The Heinrich Report Blog

Strategies, insights and tactics for today's marketer

Archive for the ‘Loyalty / Rewards Marketing’ Category

Rethinking Rewards: A New Look at Merchant-Funded Rewards

January 18th, 2011 by

Let’s face it. We’ve trained our customers to expect rewards across nearly every industry. Initially made popular by airline frequent flier programs, the idea of rewards to garner loyalty and brand preference now extends to retailers, hotels, restaurants and even consumer packaged goods (think myCoke rewards).

There’s a price to such ubiquity; rewards are expected instead of special, and have now become an inevitable cost of doing business. Consider this:

If you’re a business, it’s hard to compete unless you have a rewards program. And if you’re a debit card issuer, you know that it’s about to become even more costly. Recent and proposed federal regulations will have a big impact on revenue, and complicate your ability to keep a debit card rewards program alive.

We’re here to remind you that there are alternatives. Merchant-funded rewards programs have always been there, but now they’re gaining popularity as financial institutions in particular look for ways to cut costs and boost loyalty at the same time. Let’s take a new look at merchant-funded rewards programs, and see how they can help you market smart in 2011.

Generate loyalty; create revenue

The right merchant-funded rewards program supports a business ecosystem that can benefit the bottom lines of all involved.

Customers: They apply their payment card to a rewards program, and earn cash back and/or discounts at participating merchants every time they use the card.

Merchants: The rewards they offer for purchases make them more attractive to new customers, and help retain current ones.

Banks: A rewards program can be a great marketing tool that encourages customers to use a card often. It’s a great solution, because banks don’t pay for the rewards, merchants do.

Indeed, a white paper from Cartera.com notes that once a merchant-funded rewards program is in place, a bank could see incremental spending on debit cards rise to $40,000,000, averaging $280,000 per two million debit card holders, per year.

Expanding the silver lining of a recovering economy

The right partners can make all the difference in the dynamics of your merchant-funded rewards ecosystem. While engaging with such a program might represent a dramatic shift for a financial institution — regarding both partnership efforts and marketing — the change of approach can result in new opportunities to engage customers, and motivate them to spend again.

One merchant-funded rewards program had the foresight to anticipate this new-look economy, and now it stands out in the field as a result: Rainbow Rewards. Here’s how it works:

  • Members of Rainbow Rewards add their payment card to the program to earn cash back at participating merchants. Right now, that list includes 20,000 businesses — and it’s growing.
  • Rainbow Rewards partners not only with national brands, but also with local merchants so customers can support their community.
  • On top of that, Rainbow Rewards donates to charities based on the amount customers spend on their cards. Using the card more at participating merchants helps others more, too.

Rainbow Rewards: An approach that sets it apart

CMO/EVP of Rainbow Rewards Jen Sanning notes that the economic downturn and legislation like the Durbin Amendment has fostered innovation among financial institutions. “We’ve definitely seen bank partners getting more and more creative in how they offer rewards to their customers, and more often consider merchant-funded as the solution.”

In her view, the economy has also created a new kind of customer:

  • They value savings more than they used to. “Recession has made savings the new cool,” says Jen, “so we see consumers who want to do more with their money. They want to save, but they want to be more conscious about their spending too.”
  • They want to help others during tough times. Rainbow Rewards offers its members the chance to donate some of their earnings to good causes.
  • They want to support their local community. Rainbow Rewards works hard to team up with local merchants, not just big companies.

In all, the emphasis on local business and charitable giving strikes an emotional chord with members, one that resonates. Rainbow Rewards makes it OK for people to feel good about shopping, and about getting something back for themselves, as well.

Merchant-funded rewards programs can bring in new customers

Merchant-funded rewards programs can be a practical solution for your company, and even more so for financial institutions struggling with the new federal regulations on debit cards. But as Rainbow Rewards demonstrates, such programs can have an impact on the big picture, too. Programs like this can open the door to new customers and new merchant relationships, plus help support a marketing strategy that resonates and produces positive results.

