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Now + New + Next

Rethinking “Rewards” in the New Engagement Economy
December 10, 2013

Proprietary and Confidential © 201...
Mary Luckey
Director
Reward Strategy

Barry Kirk
Vice President
Loyalty Strategy

Proprietary and Confidential © 2011 Mari...
I am:
•Currently running a rewards program.
•Planning to launch a program soon.
•Evaluating whether to launch a program.

...
Proprietary and Confidential © 2011 Maritz

4
5
US consumers
are enrolled in

7.4

loyalty programs.

Maritz Loyalty Marketing 2013 US Loyalty Report

Proprietary and Con...
Only

16
%

of consumers

redeem for rewards in US loyalty programs

Forrester 2013 State of Loyalty Programs
Proprietary ...
The engagement cliff
Initial Awareness

Participation

& Enrollment

Participation, but with
lagging engagement
levels

Di...
The Four-Drive Model of Motivation

Driven to acquire
stuff, status,
resources

Acquire

Bond

Driven to engage,
cooperate...
Traditional
Rewards

?

Pendulum swing

Virtual
Rewards

10
Traditional rewards

Proprietary and Confidential © 2011 Maritz

11
Proprietary and Confidential © 2011 Maritz

12
Proprietary and Confidential © 2011 Maritz

13
Proprietary and Confidential © 2011 Maritz

14
Traditional reward strategy

Proprietary and Confidential © 2011 Maritz

15
Today

we have
an avalanche of data
…

Proprietary and Confidential © 2011 Maritz
People in reward programs have changed
• New Generations
– By 2015, the oldest Millennials
(born after ‘77) will be 38 yea...
People’s expectations have changed, too

“I expect personalized
experiences in all my online
environments.”

“I’m a 20-som...
Consumers are in the drivers seat

Proprietary and Confidential © 2011 Maritz

19
Social intelligence is big data
Sentiment
Volume

Velocity

Emotion

Proprietary and Confidential © 2011 Maritz

20
Maritz social intelligence study : affluent women

Volume

Affluent Women – Conversations

Emotion

Proprietary and Confid...
Proprietary and Confidential © 2011 Maritz

22
Behavioral Intelligence
is also big data

Proprietary and Confidential © 2011 Maritz

23
We are:
•Currently using big data in our reward
strategy.
•Evaluating how to use big data in our
reward strategy.
•What’s ...
Future
strategy
for

traditional
rewards
Behavioral Intelligence

Social Intelligence

Proprietary and Confidential © 2011...
Traditional
Rewards

?

Pendulum swing

Virtual
Rewards

26
Virtual rewards

are non-physical goods that exist online and
are earned by participants for engagement
and achievement.
•...
We are:
•Currently using virtual rewards in our
rewards mix.
•Evaluating whether to integrate virtual
rewards into our rew...
Proprietary and Confidential © 2011 Maritz
Tran
actions
s
Proprietary and Confidential © 2011 Maritz
Inter actions

Proprietary and Confidential © 2011 Maritz
The upside of virtual rewards:
• Low cost to produce
• Low cost to store
• Inexhaustible supply
• Can attach to any behavi...
Engaging in a behavior for its own value.

Intrinsic
Extrinsic

MOTIVATION

Engaging for the promise of an attached reward...
The downside:
Virtual rewards have low
and exceedingly fleeting
extrinsic value.
Instead, link them to
behaviors with
intr...
AWARENESS

D is ruptio
D isruptio
n!!
n

Status
Status
Quo
Quo

-

COMMITMENT

INFLUENCE

Habit

Ritual
Ritual

Social Int...
5 best uses for virtual rewards:
1.

To show progress toward a goal

2.

To acknowledge mastery

3.

To indicate social co...
37
38
Results:

2X
115
%
EE+

Participation doubled over previous year

Increase in overall recognitions submitted

Four of 7 en...
Virtual
Rewards

Traditional
Rewards

Big Data
& Strategy
40
Questions?

