viewers selected most
frequently, which chapters viewers most often
selected, and how viewers answered quiz
questions. Examples of how users have
employed these functions include adding
in-video “buy now” buttons to existing videos,
creating clickable branching menus that enable
viewers to skip to desired content, and offering
intermittent quizzes to gauge viewer learning.
HapYak offers APIs so that clients can integrate
the company’s platform into their existing
structures. Add-on APIs enable clients to write
custom JavaScript that resides on their
webpages without interfering with their ability
to control video behavior, design, look, and feel.
HapYak also advises clients on how HTML
overlays can be performed.
HapYak believes that the creation of compelling
videos requires an easy-to-use platform that
can achieve new levels of interactivity and
insight. To this end, the company created a tool
that works with any video player and which
facilitates rapid video generation. The goal of
this product is to drive customer engagement
and deepen client monetization.

8 Loyalty Management™ | Q2 2018 | loyalty360.org

LOYALTY FORUM: Q&A
Brand Vision
Q: How does employee loyalty and/or
employee Engagement fit into the
customer loyalty discussion?
We’ve really been looking at ways to encourage employees
to engage with the brand socially and spread the message
through individual social network pages. Our customers like
following the brand on Twitter, not only through the corporate
twitter account, but also through my Twitter, the Twitter of our
executives, and our captains. We have a few really engaging,
popular captains on social media, and we’ve been utilizing
things like “Captain of the Week” to give those employees
the opportunities they’ve been asking for to engage with
our guests. We’ve even observed an increase in bookings
on certain captains’ ships after they engage with guests on
Twitter. Every employee we have has the potential to improve
our company by spreading the Celebrity Cruise message, and
we take that opportunity very seriously.
Lee Moreau
Director of Loyalty
Celebrity Cruises
Our front-line employees, in particular, are really the
culmination of it all. What they do every day is what I market
and sell because we’re only as good as our employees. That
makes the service what it is. I don’t have a product. I don’t
have anything I can put in somebody’s hand. Everything we
do is based off of a group of highly-motivated and engaged
drivers and dockworkers, handling freight properly, getting it
delivered on time and intact and becoming an integral part of
our customers’ day to day operations.
Mike Rude
Director, Freight
Solutions Marketing
FedEx Services
For us, it all starts with our franchise owners. If we select the
right franchise owners they treat their internal guests (our
team) like family and treat them as such. That in turn leads
our internal guests to be able to take care of our external
guests like family.
Ali Rauch
Director of marketing
Chicken Salad Chick
The very first thing that drives our business is team member
engagement. We’re very proud of the fact that our turnover is
best-in-class in the industry, both manager and hourly team
member. It isn’t just because everyone else is falling away,
we’ve made real progress. What makes a difference is we
have a clear vision about making everyone better for being
here and everyone includes stockholders, team members, and
guests. We go out of our way to make sure team members
are well trained and that they feel like part of a family unit. We
live our B.U.R.G.E.R. values every day. We literally put them on
our sleeves!
Denny Marie Post
President and CEO
Red Robin
Culture is critical. The vast majority of GoDaddy’s
employees joined us organically meaning we hired them on
to GoDaddy. We’ve done a few acquisitions over time to
expand our product portfolio or to expand our geographic
reach in Europe, but the vast majority of employees have
been hired directly.
Steve Aldrich
Chief Product Officer
GoDaddy
Loyalty Management™ | Q2 2018 | loyalty360.org 9
 FEATURES

THE PRIORITIES
WITHIN FIREHOUSE
SUBS ® By Chris Brosey | Loyalty360

When Hurricane Harvey made landfall in the

fall of 2017, evacuations were widespread
and the damage was horrifying. As the majority
of people fled from the affected areas, there
was one group of people driving towards
the chaos, firemen.

After facing massive floods in 2016, the Harris County

Emergency Services District 48 Fire Department
in Katy, Texas realized they didn’t have enough
budgetary funds for a rescue boat, one which was
desperately needed.

With nowhere to turn, a local Firehouse Subs®

business owner recommended to the department
that they write to the Firehouse Public Safety
Foundation®, a foundation which has granted more
than $33 million to provide equipment, training, and
support to hometown heroes across 46 states, Puerto
Rico, and Canada since its founding in the aftermath
of Hurricane Katrina in 2005.

10 Loyalty Management™ | Q2 2018 | loyalty360.org

 “ Firehouse Subs made it a point to
include its philanthropic efforts
within its mainstream advertising.
Within a few weeks, HCESD 48 received rescue boats,
a transport trailer and personal water safety equipment
”
The story of HCESD 48 is one of many for the Foundation, as
they seemingly answer the bell each time a natural disaster
which was combined to be worth $ 22,372. The rescue strikes. For Chris and Robin Sorensen, founders of Firehouse
boats would later go on to save over 200 civilians who Subs, the Foundation is an extension of the service held belief
were stranded in flood waters after Hurricane Harvey hit. systems that formulated their first restaurant back in 1994.

From their early days as firefighters

to the days of handing out food after
Hurricane Katrina, Chris and Robin have
made public service a top priority.

Loyalty Management™ | Q2 2018 | loyalty360.org 11

 FEATURES
With Firehouse Subs, philanthropy and community involve-
ment are not so much a business initiative as they are a
deep-rooted part of the brand’s identity. Don Fox, CEO of
Firehouse Subs, is the spearhead behind these beliefs.
“The only reason why we created the foundation was
because we were committed to our communities and are
philanthropic by nature. We were in a unique situation as
a brand where we had a cause that was so linked with our
brand identity. Being founded by firefighters was the entire
cultutre of the restaurant. Most brands would love to have
such a strong connection. However, it wasn’t commercial-
ized in any way, that wasn’t the reason why we did it.”
When you walk into a local Firehouse Subs restaurant,
you are inundated with pictures and equipment paying
homage to the local firehouses. The connection between
each location and the local fire departments is felt from
the moment you walk in to the minute you check out.
Normally, paying homage to public service entities
within the community would be enough for most brands.
With Firehouse Subs however, they want first responders
to feel the impact of their brand and foundation. They
understand the importance of community involvement
and have stressed it as a brand for years but revamped
it further three years ago.
After speaking at a National Restaurant Association
conference in 2015, Don Fox was approached by a Cornell
professor about using Firehouse Subs’ data on philanthropy
and business results for a study they were conducting.
12 Loyalty Management™ | Q2 2018 | loyalty360.org
Their findings are what initiated the increased highlight
by the brand on community involvement.
“They did a deep dive with their analytics and they came
back with qualitative and quantitative data that stated the
highest correlating factor with sales was community involve-
ment as measured through donations. That became the
first substantive way for us to measure the engagements.”
For Firehouse Subs, the communities where
restaurants had the highest levels of consumer
sentiment were the ones with the top fundraising.
The in-restaurant fundraising platforms, which provide the basis
of the finances required for the foundation, are setup at every
Firehouse Subs location. The programs include selling empty
pickle buckets for $2, a “round up” cash out system, where
guests can round up their check to the nearest dollar for the
foundation, and selling paper medallions that are hung up in
stores during October’s Public Safety Month.
These fundraising platforms allow the foundation to purchase
necessary public safety equipment for fire departments
in communities like Harris County, where hundreds of
lives were saved as a result of the contributions made by
the foundation.
Despite the work of the foundation never being done with
the intent to drive business; after discovering over time the
crucial role it plays in customer loyalty and sales, Firehouse
Subs made it a point to include its philanthropic efforts
within its mainstream advertising.
“We hesitated with this in the past as we felt maybe it was
a bit of chest pounding but you do reach a point where you
realize the more successful you are in business the more
successful the charity does. More lives are saved the more
successful we are. It is very symbiotic in nature. In the end,
data was one of the biggest things that got us to where
we are today.”

Perhaps, what has gone unnoticed in the midst of

the massive impact of the Foundation in the public
safety sector and disaster relief as a whole is the
growth, innovation, and success Firehouse Subs
has had throughout the last few years.

With more than 1,130 restaurants across the United States,

Puerto Rico, Canada, Mexico and non-traditional locations,
“
Firehouse Subs
provides afford-
able food while
uplifting the
public safety
entities within
each community.
Firehouse Subs has come a long way since its humble
beginnings in 1994. The unique steam method of heating
the meats and cheeses is not done by any other sandwich
brand, and customers flock to local Firehouse Subs
locations for that flavor. It is a rare,
yet powerful
combination
that continues to
grow and have

”
a lasting impact
throughout the
The menu includes roughly 20 different sandwich options, country.
multiple specialty subs and salads, which provides enough
variety to get customers to come back and similarity to
keep customers back.

For regular customers, the Firehouse Rewards point-based

loyalty program is a quick way to earn free sandwiches
and various meal upgrades. The rewards app can be
used to order ahead, return to a previous order, and find
nearby locations.

Firehouse Subs provides affordable food while uplifting

the public safety entities within each community. It is a
rare, yet powerful combination that continues to grow
and have a lasting impact throughout the country.

