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Kobie Marketing Quarterly Review: Retail Edition, June 2013

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KOBIE
QUARTERLY
REVIEW
JUNE 2013
7 Spotlight
Creating Optimized
Customer Experiences
By Bram Hechtkopf
15 Retail Review
J....
CONTENTS
10% Of real-time data is
actually being utilized
missed opportunities
$$
The New Customer ConnectionThe New Custo...
FOUR THINGS YOUR RESTAURANT LOYALTY PROGRAM
SHOULD BE DOING TO EMPOWER CUSTOMER ENGAGEMENT
Faced with these uncertainties,...
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Kobie Marketing Quarterly Review: Retail Edition, June 2013

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Customer loyalty is dynamic, compelling and changing all the time. Awareness of a loyalty program’s importance was once relegated solely to a handful of sponsors of a program at a company, or those of us toiling in our industry to support the program. Today, loyalty programs are an enterprise initiative — reflective of the customer experience of brands, managed by customer service, finance, marketing, operations and IT, driven by segmented media and consumer campaigns, and expected to drive ROI, fostering lifelong connections and creating lifetime brand value. 

The loyalty and customer experience landscape has been positively impacted by several exciting trends:

- The analyses of Big Data which derive meaningful consumer behavioral insights.  We challenge ourselves and our clients to use it to create genuine experiences versus the more simplistic points-for-rewards stereotypes 

- The need for devices and channels (think smartphones, tablets, digital signage, kiosks, radio, TV, print, etc.) to create a consistent customer experience.  We need to build omnichannel loyalty programs, and then mine the data sets they create

- The importance of having programs that appeal to both the rational and emotional sides of the brain — emotional connections can include elements of gamification and social media, while rational are the tangible rewards e.g. discounts or coupons

These trends – and other insights – form the backbone of the Kobie Knowledge Quarterly Review.  Our goal is to bring to you loyalty landscape commentary and analyses of where the loyalty industry is heading.  We welcome conversations about loyalty through our observations, commentaries, insights and, in some cases, criticisms of the developments taking place.

We hope the Kobie Knowledge Quarterly Review leaves you with a greater appreciation that customer loyalty isn’t just about the program itself. Or even solely for driving ROI and heightening customer engagement. Loyalty, the bond an individual makes with another, is central to the human condition. It’s about reciprocity, faith, trust and at its greatest intensity, a type of moral obligation, akin to the connections we forge with family and friends. 

Brands and businesses, the best ones, are no different.


Michael Hemsey, President
Kobie Marketing, Inc.

Customer loyalty is dynamic, compelling and changing all the time. Awareness of a loyalty program’s importance was once relegated solely to a handful of sponsors of a program at a company, or those of us toiling in our industry to support the program. Today, loyalty programs are an enterprise initiative — reflective of the customer experience of brands, managed by customer service, finance, marketing, operations and IT, driven by segmented media and consumer campaigns, and expected to drive ROI, fostering lifelong connections and creating lifetime brand value. 

The loyalty and customer experience landscape has been positively impacted by several exciting trends:

- The analyses of Big Data which derive meaningful consumer behavioral insights.  We challenge ourselves and our clients to use it to create genuine experiences versus the more simplistic points-for-rewards stereotypes 

- The need for devices and channels (think smartphones, tablets, digital signage, kiosks, radio, TV, print, etc.) to create a consistent customer experience.  We need to build omnichannel loyalty programs, and then mine the data sets they create

- The importance of having programs that appeal to both the rational and emotional sides of the brain — emotional connections can include elements of gamification and social media, while rational are the tangible rewards e.g. discounts or coupons

These trends – and other insights – form the backbone of the Kobie Knowledge Quarterly Review.  Our goal is to bring to you loyalty landscape commentary and analyses of where the loyalty industry is heading.  We welcome conversations about loyalty through our observations, commentaries, insights and, in some cases, criticisms of the developments taking place.

We hope the Kobie Knowledge Quarterly Review leaves you with a greater appreciation that customer loyalty isn’t just about the program itself. Or even solely for driving ROI and heightening customer engagement. Loyalty, the bond an individual makes with another, is central to the human condition. It’s about reciprocity, faith, trust and at its greatest intensity, a type of moral obligation, akin to the connections we forge with family and friends. 

Brands and businesses, the best ones, are no different.


Michael Hemsey, President
Kobie Marketing, Inc.

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Kobie Marketing Quarterly Review: Retail Edition, June 2013