Mary Luckey
Director
Reward Strategy

Barry Kirk
Vice President
Loyalty Strategy

Proprietary and Confidential...
Thank You

Proprietary and Confidential © 2011 Maritz

42
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Now + New + Next: Rethinking Rewards in the New Engagement Economy

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The notion of “reward” has long been a basic and critical component of a loyalty program. But now with the rise of social channels, mobile payment, geo-location and gamification, our definition of reward is undergoing a dramatic shift, along with ideas on how frequently rewards need to be delivered to drive behavior. The challenge for brands will be how to integrate these new reward models into existing programs in a way that will maximize benefit without alienating existing members.

Barry Kirk and Mary Luckey invite you to join us for this webinar and engage in a dialogue exploring new approaches that are enabling companies to significantly rethink their reward strategy in order to drive competitive differentiation and results.

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  • Why worry about rewards and engagement?
    3% of Members enrolled in loyalty programs stopped actively participating in at least one loyalty program in the past year. This number is disconcerting for program operators, yet of even greater concern is that only 7% of these defecting customers actively defect – meaning formally request leaving a program.
  • The challenge is, those traditional models having started to show some signs of fatigue. We see this already in many loyalty programs, evidenced by this very common engagement curve.
    - high enrollment, followed by a steep drop off in engagement for many members (60% or more)
  • Traditional Awards can be defined as the tangible awards in a consumer loyalty program for which people redeem.
    After accumulating a number of points they get to spend it on REAL stuff – like merchandise and gift cards
     
    For decades now, the methodology for determining what the actual awards are in a program been very tactical and not very strategic – the tangible awards have actually been almost an afterthought.
     
  • Basically award strategy has pretty much worked like this..
    someone - picks out a limited selection of merchandise, retail and travel gift cards,
    Over time additional awards are added like online travel
    then a competitor adds charitable awards – so you do.
    Then you see magazines in another program, so you add that.
    And before you know it…. You have 
  • something like this! Kind of a HODGEPOGE of rewards.
    Most programs just keep throwing new awards at consumers because they don’t really know what else to do
    And you usually the consumers just get confused. They can’t find things, it’s tough to navigate
  • Some tangible award collections get a little more strategic …
    You might have a different selection for different segments and it would work like this:
    you think about the people in a segment – let’s say high net worth or “premier” customers. And try to envision what they want. Burberry and Coach bags, and high end trip to places like Africa. You source, and fulfill the awards
    But you never real know if you’ve hit the mark except for the occasional survey
    Well, guess what- the world has changed (but our awards strategy has not!)
    What if you could actually understand what your customers want?
    We used to “guess” what people wanted beccause we didn’t have enough data… Guess what we have now?
  • You got it ! There’s this thing called Big Data – maybe you’ve heard of it?
    The amount of data out there is staggering!
    750 million people facebook users post 90 pieces of content per month
    There are over 140 million tweets per day
    And my favorite – there are more videos posted on You Tube in 60 days then there is content that network television created in 60 YEARS.
    It’s mind boggling!
  • And people have changed too.
  • People’s expectations have changed too.
    People wanted personalized experiences
    They want relevant awards - don’t show me stuff I don’t want!“
    They also want to have a great shopping experience whether they are on their phone, tablet or laptop. “
    Let’s face it…
  • consumers are in the driver’s seat – they want what they want, when they want it! And they want their shopping and buying experience to be just as good on their reward programs as it is on any online retail site.
    So, how can we take all this big data and what we know about consumers and make the tangible award experience more strategic and targeted.?
    Well, we can start by listening to what consumers are saying.
     
