Social Loyalty Program- Archana Basarur

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Social Loyalty Program- Archana Basarur

  1. 1. Social Loyalty Program By Archana Basarur Digital Marketing MKTG 7546 02/14/2012
  2. 2. Table of Contents Overview. .............................................................................................................................................. 3 Social Loyalty Trend .............................................................................................................................. 4 Case 1. ................................................................................................................................................... 4 Case 2 .................................................................................................................................................... 4 Trend Analysis (Expert opinion) ............................................................................................................ 6 References ............................................................................................................................................ 8 Page 2 of 8
  3. 3. Overview: Facebook’s total user count has increased from 585 million (beginning of 2011) to 800+million (end of 2011) adding to a total growth of 37% (Marketingland, Infographic). During thesame period, twitter’s registered users have increased from 145 to 200 million, with 50 millionusers logging in every day by Sep 2011 (mashable, Infographic). With Tumblr now attractingover 90 million unique visitors every month, StumbleUpon driving over 50% of all socialnetwork traffic, and YouTube attracting 50% more views than 2010 (Infographics), there is nodenying the influence of social media on the way that we as human beings communicate on adaily basis. Since the majority of people in the country are constantly on social media sites at allhours of the day, companies realized that they had a whole new market to reach. In the socialspace so many brands are focused on building likes, mentions or retweets. The first traditional loyalty program came into existence 30 years ago, in the form ofAAdvantage by American Airlines, while the first airlines on Twitter joined just 50 months ago:JetBlue and Delta in May 2007 (Bill, Customerthink, Aug, 2011). Traditional Loyalty programsand social media platforms both are innovations that were popularly accepted even before theybegan to reach their full potential. Now the traditional loyalty programs are hard at work (withabout a 30-year head start), wisely exercising their marketing power–and social media has thepotential to do the same. The rise of customer engagement through social media has broughtinto question the “old” concept of customer loyalty. The opt-in nature of social media, wherecustomers choose when they want to receive and engage in communications with brands, hasbegun to overshadow the traditional CRM method of customer loyalty. Social sites provide an opportunity to recognize and reward customer loyalty not onlyfor purchases and referrals but also for liking the brand, blogs, writing reviews, spreading theword like tweeting, commenting on articles etc. The biggest advantage is at reaching millions ofcustomers at ease and less spending. Hence the scope to tie up loyal customers is enormous.The big difference here is you are carefully listening to your consumers and rewarding them fortheir every simplest action and effort towards brand thus providing them a sense of greatrecognition and attention. And guess what – who doesn’t like recognition and rewards? Page 3 of 8
  4. 4. Social Loyalty Trend: Moving beyond location-based reward schemes such as TopGuest, some companieshave created social loyalty programs that allow members to earn points, redeem points in formof discounts as they engage in various activities such as commenting on articles, reviewing,“Liking” or tweeting products, referring friends and participating in polls. This will helpcompanies to encourage customers’ involvement with their brands more and also at the sametime attract new customers towards loyalty. Two such case studies below:Case 1: 500friends is Startup Company helping e-retailers leverage the social behavior ofconsumers to increase brand loyalty and nurture profitable long term customer relationships.500friends has white-label LoyaltyPlus technology to reward consumers for social activities.Consumers get points, badges, place on a leaderboard and special deals for cashing in theserewards. If a company already has a loyalty program, 500friends can work on top of thatexisting program or if it doesn’t it can start from scratch. The rewards and loyalty programs givecustomers a reason to come back, rather than just purchase one time at a variety of sites.500friends gets paid on a subscription basis, based on hitting performance numbers. 500friendsfocuses exclusively on big e-retailers and some of its clients include hotels.com,inkjetsuperstore.com, shoebuy.com etc (500friends.com). They are currently integrated withfacebook and twitter, and onsite reviews implemented using products such as Bazaarvoice orPower Reviews. They will be integrating with Google+ (once Google opens up an API) and othersites such as pinterest very soon. They believe in having a comprehensive platform rather thanjust point of sale which will help them to further enhance towards relevancy by takingadvantage of increasingly rich customer data collected. Customers will get even more controlover how they interact with brands.Case 2: PunchTab is the worlds first instant social loyalty platform reaching over 1.2 millionconsumers every month across hundreds of sites that have integrated the companys loyaltyprograms. Using PunchTab publishers, retailers and application vendors can deploy a tightlyintegrated reward program to their users in minutes with no development or marketing costs.Consumers can immediately authenticate through popular social networks and start earning Page 4 of 8