Loyalty Management™ | Q2 2018 | loyalty360.org 13

 FEATURES

Steps beyond music and

into making connections
Chris Brosey
Loyalty360

14 Loyalty Management™ | Q2 2018 | loyalty360.org

There was a time, not too long ago in fact,
when “burning” CDs was the only way to get a
personalized variety of music while on the go, in
the shower, working out, etc. Users would “burn”
various songs onto one CD (roughly around 12
or so), and that would be the limit for the disk.
Users would then play the CDs ad nauseam until
the lyrics could be recited front and back. It was
common in those days for people to have entire
binders full of burned CDs, from which they
would continuously cycle through in an attempt
to avoid the radio or silence in general.
Fortunately for everyone (except the couples who
are still creating mixtapes for each other), we no
longer live in a time where we need to keep these
massive binders filled with CDs.
Today, we have
the gift that is
Pandora Music.
Pandora, the music streaming
app founded in 2000, provides
each of its 75 million monthly
users with a separate,
individualized radio station,
full of music that the user
prefers and without the
music they do not.
With their unique “thumb up, thumb down”
feature, Pandora continuously builds a library for
you as you listen to each station.
The magic behind all of this is Pandora’s
Music Genome Project, the self-proclaimed
“most comprehensive analysis of music ever
undertaken.” Susan Panico, SVP Strategic
Solutions at Pandora, discussed the project,
“The Music Genome Project
is our secret sauce that
makes us different from the
competition. The engineering
behind Pandora all started with
the Music Genome Project.”
“We have actual human and data science
experts that analyze every song across
450 different attributes. When you look at
voice, strings, percussion, these attributes
get scored.”
The datasets Pandora accumulates for each
user allow the company to personalize the
music on each station towards the preferences
of the user. In times where individualized
consumer preferences continue to dominate
the strategies of major brands, this unique
approach behind Pandora hits the nail on
the head.
“When you talk to people who use Pandora,
they tend to talk about it as ‘my Pandora,’
because their Pandora stations are going to be
very different from mine and yours even if they
are listening to the same artist.”
The unique nature of music lies in the emotional
connection between artist and listener. The
personalized process for Pandora taps into this
connection between both sides. Specifically,
the younger generations are where Pandora is
seeing this truly hit home.
Loyalty Management™ | Q2 2018 | loyalty360.org 15
 FEATURES
“It seems that Gen Z and younger Millennials
have become less loyal. In turn, what you
need to do is give them experiences and
content that meets them on a personal level.
We often talk about ‘show me you know me.’
There’s an expectation around how kids are
growing up, how things that are delivered
to them need to be a lot more personalized.
Going beyond that functional loyalty and
tapping into that emotional loyalty is what
most brands want to achieve.”
Not only does the data behind Pandora
allow for unique, differentiated stations
catered towards individual users, but it
allows the brand to advertise into targeted
specialized segments.
Similar to a CPG brand sending users
personalized emails regarding products that
are related to what they normally purchase,
Pandora is able to contact users about shows
or new singles of artists they know are
listened to by each user.
This symbiotic approach benefits both the
advertiser and user, as users are informed
about music or events near them that they
are interested in and advertisers are engaging
with a much more interested audience.
For its most loyal listeners, as both a business
strategy and way of giving back, the brand
released its on-demand premium feature a
little over a year ago.
The paid premium feature allows users to
search and play any song, create playlists
(on their own or powered by Pandora)
download the music they want for offline
16 Loyalty Management™ | Q2 2018 | loyalty360.org
listening, skip or replay songs an unlimited
number of times, listen with higher quality
audio, and listen with no ads.
“We did a lot of listening and research
with our consumers and I’d say most of our
products are built off insight from consumer
behavior and feedback. We reacted to that
market shift and created Pandora Premium.”
Taking things further in the desire to connect
listeners and artists, Pandora has also
sponsored multiple free concerts the last
few years.
Last year there was the fifth annual Sounds
Like You event in New York, which featured
major artists like Post Malone and SZA. This
year they have Backroads in Nashville, which
features Lady Antebellum, Carly Pearce and
Morgan Evans. These are just two examples,
as Pandora periodically sponsors concerts
throughout the year.
With everything that Pandora offers, it has
come a long way since its original days of
simply being a streaming service. The brand
is aware of the powerful connection between
music and people, and continues to capitalize
and expand upon it.
“Music is such a huge passion point
for people. It is a universal language
and it creates different triggers and
memories for people on an individual
level. It is something we take a lot of
passion and pride in fueling with our
listeners.”
 EVERY LI ST ENER O N
RA IS PLUG GED IN
PANDO
100 PERCENT.

“So, we know, not only from the registration

process, their email, geo, and age, but we can also
see these different behaviors. What devices they
are listening on, what time of day they are listening,
the type of music they listen to also tells us a lot
about their interests, ethnical backgrounds, etc.
We get probably over a billion signals of data on a
daily basis that allows us to create rich targeting
for advertisers and track that music early on.”

Loyalty Management™ | Q2 2018 | loyalty360.org 17

 FEATURES

LOYALTY IS
MORE THAN A
BIG GAME FOR
ALLY FINANCIAL
Mark Johnson
Loyalty360

Forget the game. For 24,000 people, what happened between

the New England Patriots and Philadelphia Eagles was just a way
to pass the time between the truly important events of the day—
the commercials. And it wasn’t even that they cared that much
about Budweiser’s philanthropic efforts or that Alexa lost her voice.
Heck, they didn’t even watch the commercials when they came on.
They were too busy playing Ally Financial’s augmented reality game.

In an effort to get its customers to focus on saving their money,

Ally Financial created an augmented reality game that was activated
only during the Super Bowl commercials. The game within the Big
Game had virtual dollars falling from the sky, and users had to grab
them and slide them into a virtual piggy bank at the bottom of the
screen. Those who saved the most were rewarded for their efforts.

18 Loyalty Management™ | Q2 2018 | loyalty360.org

 “There’s certainly this temptation, especially when we
launch new products and there’s all this pressure to
drive revenue and more and more customers, but for us
it’s less efficient to drive a bunch of unqualified traffic
to the top of the funnel than it is to drive a good quality
customer who we know we are going to be able to build
a relationship with.”

A total of 70,000 people downloaded the app, with 31,000
people submitting for prizes and 24,000 on average playing
during each commercial. It was enough to earn Ally the
inaugural #Interception Award from Twitter for having the
most social chatter during the Super Bowl without running a
commercial. Which is fine, but not the overall objective.
In many ways, she says, the bank has no choice but to
be a disruptor. It’s share of voice is only about 2 percent
in the financial services category, which spends $4 billion
annually on advertising and marketing. Beyond that, its
focus isn’t the same as other banks—and hasn’t been
since its creation 10 years ago.

“The idea is to get people to reframe the way they’re thinking
about their money,” says Andrea Brimmer, Chief Marketing
and Public Relations Officer for Ally Financial. “Over 50
percent of Americans couldn’t handle a surprise repair of
$500 or more, and you’ve got almost the same percentage
with less than $1,000 in their savings account. I think that
people are living very high on the hog right now, and we’re
getting into dangerous times. For us, it’s all about trying to get
people to think about this notion of money mindfulness again,
and to be a little more savvy with what they’re thinking about.”
The bank began running its “real savings stories about real
people” effort the week before the Super Bowl, noting that
“while brands are spending big money on the Big Game ads”
it’s placing its emphasis on savings.
Ally started off as GMAC, the financing arm for the
auto giant General Motors. It decided to rebuild and
rebrand the institution at the height of the banking
crisis, putting a greater emphasis on the customer
experience rather than on the bottom line.
“We launched at a horrendous time,” she says. “People were
like, ‘What are you guys doing launching a bank right now?
Everybody hates banks and the economy is falling apart?’
But that was the whole premise of our brand: We are going
solve the customer pain points, and we are going to create
this relationship putting the customer at the center of
everything that we do.

Choosing the Super Bowl—where 30-second ads cost

$5 million—to launch the effort wasn’t an accident. In
fact, it fit right into the bank’s—and Brimmer’s—dis-
ruptor mentality.

“When I took this role as CMO, we put into place this strategy
that I call our disruptor strategy,” says Brimmer. “The idea is
that every other quarter or so, we go in the marketplace with
something that is very differentiated and engaging that gets
people who may not have known about our brand to interact
with our brand. We started with Splurge Alert, Ally Lucky
Penny, Hardest Working Dollar and now The Big Save.”

Loyalty Management™ | Q2 2018 | loyalty360.org 19

 FEATURES

“People want to do business with brands that they have an emotional

connection with, and if you’re constantly optimizing for the fast sale,
you’re optimizing for the lowest common denominator and short-term
gain and that concerns me.”

