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Insight: Is Coca Cola ending a good thing?

After revamping their program two years ago, beverage manufacturer Coca-Cola announced late last year that they were officially relaunching the venerable My Coke Rewards program - eliminating the bottlecap code entry and points collection in favor of an as-yet unspecified new structure based on instant rewards. The company promises a fun, engaging program - but as a recent Bloomberg story points out, My Coke Rewards loyalists are already expressing their frustration at the program's end. Is Coca Cola ending a good thing?
 
By Rick Ferguson
 
Since the launch of My Coke Rewards in 2006, members have redeemed billions of codes online for points, and redeemed those points for tens of millions of dollars in rewards as Coca-Cola built a loyal and active membership base. By all public accounts, the program was a success. While it didn't rise to the level of New Coke, the company didn't leave well enough alone; in 2015 Coke revamped the program, devaluing points and adding tiers based on social media activity. Faced with a more complicated, less valuable program, members rebelled, and the company eventually rolled back the changes.
 
The revamp turned out to be a prelude, however, to the complete relaunch of My Coke Rewards in 2017. Beginning March 22, the program will stop issuing points; members can continue to redeem points online until June 30, at which point Coca-Cola will donate unused points to charity. On July 1, the new program will debute at the relaunched Coke.com.
 
To this outside observer, Coca-Cola has executed best practice in loyalty program exit stategy. The program changes have been communicated well in advance; members have ample time to burn unused points; and donating points to charity is a textbook example of targeted generosity. Still, that execution hasn't stopped longtime members from grousing about the end of the current program. Money quote from Bloomberg:
 
"For now, Jessica Stephens's life is still full of bottle caps. She's entering as many as she can before My Coke Rewards comes to a screeching halt when the company stops accepting codes.. 'Panic,' she says with a laugh when asked what her reaction was to finding out the program would be coming to an end. 'I wish they would've handled it better.'

"A scan of My Coke Reward's social media pages echoes Stephens's alarm. 'I don't like the new rewards, go back to what it was,' posted Peggy Brehm on Facebook. Users primarily expressed frustration with the point limit and insecurity about the quality of future rewards.

"Some users criticized Coca-Cola for being secretive about the rewards aspect of the upcoming loyalty program...'This program just keeps going downhill every time they change things to make it "better,"' Kristi LeShane wrote on Facebook. 'I think it's time to finally kick my Diet Coke addiction!'"

It's easy, of course, to cherry-pick negative comments on Facebook; any time a successful loyalty program changes, the naysayers will nay-say. The realy question is: why mess with sucess? My Coke Rewards has long been one of the most successful CPG loyalty programs in the world. Why change it now?
 
Part of the problem was the program's antiquated technology; in the age of smartphones, code-on-pack entry is horse-and-buggy tech. Still, Coca-Cola could have chosen to migrate the program to mobile while keeping the program structure intact, as other manufacturers have done. Instead, the program is migrating toward, as the company said in a statement, delivering "more personalized rewards in a faster, easier and more engaging way."
 
That cryptic statement perhaps points toward a program based on "engagement," with points earn-and-burn replaced with a mobile-based instant rewards and experiences. The Bloomberg article does state that gift cards - far and away the most popular redemption item in the current program - will remain as rewards in the new program. 
 
Rising program costs may also be the culprit; Coca-Cola underperformed last year, its share price losing 2.3% in 2016, underperforming 3.4% growth of the broader consumer staples sector, according to Nasdaq. Money quote:
 
"The beverage giant also faces weak volume growth as consumers are increasingly shifting to healthier products, rejecting many of the core ingredients that include sugar, which dominates most of the company's product ingredients."
As a result of changing consumer demand, the company is undergoing a massive restructuring that Bloomberg reports may result in a 68 percent reduction in its current workforce. In the face of such change, My Coke Rewards may ultimately be immaterial to the company's bottom line - particularly to a company that spends $4 billion annually on advertising. Easier to simplify the program than to invest the money required to update a points and liability-based program for the digital age.
 
The true test for Coca-Cola's loyalty strategy will be how well the new program is received by members. If the rewards are indeed personalized, relevent, engaging, and meaningful, then members may soon come to love the new program as much as the old. Still, it's hard not to think that Coca-Cola may be losing something in its shift away from the old code-on-pack technology - there was something to be said for the dedication required by members to sit in front of their computers entering bottle cap codes into a web site. Not all friction is bad - and as friction-laden as the process was, members enjoyed the program enough to keep entering those codes for over a decade.

All long-running loyalty programs evolve, that's how they become long-running programs. Here's hoping that Coca Cola's program will continue to evolve in the right direction.
 
Rick Ferguson is CEO and Editor in Chief of the Wise Marketer Group.