  5. 5. loyalty points that are redeemable for exclusive offers, gift cards, and custom rewards. Thereare over 2 million loyalty programs in the United States alone, most of which are trying to moveto an online, social model; PunchTab makes this easy and allows businesses and websiteowners to automate the process of bringing hard-won customers back to transact again andagain. (PunchTab.com) In general any industry where customers make more than one transaction a year is agood target for a social loyalty program - retail, travel and hospitality, financial services, CPG. Inspecific, businesses with customers having lot of online presence is a sure hit. Recent data onAirline travelers has shown that almost 90% of frequent flyers use Facebook regularly and over65% “Like” at least one airline on Facebook and there are more airlines on Twitter than thereare airlines with frequent flyer programs (191 v/s 179) (SimpliFlying, Sep 2011). SimpliFlyingCompany is helping airlines engage in customer profitability through social loyalty programs. Inlate October 2011 by partnering with SimpliFlying, Estonian Air, a fledgling airline from one ofthe more exotic parts of Europe, launched the first social loyalty program for its customers. Thenew and rather groundbreaking initiative is run via a Facebook app called AirScore and awardscustomers points for virtual, but socially important, actions such as tweeting a deal, or writing areview. These virtual points are redeemable for real-world rewards like lounge access ordiscounts on future flights. With this program Estonia is also looking to bring Estonian Air andEstonia to the world map. Estonia is a small market and in order to provide good connections atreasonable price for Estonians, the airline needs to also attract connecting traffic from outsideEstonia. Tasti D-Lite, the great-tasting, lower-calorie frozen dessert chain with a cult followingamong health-conscious consumers as well as celebrities, has partnered with start-up SNAPServices to take customer loyalty rewards to new heights. Patrons earn TastiRewards points bysharing their experiences with friends and followers online. The company has found that one infive TastiRewards members are generating connections to at least one social network and 18percent of those are generating automatic check-ins on foursquare. Page 5 of 8
  6. 6. Trend Analysis (Expert opinion): According to social loyalty Expert and CTO of 500Friends.com, Bob Tekiela, social loyaltyprograms will become the norm overtaking traditional "points for purchases" programs.According to him, in general any industry where customers make more than one transaction ayear is a good target for a social loyalty program - retail, travel and hospitality, financialservices, CPG. He says “Having a comprehensive platform is a key to success from myperspective. We see a lot of companies with a point solution. This is fine when companies wantto experiment with new ideas. When however you get serious about a loyalty program, youwant to have a comprehensive view of a customer, encourage a broad set of actions andsupport an array of motivators”. Majority of the social loyalty programs currently can integratewith only certain social sites like Facebook, Twitter; site reviews implemented using productssuch as Bazaarvoice or Power Reviews etc. They are also planning to integrate with Google+(once Google opens up an API) and other sites such as pinterest. Going forward, programs willbe further enhanced and made more relevant by taking advantage of increasingly rich customerdata collected and available. Customers will get event more control over how they interact withbrands. According to industry experts, the key differentiator will be rewarding customers for awide range of actions which encourage both "spenders" and "talkers". The future of this trendis to drive the total value of customer defined as Total value = Lifetime Value + Referral Value.Different people respond better to different motivators. One of the competitive strategies willbe to support both traditional financial motivators and social motivators such as badges,leaderboards and public mentions to make social loyalty programs appealing to a broader set ofcustomers. Making it incredibly easy to launch and customize a loyalty program according tobrand needs is equally important. It will not be a surprise if future social loyalty programs startproviding tools to show the impact of the loyalty program on sales, brand popularity, increasedcustomer base etc. “Marketing to small businesses is similar to marketing to consumers. Similar tools andtechniques can be used” says Tekiela. The next step in the trend will be attracting businesseswhich have small businesses as their customer to leverage social loyalty. At the other extreme Page 6 of 8
  7. 7. you would have for example an aircraft engine business of GE which essentially has two keycustomers - Boeing and Airbus. In such business it is all about human touch. In the middle youhave B2B companies which sell to enterprises. They can of course leverage social media to buildloyalty. The focus would however be different - size of customer base is smaller but depth ofinteraction higher. Brand specific community sites attached to company websites work well insuch scenario. There are some concerns about user privacy involved with social loyalty which demandsuser to enter social media credentials to enroll to such social rewards programs. Anotherchallenge would be integrating the social loyalty program to larger group of social mediaplatforms to attract and reward broader customer interest base. Page 7 of 8
  8. 8. References: 1. http://marketingland.com/infographic-how-facebook-grew-users-pages-in-2011-3943 2. http://mashable.com/2011/09/30/twitter-history-infographic/ 3. http://estonian-air.com/en/service/news/press-releases/estonian-air-makes-history-in-loyalty- marketing/ 4. http://mashable.com/2011/02/09/snap/ 5. http://www.bizreport.com/2011/06/why-social-loyalty-is-as-important-as-social-strategy.html 6. http://www.customerloyalty.org/how-social-media-is-changing-customer-loyalty-programs/ 7. http://www.forbes.com/sites/tomiogeron/2011/06/21/500friends-helps-ecommerce- companies-build-loyalty/ 8. http://www.customerthink.com/blog/the_historical_bond_of_social_media_and_loyalty_progr ams 9. http://www.punchtab.com/ 10. http://500friends.com/ 11. http://simpliflying.com/2011/infographic-the-future-of-loyalty-program-will-be-powered-by- social-media/ 12. http://www.loyalty360.org/state_of_the_industry/the-future-of-loyalty-programs-is-social/ 13. http://www.prnewswire.com/news-releases/punchtab-raises-850000-in-seed-funding-to-build- instant-loyalty-122930238.html 14. Bob Tekiela, Co-founder & Chief Technology Officer of 500Friends - Prior to joining 500friends, Bob served as CTO of StrongMail, a Sequoia-funded company and leader in e-mail marketing software. Previously, he was CTO of social media innovator PopularMedia, Vice President of Technology at Sapient Corporation, and CTO at Digitas. Bob holds an M.S. from AGH University of Science and Technology in Krakow, Poland. 15. http://www.entrepreneur.com/article/222444 16. http://www.bizjournals.com/sanjose/news/2011/11/08/punchtab-raises-44m-led-by-mdv.html 17. http://www.businesswire.com/news/home/20120119005301/en/Bamboo-Social-Rewards- Platform-Propels-Estonian-Air 18. http://travel.usatoday.com/hotels/post/2011/11/social-media-not-so-effective-for-customers- hotels/569640/1 19. http://www.prnewswire.com/news-releases/turnto-networks-and-500friends-form-strategic- partnership-to-boost-brand-loyalty-and-revenue-for-e-commerce-retailers-138987884.html 20. http://socialcommercetoday.com/speed-summary-putting-social-media-to-work-bain-report- download/ Page 8 of 8

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