Billshrink Cardlytics Cartera Commerce MasterCard Marketplace
Category:  Loyalty / Rewards Marketing, Payment Card Marketing  |  Tags: , , ,   |  No Comments

The Power of Thank-You

November 16th, 2010 by

“The deepest human need is the need to be appreciated.” William James, premier American psychologist, 1842-1910

When’s the last time you thanked your customers and employees? A graceful, sincere expression of thanks toward the people who support your company can go a long way toward showing you care, and generating loyalty.

There’s no one right way to express thanks. Sometimes you need the actual words “thank you.” For example, when you shop in-store at Nordstrom, don’t be surprised if you receive a handwritten thank-you note from the sales person a week later! Other times, it’s enough to show customers you’re paying attention.

There’s always an opportunity for thanks. Here are just a few to consider:

  • Send a note of congratulations and/or thanks based on a customer’s anniversary.
  • Acknowledge birthdays with a special offer.
  • Follow up a purchase with a thank-you email.
  • Surprise your customers with a special thank-you discount on a day of their choosing.
  • Acknowledge spending thresholds or loyalty tiers with a letter and a reward.

Spread the gratitude in-house, too.

Gratitude as part of your corporate culture can drive innovation in your company, and help ensure the sentiment gets paid forward to your customers. Zappos, who we covered in The Heinrich Report last month, is a great example of a company that stands by this philosophy, and enjoys success as a result. In Boom!: 7 Choices for Blowing the Doors Off Business-As-Usual, authors Kevin and Jackie Freiberg eloquently explain why gratitude works:

“Show us a corporate culture infused with gratitude, and we will show you a culture of civility, compassion and courtesy…a culture where people find freedom to soar.”

Is that your company? If you do a culture check, do you find “thank you” is part of the conversation?

Heinrich can help you find a way to express your gratitude. Email us today.

Category:  Customer Acquisition / Retention, Loyalty / Rewards Marketing  |  Tags:   |  No Comments

The New Loyalty Landscape, Part II: Insights From an Industry Expert

September 29th, 2010 by

In last month’s Heinrich Report, we talked about the new loyalty marketing landscape. Today’s marketing leaders face a tremendous pressure to focus on loyalty as Facebook, Foursquare and Shopkick emerge as forceful, impossible-to-ignore players in the industry. Indeed, according to leading loyalty firm Loyalty Lab, “Increasing customer loyalty is seen as the top force driving marketing innovation for their companies.” 

So whether your company dabbles or dives into newer mediums like social media or mobile as part of a marketing plan, you need to stay in the loop when it comes to loyalty marketing. To help, Heinrich gathered key insights from Keith Rose, president of Loyalty Lab.

Look at loyalty in a new light.

A San Francisco-based firm that specializes in “motivating and accelerating customer loyalty,” Loyalty Lab provides the platforms, interfaces, applications, and relationships necessary to support a cohesive loyalty marketing strategy — and promote a new philosophy about the concept as a whole.

Out with the old loyalty, in with the new.

Groundbreaking, traditional loyalty programs like American AAdvantage and Hilton HHonors work on a give/get system. The customer joins a program, earns points and eventually earns enough to receive a seat upgrade, free ticket or free night’s stay. Keith and Loyalty Lab see that setup as prohibitive: “That’s about retention — and the goal is not just retention in the ‘new loyalty.’ It’s different now. You want to motivate market share increases, not reward past behavior.”

Why the shift in focus?

“That reward structure is limiting. You’re missing out on a lot of people,” says Keith. “Not everybody who joins a Mileage Plus or Hilton HHonors is going to be able to reach the next tier of membership,” a point that’s especially valid in today’s economy.

So what’s a company to do?

“You can’t just focus on the top tiers anymore,” continues Keith. “The people in your program, the ones who can’t compete for the big rewards, they could still be advocates, and you don’t want to lose them.” Advocacy is the new word for “loyalty.” Your goal should be to mold consumers into advocates who speak on your company’s behalf.

Understand the loyalty curve, and stay one step ahead of it.

Loyalty Lab’s technology helps companies guide consumers toward advocacy. Five stages mark the progress:

Together, these stages make up the loyalty curve. To encourage customer progress on the curve, you have to:

  • Create a meaningful engagement experience for all of them.
  • Make it easy to interact with your company. 
  • Offer them relevant information.