“I can tell you, having been here from the start 10 years
ago, we will literally sit in meetings and argue for two hours
about the stupidest things because we are arguing with
the customer hat on. It could be the smallest experience, and
we are sitting there trying to figure out the best way to
give that best experience.
We’ve never wanted to walk away from those tenets in our
marketing thinking either. There’s certainly this temptation,
especially when we launch new products and there’s all this
pressure to drive revenue and more and more customers,
but for us it’s less efficient to drive a bunch of unqualified
traffic to the top of the funnel than it is to drive a good
quality customer who we know we are going to be able to
build a relationship with.”
“And that’s a big part of how we measure success—what kind of
balances did we bring? What was the funding on their account?
Do they have multi-product relationships with us? I don’t get
credit for driving 100 million people to the storefront; I get credit
for driving 25 million people and 80 percent opened an account
and brought the balances and relationship that we wanted.”
In addition to the lengthy meetings debating customer
viewpoint, the bank also fights hard to keep in check the bal-
ance between sales and engagement.
A number of the touchpoints it sends out have no sales
message in them at all, but are focused entirely on enhancing
engagement.
It has a surprise-and-delight campaign where it randomly
selects members and gives them gift cards as a way of
saying thank you. It strategically sends out birthday
e-cards five days ahead of its customers’ birthday that
say, “We want to be the first to wish you a happy birthday.”
It sends “My Ally Updates” emails that offer informative
articles or quizzes.
“We’ve been very protective of keeping those pure,”
says Brimmer.
What often gets lost in the proliferation of data and constant
pressure to make money is that marketing is both an art and
a science, and the “art” portion—the customer engagement
and satisfaction—is too hard to quantify financially, so it gets
shoved to the side.
“I do worry as an industry that we are becoming overly
reliant on data, and what that does is take out of the
equation the heart of marketing, which is the art part of it.
It’s not all the science.”

20 Loyalty
Loyalty Management™
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2018 || loyalty360.org
loyalty360.org
“People want to do business with brands that they have an
emotional connection with; and if you’re constantly optimizing
for the fast sale, you’re optimizing for the lowest common “I have been in this business
denominator and short-term gain and that concerns me.”
for nearly 30 years now,
What makes it even more critical is how the changes
in technology and the customer actually makes it more and I would say the business
difficult to measure the effectiveness of data.
of marketing has changed
Yes, all of the data helps with segmentation and person-
alization, but the options customers have to receive more in the last three years
messaging are so numerous now that getting an accurate
report on effectiveness is a challenge. than it has in the 25 years
“I have been in this business for nearly 30 years now, previous to that because of
and I would say the business of marketing has changed
more in the last three years than it has in the 25 years
the reign of digital disruption
previous to that because of the reign of digital disruption
—virtual reality, augmented reality, customer shopping
—virtual reality, augmented
online, the customer having five different screens on at the same
time. Look around your own house if you have
reality, customer shopping
teenagers: they’re on the phone, their headsets are on,
the TV is on, their laptops are in front of them and they’re
online, the customer having
probably snapchatting like crazy.
five different screens on at
For us as marketers, trying to reach people in new and
differentiated ways is becoming more and more challenging.
the same time.”
Then you have to overlay trying to ascribe attribution to
that to understand what should be in your marketing stack—
what’s the most efficient dollar, what’s driving that action.
How do I know if the TV ad they saw drove the action or
the digital ad that I served got them to click and come to
our storefront? It’s very difficult to figure out attribution.”

The answer: shift your thinking. Disrupt the pattern.

Go for the emotion, let the customer know you
care and let loyalty grow from there.
“The way we measure [our marketing campaigns] is
through increased positive social sentiment, any spike we
see in increase of awareness and visits to the microsite,
and our ability to capture that customer information and
begin to market to them. That’s how we measure it, but
first and foremost, I look at these as creating inertia and
momentum for our brand in the marketplace that we
would not have otherwise been able to create.”

There’s no way of measuring it, but if a brand can get its

customers to pay attention to its augmented reality app
instead of the Super Bowl commercials, it’s already won
the loyalty game.

Loyalty Management™ | Q2 2018 | loyalty360.org 21

 FEATURES

SLING STAYS TRUE

TO ITS PROMISE
AND HELPS PEOPLE

CUT THE
CABLE
CORD
Mark Johnson
Loyalty360

22 Loyalty Management™ | Q2
Q1 2018
2018 || loyalty360.org
loyalty360.org
Chris O’Brien is a writer for the San Jose As someone who is on the frontline of
Mercury News who writes about all of the technology, O’Brien is no doubt all-too-familiar
techy stuff that occurs in the area’s Silicon with the technological alternatives to cable and
Valley. He is also, by his own estimate, an satellite television that are popping up these
outlier. A member of the vanguard. It’s not that days, including—if not especially—Sling TV.
he’s a rebel without a cause or a Russian troll.
It’s just that he and his family did something
that would come across as radical—perhaps
even heretical—with a majority of Americans.

He cut the cord. He called his cable company

and broke off their lifetime relationship.

“Parting,” he said
in an article on
the newspaper’s
website detailing his
experience,1 “is not
sweet sorrow.”
1
mercurynews.com/2012/05/01/obrien-how-my-family-cut-cable-tv-service-and-lived-to-tell-the-tale
Loyalty
LoyaltyManagement™
Management™ || Q2
Q1 2018 | loyalty360.org 23
 FEATURES

In February 2015, Charlie Ergen launched
Sling TV, an online alternative that streams
TV shows and movies over the Internet. It
offers a healthy number of programs at a
fraction of the cost of other paid TV avenues,
and even provides a la carte options for
those who only want to pay for their favorites
instead of a package of channels.
What’s ironic is that Ergen launched and is
currently chairman of Dish TV, and was the
first person to launch a satellite into space to
relay all of the network’s programs down to
homes across the country. So with Sling TV,
he created a business to compete against his
other business.
Talk about being a disruptor. Or a genius. If
you can’t beat your competition, why not be
your competition?
Besides that, the Chris O’Brien’s of the
world are quickly moving off the margins
and moving toward the mainstream. One of
the largest segments in the paid television
industry isn’t new subscribers or binge
watchers, but the dissatisfied, frustrated
consumers who are cutting their cords and
fighting back against the increased cost and
decreased options that are presented to
them by cable and satellite providers.
That’s just opening the door for Sling TV.
“I think we’re addressing a
lot of the pain points that
people have with traditional
TV models, whether that’s
long-term contracts or useless
channels or you need all of this
equipment or, quite honestly,
an overall negative sentiment
people have with traditional
paid TV,” says Colleen
Sugarman, head of marketing
for Sling TV. “We’ve been able
to come in and address those
pain points with what we
consider to be a whole-
product solution.”

24 Loyalty Management™ | Q2
Q1 2018
2018 || loyalty360.org
loyalty360.org
Customers get the ability to “take control of
their TV experience,” she says, by selecting
from an option of 20 channels, 25 channels,
adding on genre-based “Extras” and adding
on additional individual channels. They can
watch on a TV, computer, Smart TV, tablet or
phone, and can add or subtract DVR options.
Customers can also change services anytime
online, which is ideal for families who are
bored during the summer but suddenly find
themselves with no time when school and
soccer season starts.
“The traditional paid TV model has
hundreds of channels, but consumers
equate that increasing their bill and
their bill continuing to go up,” she
says. “We really want to be engaged
with the consumer in a different way,
to allow them to customize their TV
programming.”
The options allow for personalization, and
that came about by listening to all of the
frustration of cable and satellite users and
acting on their pain.
The company is on the forefront of a new,
fast-paced and evolving industry, so it’s
forced to do regular competitive analysis and
adjust quickly to changes. But, she says, it all
comes down to putting the customer first,
and that’s just as easily done as said.
“What I love about my job is we are
listening to customers. We stay true to the
brand promise of delivering what they want.
I also think that, based on what we hear,
we’re able to take feedback and quickly
make improvements to the app, and that’s
consumer experience. And I think that, in
the end, we’re going to win.”

“We also have a brand promise to

consumers to try to make everything easy.
How do you have an experience that’s easy
to navigate? How do we allow for people to
come in and out of the service? I’ve managed
a lot of subscription-based services where
you would never allow consumers to have
easy online cancellation. We’re the opposite.
When we think about the marketing, we
always put the consumers in the center, and
we think about that brand promise of, ‘Hey,
we want to be new and different,’ and really
run from the old traditional model that, quite
honestly, people don’t like.”

What has made Sling TV so popular so

quickly is that they employ two of the
anchors to creating customer loyalty—
personalization and listening to the customer.

Loyalty Management™ | Q2 2018 | loyalty360.org 25

TECHNOLOGY, TRENDS & REWARDS

Short-term activations drive

acquisition, engagement and
retention for your loyalty program.

Gina Fleck
Director of Loyalty
at HelloWorld, A Merkle Company

W
hile there are over 3.8 billion loyalty program memberships in the US alone,
54% of them are inactive (2017 COLLOQUY Loyalty Census) – a trend that has
continued over the past few years. Despite this, many loyalty marketers have
continued to focus on program acquisition as their main measure of success, putting
Download free whitepapers and
large portions of budgets on things like media and awareness. And while those things are eBooks on loyalty and engagement:
still important, critical attention needs to be given to ongoing initiatives that will engage HelloWorld.com/Insights/whitepapers
members once they are in the funnel and reward them beyond purchase.
For more ideas on promotions,
In recent years, marketers have learned that the traditional “spend & get” format only
loyalty and overall engagement,
works to a certain point. Finding ways to reward beyond purchase and driving longer-term
visit www.HelloWorld.com.
engagement is key. 75% of consumers want to be rewarded beyond purchase (HelloWorld
2017 Loyalty Barometer Report). Layering short-term bursts of promotional activity on top
of ongoing loyalty programs is a proven way to motivate members to engage and drive
specific behaviors. Following is a quick primer on best practices for integrating promotions
into your loyalty experience.

