Experience is key to loyalty, experts agree

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By: Wise Marketer Staff |

Posted on April 8, 2013

The word 'experience' is one that applied universally throughout Loyalty 360's recent Loyalty Expo conference in Florida, according to The Wise Marketer's US Contributing Editor, Bill Hanifin.

In fact, the word was used in the titles and summaries of nearly half the presentations, establishing the importance of integrating today's loyalty programmes in the context of daily purchase behaviour and brand interaction as the most vibrant theme of the event.

Mark Johnson, Loyalty 360's CEO, provided the keynote presentation. Asking the question that never seems to go away with a simple consensus, Johnson queried the audience on how they define "loyalty". He continued by sharing a series of personal experiences with some of his most frequented airline, hotel and retail brands, making the case that the true value of a loyalty programme is in the data collected. While the world spins in discussions about Big Data, Johnson pleaded for brands to take advantage of "little data" to inform daily interactions, recognise valuable customers, and enable customized treatment of these customers based on their history, value, and potential to the brand.

Phil Rubin, owner of the agency rDialogue and Maggie Lang, Kimpton Hotels, followed with a case study of how the boutique hotel chain has used little data to improve its customer service and increase customer satisfaction. The San Francisco chain is an acknowledged pioneer in bringing the boutique hotel concept to the US and now operates 58 hotels in 24 cities. Its loyalty programme is named InTouch and focuses on gathering profile information for its members in order to serve up personalised experiences while on property.

In Kimpton's and other presentations which shared examples of brands crafting customer interactions based on collected data and positioning this customization as a benefit of a loyalty programme, several delegates asked for clarification between data-informed customer experience and stellar customer service.

For instance, when reservation personnel at the hotel made an in-the-moment decision to provide a cocktail for a weary traveller on the house, delegates wanted to know if the surprise and delight tactic was "loyalty" or "customer service". The answer seems to "both" and highlights another important aspect of loyalty programme execution today. Front line employees hold the key to successfully communicating programme benefits and making these benefits come alive for members. For Kimpton and others, training employees to understand the importance of the InTouch programme and allowing them the freedom to execute within discretionary limits was the crucial link between the loyalty programme and the customer experience.

The discussion of customer experience continued with Orbitz, Choice Hotels, MasterCard, American Eagle Outfitters, SunTrust Bank, Badgeville and several others. As you might expect, it was the presentations that shared data concerning programme outcomes that drew the highest interest from delegates.

Mister Car Wash - a large chain in the US, with over 100 locations in 14 markets - operate two loyalty programmes: the Mister Value Program (MVP) and the Unlimited Car Wash Club. The MVP programme is free to join and provides a 10% discount on full service car wash and other services, while the Car Wash Club provides unlimited car washes for a monthly fee with no contract. Individual store managers were voicing concern that these programmes were margin-eaters, and wisely the chain decided to respond to their doubts with hard programme data.

The power of both programmes was made clear when Mister Car Wash shared that members who registered an email address with the chain visited 4.67 times more than those who did not register an email and delivered an average revenue US$75.42 higher than their non-registered counterparts. Those numbers translate into huge incremental revenue figures and helped sway opinion among store managers.

Other topics drawing attention at the conference were coalition marketing, local merchant marketing, and the convergence of the payments and loyalty industry.

Plink.com presented a case study with Dunkin Donuts, one of the leading coffee chains in the US. Plink was launched in early 2012 as a merchant funded loyalty programme that links online and offline merchants with consumers through a registered card model. The Plink merchant network has grown quickly to include 15-20 national brands across more than 50,000 locations in the country. Interestingly, Plink CEO Peter Vogel shared that the company is not lobbying to become "someone's loyalty programme", but is offering national brands a disruptive form of advertising in a risk free, performance based model that will shift market share their way.

For Dunkin Donuts, early results of working with Plink has generated 22% incremental sales for participating locations with 63% of transactions coming from new customers. Plink also reported a 24% market share increase for Dunkin Donuts, shifting share from the chain's principal competitors in the process.

A discussion of the convergence of Loyalty Marketing and the Payments business wrapped up the conference for LoyaltyTruth. The panel composed of Leslie McNamara, Citi Retail Services, Brandon Hayes, The Home Depot, Arnold Lewis, Macy's, and Bernny Thacker, OfficeMax was moderated by Phil Rubin. Panellists agreed that private label credit is far from dead, and that even after two rounds of credit card and interchange legislation in the US, the payment vehicle is once again becoming integral to the customer experience. Brandon from Home Depot expressed that cards "can help fulfil consumers dreams" and facilitate purchases which otherwise might not be made. The PLCC product is more available to consumers with approvals able to be made in the process of check out. The result is that customers associate the payment card with their favourite brand and tend to view it as a payment facilitator rather than simply an alternate source of credit.

While the friction between retailers and card issuers was acknowledged, Leslie from Citi made a clear case that her organisation's success is tied to serving the retailer and helping to drive incremental sales and profits. As proof of this statement, Leslie expressed support for her retail partners such as Home Depot who choose to accept PayPal at the retail point-of-sale. By operating in this transparent model, Citi is establishing itself as a partner with its retailers rather than just a card issuer.

Based on what was heard at Loyalty Expo 2013, there is progress and change ahead that can only serve to accelerate the transformation of loyalty marketing in the future.

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