Interestingly, Keith barely mentions popular marketing tactics like “special offers” when he talks about the loyalty curve. “It’s not a ‘here, take this’ approach, where the customer might take the offer and run,” he explains. Customers won’t feel loyal to an offer. But they can feel loyal to your brand. To build that connection takes time, takes a more measured, open and honest approach — and takes a full-on commitment to social media. Indeed, in this new era of loyalty, “Loyalty is not an end in itself. Social is.”

Create advocates and give them a voice in social media.

No doubt, this new approach to loyalty has evolved from a new kind of customer. They’re very aware when they’re being marketed to, and they’re distrustful of advertising overall. (BrandingStrategyInsider.com) What they do trust: recommendations from people they know and consumer opinions online. (BrandingStrategyInsider.com) 

These consumers, the kinds who seek out information and advice and who give it, also happen to be most likely to engage with brands through social media. According to Marketing Profs: 

  • 65% of frequent social networking users say they are fans of at least one brand on Facebook.
  • 31% follow a brand on Twitter.

What’s more, the social interaction with a brand stirs up positive vibes for the consumer: “Consumers who actively engage with social media are more positive about their connections with brands. 35% of those who use social media say they believe, ‘companies are genuinely interested in them,’ compared with just 16% of all consumers, according to a study by Alterian.” (MarketingProfs) 

So, whereas the past loyalty model offered rewards for personal achievement, the new one fosters a feeling of a personal connection between company and customer through social media — and makes that its own reward.

On the loyalty horizon: More personal engagement through mobile.

Keith believes mobile is the next big thing in loyalty marketing, and the advent of new mobile apps just in the past few months supports his prediction. Consider Shopkick, a new iPhone/Android app. Once downloaded, customers earn rewards just by walking into the store, and accumulate more for additional actions as they move closer to a purchase.

Shopkick founder and CEO Cyriac Roeding calls it a “location-based shopping app,” and explains how it moves away from the more automated “buy this, get that” dynamic: “Location-based shopping requires a completely different approach….You need to think about the shopping experience per se, and try to make that completely different and better.” (AlleyInsider) 

Through its features, Shopkick makes loyalty feel more hands-on and personal — a necessity when you’re trying to generate advocacy. For example, once you’re inside a store, you can scan items you like into your phone so Shopkick can offer you rewards that are customized to your interests. It also appeals to the social media consumer by offering Facebook credits for games, music and more.

In part, it’s the ease-of-use that gets Keith excited about mobile. He likes to use American Idol as an example. “Millions of people instantly picked up their phones to vote on their favorite contestant. They didn’t even hesitate.” He’s got a point: Newer companies like Foursquare bank on people doing things on a cell phone that they might not do online. Whether it’s because it’s new, or easy, or because a consumer might have a greater feeling of control when their mode of response is in the palm of their hand, mobile has changed the loyalty marketing terrain.

Smart loyalty marketing can help any business grow.

Loyalty Lab can be an affordable partner no matter the size of your budget. As Keith puts it, “We’re all about leveraging technology to make loyalty more affordable and get faster results.” Used with the support of a strong marketing strategy, you can create advocates for your company and enjoy a strong customer base — one that’s built on more than just your latest special offer.

<<Back to the Heinrich Report

Category:  Loyalty / Rewards Marketing, Marketing Strategy, Social Media Marketing  |  Tags: ,   |  No Comments

Understanding the New Loyalty Landscape

August 23rd, 2010 by

Understanding the New Loyalty Landscape.

The turbulent economy of the past few years has forced companies to take a fresh look at existing marketing tactics that can help attract and retain customers — even as they have less money to invest in new innovations. At the top of the list: loyalty. Traditional programs, like American Express, American Airlines and Hilton, might immediately come to mind. But thanks to new online tools, the “points-for-purchases model” is just the beginning of what’s possible in loyalty, and that’s good news for businesses of any size.