  1. 1. KOBIE QUARTERLY REVIEW JUNE 2013 7 Spotlight Creating Optimized Customer Experiences By Bram Hechtkopf 15 Retail Review J.C. Penney and the Billion-Dollar Question 17 Restaurant Spotlight Genuine Customer Experience is Back for Seconds By Marc Glazer RETAIL EDITION THINGS YOUR RETAIL CUSTOMERS EXPECT THIS YEAR BY MICHAEL HEMSEY PAGE 9 @Kobie_Marketing on.fb.me/17n5zxV linkedin.com/company/kobie-marketing www.kobie.com
  2. 2. CONTENTS 10% Of real-time data is actually being utilized missed opportunities $$ The New Customer ConnectionThe New Customer Conn big databig data OMNICHANNEL LOYALTYOMNICHANNEL LOYALOMNICHANNEL LOYALTY p.o.s. tweets likes surveysemailwebsites blogsforums purchases Too often marketers fail to incorporate loyalty early enough into the omnichannel “big picture.” It isn’t about offering a discount, it’s about offering someone the right offer at the right time. Big Data refers to the constant incoming information so large it surpasses what typical storage tools can handle. A recent IBM study showed that only about 10% of real-time data being collected is being used effectively by businesses! $$ $$ $$ $$ $$ $$ $$ $$ $$ $$ Omnichannel loyalty (OCL) is an enterprise-level initiative to drive, track, measure and reward incremental behavior throughout the enterprise and customer experience. With omnichannel loyalty, traditional loyalty attrition is reduced, as brand advocates play an enhanced role across the customer lifecycle. Consumers become empowered through a mix of compelling and coordinated cross-channel engagements, as well as truly personalized messaging that delivers more meaningful and relevant brand interactions, and the right reward for the “right” behaviors along the way. The result when executed with precision is a true impact on customer lifetime value (LTV) – the ultimate loyalty metric. $$ $$ $$ $$ $$ $$ Of businesses created an experience-based 42% Of businesses defined customer engagement 37% Of customers expect a similar experience 42% Of businesses surveyed indicated little to no 58% 90% Of Big Data becomes missed opportunities $$ $$ $$ 4 CREATING OPTIMIZED CUSTOMER EXPERIENCES Ask marketers or loyalty marketing service providers (L-MSPs) what the common 2013 theme is and they’ll tell you “convergence” – just like 2012. But what type of convergence do I mean? By Bram Hechtkopf 7 FIVE THINGS YOUR RETAIL CUSTOMERS EXPECT THIS YEAR While Toys “R” Us’ recent miss stems from heightened discount competition, some of the company’s shortcomings might be internal too – hyper-reliance on excessive discounts. By Michael Hemsey 5 WHEN IT COMES TO LOYALTY, EXPERIENCE IS EVERYTHING Summing up loyalty comes down to experiences: positive experiences engendering decades of loyalty and negative ones that take longer to subside. By Michael Hemsey 9 MOVING FROM TRANSACTIONAL TO EMOTIONAL LOYALTY Consumers increasingly expect an enhanced brand experience, one that takes loyalty beyond the points-for-rewards stereotype, delivering on emotional experiences as much as any tangible reward. By Bram Hechtkopf www.kobie.com
  3. 3. FOUR THINGS YOUR RESTAURANT LOYALTY PROGRAM SHOULD BE DOING TO EMPOWER CUSTOMER ENGAGEMENT Faced with these uncertainties, restaurant loyalty programs are more valuable than ever in attracting, engaging and retaining patrons. By Marc Glazer12 GENUINE CUSTOMER EXPERIENCE IS BACK FOR SECONDS Ask the technology skeptics whether they think technology has helped or hindered interpersonal communication, and invariably they’ll offer muted grumblings like “talk much, say little, connect less.” By Marc Glazer SOLVING THE RIDDLE OF BIG DATA For all the talk of Big Data and its global impact, more than a quarter of North American retailers in 2012 — 27% — remain unaware of Big Data or are aware of its existence, but uncertain of its retail potential. By David Andreadakis JCP AND THE BILLION-DOLLAR QUESTION Coupon king Myron Ullman is back in the spotlight trying to save J.C. Penney from itself. But can he succeed? That’s the $1 billion question being asked by media and retail industry experts. By Bram Hechtkopf STARBUCKS AIMS TO CREATE LOYALTY FROM ITS DISLOYAL CUSTOMERS. HUH? It’s rare when a company voluntarily admits it could do something better – especially when that company is Starbucks. With a record $1 billion placed on its Starbucks Cards in the first quarter of 2013, the king of coffee has little to worry about. By Pamela Sullins 25 THE KEY TO PERSONALIZING EACH CUSTOMER’S LOYALTY EXPERIENCE? ACTING ON BUSINESS INTELLIGENCE Individualized  pricing,  however,  is  just  the  beginning.  A  growing  number  of  brands   across  different  ver=cals  (most  no=ceably  in  financial  services  and  retail)  are  upping   their  loyalty  game  by  trumpe=ng  the  value  of  individualized  experiences  over  just   discounts  and  deals.  By Michael Hemsey 15 17 20 ARE LAST YEAR’S BIGGEST TRENDS IN THE LOYALTY INDUSTRY CHANGING, OR ARE THEY GROWING? Big Data, social media and the continued expansion of mobile market saturation were all topics of wide discussion and analysis throughout the loyalty industry. By Bram Hechtkopf 22 www.kobie.com 2
  4. 4. Customer  loyalty  is  dynamic,  compelling  and  changing  all  the  =me.  Awareness  of  a  loyalty   program’s  importance  was  once  relegated  solely  to  a  handful  of  sponsors  of  a  program  at  a   company,  or  those  of  us  toiling  in  our  industry  to  support  the  program.  Today,  loyalty  programs   are  an  enterprise  ini=a=ve  —  reflec=ve  of  the  customer  experience  of  brands,  managed  by   customer  service,  finance,  marke=ng,  opera=ons  and  IT,  driven  by  segmented  media  and   consumer  campaigns,  and  expected  to  drive  ROI,  fostering  lifelong  connec=ons  and  crea=ng   life=me  brand  value.   The  loyalty  and  customer  experience  landscape  has  been  posi=vely  impacted  by  several  exci=ng   trends: • The  analyses  of  Big  Data  which  derive  meaningful  consumer  behavioral  insights.     We  challenge  ourselves  and  our  clients  to  use  it  to  create  genuine  experiences  versus  the   more  simplis=c  points-­‐for-­‐rewards  stereotypes   • The  need  for  devices  and  channels  (think  smartphones,  tablets,  digital  signage,  kiosks,   radio,  TV,  print,  etc.)  to  create  a  consistent  customer  experience.    We  need  to  build   omnichannel  loyalty  programs,  and  then  mine  the  data  sets  they  create • The  importance  of  having  programs  that  appeal  to  both  the  ra=onal  and  emo=onal  sides   of  the  brain  —  emo=onal  connec=ons  can  include  elements  of  gamifica=on  and  social   media,  while  ra=onal  are  the  tangible  rewards  e.g.  discounts  or  coupons These  trends  –  and  other  insights  –  form  the  backbone  of  the  Kobie  Knowledge  Quarterly  Review.     Our  goal  is  to  bring  to  you  loyalty  landscape  commentary  and  analyses  of  where  the  loyalty   industry  is  heading.    We  welcome  conversa=ons  about  loyalty  through  our  observa=ons,   commentaries,  insights  and,  in  some  cases,  cri=cisms  of  the  developments  taking  place. We  hope  the  Kobie  Knowledge  Quarterly  Review  leaves  you  with  a  greater  apprecia=on  that   customer  loyalty  isn’t  just  about  the  program  itself.  Or  even  solely  for  driving  ROI  and   heightening  customer  engagement.  Loyalty,  the  bond  an  individual  makes  with  another,  is  central   to  the  human  condi=on.  It’s  about  reciprocity,  faith,  trust  and  at  its  greatest  intensity,  a  type   of  moral  obliga=on,  akin  to  the  connec=ons  we  forge  with  family  and  friends.   Brands  and  businesses,  the  best  ones,  are  no  different. Michael  Hemsey,  President Kobie  Marke=ng,  Inc. FROM OUR PRESIDENT www.kobie.com 3