26 Loyalty Management™ | Q2 2018 | loyalty360.org

 Best Practices in Digital Engagement
Driving ongoing and active engagement with consumers is one of the toughest challenges for marketers right now, but
promotional overlays are a proven way to overcome it. If you take the time to define your goals, design your campaign,
create an awareness plan, and measure success, you can overcome these challenges and keep your consumers happy.
STEP 1: Plan
Start at the End
What behaviors do you want from
your members that are measurable
and uncomplicated? Think about
what’s important to your brand
and what might need an additional
push at this point in your loyalty
program’s current state, and be
specific about what you’re trying
to achieve. Taking the time to
ensure you know how to define
success before launching the
campaign will make measurement
much simpler.
STEP 2: Design & Promote
Create Your Activation
Once you’ve determined your
goals, a promotional overlay can be
designed to motivate those specific
behaviors. These activations layer
easily onto your existing loyalty
program without interrupting the
program’s framework.
Acquisition - sweepstakes spark
attention with aspirational prizes
Engagement - instant win or collect
and win games drive frequency
Retention - punchcards and
limited-time offers reward
ongoing program commitment
STEP 3: Measure
Measure Success
The steps you took in the planning
phase should come in handy as
you measure. Are the appropriate
metrics being tracked? Are they
accessible? Is the reporting
cadence agreed upon? For shorter
term campaigns, one report at the
end might be sufficient, but larger
initiatives might require weekly or
daily insights. Remember to keep
focus on the specific goals
determined for the campaign,
When the Time Is Right
While promotional overlays
are effective any time, strategic
timeframes can amplify your results.
Some common timeframes to test are
around your brand seasons, such as
back-to-school or holidays.
Maximize impact of your activation
by tying an overlay to a new product
launch or brand campaign.
Conversely, leveraging historically
slow seasons can be a great time for
testing. Execute an overlay during a
low season or purchase cycle.
Consider Gamification
Gamification is using game concepts
and mechanics to engage users and
change behavior. Weave elements
that make games compelling into
promotional overlays to move users
toward your objectives, like brand
awareness or education. Common
mechanics include:
• • Leaderboards/Scoreboards
• • Levels/Tiers
• • Progress Bars
• • Badges/Trophies
• • Challenges/Unexpected Rewards
and measure success based on
those. Then, look more broadly –
it’s possible that the campaign also
mpacted other program performance
measures that you didn’t foresee.
Learn, Rinse, and Repeat
Once the campaign is over and you’ve
measured its performance, take things
one step further to understand what
was learned. If the campaign worked,
determine how and when you can
Loyalty Management™ | Q2 2018 | loyalty360.org
TH E FIRST LAYE R
While understanding your
brand’s goals are important,
considering what your
members think, do and feel
at any point within your brand
experience provides a strong
foundation for the rest of
your planning.
Have an Awareness Plan
How will you get the word out?
While you don’t need a large media
buy, particularly if you are targeting
existing program members, it’s
critical to have a plan that allows
you to “promote the promotion.”
Leverage your email database,
social channels, and program site or
app. For larger initiatives, consider
point-of-sale assets like standees,
posters, or shelf displays to engage
members while in store. Paid media
can also allow you to reach new
consumers beyond point-of-sale,
whether through ads, promoted
posts, or influencer campaigns.
run it again to drive even more
results. If the data shows something
could have worked better, make sure
future marketing plans optimize it.
Promotional overlays shouldn’t be
a one-time thing or conducted the
same way every time. Test and learn
different tactics to build a dossier
of verified activations that drive
specific results for your audience,
and build on it over time.
27
BEST PRACTICES

Increasing Foot Traffic and Sales

Through Multi-Channel Loyalty

Ann Olinger
Sr. Manager, Product Experience
Analytics Suite

Already a leader in its region for brick-and-mortar hockey equipment

sales, B&R Sports wanted to offer customers an online shopping
experience while growing its retail footprint. With ecommerce slated B&R Sports
to launch in August 2018, B&R has already seen an increase in brick- By the Numbers
and-mortar foot traffic and sales after implementing a multi-channel
engagement program that incorporates loyalty & rewards, email
marketing, and social media. This multi-channel approach keeps the
B&R Sports brand top of mind and improves customer retention and
repeat business. 10 Stores in 3 cities
Located in “Hockey Alley”:
Detroit, Grand Rapids,
Characteristics of Multi-Channel Loyalty and Chicago
The B&R Sports multi-channel engagement and loyalty
program has some unique characteristics, and some that
are common in the industry:

Tap to save a coupon to Google Pay 80%

Best email open rate
keeps the brand top of mind
With one tap, customers can save emailed coupons to Google Pay.
“When customers with one of our coupons in Google Pay pass
by one of our stores, they get a notification that there’s a coupon
waiting for them to use. It keeps us top of mind,” says John Merola,
Director of Digital Marketing and Ecommerce, B&R Sports. “When 23
Number of online
they come into the store, rather than having to dig through their
review sites B&R Sports
email inbox to find the coupon, they can pull up Google Pay on their will consolidate into a
phone to use it. I find that customers love this convenience.” single dashboard

28 Loyalty Management™ | Q2 2018 | loyalty360.org

 When customers with one of our coupons in Google Pay
pass by one of our stores, they get a notification that there’s
a coupon waiting for them to use. It keeps us top of mind.”
– John Merola, Director of Digital Marketing and Ecommerce, B&R Sports.

Tools that are simple for marketers Guiding Principles For Developing
Managing the company’s two Chicago stores
as well as the ecommerce and digital marketing
Multi-channel Loyalty
Based on the experience of B&R Sports and other
initiatives for the entire brand, John Merola stays
Xenial retail customers, there are several guiding
very busy. “I only have time for simple when it
principles for developing a multi-channel engagement
comes to marketing and the tools I use. An analytics
and loyalty program:
program with built-in email marketing helps us
capture a snapshot of our marketing without having
to dig very far,” he says. “I like opening a simple
Facts are a marketer’s friend
“Email—our entire multi-channel approach,
dashboard with graphs and numbers that let us
really—is working for us,” says Merola. “We are
compare today’s trends with yesterday or one week
selling more hockey gear, and I know this from
ago, or see whether our marketing efforts brought
my dashboard.”
in new or returning customers. And I don’t need
a business analyst or database expert to get this
information. It’s at my fingertips.”
Make rewards meaningful
B&R Sports customers earn 1 point per dollar
they spend. 250 points=$10 to spend on any item.
Metrics lead to better
“Customers are truly excited when we tangibly show
targeting – and success
our appreciation for their patronage,” says Merola.
“A quick glance at a line graph lets me see whether
or not an email promotion worked,” says Merola. “And
I can measure a campaign’s success based on actual
Keep on growing
Next, Merola hopes to implement tools that
sales because email marketing is integrated with our
will help him understand customer demographics
POS. This lets me see metrics such as numbers (and
(such as age, number of children, and median income)
spend) of new versus returning customers. That’s
and zip codes. This kind of information will help him
powerful for a marketer.”
refine marketing efforts such as geo-fencing his online
ads and streamlining direct mail costs when opening
Adaptable
a new location. It can even guide company leaders
Using native functionality, Merola can
regarding the best place to open a new store. Merola
customize each email with coupons or offers coded
is also considering a tool that will give him insight
uniquely to the recipient. He says, “My system tracks
into online customer reviews alongside those of his
usage so I can measure effectiveness.”
closest competitors. “It comes back to simplicity,” says
Merola. “I’ll consolidate reviews from 23 different
online sites into a single dashboard, and I can’t wait.”

Ann Olinger is passionate about building products that

intersect analytics, technology, and intuitive design.
She currently manages the Analytics product suite,
which helps thousands of merchant locations across
the U.S. and abroad grow their businesses, for Xenial,
A Global Payments Company.

Loyalty Management™ | Q2 2018 | loyalty360.org 29

STATE OF THE INDUSTRY

Simplicity in Loyalty Programs

– Not as Simple as it Sounds
Kate Baumgart Hogenson
Strategic Marketing Consultant, Loyalty and Customer Experience
Kobie

During a loyalty program design session, you will almost always hear the phrase “the program has to be simple.” Marketers firmly
believe that consumers want a simple program. But many of the biggest, most popular, and most engaging loyalty programs are
anything but simple. How can that be?

It turns out that program complexity exists for very good reasons:

1. Customer needs vary

There is behavioral research that shows that members are more likely to feel loyal to a brand and are more likely to make their next
purchase from that brand when they perceive themselves to be 80 percent of the way to a reward rather than only 20 percent of the
way to a reward.1 The problem is that a single person buys at a different rate than someone shopping for a family, an occasional first
class traveler flies less often than a road warrior, the marathoner buys running shoes more often than the 5k runner. How can you
make all types of profitable members on your base feel like they are 80 percent of the way to a reward?
One way is to add a greater selection of rewards that offer each group a reward within reach. In an earlier time, offering a choice of
rewards led to ever expanding and complex reward charts, such as the major hotel chain with separate rewards for the Level 2 hotel
in Des Moines and the Level 5 hotel in Hong Kong. Many marketers still shy away from the “reward catalog” approach as being far
too complex.