Loyalty basics: recognition, rewards

In 2009, U.S. consumer participation in loyalty and rewards programs rose across every demographic segment, and grew 19% overall since 2007. (Colloquy, Jul 2009). Customers join with the hope of benefitting more from their consumer experience, and studies show that many are dissatisfied. MarketingProfs.com references a study by the Chief Marketing Officer (CMO) Council that explains:

  • 70% want more discounts and savings.
  • 58% want better personal benefits and services.
  • 52% want more compelling personal offers as a reward for steering their business to loyalty-program operators.

The article continues: “Most consumers surveyed (54%) say the barrage of irrelevant messages, low-value rewards, and impersonal engagement don’t particularly engender loyalty.” Implementing a loyalty program as a quick fix solves nothing. Like any other tactic, loyalty should be integrated into your marketing strategy, and help you meet your marketing goals.

Beyond the loyalty “program”

Customer frustration with loyalty programs could be a result of online influences. As consumers who shop, talk, and surf online, they’ve learned that they can get loyalty-like benefits without joining a loyalty program.

For example:

  • Personal responses from a live representative. A company’s Facebook page often establishes a direct link between company and customer, and personalizes the experience. JCPenney’s Facebook page is a great example. There, you might see customers asking questions and a JCPenney’s representative answering them personally. Even gripes get acknowledged. It’s a true sounding board that delivers results.

  • Relevant offers and suggestions. “If you like X, you might also try…” Online “cookies” create a more personal shopping experience for customers, and leave a trail of valuable data for businesses. For example, the person who buys a book in a certain category might get a discounted offer for another book in the same category.

The good news: You and your company can easily participate in these easy-to-find, easy-to-participate-in online experiences. It’s an opportunity to generate loyalty through good customer service, transparency and more insightful interactions, and it won’t break your bottom line.

Think of it as the new outlook on loyalty. You can use it as a marketing tactic to create the ultimate customer. Keith Rose, president of industry-leading Loyalty Lab, explains, “Today, loyalty is not just about giving customers points for making purchases. What it’s really about,” he continues, is “actually using active motivation to encourage your customers to follow a natural progression from fan, to loyalist, to advocate.”

Redefining loyalty through social media and mobile

To “actively motivate” your customers toward advocacy for your company and your brand, you have to go where they go—and stay one step ahead of them at all times.

  • Find customers in Foursquare, and reward them.  In his recent article on Clickz, Jack Aaronson  shows you who’s doing customer loyalty right in Foursquare. Examples include: 

The Wynn Hotel (Las Vegas): Gives you a free glass of champagne when you check in at the Blush nightclub.              

Ben & Jerry’s (in Detroit): Gives you a free small cone for every fifth check-in. Mayors get     10 % off.   

Mobile app CardStar took further steps to make Foursquare synonymous with loyalty. The app, which makes it possible to keep all of your loyalty program membership information in your mobile device, added a Foursquare integration feature. Now, loyalty program members can automatically check in to Foursquare every time they use a rewards card via CardStar.

Put informative, relevant content on Facebook or Twitter.Great content can make all the difference in the way a customer — new or existing — feels toward a company. (See last month’s Heinrich Report article, “How to Make Your Content King”) American Express® Open Fo rum stands out as a great example. They encourage customer dialogue, and connect their product to all communication platforms to make it easy for customers to use or buy.  Plus, they use social media forums to put a human face to their company, and position themselves as a partner to small businesses. Together, these efforts nurture a comfortable company — customer connection. 

  • Use mobile to facilitate interaction with your brand. An appreciative customer can become a loyal one. Show your customer that you understand their needs, and give them helpful tools. E*Trade, for example, recognized that a key segment of their customers are tech-savvy and always on the go. They responded with an app that makes it easier to trade from a mobile device. 

Geo-targeting advances in mobile are also making it easier to target offers to customers at the exact moment they’re searching for what you sell — or even when they are near your store. See last month’s Heinrich Report for more.

Overall, online tactics make it easy to quickly understand what your customers want and get it to them — and that’s sometimes half the battle when it comes loyalty.

Make customer loyalty a goal o f any marketing campaign

In the end, loyalty marketing follows the same rules you already know: You have to take the time to understand what customers want, need and expect. The key difference: Customer expectations are higher. Members expect more personalized attention, and a lack of it hurts worse than if they weren’t part of a program.