  5. 5. 10% Of real-time data is actually being utilized $$ The New Customer ConnectionThe New Customer Conn big databig data OMNICHANNEL LOYALTYOMNICHANNEL LOYALOMNICHANNEL LOYALTY p.o.s. tweets likes surveysemailwebsites blogsforums purchases Big Data refers to the constant incoming information so large it surpasses what typical storage tools can handle. A recent IBM study showed that only about 10% of real-time data being collected is being used effectively by businesses! $$ $$ $$ $$ $$ $$ $$ $$ $$ $$ Omnichannel loyalty (OCL) is an enterprise-level initiative to drive, track, measure and reward incremental behavior throughout the enterprise and customer experience. With omnichannel loyalty, traditional loyalty attrition is reduced, as brand advocates play an enhanced role across the customer lifecycle. Consumers become empowered through a mix of compelling and coordinated cross-channel engagements, as well as truly personalized messaging that delivers more meaningful and relevant brand interactions, and the right reward for the “right” behaviors along the way. The result when executed with precision is a true impact on customer lifetime value (LTV) – the ultimate loyalty metric. $$ $$ $$ $$ $$ $$ 90% Of Big Data becomes missed opportunities 4 Lines  are  becoming  blurred  between  marke=ng  channels   and  media  in  a  way  that  has  a  huge  impact  on  how   customers’  want  to  experience  your  brand.  Omnichannel   Loyalty  is  the  key  to  bringing  this  all  together.  With   Omnichannel  Loyalty,  you  can  reach  your  loyal  customers   across  all  plaYorms,  mediums,  and  channels  in  a  more   efficient  and  aligned  manner  allowing  you  to  track  data   be[er  than  ever  and  ensure  the  most  meaningful  customer   experience  and  engagement.  One  size  fits  all  is  over.   SCAN ME! FOR THE FULL INFOGRAPHIC OMNICHANNEL LOYALTY FRAMED
  6. 6. Summing  up  loyalty  comes  down  to   experiences:  posi=ve  experiences  engendering   decades  of  loyalty  and  nega=ve  ones  that  take   longer  to  subside.  But  let’s  focus  on  the   posi=ve  with  two  anecdotes.  On  Valen=ne’s   Day,  my  wife’s  friend  received  a  handwri[en   note  from  a  sales  associate  at  Neiman  Marcus,   thanking  her  for  a  Tom  Ford  perfume  purchase   while  sugges=ng  two  new  fragrances  from  the   same  line,  samples  included. “Dear  XXX,  I  know  that  the  Italian  Cypress  must   s8ll  be  exci8ng  your  senses,”  the  card  began.   “Based  on  what  we  discussed  last  8me  you   were  here  I  put  together  a  couple  of  samples  of   what  I  thought  you  might  like.” In  an  age  of  impersonal  emails  and  untargeted   offers,  personal  messaging  made  my  wife’s   friend  feel  valued.  It’s  great  to  see  handwri[en   notes  and  unexpected  samples  have  not  been   forgo[en.  Clearly,  the  Neiman  Marcus   salesman  recorded  customer  preferences  into   a  CRM  program  and  turned  data  into  ac=on. Then  there's  my  own  experience  with  Uber,  a   two-­‐year-­‐old  app.  Uber  pinpoints  your   loca=on,  or  you  enter  a  pickup  address,  and  it   allows  you  to  select  private  taxis,  limos  or  SUVs   without  the  hassle  of  finding  a  cab  or  doing  the   “New  York  wave.”  The  app  links  your  credit   card  to  each  payment  and  eliminates  card   swipes  and  clones  while  accruing  points  on   various  loyalty  programs.  Chase  Sapphire   Preferred  awards  2.14  points  per  dollar  spent   and  car  services  count  as  travel  expenses.   Here,  too,  the  experience  concluded  with  a   Thank  You  email. "Hi  Michael,  we  hope  you  enjoyed  your  first   ride  with  Uber!”  it  read.  “Below  is  your  custom   Uber  invite  link.  Each  friend  that  signs  up  with   your  link  will  receive  $10  off  their  first  Uber   ride.  And,  for  each  of  your  friends  that  takes  a   ride,  we'll  drop  $10  Uber  credits  on  your   account." “Summing up loyalty comes down to experiences: positive experiences engendering decades of loyalty and negative ones that take longer to subside” WHEN IT COMES TO LOYALTY, EXPERIENCE IS EVERYTHING By Michael Hemsey 5
  7. 7. The  Science  Behind  Loyalty These  examples  work  because,  as  Forrester   Research  pointed  out  in  a  2012  study,   consumers  reward  brands  that  “make  them  feel   special”  and  will  pay  more  for  that  service.   American  Express,  for  instance,  scored  37%   higher  than  MasterCard  on  delivering  special   experiences  and  enjoyed  18%  higher  pricing   power  as  a  result.  Part  of  that  experience  means:   brands  empowering  frequent  users  to  promote   products  via  social  media  and  tradi=onal  outlets,   good  corporate  ci=zenship  and  becoming  an   “invaluable  resource”  –  or  a  brand  that   consumers  feel  they  can’t  do  without. None  of  these  findings  directly  link  to  specific   loyalty  programs.  It’s  the  li[le  things  — the   subtle  corporate  signals  that  inform  customers   that  their  experience,  managed  across  all   channels,  is  tops.   For  brands,  mee=ng  consumer  experience   expecta=ons  has  a  prac=cal  marke=ng  purpose,   and  is  only  the  beginning. Delivering  quality  experiences: • Is  how  brands  dis=nguish  themselves  in   compe==ve  markets.  For  instance,   global  ad  spending  was  up  4.3%  in  the   third  quarter  of  2012,  to  $139  billion.   Samsung,  Microsop  and  Apple  shelled   out  $3  billion,  $1.9  billion  and  $933   million,  respec=vely,  in  adver=sing  in   2011,  as  each  wrestled  for  dominance.   With  this  kind  of  rivalry  common,   experiences  set  brands  apart.   • Equals  emo=onal  connec=ons  that  drive   product  loyalty  —  a  vital  omnichannel   component  as  marketers  promote   brands  across  mul=ple  channels.  The   17th  Annual  Brand  Keys  Customer   Loyalty  Engagement  Index  found  that   emo=onal  engagement  trumps   promo=ons  and  discoun=ng  in  consumer   importance.  So  when  Hyundai  =es  for   the  number  one  spot  in  the  automo=ve   subcategory  of  the  loyalty  index,   something  is  right. • Ensures  the  rise  of  brand  ambassadors.   Emo=onal  connec=ons  inspire  people  to   discuss  their  posi=ve  experiences.  And   despite  brand-­‐fickle  and  loyalty-­‐suspect   consumers,  commi[ed  fans  drive  further   brand  buzz,  resul=ng  in  higher  profits   and  ROI. Loyalty  Management  Goes  A  Long  Way  Too When  discussing  customer  experience   importance,  back-­‐end  loyalty  legwork  is  also  key   —  the  convergence  of  management  styles   uni=ng  tradi=onal  loyalty  program  metrics  and   customer  rela=onship  management  (CRM)  under   one  roof.  For  Neiman  Marcus,  imagine  customer   insights  volume  if  in-­‐store  experiences  (and  the   informa=on  used  craping  the  note)  were   augmented  with  loyalty  program  data.  I  suspect   far  more  customer-­‐specific  notes  could  be   wri[en.  Merging  CRM  and  loyalty  helps  realize   experience-­‐driven  outcomes,  increases  brand   efficiency  and  corrects  downstream  errors. Experience  is  everything.  Yet  what  experiences   inspire  loyalty  remains  fluid.  Keeping  these   observa=ons  in  mind  will  not  guarantee  brand   success,  but  it  will  improve  loyalty  odds.  And   combining  tradi=onal  outreach  with  CRM  might   be  the  best  loyalty  solu=on  yet. “When discussing customer experience importance, back- end loyalty legwork is also key — the convergence of management styles uniting traditional loyalty program metrics and customer relationship management (CRM) under one roof.” 6 GET AMPED! A revolutionary new loyalty marketing platform is coming. Find out more info@kobie.com