  • Yes, people are talking online all day about what they want and don’t want. We just have to listen.
    We’re working with one of Maritz’ research companies – Evolve24 to find out what people really want.
    Evolve is social media intelligence company. They not only monitor conversations and other digital content, but they have patent pending processes that also captures
    sentiment – are conversations positive or negative
    Volume and velocity – how much is being said, and how fast is it spreading
    And emotion – how strongly do people feel about what they’re talking about
    We talked earlier about important emotions are in human beings. What we’ve found out that the online conversations that have very little emotion aren’t very important. What you need to pay attention to are conversations that have very strong emotions tied to them
    You need to pay attention to things people LOVE and things people HATE.
    Let’s go back to the high net work segment we were talking about before.
  • Show lifestyle shots of affluent women having a girls night out… This will capture their emotions. And you can feature a special girls night out in New York City and the latest designer jewelry.
    Ongoing monitoring will enable us to really keep our finger on the pulse of what people are saying and adjust the award collection based on what we learn.
    Next slide –
    Another way to use this big data is use behavioral data
    Barry and I are on the same program but
    Barry would I phone
  • The future of delivering effective tangible awards
    Is using DATA and Analytics to provide meaningful and relevant awards to your consumers.
    In addition to using social media monitoring to capture what your people are saying,
    You need to add other tools to understanding what your consumers are viewing, what they’re buying and what targeted communications they’re responding to – just like you’re doing in other aspects of the consumer loyalty program.
    If you follow this model, you’ll start to actually see the individuals in your program and will be better able to engage them.
    If you don’t capture their emotions and their wants at the right time, and you don’t give them what they want WHEN they want it, you won’t capture their loyalty.
  • Why are we even looking at virtual rewards
    - Shift to social and online behavior – explosion of new touch points
  • So many new touch points, you need a cost effective way to reward behavior that doesn’t have an explicit dollar value attached
  • A similar survey was performed by Make Their Day in 2007, in which 57 percent of respondents reported that their meaningful recognition had no dollar value—today, that number has jumped to 70 percent.
    So, why not just use them instead of traditional tangible rewards.
  • – so focus them on the intrinsic end of the continuum
  • All engagement outcomes improved (one remained same)
    Four of 7 engagement outcomes are up significantly
    e.g. I feel motivated to go beyond my formal responsibilities up from 3.9 to 4.2
  • Transcript of "Now + New + Next: Rethinking Rewards in the New Engagement Economy"