Stay tuned: In an upcoming Heinrich Report, we’ll get more insights from an industry leader in customer loyalty.

Check out JCPenneys Facebook page
Check out American Express Open Forum 
Learn more about Card Star 

<

Category:  Customer Acquisition / Retention, Loyalty / Rewards Marketing, Mobile Marketing, Social Media Marketing  |  Tags: ,   |  No Comments

The Surprising Perks of Print On Demand

June 9th, 2010 by

 

Mail has morphed in ways that not even the post office could have predicted.  The box looks smaller, but the mail is bigger. The dimensions are different, but the messages are similar. And just as the world turns away from tactility, print on demand is bringing it back.  And it’s better.

Why? Because the print-on-demand concept harnesses the hassle-free, cost-efficient, history-tracking hotness of an email message with the old-fashioned power, personalization and physical fit-ness of snail mail. 

Suspicious? We were too. But here’s the 411.

“It’s the fastest, easiest, most economical way to send 1 to 1 direct mail,” says Perry Wilson, vice president of sales at Heinrich’s long-time printing partner, Advanced Image Direct, who just launched Cloud2Mail, an application for CRM programs like SalesForce.com.  “At per-unit cost and automated triggers, you just can’t beat the price or the process.”

But, we asked, what about traditional direct mail? Print on demand isn’t for large-scale jobs, which makes it the perfect complement. But there’s another reason why we think it rocks: It supports the newfound Shangri-la of segmentation and loyalty programs, a tactic we love —because it works.

Say you want to reach a specific level of shoe shoppers — those who spend $500 per month. Rather than doing a en masse direct mail to your President’s Club Level Visa holders, your system activates a personalized thank-you note and coupon whenever one of your star shoppers buys a new pair of Manolos. Some applications, such as Cloud2Mail, utilize USPS intelligence bar codes, which provide delivery receipt. See image below.

Now, imagine that convenience for every communication piece you have: white papers, PDFs, brochures, sales letters, Power Point presentations.

The concept isn’t necessarily new, but the costs are.

“No one argues that more sophisticated targeting and robust personalization drive higher response,” says George Eddy, president of Heinrich, “But with print on demand, there’s less of a trade-off in terms of quality and investment. And that’s crucial.”

 


 Cloud2Mail

 

 <<Back to The Heinrich Report

Category:  Direct Mail, Integrated Direct Marketing, Loyalty / Rewards Marketing  |  No Comments

Relevance = Response

September 23rd, 2009 by

Relevance Boosts Loyalty for Country Financial

Considering a content-based marketing program? It’s been a smart move for Country Financial. The Country Financial Farm and Ranch Customer Loyalty Program developed by Denver Advertising Agency, Heinrich Marketing has increased retention of farm and ranch customers so effectively, Country is continuing the program for the third year and expanding it to customers of a new subsidiary.

“There was no formal loyalty program in place for this vital segment before,” notes Heinrich Senior Vice President Sandi McCann. “As part of a multi-touch communication strategy, we developed a highly targeted publication featuring short industry news, pairing it with relevant information on how Country Financial’s products can help  customers protect their most valuable assets.”

What made this program so successful? “Relevance, first and foremost,” says McCann. “This audience has very specific interests, challenges and needs. Besides being informative, useful and backed by Country’s respected experience providing financial security in the farming and ranching industry, the content Heinrich builds for this program is highly customized to this segment’s needs.”

“More than ever in today’s market,” adds McCann, “the better you know your customer and the more relevant you make your marketing messages, the better ROI you’ll see.”

Contact Heinrich, a Denver Advertising Agency, for more information.

 

 

 

 

 

 

 

Category:  Content Marketing, Customer Acquisition / Retention, Loyalty / Rewards Marketing  |  No Comments

All the Right Moves for Shifting $ to Email

September 23rd, 2009 by

All the Right Moves: How to Shift Dollars from Print to Email

Commercial email will continue to claim the top growth ranking among direct marketing channels for 2009, according to the Direct Marketing Association. It’s no surprise, since many case studies and industry reports show huge ROI potential from email.