  8. 8. Ask  marketers  or  loyalty  marke=ng  service  providers  (L-­‐ MSPs)  what  the  common  2013  theme  is  and  they’ll  tell   you  “convergence”  –  just  like  2012.   But  what  type  of  convergence  do  I  mean?  There  are  two   types,  one  unfolding  in  response  to  the  other.  Last  year,   marketers  anxiously  sought  the  implica=ons  of  channel   convergence  capitalizing  on  many  touch  points:   smartphones,  tablets,  TV,  email  and  social  media.  The   upside  to  convergence  and  channel  prolifera=on  was   copious  customer  data.  Everything  from  shopping  habits   and  loca=on  to  loyalty-­‐program  status  can  be  tracked   across  mul=ple  channels.   One  challenge  for  marketers  and  L-­‐MSPs  comes  down  to   managing  the  data  deluge:  how  to  turn  data  into   ac=onable  insight  that  drives  ROI.  Tradi=onally  some  of   this  data  were  organized  through  CRM  sopware.  But   thanks  to  informa=on  inunda=on,  corporate  structures   developed  siloed  management  styles,  making  internal   communica=ons  difficult.  Now,  experien=al  metrics   gathered  from  loyalty  programs  plus  CRM  sopware  are   yielding  new  types  of  customer  experience   management,  or  CEM.  It’s  a  vital  convergence  helping   prove  loyalty’s  worth. Even  so,  Temkin  Group’s  2012  report  finds  that  while   59%  of  respondents  plan  to  help  their  companies   become  CEM  leaders  in  the  next  three  years,  only  7%  of   North  American  companies  have  a  strong  grasp  of  CEM. CREATING OPTIMIZED CUSTOMER EXPERIENCES By Bram Hechtkopf “Experiential metrics gathered from loyalty programs plus CRM software are yielding new types of customer experience management, or CEM. It’s a vital convergence helping prove loyalty’s worth.” - Bram Hechtkopf 7
  9. 9. Clearly,  there’s  more  to  do.   Loyalty  and  CRM  Converge  Crea<ng   Customer  Experience  Management Like  omnichannel  loyalty,  a  loyalty   program’s  integra=on  with  CRM  and   CEM  must  start  at  the  highest  levels.   C-­‐Level  execu=ves  must  be  on  board   and  so  must  subordinates.  Only  then   can  CRM  –  what  Forrester   Research  calls  “the  right  metrics  to   track  success  and  prompt  correc=ve   ac=on”  –  be  used  to  give  more  of   what  customers  seek  at  the  right   =me.  As  with  channel  convergence,   CRM  and  loyalty  convergence  are   about  the  coming  together  of  data,   people,  process  and  technology  –   real-­‐=me  responses,  tracking  and   rewarding  customers  for  their   ac=ons  in-­‐store  or  online.   Of  course,  arbitrarily  rewarding   members  for  ac=ons  they  would   have  already  taken  via  social  media   is  foolish.  It’s  even  worse  if  the  social   channel  in  ques=on  isn’t  directly   driving  purchasing  behavior.  Yet   technology  that  manages  CRM,  CEM   and  loyalty  ensures  repeat  business,   improved  ROI  and  upselling   opportuni=es. This  is  what  Bob  Thompson,  CEO  of   CustomerThink  Corp.,  calls  “lep   brain”  and  “right  brain”  teamwork.   CRM,  he  argues,  concerns  a   customer’s  value  to  a  given   enterprise.  It’s  about  systems  and   transac=ons  and  “func=onal  value,”   or  lep  brain.  CEM  is  about  the   enterprise’s  value  to  customers  and   concerns  people  and  interac=ons.   Here,  customer  “emo=onal  value”  –   right-­‐brain  thinking  –  is  priority  one.   But,  as  with  our  brains,  there  is   constant  sharing  of  data,  maximizing   problem  solving. Loyalty  marketers  have  access  to  a   host  of  data  points  (travel   preferences,  frequently  visited   des=na=ons,  average  purchase   prices,  types  of  purchases,   purchase  loca=on,  customer   gender,  etc.,)  that  provide  valuable   insight.  The  convergence  with  CRM   allows  marketers  to  improve  CEM   through  that  insight. Ul=mately,  consumers  will  demand   such  coordina=on  in  order  to   seamlessly  enjoy  the  mul=ple   channels  they  already  use. Rediscovering  the  ‘R’  in  CRM   While  the  ‘E’  in  CEM  Evolves The  above  subhead  is  a  nod  to  the   =tle  of  a  recent  Forbes  ar=cle  that   drives  home  the  essence  of  CRM   and  CEM  convergence  and   what  Forrester  calls  the  “age  of   agile  commerce.”  Whether  it’s   CEM  or  CRM  and  loyalty   management  programs,   converging  management   approaches  come  down  to  brands   driving  quality  rela=onships  with   customers  and  mee=ng  customer   expecta=ons  through  smart,  =mely   campaigns  and  op=mized   opera=ons.  It’s  about  taking  the   wealth  of  metrics  now   accumulated,  turning  that   informa=on  into  genuine   experiences  that  people  enjoy  and   managing  that  data  under  one  roof. Think  of  management  convergence   in  terms  of  the  five  Es:  enterprise  (C-­‐ level  buy-­‐in),  economics  (your   converged  CRM/  Loyalty   management  system  yielding   tangible  economic  benefits),   experience  (do  your  sales  and  IT   teams  have  the  tools  and  training   needed  to  manage,  measure  and   track  an  omnichannel  and  CRM-­‐ CEM-­‐loyalty  framework?),   engagement  (is  your  data  aligned   with  your  messaging  and  branding?   What  is  your  level  of  data  accuracy   or  “hygiene?”),  and  execu=on,  or   actually  geung  the  job  done,   demonstra=ng  a  genuine  customer   connec=on  through  improved  ROI,   repeat  business  and  posi=ve   feedback. Just  as  CRM  and  loyalty  convergence   discussions  begin  with  real  people  in   real  boardrooms,  real  salespeople–   “customer  advocates”  –  remain  vital   to  the  downstream  process,   humanizing  brand  interac=on. Customers  are  a  business’s  most   valuable  asset  and  loyalty  ini=a=ves   are  the  best  way  to  drive  brand   allegiance.  Only  with  a  CRM  and   loyalty  management  system  working   together  seamlessly  will  the  best   customer  experience  emerge.    “As with channel convergence, CRM and loyalty convergence are about the coming together of data, people, process and technology – real-time responses, tracking and rewarding customers for their actions in- store or online.” - Bram Hechtkopf 8
  10. 10. MOVING FROM TRANSACTIONAL TO EMOTIONAL LOYALTY By Bram Hechtkopf A  Forrester  Report  and  CMS   Wire  cri=que  earlier  this  year   reiterated  a  point  which  Kobie  has   endorsed  for  quite  some  =me  in  our   efforts  to  educate  clients  and  the   loyalty  industry.  There  is  compelling   evidence  sugges=ng  that  consumers   increasingly  expect  an  enhanced   brand  experience,  one  that  takes   loyalty  beyond  the  points-­‐for-­‐ rewards  stereotype,  delivering  on   emo=onal  experiences  as  much  as   any  tangible  reward.  Despite  this,   brands  con=nue  to  play  catch  up. They’re  stuck  in  what  we  and   Forrester  call  “loyalty  1.0.” While  generally  an  objec=ve  review   of  the  data  at  hand  and  Forrester’s   handling  of  it,  the  ar=cle  raises  two   important  ques=ons  –  ques=ons  that   require  serious  thought.  Con8nued  on  page  11 FIVE THINGS YOUR RETAIL CUSTOMERS EXPECT THIS YEAR By Michael Hemsey For  Toys  “R”  Us,  this  year  has  been   a  troubled  one.  The  global  retailer’s   CEO,  Gerald  Storch,  stepped  down   aper  the  company  failed  to  hit   revenue  targets  and  had  lackluster   same  store  and  overall  store  sales   during  the  2012  holiday  season.   While  Toys  “R”  Us’  recent  miss   stems  from  heightened  discount   compe==on,  some  of  the  company’s   shortcomings  might  be  internal  too  –   hyper-­‐reliance  on  excessive   discounts. Discounts,  as  we  have  seen,  can  do  a   lot  of  damage. But  at  least  there’s  a  lesson  to  be   learned  by  other  retailers.  Despite   Storch  being  credited  for  heralding   an  omnichannel  strategy  at  Toys  “R”   Us,  relying  heavily  on  in-­‐store  and   merchandising  across  mul=ple   channels,  increasingly  consumers  are   striving  for  quality  brand  experiences   as  much  as  they  seek  quality  prices. And  with  experiences  being  central   to  customer  engagement  and   loyalty,  here  are  five  things  that   retail  customers  can  expect  more: #1.  The  con<nued  rise  of  corporate   philanthropy  and  brand  social   awareness:  Panera  Bread  is  a  good   example.  While  the  brand  is   spending  some  $70  million  on  its   “Live  Consciously”  campaign  through   mul=ple  channels,  its  Panera  Bread   Founda=on  established  Panera  Cares   Cafés.  These  are  places  offering   variable  pricing  based  on  customers’   ability  to  pay,  if  at  all.  Instances  like   this  support  recent  eMarketer  data   which  finds  56%  of  US  Internet  users   have  purchased  a  product  based  on   a  brand’s  cause  allegiances. Con8nued  on  next  page “56% of US Internet users have purchased a product based on a brand’s cause allegiances” - eMarketer “Consumers increasingly expect an enhanced brand experience, one that takes loyalty beyond the points-for-rewards stereotype, delivering on emotional experiences as much as any tangible reward.” - Bram Hechtkopf 9