May need multiple value propositions which are each simple on their own

Motivated by Streamlined order process

Habit Automated reorders

Program
Motivated by Benefits Recognition
for reaching
Early access

Status a performance
goal
Invitations to
exclusive events

Motivated by Member Pricing

Price Only Buy 1, Get 1 offers

Fortunately, user experience design has dramatically improved so that the complexity can work in the background. For example, Hilton
introduced a sliding scale that enabled every member to pay for any hotel with a mix of points and dollars – in effect creating infinite
choices that would have been far too complex to explain in a reward chart. Hilton more than doubled program engagement measures,
because now almost every member is 80 percent of the way to a reward. Increased member engagement has driven revenue and
profit for them.
The interface delivers simplicity for the customer, even if the work behind it was complex to set up.

30 Loyalty Management™ | Q2 2018 | loyalty360.org

2. The same customer has changing needs
When members first join a program, they tend to focus on
the core value exchange proposition – if I do this, I’ll get that
incentive. That’s one relatively simple message and many
programs stop there. However, there is research indicating that
incentive-only approaches do not build long term brand equity.2
As customers experience multiple interactions with a program,
they come to value the benefits that make it easier to do
business with the company such as profiles that short-cut
re-orders or express lanes for frequent travelers. Or they value
recognition benefits such as early access to new products or
exclusive invitations to special events.
3. Programs need to stay fresh by adding
new enhancements
When The Wise Marketer recently asked a broad selection
of program members what drove them to disengage from a
program, there were about the same number of members who
said “Program was boring / had nothing new overtime” as the
number of members who said “Program rules were confusing
or unclear.”3 That’s a stunning result.
Simplicity can become boring and might ultimately be as detrimental
to member engagement as the confusion of complex program rules.
The lesson is that a static program can become a dead program.
The most popular and beloved hotel programs evolved over the
past 30 years to address an increasing variety of travelers and to
embrace evolving trends. Hotel programs tend to be the most
complex programs in market, but the best brands do a stellar job
of presenting only the value proposition needed at each point
in time – how many nights you need to reach the next tier, what
you need to do to skip the line and go straight to your room, and
what you earned on your most recent stay.
4. Financial margins create the need for a Stable URL: http://www.jstor.org/stable/10.1086/656392
variety of incentives
If you have very different margins by product line, you may
be willing to give very different incentives. A simple approach
would be to set program earning based on only the lowest
payout products. However, that doesn’t create an incentive to
buy that higher margin item you really want to sell.
Again, behavioral research can help inform how to show the
complexity. If a customer is buying that low margin product,
show them the number of points they’ll earn for that item.
If they are looking at the overall program, don’t bother them
with a chart that says they will earn 7 points on category A, 10
points on category B, and 13 on Category C; keep it simple and
tell them they’ll earn an average of 10 points per $1.
5. Multiple brand programs require cooperation
to combat complexity
Many companies struggle with the day-to-day management of a
multi-brand program. Each brand wants to own the customer and
have top placement at all touchpoints – they often argue for separate
programs which really is not simple for the customer.
The companies who do a good job of managing multi-brand
programs reduce complexity by focusing on the end-to-end
experience for the member – presenting cross-sell opportunities at
the right times and making the handoffs seamless. Most critically,
they recognize when the program needs to be center stage for the
member – show the member that they need one more purchase
for that next reward and then show them that they have a choice of
brands that will get them there.
Let’s face it – what marketers REALLY mean when they say they
want a simple program is that they want the program to be simple
for them.
The best programs make it easy to do business with the brand
across a broad range of customers with different needs. They
show the member one specific value proposition at each specific
point in time. The member experience makes sense, feels easy and
non-intrusive. Making it simple and easy for the customer is often
anything but simple and easy behind the scenes.
The true guiding principle that marketers need to embrace is
“avoid one-size-fits-all solutions.” It will likely take more work for
the marketer, but that work will yield more engaging experiences
for the customer and ultimately, a more profitable and sustainable
loyalty program.
Research referenced:
1.“Illusionary Progress in Loyalty Programs: Magnitudes, Reward Distances, and
Step-Size Ambiguity,” Rajesh Bagchi and Xingbo Li. Journal of Consumer Research,
Vol. 37, No. 5 (February 2011), pp. 888-901 published by: Oxford University Press.
2.“Models for the Financial-Performance Effects of Marketing,” Dominique M.
Hanssens and Marnik G. Dekimpe, (2017), Handbook of Marketing Decision
Models, B. Wierenga and R. van der Lans (editors).
3.“From Transient to Resolute: How Deep does Loyalty Go?” The 2018 Maritz
| Wise Market Loyalty Landscape
Loyalty Management™ | Q2 2018 | loyalty360.org 31
BEST PRACTICES
CUSTOMER LOYALTY
THAT STANDS THE
TEST OF TIME
Meg Tronquet
Manager at Lenati specializing in customer
loyalty and marketing strategy driven by
data and customer insights.
Consumer shopping habits and loyalty programs
have transformed since they first burst onto the
scene in the 1990’s. No longer a simple punch card
approach, loyalty has morphed into a sophisticated
mechanism for collecting customer data to enable
personalized marketing and a one-on-one customer
relationship.
Let’s take a look at how loyalty has changed in the last twenty
years to illustrate the point. In 1998, Jennifer would meet
her boyfriend at the local Blockbuster to pick out the newest
release to watch on a Friday night.
As a Blockbuster loyalty program member, Jennifer earned
points with each rental which she could redeem for a free rental.
Fast forward 20 years and Jennifer flips back and forth between
her streaming subscriptions—Amazon Prime, Netflix, and Hulu—
in search of Friday night’s feature, which is personalized to know
what she likes and anticipate what she wants to watch next.
32 Loyalty Management™ | Q2 2018 | loyalty360.org
Laurie Meek
Manager with Lenati with over twelve years
of experience in client service, including
loyalty program strategy & design.
In just 20 years, consumers have more choices than ever
before. It’s no wonder that their expectations for brands are also
shifting. In this modern landscape, it is imperative companies
adapt to maintain relevancy, or risk going the way of Blockbuster.
Successful companies don’t merely adapt – they transform.
Transformation begins when brands create a one-on-one
relationship with their customers. Loyalty programs act as
a direct link to consumers which allows brands to maintain
a pulse on customer habits and preferences. Keeping pace
with customers enables brands to anticipate shoppers’
needs, craft meaningful experiences and innovate products
and services. As companies transform, traditional retail is
massively disrupted.
By thinking ahead, brands can build strong emotional
connections with their customers that engender lasting
loyalty. The three key steps needed to make this change are:
(1) know your customer, (2) take action on customer insights,
and (3) leverage technology to build the right experiences.
 “ By thinking ahead, brands can build strong
emotional connections with their customers
that engender lasting loyalty. “

STEP 1: KNOW YOUR CUSTOMER

1.
Build significant utility into the member experience.
Example: The Hilton Honors app is highly functional and
Before building a loyalty program, you must know who your enables guests to check in, choose their room, request
customer is and what they value. Most loyalty programs aim complimentary items, and use a digital room key.
to gather customer data that will be used for personalized
marketing. Having a single view of your customer is critical

2.
Reframe loyalty-as-a-service. Example: While Amazon
to building long-term loyalty.
doesn’t have a traditional loyalty program, Prime acts as
a “service model” – members unlock access to several
A holistic customer view enables brands to understand customer complementary services in addition to free shipping.
communication preferences, spending habits, and CLV. This in-
formation, in turn, gives brands the ability to anticipate customer
needs, build a marketing engine to support a lifelong relationship,

3.
Double-down on strategic assets and competitive
and create true customer loyalty. advantages to create benefits that are hard to replicate.
Example: Nike+ leverages its reach and resources to
STEP 2: ACTION ON CUSTOMER INSIGHTS provide coaching and workouts to its Run Club members.

Once a brand has insights into its customer base, it can begin

4.
Don’t wait to invest in technology – the next gen will be
to take action on it. It should ideate and use design thinking to
here very soon. Example: Domino’s Pizza has invested
determine what is most relevant to its high value customers
heavily in technology and now has a premium customer
and how to personalize their experiences. Ease pain points by experience delivered through the app.
designing complimentary services, products or offerings – make
it both fun, easy, and meaningful so customers keep coming back.
Loyalty is about more than making repeat purchases; it’s about No brand wants to find itself a fond memory of a bygone
creating an emotional connection with your customers. era; Blockbuster is a hallmark of the 1990’s as it served
a customer need by connecting customers to Hollywood.
STEP 3: LEVERAGE TECHNOLOGY TO BUILD However, because it failed to adapt to changes in tech-
nology and shifts in consumer behavior, it is just a memory.
THE RIGHT EXPERIENCES
While following the above steps may not enable brands
Lastly, it’s important to leverage the right technology to deliver
to fully predict customer behavior, doing so will help them
the ideal customer experience. A brand should make sure its
identify critical questions as they consider the longevity of
customer experience is fleshed out in detail and that the experi-
their offerings and how they will maintain customer attention.
ence has a place with its technology vendor to bring its vision to
life and to evolve that vision over time. This process often takes
longer than planned, so start early!
Stay tuned for a comprehensive white paper which
While predicting the future is difficult, a brand can prepare to delves more deeply into these topics.
stay ahead of the competition and anticipate its customer’s
wants and needs. Brands should consider the following as they
“future-proof” their loyalty strategy:

Loyalty Management™ | Q2 2018 | loyalty360.org 33

 TECHNOLOGY, TRENDS & REWARDS

CUSTOMERS ARE NOT

COMING BACK? TRY OUT
10 C STOMER
RETENTION
STRATEGIES
THAT ACTUALLY WORK
Long-term success of your company depends on your clients, there is no
doubt about it. While you may focus on reaching out to more and more new
customers, do you actually care about what your current clients do and think?
If so, you should definitely become acquainted with customer retention.