Yet those results are far from a sure thing — and they’re getting tougher to achieve as more marketers crowd the email space and more customers get overwhelmed with the sheer number of incoming emails — spam or no spam.

Matt Elliott, director of client services at Listrak, says these are the top five mistakes he’s seen clients make in shifting budget dollars from print direct mail to email.

Say goodbye to batch-and-blast.

“Buying a list and doing batch-and-blast mailing sometimes works for direct mail, but spells doom for an email program,” says Elliot.

This goes for appending email addresses, too. Permission and relevance are crucial to achieving strong ROI with email marketing, so you may be better off incentivizing your customers to give you their email addresses vs. buying a list.

“There can be short term gains and advantages to buying lists,” explains Elliot, “but there are many drawbacks — you don’t know if the data is accurate, and you’ll get a lot of spam complaints, which will damage your reputation. For a long-term email strategy, you have to have a program to build your list organically.”

See past the glitz of low-delivery costs.

“Email as a delivery channel is cheap,” says Heinrich Senior Vice President Sandi McCann, “but to deliver on revenue goals, you still have to invest in developing your marketing and messaging strategy.”

“Email is also more relational than offline marketing,” Elliot points out, “so the messaging and strategy are different. It’s very difficult to run cost-effective email campaigns if you focus on the inexpensiveness of email and the whiz-bang technology, and lose sight of the importance of messaging strategy. It’s imperative to focus on the entire subscriber lifecycle strategy, not just the results of each individual campaign.”

Step away from the dead addresses.

Too many companies are so eager to have a massive list of email addresses that they cling to them too desperately — with no real plan for identifying which addresses are dying or dead. The cost to mail to inactive addresses can get big in a hurry, and is being scrutinized more and more by companies scouring the books for cost-savings targets.

“A smaller but more qualified list will always out-perform a larger unqualified list,” says Elliot. “If there are old email addresses on your list that haven’t opened or clicked on one of your messages in over a year, there is a danger of those addresses becoming spam traps, which can ruin your reputation.”

Map out an email subscriber retention matrix including specific triggers that point to possible attrition, specific retention messaging and incentives, and a clear line in the sand — which, when crossed, marks an address to be scrapped.

Ask your customers what they want via email.

“The new paradigm in email marketing is that subscribers are in control of the content,” says Elliot. “It’s the golden ticket to relevancy and engagement.

“Subscribers are guarding their inboxes more carefully and protecting against spammers,” he adds. “Even if they did opt-in to your list, if they don’t like the types of messages you send them, they’re more likely to report a message as spam than they are to unsubscribe from your list.”

Sometimes subscribers don’t know they want something until/unless you show it to them as an option. For example, they may prefer less-frequent emails, or an informational newsletter instead of (or in addition to) promotional emails, or offers from another business under your umbrella that’s more targeted to their interests.

“It’s not enough just to ask for email addresses,” Elliot points out. Set up a quick-scan yet meaningful email preference center and invite new and existing subscribers to check the boxes. And clearly state the frequency of mailings, your privacy policy, the types of messages that will be received, etc., at every point of contact where email addresses are collected (which should be every point of contact, by the way).

From there, continue increasing relevance by tracking purchase behavior from your emails and segmenting messaging and offers accordingly.

Talk differently to loyal customers.

“Having a subscriber’s email address and permission to communicate with them is a privilege,” Elliot observes. “It’s really important to distinguish your engaged subscribers and to speak to them differently.”

If you’ve heard that advice once, you’ve heard it a thousand times — yet it’s all too easy to get mired in the angst of meeting week to week revenue goals. Focusing on retention strategy in your day-to-day customer communications takes discipline, and you’ve got to be aligned on your retention strategy from top to bottom. But The Ultimate Question author Frederick Reicheld of Bain & Co. says every 5 percent increase in retention equals a 25-100 percent increase in profitability.

Reward your customers with special offers through your email program, he urges. “Whether it’s free shipping, a special discount for email members only, or content that isn’t available to the general public …. Whatever you can do to make your subscribers feel special and exclusive will work.”

Category:  Integrated Direct Marketing, Loyalty / Rewards Marketing  |  No Comments