When it comes to loyalty program enhancement, most marketers are squeezing basis points of response out of email marketing or are micro-tweaking status tiers and reward levels. Of late, however, we’re noticing a handful of brands pursing discontinuous innovation, which seems to fall into one of three categories:
- Individualize—fun read in the New York Times this weekend about Sam’s Club personalizing discounts. In short, Sam’s uses predictive analytics to mine data and customize a set of coupons for the customer, who can print them out at a store kiosk. This is a potentially very powerful way of boosting the relevance of coupons for “club” members, which feeds through to stronger sales and profits. In one case, a gentleman came into Sam’s to buy food, but left with two TV’s (so much for self control). The coupon redemption rate in these cases can increase by 10x, from 2% to over 20%. If this approach sounds data intensive to you, it should. Because it is. More here on boosting your organization’s analytics capability.
- Socialize—Tasti D-Lite, a chain of ice cream treat shops, has linked its loyalty program to FourSquare (not sure what FourSquare is? See this post) and Twitter in an effort to get consumers to socialize their loyalty to Tasti D. When you sign up for the program, you have the option to link your account to Twitter and FourSquare. Of course, you get extra points for doing so. In return for the extra points, each time you use your card, a message is broadcast to your Twitter/FourSquare network that you’ve earned Tasti points. Clever.
- Monetize—okay, “monetize” isn’t exactly right, but “currency-ize” (more accurate for this category of innovation) isn’t a word. We’ve heard from a handful of brands across the MLC membership that are looking to elevate their loyalty programs to currency status—along the lines of what the airlines have done in the past 20 years. These brands are trying to broaden the applicability of rewards points to enable consumers to advance the cause they share with the brand; trial related products or services outside of the reward brand itself; acquire and display new degrees of status; access exclusive content or events; and so on. Degree of difficulty here is high, but the prize is equally large.
Our advice? Watch out for brand dilutive moves, and beware making promises with points that your brand can’t keep. There are 9 trillion unused frequent flyer miles, chasing increasingly scarce seats. That’s making frequent flyer membership less and less appealing for consumers—or downright disappointing. Don’t let your loyalty program land you in the customer service ranks of the major airlines.
MLC Members: See our Loyalty Program Resource Center for handy planning and management tools.
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