  11. 11. Con8nued  from  previous  page  top... #2.  An  increase  in  loyalty  program   transparency,  where  fewer  hoops  means   happier  customers:  It  should  be  obvious  –   shoppers  want  the  most  bang  for  their  loyalty   buck.  Consider  gas  sta=ons.  Most  gas  sta=on   loyalty  programs  link  their  rewards  to   convenience  store  purchases.  But  Bri=sh   Petroleum  is  changing  that  with  its  BP  Driver   Rewards  program.  Star=ng  in  April  2013,  BP   will  launch  a  new  loyalty  program  where   consumers  earn  5  cents  off  every  gallon  of  gas   they  pump,  aper  the  first  20  gallons.   Consumers  will  see  direct  savings  for  buying   something  they  already  need:  fuel.  Similarly,   Winn  Dixie’s  Fuelperks  program  earns  users  5   cents  off  per  gallon  pumped  at  Shell  sta=ons   for  every  $50  they  spend  on  groceries.    Simple,   honest  and  direct  loyalty  programs  mean   business  and  retailers  are  eager  to  jump  on   board. #3.  Customer  engagement  that  uses  21st   century  Big  Data  metrics  to  drive  tradi<onal   outreach:  Or  as  Claud  Cecil  Gurney,  founder  of   design  firm  de  Gournay,  describes  a  consumer   purchase:  “[Feeling]  like  something  they’ve   created  for  themselves  rather  than  something   that’s  been  bought  off  a  shelf  and  stuck  in  their   house.”  Accomplishing  that  genuineness   requires  constant  engagement  across  all   channels.  It  also  requires  ac=ng  on  gathered   data  which  is  a  central  tenet  of  the   omnichannel  loyalty  experience. #4.  The  improved  organiza<on  and  de-­‐siloing   of  Big  Data:  This  one’s  a  no-­‐brainer  but  it  bears   repea=ng.  A  Forbes  ar=cle  discusses  how   brands  should  opt  for  a  single  “golden  version”   of  customer  data  and  maximize  engagement   by  taking  a  holis=c  view  of  the  customer.  To   me,  this  sounds  a  lot  like  convergence  and  the   need  to  bring  loyalty  data  and  tradi=onal  CRM   data  under  one  de-­‐siloed  roof.  Forbes  refers  to   it  as  “master  data  management.”  Whatever   you  call  it,  convergence  is  key.  The  good  news   is  that,  according  to  a  2012  Retail  Horizons   report,  nearly  67%  of  retailers  surveyed  ranked   customer  sa=sfac=on  as  their  top  strategic   ini=a=ve  for  2012.  Another  82%  said  customer   service  strategies  would  be  top  priority,  up   from  75%  the  year  before.  If  that  was  the   sen=ment  in  2012,  you  can  be  sure  2013  will   be  just  as  intense. #5.  Growth  of  alterna<ve  forms  of  payment:   We’ve  wri[en  about  the  increasing  popularity   of  mobile  wallets  and  the  brand  possibili=es   that  come  with  Apple’s  Passbook  app.  But   here’s  another  take.  Walmart  is  expanding  use   of  its  iPhone  “Scan  &  Go”  app  to  40  Denver,   Co.  stores.  The  app  allows  customers  to  scan   products  while  they’re  shopping.  When  they’re   done,  the  app  organizes  purchases  under  a   single  QR  code  that  can  be  read  by  QR-­‐ equipped  readers  at  checkout.  Think  of  Apple   stores,  where  salespeople  are  on  hand  to  scan   products  throughout  the  store.  There’s  no   checkout  line.  Walmart’s  experiment  is  proving   similarly  effec=ve  in  streamlining  the  in-­‐store   shopping  and  checkout  process. And  if  Walmart’s  doing  it,  others  will  follow. But  as  Toys  “R”  Us  con=nues  its  search  for  a   CEO,  it  would  be  wise  for  it  –  and  other   retailers  –  to  keep  these  five  customer   expecta=ons  in  mind.  An  omnichannel   approach  is  great  and  compe==ve  prices  are   too.  But  that’s  just  the  first  step  toward   enhancing  loyalty  and  driving  ROI.  Enhanced   social  good,  loyalty  program  transparency,  Big   Data  and  the  use  of  its  metrics  in  a  de-­‐siloed   data  environment,  and  one  that  relies  on   innova=ve  payment  methods  are  increasingly   vital  components  to  include  in  the  loyalty  mix. “Accomplishing that genuineness requires constant engagement across all channels. It also requires acting on gathered data which is a central tenet of the omnichannel loyalty experience.” 10
  12. 12. Con8nued  from  page  9  boUom 1. Why  isn’t  a  customer  who  uses  a  discount   coupon  engaged  with  the  brand,  since  the   purchase  experience  might  result  in  a  product   or  service  so  terrific  that  the  customer  is  sold   for  life? 2. How  is  emo=onal  loyalty  to  a  brand  different   from  becoming  a  brand  advocate  —  and,  if  it’s   the  same,  why  single  out  loyalty  programs  for   that  challenge  when  other  marke=ng  efforts   might  be  needed,  such  as  proac=ve  customer   service? “Dis”  loyalty  Cards  Versus  the  Need  for  Experience The  fact  that  the  first  ques=on  needs  to  be  raised   underscores  in  part  why  companies  remain  at  loyalty   1.0.  Consumers  want  to  know  whether  or  not  they’re   being  offered  “just  another  discount”  (hence,  the   rewards  stereotype)  or  if  they  are  being  provided   relevant  offers.  Relevant  and  =mely  offers  are  the   beginning  of  an  emo=onal  brand  connec=on.  That’s   because  there’s  recogni=on  on  the  part  of  the   consumer  that  craping  that  relevant  offer  required   detailed  customer  knowledge  –  not  something  gleaned   from  email  spam. In  other  words,  the  challenge  for  marketers  is   answering  the  following  ques=ons: • How  well  do  we  know  our  customers? • Do  we  know  what  offers,  customer  experience   and  engagement  techniques  will  drive   customer  life=me  value  and  incremental   behaviors? • What  strategy  and  loyalty  tac=cs  make  the   most  sense  and,  just  as  important  as,  how  long   will  it  take  our  brand  to  reach  next-­‐level  loyalty   engagement? • Finally,  do  we  have  the  metrics  in  place  to   measure  these  outcomes? Emo<onal  Loyalty  Yielding  Brand  Advocacy As  for  the  second  ques=on  above,  there  are  obvious   connec=ons  between  emo=onal  loyalty  and  becoming   a  brand  advocate.  I  would  argue  it’s  best  to  describe   one  folding  into  the  next.  Emo=onal  loyalty  is  about   the  brand  connec=ng  with  the  consumer,  making  the   customer  feel  good  about  their  purchase  and   experience,  crea=ng  opportuni=es  for  the  customer  to   return  and  experience  “more  and  be[er”  over  =me.   Customer  service  is  important  too,  as  is  social  media.  In   today’s  tech-­‐centric  world,  consumers  appreciate   genuine  engagement  via  conversa=on.  For  instance,   sop-­‐selling  loyalty  could  be  a  hotel  manager   discovering  that  one  of  their  frequent  guest  couples   a[ends  annual  local  wine  fes=vals.  Rather  than   bombarding  this  couple  with  two-­‐dimensional  email   message,  the  hotel  instead  sends  SMS  messages,  push   no=fica=ons  or  Facebook  posts  related  to  the  fes=val   (and  not  the  rewards)  to  inspire  a  stay. In  another  concrete  example,  Burberry’s  new  London   store  features  a  22p  digital  screen,  500  speakers  and   RFID  chips  in  certain  clothes  that,  when  worn  in  front   of  the  screen,  show  wearers  a  virtual  catwalk.  While   less  conversa=on-­‐specific,  technology-­‐driven  loyalty  is   also  at  the  heart  of  the  new  engagement. Only  aper  these  connec=ons  have  been  established   can  marketers  expect  true  brand  ambassador   engagement  –  consumers  willing  to  promote  a  given   brand  as  much  out  of  rewards  expecta=on  as  they  are   mo=vated  to  support  a  brand  they  believe  genuinely   connects  with  them. Regardless,  achieving  both  kinds  of  loyalty,  experience   and  rewards-­‐driven  (because  loyalty  1.0  is  s=ll  very   important),  requires  engagement  throughout  the   customer  lifecycle  and  through  all  touch  points  –  the   central  tenet  of  an  omnichannel  loyalty  focus.  