But you can be

What is customer retention? In short –
it is how well you manage and keep
your customers and actually encourage
them to constantly come back and buy
your products or services. Believe it or
not, retaining customers costs less than
acquiring new ones and generates more
profit. According to Bain&Company,
increasing customer retention rates by
only 5 percent increases profits by
25 to 95 percent1.
So, it is a game definitely worth playing.
In this article, we will present customer
retention techniques on keeping your
clients close and boosting your customer
retention rates. But first…
You have probably asked yourself that
question. The customer bought my
product and the money is banked – it is
time to convince someone else. In reality
the existing customer has already bought
and used your product and if they are happy
enough maybe they will recommend it to
their friends. They are already educated
on your product and company, the trust
has been established, and you have the
client’s details in the database, ergo – you
know what they like and want. Instead of
repeating the process of getting a complete
stranger to this point, it is more profitable
to invest in clients you already have. After
all, they are the walking adverts. Make a
customer happy and you can be sure that at
least a few other people will learn about it.
100% sure that they
will tell their friends or
share bad review in
social media. With one
lost client you can lose
plenty more.
Actually, most clients leave because they
are unhappy with the way a company
treated them. Unfortunately in most cases
you will not know what happened: they
have probably been disappointed in the past
so it is easier for them to just switch to the
competition than file complaints and tell
you what went wrong.

…why should you bother
with your current customers?
Customer retention gives you quality insight If you want to succeed in the long-term,
on how satisfied your customers are, not you must follow these customer retention
only with your product/service, but more management rules in order to boost client
importantly – with your customer service. retention rates in your company.

34 Loyalty Management™ | Q2 2018 | loyalty360.org

 10 CUSTOMER RETENTION STRATEGIES
TO INTRODUCE TO YOUR COMPANY
1. KEEP THE HIGHEST STANDARD
OF CUSTOMER SERVICE
People are more effected by negative events
than positive ones. In practice, that means
your clients are willing to dwell on anything
negative connected to your company and
comment on it, both in real life and in social
media. The value of very good customer
service cannot be underestimated. Even
if the client is not happy with the product,
their attitude towards the company can
remain highly positive if they are approached
by an apologetic staff, who is willing to do
anything to keep the customer satisfied.
Eventually, the negative event can be turned
into a positive experience. Having said
that, you need to remember that customer
satisfaction can be achieved by exceptional
employees. Appreciate your staff, because
their positive approach to their job and
customer service will result in how clients
see your company. Anyone who represents
your business and has a direct contact
with customers, needs to have a positive
and professional attitude. The customer
service team needs tools for handling client
communication as fast as possible and
without asking loads of questions. Clients
have to know that the company recognizes
them, knows their shopping history, and
quickly solve any problems they might have.
Remember that sometimes treating someone
as unimportant may lose you not only this
client, but potential future profit and maybe a
reputation (you never know when unsatisfied
customers decide to share their story and
“warn” others).
2. BUILD AND CONSTANTLY professionally manageable and give you
MAINTAIN A RELATIONSHIP
WITH THE CUSTOMER
Use the customer service to build trust and
in time, create a relationship with clients. If
a certain customer trusts you, even if you
make a mistake, they will be willing to forgive
you. Instead of complaining, simply admit
that it sometimes happens even to the best
companies. After first purchase, you receive
a lot of information about a client. Use them
to keep in touch, send discount codes, special
promotions or small gifts. These promotions
help customers remember your company,
gives them a reason to come back, and helps
them to forget about the competition around
your brand. Lastly, this could lead to those
customers recommending your company to
friends around them.
3. PERSONALIZATION IS KEY
No one likes to be treated as part of the
crowd. Each customer is different and
requires a unique approach. Nowadays
clients demand a customized shopping
experience. Personalized messages and
discounts can make a difference between
more business with a particular client and
losing them forever.
4. APPRECIATE YOUR CLIENTS
If your clients are happy with your products,
share something nice about your company
or simply come back for more – show them
some love. Acquire a proactive approach. It
can be something as simple as a discount
code, better promotions for the most loyal
customers, or “thank you” messages. Make
an effort and appreciation will be mutual.
5. CLEARLY DEFINE AND SET the content understandable for every client.
CUSTOMER EXPECTATIONS
You need to show clients what they can
expect of you in a very early stage of your
relationship. A little trick: set the expectations
lower, and surprise the client with a quicker
reaction. Also, in worst case scenario, you will
have more time to deliver on your promises.
Simple example: in an automatic response for
customer inquiries, promise a response in
24 hours. If the client gets the response after
an hour or two, they will feel amazed by the
fast reaction. Still, you give your team enough
time to get things done, even if someone gets
sick and their duties have to be passed to
someone else. Remember to always stick to
your word and meet the deadlines you have
set for yourself.
6. USE SOCIAL MEDIA
Nothing boosts customer retention
rate quite like a good social media presence.
Your clients are probably on social media
right now, so use that opportunity. Depending
on the type of your business, start official
accounts on Facebook, Twitter, Instagram,
LinkedIn, YouTube, Snapchat and wherever
else you can think of. Check what channels
your customers are interested in and
communicate with them via those platforms.
Not only will you be able to reach your
customers, but also learn their opinion about
your company and encourage them to share
and become brand ambassadors. Don’t forget
about both mobile and desktop versions,
adjust the language, graphic design and don’t
be afraid to be direct and personal.
7. COLLECT FEEDBACK
Don’t be afraid to ask customers what they
really think about your company. Catching
mistakes early on gives you room for
improvement. You can avoid negative public
feedback by asking questions on a personal
level. You can reach out to clients via surveys
or short messages. Ask yourself questions,
“Do they like your products, what would they
change?” Genuine customer feedback is worth
more than expensive
market research,
and will make
your clients feel
important and
able to make a
change.
Loyalty Management™ | Q2 2018 | loyalty360.org
8. KEEP YOUR WEBSITE, MOBILE
APP AND PURCHASING PROCESS
CUSTOMER-FRIENDLY
The easier your shopping process is, the
better. Clients need to understand how your
website/application works, and the payment
process needs to give them plenty of options
to choose from. Simplify processes as much
as possible, run tests with focus groups,
introduce more language options, and make
The worst you can do is make your customers
feel stupid!
9. BECOME THE CUSTOMER’S
SOURCE OF KNOW-HOW
Be an expert in your business and educate
your customers, so in case of problems, they
know to turn to you for answers and help. Use
positive testimonials about your products,
maybe start a blog with insightful posts.
Sell not only product/services but also the
knowledge.
10. CUSTOMER-MANAGEMENT
PLATFORMS
The more customers you get, the more
complicated it gets to handle them all in a
professional manner. Consider introducing
the customer-management tools to your
company to both help your employees and
provide the clients with high-quality service.
Appropriate platforms will manage your client
data base, send automatic messages, suggest
promotions, and remind you of payments.
Customer retention plans will be more
more time to focus on different tasks.
Customer retention
management leads to loyalty
Marketers usually distinguish between two
terms: customer retention and customer loyalty.
We already know that customer retention is
defined as the ability to retain a customer for
a specified period of time and is presented
as a number/percentage of customers that
are still active, while customer loyalty allows
businesses to measure how often a particular
customer uses products and services. Similarity
and dependency between those two terms is
easily noticeable, as it is not possible to create
customer loyalty without having an effective
retention strategy first. Having a comprehensive
set of customer data is a great opportunity
to run the predictive analytics. This makes it
possible to identify trends in customer behavior
that can help to effectively reduce their churn
and later run a successful loyalty program.
1.
https://hbswk.hbs.edu/archive/the-economics-of-e-loyalty
35
STATE OF THE INDUSTRY

MOVING FROM
Lately, we’ve seen more and more brands facing up to the
fact that traditional loyalty programs simply don’t work in
most industries.

A LOYALTY They fail to create lasting loyalty, largely because they

PROGRAM TO
don’t capitalize on customer data to create ongoing,
emotional value for their members. And a loyalty program
that doesn’t add value for its members long-term won’t

A LOYALTY create value for a business, either.

STRATEGY So, what does the future

look like? Will loyalty
programs cease to exist?
Marlon Bowser
CEO
HTK
Not quite.
Traditional, transaction-based programs may be on
their way out, but there is still a place for engagement-
based programs, which reward customers for their loyal
behaviour, beyond purchases.

The key is that these programs sit within a wider loyalty

strategy. This strategy places the focus on creating value
and positive experiences for the customer across their
entire journey - not just at the moment they swipe their
card or redeem a reward. And that leads to emotionally
loyal customers, who purchase frequently, refer more
friends and are willing to try new products and services.

The loyalty program, then, becomes a means to an

end rather than an end in itself - one component in the
customer experience machine, where profitable loyalty is
the end goal.

So how do you make this shift: from an isolated loyalty

program to an integrated strategy, with a business-wide
impact on customer experience?