    1. 1. Now + New + Next Rethinking “Rewards” in the New Engagement Economy December 10, 2013 Proprietary and Confidential © 2011 Maritz 1
    2. 2. Mary Luckey Director Reward Strategy Barry Kirk Vice President Loyalty Strategy Proprietary and Confidential © 2011 Maritz 2
    3. 3. I am: •Currently running a rewards program. •Planning to launch a program soon. •Evaluating whether to launch a program. Proprietary and Confidential © 2011 Maritz 3
    4. 4. Proprietary and Confidential © 2011 Maritz 4
    5. 5. 5
    6. 6. US consumers are enrolled in 7.4 loyalty programs. Maritz Loyalty Marketing 2013 US Loyalty Report Proprietary and Confidential © 2011 Maritz 6
    7. 7. Only 16 % of consumers redeem for rewards in US loyalty programs Forrester 2013 State of Loyalty Programs Proprietary and Confidential © 2011 Maritz 7
    8. 8. The engagement cliff Initial Awareness Participation & Enrollment Participation, but with lagging engagement levels Disengagement Time Proprietary and Confidential © 2011 Maritz
    9. 9. The Four-Drive Model of Motivation Driven to acquire stuff, status, resources Acquire Bond Driven to engage, cooperate,“fit in” to the community CHOICE Driven to defend status, stuff, ideas and relationships Defend Create Driven to “create” better self, team, organization, world Based on the work of Paul Lawrence and Nitin Nohria at Harvard Business School ©2013 The Maritz Institute. All rights reserved. 9
    10. 10. Traditional Rewards ? Pendulum swing Virtual Rewards 10
    11. 11. Traditional rewards Proprietary and Confidential © 2011 Maritz 11
    12. 12. Proprietary and Confidential © 2011 Maritz 12
    13. 13. Proprietary and Confidential © 2011 Maritz 13
    14. 14. Proprietary and Confidential © 2011 Maritz 14
    15. 15. Traditional reward strategy Proprietary and Confidential © 2011 Maritz 15
    16. 16. Today we have an avalanche of data … Proprietary and Confidential © 2011 Maritz
    17. 17. People in reward programs have changed • New Generations – By 2015, the oldest Millennials (born after ‘77) will be 38 years old 1 • More Digital Devices – Average U.S. household has 5 digital devices, and some have 15 or more2 • Soon, More Devices than People! – Number of mobile-connected devices will soon exceed the world’s population3 1 Pew Research Center’s Internet and American Life Report 2 Bloomberg Tech Blog 3 Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update Proprietary and Confidential © 2011 Maritz 17
    18. 18. People’s expectations have changed, too “I expect personalized experiences in all my online environments.” “I’m a 20-something who likes music downloads and designer handbags … so don’t show me housewares, sporting goods, and lawn care.” “I want access to my rewards site on my smartphone, tablet or laptop – depending on where I am and what I’m doing.” Proprietary and Confidential © 2011 Maritz 18
    19. 19. Consumers are in the drivers seat Proprietary and Confidential © 2011 Maritz 19
    20. 20. Social intelligence is big data Sentiment Volume Velocity Emotion Proprietary and Confidential © 2011 Maritz 20
    21. 21. Maritz social intelligence study : affluent women Volume Affluent Women – Conversations Emotion Proprietary and Confidential © 2011 Maritz 21
    22. 22. Proprietary and Confidential © 2011 Maritz 22
    23. 23. Behavioral Intelligence is also big data Proprietary and Confidential © 2011 Maritz 23
    24. 24. We are: •Currently using big data in our reward strategy. •Evaluating how to use big data in our reward strategy. •What’s big data? Proprietary and Confidential © 2011 Maritz 24
    25. 25. Future strategy for traditional rewards Behavioral Intelligence Social Intelligence Proprietary and Confidential © 2011 Maritz
    26. 26. Traditional Rewards ? Pendulum swing Virtual Rewards 26
    27. 27. Virtual rewards are non-physical goods that exist online and are earned by participants for engagement and achievement. • Likes • Badges • Shares • Trophies/Achievements • Comments • Virtual “goods” • Levels • Points 27
    28. 28. We are: •Currently using virtual rewards in our rewards mix. •Evaluating whether to integrate virtual rewards into our rewards mix. •Not planning to include virtual rewards in our program. Proprietary and Confidential © 2011 Maritz 28
    29. 29. Proprietary and Confidential © 2011 Maritz
    30. 30. Tran actions s Proprietary and Confidential © 2011 Maritz
    31. 31. Inter actions Proprietary and Confidential © 2011 Maritz
    32. 32. The upside of virtual rewards: • Low cost to produce • Low cost to store • Inexhaustible supply • Can attach to any behavior • Consumers and employees like them. A lot. Proprietary and Confidential © 2011 Maritz 32
    33. 33. Engaging in a behavior for its own value. Intrinsic Extrinsic MOTIVATION Engaging for the promise of an attached reward. Proprietary and Confidential © 2011 Maritz 33
    34. 34. The downside: Virtual rewards have low and exceedingly fleeting extrinsic value. Instead, link them to behaviors with intrinsic motivators. 34
    35. 35. AWARENESS D is ruptio D isruptio n!! n Status Status Quo Quo - COMMITMENT INFLUENCE Habit Ritual Ritual Social Interaction – Autonomy – Mastery Effort – Risk - Reward + Proprietary and Confidential © 2011 Maritz
    36. 36. 5 best uses for virtual rewards: 1. To show progress toward a goal 2. To acknowledge mastery 3. To indicate social connection/status 4. To enable online personalization 5. As a proxy for a tangible reward Proprietary and Confidential © 2011 Maritz 36
    37. 37. 37
    38. 38. 38
    39. 39. Results: 2X 115 % EE+ Participation doubled over previous year Increase in overall recognitions submitted Four of 7 engagement outcomes are up significantly Proprietary and Confidential © 2011 Maritz 39
    40. 40. Virtual Rewards Traditional Rewards Big Data & Strategy 40
    41. 41. Questions? Mary Luckey Director Reward Strategy Barry Kirk Vice President Loyalty Strategy Proprietary and Confidential © 2011 Maritz 41
    42. 42. Thank You Proprietary and Confidential © 2011 Maritz 42
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