Defined   as  an  enterprise-­‐level  ini=a=ve  to  drive,  track,  measure   and  reward  incremental  behavior  throughout  the   enterprise  and  customer  experience.  The  result  is   personalized  messaging  that  delivers  more  meaningful   and  relevant  brand  interac=ons  and  the  right  rewards   for  the  “right”  behaviors  along  the  way.  This  results  in   a  true  impact  on  customer  life=me  value  (LTV)  –  the   ul=mate  loyalty  metric. As  has  been  rightly  pointed  out,  emo=onally-­‐driven   loyalty  2.0  remains  a  struggle.  But  perhaps  answering   the  above  ques=ons  will  help  illuminate  steps  brands   can  take  to  get  the  job  done  faster. What  addi=onal  steps  can  brands  take  to  turn   transac=onal  loyalty  into  emo=onal  loyalty  and  where   else  are  they  falling  short?    To  add  your  comments,   visit  the  Kobie  blog  at  www.blog.kobie.com.   11
  13. 13. Just  when  it  seems  that  an  economic  spring   has  arrived  –  stocks  are  up  and  unemployment   con=nues  to  fall  –  we’re  treated  to  a  blizzard  of   hard-­‐to-­‐stomach  restaurant  industry  sta=s=cs.   According  to  a  recent  Knapp-­‐Track  Index  of   monthly  restaurant  sales,  casual  restaurant   sales  fell  5.4%  in  February,  .6%  in  January  and   1.6%  in  December.  This  was  the  first   consecu=ve  three-­‐month  drop  in  nearly  three   years.  While  some  of  those  declines  might   reflect  winter  doldrums,  when  more  people   stay  home,  it  might  also  signal  =ght  consumer   spending  and  the  specter  of  renewed   economic  troubles. Faced  with  these  uncertain=es,  restaurant   loyalty  programs  are  more  valuable  than  ever   in  a[rac=ng,  engaging  and  retaining  patrons.   It’s  not  so  much  that  diners  require  coaxing  via   points-­‐for-­‐rewards  gimmicks.  Rather,  as  much   as  diners  crave  a  great  meal  and  great  service,   they  seek  loyalty  programs  that  are  accessible   on  their  preferred  channels,  offer  meaningful   rewards  and  enhance  their  overall  experience   with  the  restaurant. To  that  end,  I’ve  listed  four  sugges=ons  that   can  help  restaurants  nourish  their  loyalty   programs  and  be[er  feed  restaurant  goers’   desires  to  enjoy  fun  rewards. Number  1:  Rewards  need  to  be…  well… rewarding  –  That’s  a  line  borrowed  from   Cynthia  Boris’  Marke=ng  Pilgrim  blog.   With  data  showing  that  58%  of  loyalty  program   members  prefer  to  dine  at  eateries  with  a   rewards  program,  there  are  strong  indica=ons   that  if  restaurants  improved  their  offerings,   more  members  would  join.  That’s  true  even  if   the  same  study  reveals  only  36%  of   respondents  are  members  of  a  given  program.                                   “58% of loyalty program members prefer to dine at eateries with a rewards program; there are strong indications that if restaurants improved their offerings, more members would join.” FOUR THINGS YOUR RESTAURANT LOYALTY PROGRAM SHOULD BE DOING TO EMPOWER CUSTOMER ENGAGEMENTBy Marc Glazer 12
  14. 14. Too  many  restaurants  make  their  loyalty   program  members  jump  through  too  many   hoops  to  earn  a  reward  or  don’t  offer  rewards   commensurate  to  customers’  outlays:    no   one’s  going  to  eat  at  a  restaurant  full  price  10   =mes  just  to  earn  a  free  T-­‐shirt.  But  consider   BJ’s  Restaurant  and  Brewhouse’s  Premier   Rewards  loyalty  program,  which  offers  rewards   including  a  5-­‐course  dinner  valued  at  $30  per   person.  They  also  offer  the  chance  to  purchase   items  via  points  at  auc=on.  The  latest  offer:  a   Guinness-­‐sponsored  mountain  bike. Number  2:  Get  Your  Game  on  –  Ea=ng  out,   even  if  it’s  just  for  dessert,  is  supposed  to  be   fun.  And  it  isn’t  only  children,  tweens,  teens   and  20-­‐somethings  playing  video  games  (the   average  gamer  is  more  like  30+).  So  why  not   add  gamifica=on  to  your  program  and  link   virtual  points  to  real-­‐world  rewards  as  an   added  endorphin  rush?  Take  Rita’s  Italian   Ice,  the  Italian  ices  chain.  Recently  the  brand   created  a  new  loyalty  program,  Rita’s  Rewards.   Timed  to  coincide  with  the  first  day  of  spring,   the  Rita’s  Rewards  app  lets  users  share  their   Rita’s  experiences  via  Facebook,  write  reviews   and  earn  points  toward  free  Italian  ices.  In  May   the  app  will  expand  to  include  a  Rita’s  Italian   Ice  Factory  game.  While  details  are  unknown,   the  game’s  working  =tle  suggests  users  will  be   able  to  create  their  own  virtual  flavors  and   dream  up  their  own  concoc=ons,  earning   addi=onal  points  along  the  way.  With  chain   restaurants  like  the  Cheesecake  Factory   specializing  in  dessert  offerings,  similar  sweet   tooth  incen=ves  could  apply  here  too. Number  3:  Serving  up  SoLoMo  Hot  or  Cold  –   Central  to  gaming’s  popularity  are  its   communal  and  social  applica=ons.  SoLoMo   refers  to  the  connec=on  of  social  media  and   local  or  proximity-­‐based  adver=sing  through   smart  mobile  devices.  Smartphone  and  tablet   adop=on  rates  hover  near  55%  and  30%,   respec=vely,  and  digital  signage  costs  con=nue   to  fall.  For  restaurants,  this  means  the  =me  for   new  levels  of  patron  engagement  is  now.   Third-­‐party  “social  apps”  are  helping   restaurants  be[er  achieve  this  goal  by  allowing   customers  to  share  their  dining  experiences   with  their  networks.  Open  Table,  a  San   Francisco-­‐based  company,  connects  diners  via   Facebook  and  allows  users  to  make  mobile   reserva=ons.  Beginning  in  February,  the  Places   I’ve  Eaten  Facebook  app  will  let  users  view   their  friends’  restaurant  preferences  –  where   they  ate,  what  they  ordered  and  descrip=ons   of  their  general  experience.  While  it’s  not   strictly  a  loyalty  program,  restaurants  could   easily  add  a  =ered  loyalty  structure  to  an  in-­‐ house  Open  Table-­‐like  app,  incen=vizing  visits.         Number  4:  Don’t  Get  Aggravated,  Aggregate  –   Not  only  do  rewards  need  to  be  rewarding,  the   earning  process  needs  to  be  seamless  and   efficient.  One  way  to  achieve  this  is  through   points  aggrega=on.  While  the  average   American  household  is  a  member  of  18  loyalty   programs  —  the  restaurant  industry  alone   claims  9.7  million  members  –  a  third  of  all   loyalty  dollar  value,  $16  billion,  goes   unredeemed  yearly.  Part  of  that  disconnect   stems  from  the  clu[ered  nature  of  exis=ng   loyalty  currencies.  However,  Chicago   startup  Belly  is  working  to  change  that.  The   loyalty  currency  aggregator  allows  members  to   use  and  share  the  same  points  across  small   businesses  that  include  restaurants,  while   benefi=ng  from  social  media  and  the  metrics   gathered  from  the  experience.  In  February,   Belly  announced  that  it  boasted  over  1  million   loyalty  members,  had  4,500  businesses  signed   up  and  planned  to  hire  150  more  employees   this  year.  Plink,  another  burgeoning  loyalty   aggregator  that  includes  retail,  restaurants  and   the  American  Red  Cross,  recently  announced   that  it  had  surpassed  50,000  offline  loca=ons   to  earn  rewards.   The  restaurant  industry  may  have  a  bit  further   to  go  in  realizing  its  own  economic  spring.  But   adop=ng  these  four  guidelines  will  help   encourage  new  levels  of  patron  engagement,   increased  revenue  and  a  chance  for  your   eatery  to  help  break  this  recent  three-­‐month   sales  slump. 13