36 Loyalty Management™ | Q2 2018 | loyalty360.org

Here are four things to consider:
1. Prioritise data
Loyalty programs are particularly adept
at capturing customer data - which is
good news, because it’s data that fuels
a better customer experience. The
trouble with traditional programs is that
they typically haven’t been very good
at using the information they collect,
beyond fairly simple things like product
recommendations.
But the foundation of good customer
experience is understanding your
customers - both on a large scale and
on a one-to-one basis. And for this,
data is essential. So, when moving to
an experience-focused loyalty strategy,
the first and most important thing to
consider is what you know about your
customers and how you can use that to
your advantage - and theirs.
Start by asking questions like: Where
could the right data help us make the
customer’s experience faster, easier
or more connected? What data do
we need to make their journey more
personalised?
You’ll probably come up with a long list
of potential use cases, so prioritise one or
two based on your marketing objectives.
For example, if one of your objectives is
to increase the average basket size of a
key customer segment, focus on ways
that better use of data could make your
upselling efforts more relevant.
Then, do an audit of the data you
currently have - is it accurate and up-
to-date? Do you have what you need to
implement the use cases you’ve chosen
to focus on?
If there’s essential customer data you’re
missing, think about how you can collect
this through your loyalty program -
whether through implicit behavioural
data, or by incentivising members to
share their interests, preferences or
other information.
2. Take ownership
When loyalty is a business-wide focus,
rather than an isolated program, it’s
important that your team has the ability
to integrate, adjust and tweak all of the
moving parts. And for many businesses
that will mean bringing the loyalty
program (and its associated tech) back
in house as much as possible.
If your loyalty program has been
managed or implemented by an agency,
this might sound daunting. Fortunately,
SaaS (software-as-a-service) platforms
offer a good solution. Cloud-based
loyalty software should come with plenty
of features and integrations “off-the-
shelf”, meaning you won’t end up with
complicated, implementation. That makes
it much easier for your internal teams
to manage.
And it’s becoming increasingly
essential for teams to have a hands-
on approach to loyalty. To ensure your
customer experience is running at peak
performance, you’ll need to be able to
adapt the mechanics that drive it.
As customer needs change, business
goals shift, or simply as you learn more
about what drives loyalty among your
base, you’ll want to optimise and tweak
your loyalty approach - without having to
go through a full program overhaul.
3. Get the (tech) basics right
As marketers, we’re bombarded with
calls to adopt the latest and greatest in
tech - and when it comes to the customer
experience, technology does have a key
role to play.
As people become accustomed to new
channels and devices, they’ll increasingly
expect the brands they buy from to
interact with them there - and provide a
good experience while doing it. But before
you dive straight into augmented reality
or the like, it’s important to get the basics
right. Seamless, connected customer
experiences - the kind that drive emotional
loyalty - depend on the right data, working
across channels in real-time.
That means joining up all the touchpoints
and channels where customers currently
interact with you - and getting data
flowing smoothly between them, so you
can shape the customer experience on
the fly.
Loyalty Management™ | Q2 2018 | loyalty360.org
For this, its good to have a platform that
can act as a central “brain” for your loyalty
and CX efforts, processing, analysing and
actioning data across multiple systems.
This enables each system to deliver a
personalised experience based on the
most up-to-date information - whether
at point of sale in-store, through a mobile
app or on the web.
4. Measure the right things
That you should measure the impact
of your efforts goes without saying, but
when looking at a wider loyalty strategy,
there are some special things to consider.
First, make sure your KPIs aren’t too
narrow; instead, look at the impact of
your loyalty and CX initiatives across
business functions.
That could be an increase in referred
customers, an uptick in the number of
product categories members purchase
from, even a reduction in calls to your
support center - exactly what you
measure will depend on your business
goals and the mechanics you’ve put
in place. Ultimately, though, it means
requiring your efforts to show some kind
of financial impact.
Because emotional loyalty is the goal,
it’s also a good idea to keep tabs on the
state of your customers’ relationship
with your brand. Measuring things like
their overall value and sentiment towards
your business will be a good indicator
of whether your efforts are making a
difference.
Finally, beware of relying too heavily on
vanity metrics. Things like the number
of customers enrolled in your loyalty
program are good to monitor, but they
won’t necessarily tell you whether your
loyalty strategy is having an impact on
your bottom line.
Customer expectations are changing fast,
and the loyalty program as we know it
is fading out. It’s critical that customer-
centric businesses begin to see loyalty as
a core revenue-driving function, rather
than a siloed solution to customer churn.
37
BEST PRACTICES

LOYALTY PROGRAMS
IN QUESTION BY
CERTAIN INDUSTRIES
Louis R. Ramery CEO,
east|west marketing group

Lou is CEO and co-owner of east|west marketing group,

a New York based marketing services firm. Established in
1983, e|wmg is recognized for highly creative, personalized
and exceptional client service committed to delivering
insightful, customer-centric, creatively driven and results-
focused marketing solutions across multichannel platforms.

Martin Whitehead of Customer

Marketing, east|west marketing group

Martin leads the CRM and Loyalty Marketing practice at

east|west marketing group, which encompasses a full-service
consulting group, program management, marketing operations
and multi-channel creative design and execution.

It’s surprising during this age of “big data” that some

companies are questioning the value of their loyalty
programs. In a time where customer data is easier to
collect, cheaper to store and one of the top things on all
executives’ minds, it seems odd to begin questioning
whether a loyalty program is a prudent way to invest
coveted marketing resources.

Some retailers are still struggling to recognize the returns they

expected following the growth of loyalty throughout that sector
several years ago, and the demise of the Plenti coalition program
has started a conversation about the financial worthiness of
certain loyalty programs. The airline and financial services loyalty
schemes are continuing to grow and lead the loyalty world with
new innovations, and the retail sector should continue to press
forward and create better solutions to deepen the engagement
with their customers.

Just because the retail world lacks the main ingredient

that the travel programs have enjoyed since their
inception – cheap program rewards – there’s no reason
why more retailers can’t recognize more success
through loyalty marketing.

38 Loyalty Management™ | Q2 2018 | loyalty360.org

While it’s always wise to keep a close eye on the health of your
program, there is no reason to question the value of a well-crafted
loyalty strategy. Programs like Neiman Marcus InCircle, Tesco
Clubcard, My Best Buy and CVS Extra Care are continuing to lead
the way for retailers, and the last few years have seen a number of
new and redesigned programs entering the marketplace.
The 7Rewards program from 7-Eleven was the first program to
tackle the convenience store category in the U.S. and a few of the
leading grocery store program enhancements are signaling that low
margin businesses can benefit from loyalty programs too. In fact, a
recent loyalty study shows that retail programs have now passed the
travel industry participation levels.
There are now over 1.5 million Americans belonging to some
sort of retail loyalty scheme, and that number is expected to
grow as Millennials get more involved.
Poor member segmentation is the biggest culprit, but there are many
other bad behaviors that are draining budgets. Poor management of
offer strategies, over-investing in technology platforms, and not creating
a dialogue with members are issues seen throughout various industries.
It’s not fair to just point the finger at the retail sector. Insurance
companies, the leisure entertainment world, and the utility sector are
even less successful in creating loyal relationships with their customers.
Only a few of the leading companies in those industries have attempted
to climb the customer relationship mountain and it’s sad to see them
sitting on the sidelines. Today’s competitive environment certainly can’t
be working in their favor so there must be other factors at play.
A well-designed loyalty strategy is guaranteed to generate revenue
and drive profitability. Nobody will argue with that, and we believe it’s
important to regularly check the health of any loyalty program to
ensure it’s producing the originally intended results.

For many retailers, it’s the loyalty program that is providing
valuable customer data. Then, the data is used to drive personalized
offers and recognition throughout the shopper experience. The pro-
grams are also an excellent way to treat customers differently based
on value to the corporation or behavioral patterns, and these loyalty
elements should be exploited by corporate leaders.
The old measures of loyalty program performance need to be
thrown out and replaced by better indicators that reflect the new
era of data-driven marketing. Many programs still don’t adequately
invest in reporting. Don’t fool yourself by thinking that counting new
enrollments and other simple program metrics are enough to keep
up with program performance.
There are a number of changes across the marketing suite
of which smart loyalty managers are taking advantage to
improve the results of their programs:
There’s no reason to accept poor results from a loyalty
program or, worse yet, not even know what the program is
doing for your business. CEOs should ask their heads of
loyalty these four simple questions:
1. Is the loyalty program changing the behavior of the
core customer group?
2. Do we know the financial impact on the business – the
value of the loyalty currency and the cost of the benefits?
3. Do we measure and report on the right elements
of the program?
4. Have we recognized the value of the loyalty technology
platform?
If the answer to any of those is no, then the business should
stop and question how the loyalty program is being managed.

• Integrated analytics and reporting modules that are

directly attached to the core loyalty technology engines

• Better use of program-related data to feed marketing

strategy and change how CMOs relate to their
customers

• Alternative program funding sources to reduce the

cost of loyalty operations, especially in businesses with
challenging margin rates.

• Partnerships and alliances that reduce program costs

and expand marketing opportunities

• More use of digital channels and mobile applications

to better engage members

• Connecting social media initiatives to loyalty

programs to provide real value

The list goes on and it’s exciting to see how some companies are
recognizing new ways to increase the ROI on their loyalty invest-
ments. That said, it’s also discouraging to see so many programs
missing the mark and wasting precious resources that could be
driving better results.

Loyalty Management™ | Q2 2018 | loyalty360.org 39

 Conference Review

2018
May 15-17 | Caribe Royale | Orlando, Florida

About the Loyalty Expo

With customer loyalty now being recognized as the key
to business success, brands who excel in the effort were
recognized at the fifth annual Loyalty Expo at the Caribe
Royale Resort in Orlando, Florida in May.

The Loyalty Expo is a true voice of the customer-driven, best

practice-focused customer loyalty and reward conference.
Through a robust slate of best-in-class speakers and interactive
discussions, actionable case studies, and proven world-class
technology suppliers, the conference covers the latest theories,
best practices, relevant case studies, emerging trends, and
strategies that drive measurable behavioral change and
quantifiable results.

“We had more than 100 brands submit entries and this year’s
winners demonstrated excellence in customer-centricity,” said
Loyalty360 CEO and CMO Mark Johnson. “The awards recognize
brands that are truly working to build stronger and deeper
relationships with their customers. The categories represent key
tenets of a brand’s interactions with its customers.”

loyaltyexpo.com

Jim Lyski,
EVP, CMO,
CarMax

40 Loyalty
40 Loyalty Management™
Management™ | Q2
| Q2 2018
2018 | loyalty360.org
| loyalty360.org
 Conference Review

Employee Engagement

WINNER

2018 Frank Neumann

Sr. Director of Consumer
Lifecycle Management
& Loyalty, Vans

Vans is more than a footwear company. It’s a promoter

of the action sports lifestyle, youth culture and creative
self-expression. It just happens to do this through its
footwear, apparel and accessories brand.

It’s also a family, which it proved with its new employee

engagement strategy, which takes a page from its
member loyalty program by offering an employee
incentive program designed to encourage store teams
to tell the loyalty story from the moment a customer
walks through the door through checkout. It offers
incentives such as monthly giveaways and an annual
prize in which the highest performing store in each
region receives a personalized gift designed by the
company’s founder.

More importantly, store associates are empowered to

identify and reward the most loyal consumers in one-on-
one personalized interactions. Store managers have full
authority to identify deserving consumers and celebrate
them by “surprising and delighting” with a prize.

Finalists: GameStop, IHG, Caesars Entertainment

Loyalty Management™ | Q2 2018 | loyalty360.org 41

 Conference Review

Technology & Trends

WINNER

2018

Ally Financial doesn’t have any brick-and-mortar locations but is on the

list of the 25 largest financial institutions in the United States because of
its emphasis on the customer—and its creativity.

This year, for example, it pushed an emphasis on savings to its customer

by creating a first-of-its-kind, real-time Augmented Reality game that
helped it “hijack” the Super Bowl. Customers downloaded Ally’s “The Big
Save” AR game and—during the highly popular commercials—dragged
virtual dollars into a piggy bank on their phone screen.

The goal was to increase awareness about the need for personal
savings during a time when brands were spending millions of dollars
on advertising. More than 600,000 people played the game,
spending an average of 54 minutes each. It was so popular, it won
Twitter’s Interception Award for most talked-about brand during the
Super Bowl that didn’t run a commercial.

Finalists: Best Buy Canada, Balance Grille, Adore Me

Megan Audette
Marketing Manager, Strategy,
Ally Financial

42 Loyalty Management™ | Q2 2018 | loyalty360.org

 Conference Review

Customer Analytics & Data

WINNER

2018

When the My FedEx Rewards program was launched three years

ago, it performed, below expectations. FedEx tinkered with it for
a couple of years trying to get it right, but last year completely
reinvented the program. It utilized Customer Driven Design
principles in which customer empathy tools (research, feedback
and internal analytics/data), were at the core.

The new program eschewed points in favor of more personalized

rewards, with benefits steered toward incentives that members
can then invest back
into their business; such as curated content,
electronic and physical gift cards, digitally downloadable rewards
and merchandise.

And what a difference it has made. In less than a year, the My FedEx
Reward program went from an underperforming, one-size-fits-all
treatment to a holistic marketing engine, powered by sophisticated
analytics and technology, and has resulted in instant benefits-both
in terms of program growth and customer engagement.

Finalists: Adore Me, Sleep Number, USA Today

Michelle Proctor
Director of Marketing,
FedEx Services

Loyalty Management™ | Q2 2018 | loyalty360.org 43

 Conference Review

Program Partnership

WINNER

2018

To emphasize its dedication to its customers, American Family

Insurance created DreamKeep Rewards, a program that forges
partnerships with local businesses such as spas, zoos, restaurants,
and more to provide memorable experiences for its members.

Customers earn points for completing dozens of activities—simple

things such as being a designated driver, checking the tire pressure
in their vehicles, replacing a washing machine hose, organizing a
neighborhood watch meeting, and many more. In return, participants
receive a variety of rewards, including experiences at businesses
within their own city.

As the first pure loyalty program in the insurance sector, this program
has demonstrated the best of loyalty practices and challenged the
norms of a decade worth of loyalty programming that previously
saturated whole sectors and missed the mark with consumers.

Finalists: Caesars Entertainment, SCENE, Shangri-La Hotels

Mark Rothwell
AVP Brand & Consumer,
Direct, & Loyalty Marketing,
American Family Insurance

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 Conference Review

Loyalty/Reward Program Design

WINNER

2018

The Minneapolis Institute of Art has operated for the benefit of the
general public since 1883. It doesn’t charge an admission fee, which is
great for enhancing the cultural experiences of the people of Minneapolis
and showing off the museum’s 90,000 pieces of art. However, this makes
operating a challenge from a financial perspective.

As a result, it relies heavily on membership, as do many nonprofit

organizations. However, rather than operating with the traditional annual
renewal model of membership, the institute created a “pay what you can”
membership model that rewards philanthropy, participation and visitation.
Rather than membership expiration, benefits simply regress to their
foundational free level on the anniversary of their most recent gift.
 
The one-of-a-kind program leads the nonprofit arts sector in a shifting
philanthropic environment. As a trailblazer in the non-profit loyalty program
sector, MiA is redefining the traditional
view of loyalty program enrollment
and its related incentives.

Finalists: FedEx, Cooper’s Hawk Winery & Restaurants, Galderma

Eric Bruce
Head of Visitor Experience,
Minneapolis Institute of Art

Loyalty Management™ | Q2 2018 | loyalty360.org 45

 Conference Review

Allie Porter
Digital Marketing
Creative Campaign
Specialist,
Domino’s

WINNER

2018

Domino’s Piece of the Pie loyalty program is among the best known
and best performing loyalty programs in the QSR vertical, and it has
created a strong following among pizza fans that typically don’t see
loyalty as a strong factor when deciding between a few top brands.
However, even with more than 15 digital channels to earn points in
the program, a large segment of customers were left out: those who
chose to order over the phone or in-person.

As a result, the program fell short. Domino’s realized this, so despite

the challenges, it developed an offline earning enhancement. To
drive awareness it created a Domino’s Earn Anywhere program
enhancement and campaign.

The Earn Anywhere campaign consisted of traditional media,

digital channel promotion, in-store measures including employee
training, and perhaps most interestingly, a mobile game that had the
potential to reward players with loyalty points toward free pizza.

Finalists: IHG, SCENE, Celebrity Cruises

Sarah DePotter
Loyalty Program Leader,
Domino’s

46 Loyalty Management™ | Q2 2018 | loyalty360.org

 Conference Review

360-Degree
360-Degree WINNER Award - Brand
Award - Vendor WINNER

2018
2018

To top off a successful Loyalty360 Award

Optimove is the science-first Relationship campaign, FedEx was named the platinum
Marketing Hub, used by over 300 customer- winner of the brand 360 Degree Award winner
centric businesses to drive measurable growth during the 2018 Loyalty Expo. The My FedEx
by scaling customer engagement. Optimove Reward program has made amazing strides over
is used by leading brands of all sizes, including the last year. We look forward to the continued
Stitch Fix, Glossier, B&H, Sweaty Betty, Freshly, success of the program.
AdoreMe and many others.

Finalists: IHG, SCENE, Caesars Entertainment

Finalists: Lenati, TLC Marketing, Brierley + Partners

Saurabh Kohli Michelle Proctor

New Business Manager, Director of Marketing,
Optimove FedEx Services

2018

Loyalty360, the association for

customer loyalty, held the first-ever
edition of the Loyalty360 Top 10,
the latest in its stable of industry-
defining awards.

The awards recognized the top tier

of Loyalty360 members across six
categories, granting the distinction
to 10 of the industry’s leading brands,
agencies, individuals, programs,
and technologies.

Loyalty Management™ | Q2 2018 | loyalty360.org 47

7695 Beechmont Ave.
Cincinnati, OH 45255

SPECIAL
OFFER

Loyalty360 Members have special access to

Customer Expo networking events, sessions, and more!
Receive a 6-month Loyalty360 Individual Membership
with any full conference pass purchase.

Use the code L360MBR at checkout.

CustomerExpo.com

Code cannot be combined with other offers or applied to existing registrations. Valid until October 1, 2018.

513.800.0360 | loyalty360.org | @loyalty360