  15. 15. WOULD YOU ASK A MECHANIC TO PERFORM OPEN HEART SURGERY? PUT YOUR PROGRAM BACK IN THE HANDS OF THE LOYALTY EXPERTS Kobie is the secret. Reach your customers at every touchpoint with omnichannel loyalty. Scan the QR code or go to kobie.com/GRMA.
  16. 16. Coupon  king  Myron  Ullman  is  back  in  the  spotlight  trying   to  save  J.C.  Penney  from  itself.  But  can  he  succeed? That’s  the  $1  billion  ques=on  being  asked  by  media  and   retail  industry  experts.  It’s  also  how  much  J.C.  Penney   lost  last  year  when  so  many  of  its  customers  took  their   loyalty  elsewhere  aper  the  retailer  phased  out  the   coupons  shoppers  had  come  to  love  and,  more   importantly,  expect.  As  part  of  its  turnaround,  pundits   argue,  JCP  needs  to  return  to  basics:  no  more  costly   store  redesigns,  fewer  in-­‐store  bou=ques  and  a   complete  restora=on  of  the  retailer’s  daily  discounts.   Judging  from  its  latest  ad,  JCP  recognizes  its  errors,   admits  its  mistakes  and  says:  “we  learned  a  very  simple   thing,  to  listen  to  you.” I  think  what  the  retailer  is  also  trying  to  say  is:  “we’re   sorry.” At  Kobie,  we’d  recommend  not  geung  stuck  in  that  kind   of  discount  dilemma  to  begin  with.  Stereotypical  points-­‐ for-­‐rewards  programs  and  coupon-­‐condi=oning  aren’t   what  inspires  true  brand  loyalty.  They  simply  inspire   behavioral  condi=oning  based  on  cost,  not  brand   a[ributes  –  and  it’s  very  difficult  to  build  a  sustainable   loyalty  program  based  on  offering  the  lowest  price   alone.  And  at  the  2013  GRMA  Leadership  Forum,  a  high-­‐ level  gathering  of  retail  execu=ves  and  industry   influencers  which  took  place  in  Kobie’s  home  city  of  St.   Petersburg,  many  shared  that  sen=ment.   JCP AND THE BILLION-DOLLAR QUESTION By Bram Hechtkopf “Stereotypical points-for-rewards programs and coupon- conditioning aren’t what inspires true brand loyalty. They simply inspire behavioral conditioning based on cost, not brand attributes – and it’s very difficult to build a sustainable loyalty program based on offering the lowest price alone.” - Bram Hechtkopf 15
  17. 17. The  Response  to  Coupon   Condi<oning Let’s  say  you  are  a  retailer  who   offers  daily  deals  or  coupons  as  part   of  your  corporate  culture.  What  do   you  do  then?  Does  that  contradict   our  typical  customer  reward   program  recommenda=ons?  In  light   of  a  recent  2013  Coupon  Trend   Report  which  showed  a  14%  drop  in   the  US  coupon  redemp=on  rate  for   2012,  can  J.C.  really  win  back  its   formerly  loyal  customers  this  way,   one  penny  at  a  =me? Yes.  I  think  it  can  –  by  embracing   both  old  and  new  tac=cs.  That   means  returning  to  brand  experience   basics,  including  a  store  filled  with   discounts  and  deals.  But  it  also   means  the  use  of  omnichannel   marke=ng  and  loyalty  tac=cs  –  an   approach  which  growing  numbers  of   US  retailers  are  adop=ng.   Omnichannel  loyalty,  an  enterprise-­‐ level  ini=a=ve  to  drive,  track,   measure  and  reward  incremental   behavior  throughout  the  enterprise   and  customer  experience,  is  channel-­‐ agnos=c  and  delivers  true  customer   engagement. So,  if  I  were  in  Myron  Ullman’s   shoes,  I  would  be: • Launching  aggressive   campaign  outreach  across   mul=ple  channels,  asking   members  of  JCP’s  Rewards   program  which  discounts   they  would  like  restored  first   –  beyond  what’s  already   been  put  back. • Making  in-­‐store  product   research  and  price   comparisons  easy  and   transparent. • Puung  myself  in  the  shoes   of  your  customers.  Don’t  just   listen  to  my  customers.     Understand  what  it  means  to   “be”  them. • Considering  QR  codes  or  at   least  using  image-­‐ recogni=on  technologies  like   Google  Goggles,  a  standard   feature  on  the  mobile  search   engine. • Improving  the  brand’s   mobile  interface  and  online   buying  experience. • Becoming  Amazon-­‐aware   and  bea=ng  compe=tors  at   their  own  game,  improving   rewards  technology. Almost  a  year  ago,  I  wrote  a  blog   called  The  Drug  of  Discounts:   Couponing  Addic=on  and  What  to  Do   About  It,  tepidly  endorsing  the  now   defunct  “Fair  and  Square”  pricing   ini=a=ve  and  praising  the  brand’s   a[empt  to  break  its  couponing   addic=on.  Rather  than  going  cold   turkey  though,  perhaps  JCP  should   have  explored  some  form  of  “coupon   replacement”  therapy  instead. Retail  analyst  Robin  Lewis  calls  the   current  JCP  crisis  a  “saga”  and   “perhaps  the  most  colossal,   drama=c,  tragic,  transparent,  rapid   and  microscopically-­‐tracked   meltdown  in  the  history  of  retailing.” Let’s  see  if  Ullman’s  approach  to  the   brand  and  to  rebuilding  customer   loyalty  can  prove  him  wrong.     Retail analyst Robin Lewis calls the current JCP crisis a “saga” and “perhaps the most colossal, dramatic, tragic, transparent, rapid and microscopically-tracked meltdown in the history of retailing.” Bram Hechtkopf 16
  18. 18. STARBUCKS AIMS TO CREATE LOYALTY FROM ITS DISLOYAL CUSTOMERS. HUH? By Pamela Sullins It’s  rare  when  a  company  voluntarily   admits  it  could  do  something  be[er   –  especially  when  that  company  is   Starbucks.  With  a  record  $1  billion   placed  on  its  Starbucks  Cards  in  the   first  quarter  of  2013,  the  king  of   coffee  has  li[le  to  worry  about. Which  is  why  Joe  LaCugna,   Starbucks’  director  of  analy=cs  and   business  intelligence,  may  have   surprised  a  few  people  when  he   revealed  what  Starbucks  is  doing   now:  catering  to  its  disloyal   customers.    Con8nued  on  page  19... GENUINE CUSTOMER EXPERIENCE IS BACK FOR SECONDS By Marc Glazer Ask  the  technology  skep=cs  whether   they  think  technology  has  helped  or   hindered  interpersonal   communica=on,  and  invariably   they’ll  offer  muted  grumblings  like   “talk  much,  say  li[le,  connect  less.” In  their  minds,  services  like  tex=ng,   Facebook  and  Twi[er  have  done   plenty  to  help  people  broadcast   what’s  on  their  minds  from  the   highest  mountain,  but  done  li[le  to   actually  facilitate  meaningful   communica=on.  In  other  words,  the   more  we  become  digitally  linked,   synced  and  wired,  the  less  we   establish  genuine  rela=onships. They  do  have  a  point.  It  could  be   easy  to  agree  with  the  skep=cs  that   something  has  been  lost—that   something  has  been  lep  off  the   modern  menu  of  restaurant-­‐diner   rela=ons. “Love  Can’t  Be  Automa<c” Dining  remains  one  of  the  most   in=mate  and  important  human   experiences—a  celebra=on  of  good   food,  service,  style,  atmosphere  and,   of  course,  good  company.  When  you   think  about  it  driving  a  genuine   personal  experience  in  the  casual-­‐ dining  and  quick-­‐service  restaurant   space  shouldn’t  be  that  difficult.   The  experience  of  warmth  and   connectedness  is  as  memorable   when  the  waiter  brings  you  your   meal  as  it  is  when  the  friendly  drive-­‐ through  a[endant  asks  you  the   “light”  to  “sweet”  balance  in  your   coffee  rather  than  taking  the  order   on  faith.  That’s  the  way  to  drive  true   restaurant  loyalty  and  enhanced   revenue:  through  engagement. Today,  technology  (in  the  form  of   smartphones,  tablets,  and  on-­‐the-­‐go   social  media  as  well  as  the   omnichannel  loyalty  and  CRM   programs  they  augment)  is  bringing   back  a  bit  of  that  dining  nostalgia— and  finding  new  and  crea=ve  ways  to   mone=ze  it.  The  reality  is  that  people   have  changed  far  less  than  our   technology.  The  craving  for  a   genuine,  personal  dining  experience   remains  as  true  now  as  when   McDonalds  first  opened  its  doors  in   1955,  or  when  its  first  class  of  15   Hamburger  University  students   graduated  in  1961.       Con8nued  on  next  page... “The reality is that people have changed far less than our technology. The craving for a genuine, personal dining experience remains as true now as ever.” - Marc Glazer 17
  19. 19. Con8nued  from  previous  page  top  ... The  disconnect  between  truly   “human”  customer  service  and  “just   geung  it  done”  customer  service   began  some  years  ago,  and  it   con=nues  to  accelerate  with  the  help   of  technology.  Yet  some  people  out   there  truly  “get  it,”  and  are  saying,   “Stop!”  Speaking  “at”  people  isn't   enough. Case  in  point,  a  guy  who  gets  it:   Ramon  De  Leon,  a  former  Domino’s   Pizza  delivery  guy-turned-social   media  marke=ng  director  for  a  six-­‐ store  Domino's  franchise  in  Chicago.   “Love  can’t  be  automa=c,”  he  says.   It's  one  of  the  most  memorable   sentences  I've  heard  in  years.  He  said   it  passionately  at  the  RAMP   Advanced  Commerce  &  Mobile   Retail  Services  Summit  in  Chicago   last  year.  It  was  possibly  my  biggest   takeaway  from  three  days  spent  at   RAMP.  His  point  was  simple  and   elegant:  automa=c  tweets  and   Facebook  bots  that  try  to  a[ract,   retain,  and  engage  customers  can   only  get  a  restaurant  so  far—if   anywhere  at  all. This  isn’t  a  new  concept  for  Ramon;   this  is  a  guy  who  back  in  1998  began   using  his  cell  phone  to  call  people  if   they  were  not  at  their  door  when  the   delivery  arrived.  By  building  that   level  of  personal  interest,  customers   soon  began  calling  him  directly  for  a   pizza  delivery.   Social  Media  Gets  Real What’s  needed  is  a  return  to  a   genuine  one-­‐on-­‐one  personal   connec=on.  Learning  names.  Coaxing   people  into  a  smile.  Fostering  real   rela=onships.  Ramon  De  Leon  buys   the  idea—he  likes  to  impress  this   “truth”  on  his  employees,   encouraging  them  to  develop  similar   rela=onships.  He  calls  it  “the  nonstop   online  conversa=on.” How  does  Domino's  start  this   conversa=on?  Simple.  Employees  are   encouraged  to  interact  with  their   customers  via  Facebook,  Twi[er  and   other  social  media  outlets.  Rather   than  hard-­‐selling  the  pizza,  the   interac=on  is  about  geung  to  know   the  customer—offering  deals  and   discounts  that  are  relevant  and   =mely. Even  back  in  2010,  speaking  to  an   audience  at  WordofMouth.org’s   SuperGenius  Conference  in  New   York,  De  Leon  explained  that  90   percent  of  his  Twi[er  posts  had   nothing  to  do  with  pizza  per  se,  but   instead  were  genuine  reac=ons  and   comments  on  other  people’s   conversa=ons. It’s  important  that  social  media  be   more  like  a  genuine  conversa=on   between  good  friends.  There  is  a   need  for  brutal  honesty  and   unparalleled  transparency.   Ex=nguishing  social  media   “fires”  (nega=ve  reviews)  with  social   media  “water”  (apologe=c  videos   admiung  mistakes)  is  as  important   as  addressing  a  “real-­‐world”   problem  like  a  mixed-­‐up  order. Serving  and  Servicing  One   Customer  at  a  Time Before  the  pizza  dough  rises,  other   restaurants  are  re-­‐engineering  their   social  media  efforts  too,  driving   newfound  loyalty  and  engagement   in  the  process.  Recently,  I  stumbled   upon  a  story  about  the  Blue  Heron,   a  small  “farm-­‐to-­‐table”  restaurant   nestled  in  the  Connec=cut  River   Valley  in  Sunderland,  Mass.,  co-­‐ owned  by  Deborah  Snow,  61,  and   her  partner.  Snow  knew  it  would  be   hard  to  convince  her  mostly  40-­‐  and   50-­‐something  diners  of  the  value  of   social  media.  Yet  she  has  found   Twi[er  to  be  an  excellent  way  to   keep  in  touch  with  regular  patrons   while  gaining  new  converts.  Rather   than  twee=ng  about  deals,   discounts,  and  the  latest  dishes,  she   tweets  food  recipes  and  even  food   poetry.  She  calls  Twi[er  her   “crea=ve  outlet.” When  it  comes  to  restaurant   customer  engagement  and  loyalty,   it’s  important  to  remember  that  yes,   promo=onal  offers  are  important.   S=ll,  in  an  age  when  it’s  so  easy  for   customers  to  become  reduced  to   faceless  en==es,  personal   connec=ons—connec=ons  that   evoke  an  earlier,  less  tech-­‐centric   =me—are  cri=cal  in  breaking   through  to  the  quick-­‐service  and   casual-­‐dining  crowd.   To  stay  ahead  of  “the  wave  of  the   now”  is  to  become  an  omnichannel   marketer  who  delivers  omnichannel   loyalty  and  customer  experiences,  no   doubt.  In  light  of  Ramon  De  Leon's   speech  at  RAMP,  however,  it's   important  we  remember  the  real   people  at  the  other  end  of  each   channel.  There  must  be  an  ongoing   dialog,  a  conversa=on  that  advances   a  true  rela=onship. So  is  genuine  customer  experience   back?  You  be[er  believe  it! “It’s important that social media be more like a genuine conversation between good friends. There is a need for brutal honesty and unparalleled transparency. Extinguishing social media “fires” with social media “water” is as important as addressing a “real-world” problem like a mixed-up order.” - Marc Glazer 18
  20. 20. Con8nued  from  page  17   boUom... Starbucks  will  use  its  metrics   gathering  to  discover  which   members  use  their  rewards   card  least  frequently,  sending   text  messages  to  mobile   phones  offering  free  cups  of   Joe  and  other  =mely  and   relevant  rewards.  So  far  the   company  has  analyzed  about   half  of  its  6  million  loyalty   program  memberships.  The   ques=on  is:  what’s  the  harm  –   if  any  –  in  promo=onal   adver=sing  when  it  costs   Starbucks  pennies  per  cup? With  its  new  approach  to  the   disloyal,  my  advice  to   Starbucks  would  be  to  think   about  the  ‘Five  Es,’  –  that  is,   Enterprise,  Experience,   Economics,  Enablement  and   Execu=on.  Enterprise  speaks   to  the  business  at  hand,   experience  relates  to  the   brand  rela=onship  customers   seek,  economics  concerns  the   cost  of  genera=ng  such   loyalty,  enablement  relates  to   the  mechanics  of  making   loyalty  happen  and  execu8on   refers  to  its  real-­‐=me   deployment. Brands  that  try  appealing  to   every  consumer  segment  all   the  =me  risk  dilu=ng  what   they  stand  for,  undermining   the  enterprise  at  large  and   weakening  the  customer   experience  for  truly  loyal   customers.  They  also  risk   raising  short-­‐term  costs,   making  execu=on  sluggish.  In   contrast: • Commi[ed  long-­‐term   customers  usually   possess  a  strong   sense  of  brand  pride   and  devo=on  for   which,  historically,   loyalty  programs   reward  them. • Doing  so  promotes   posi=ve  brand   engagement  and  the   opportunity  for   genuine  experiences   that,  ideally,  loyalty   program  members   are  eager  to  tell  their   friends  and  family   about  through  every   channel  they  use,   including  mobile,   social  media,  online   and  of  course,  word-­‐ of-­‐mouth. Starbucks’  brand  message  is   clear:  it  caters  to  the  upscale   customer,  who  doesn’t  think   twice  about  ordering  a  $7  cup   of  coffee.  Is  it  wise,  then,  to   spend  such  effort  seeking  to   a[ract,  engage  and  retain  a   rela=vely  disloyal  subset? Widening  the  loyalty  net  a   li[le  further  isn’t  a  bad  thing   by  any  measure.  It’s  just  that   the  intensity  of  its  rollout   needs  to  be  measured.  So  if   you’re  a  brand  intrigued  by   Starbucks’  novel  loyalty   approach,  by  all  means  gather   the  data  and  start  hun=ng  for   your  most  disloyal  customers.   But  take  the  economics  (read:   cost)  of  the  Five  Es  seriously,   otherwise  your  enterprise   could  suffer.  Consider  a  six-­‐month  trial   period  to  see  if  the  expense  of   catering  to  disloyal  customers   yields  higher  spends  and   increased  brand  interac=ons.   Otherwise,  efforts  to  a[ract,   engage  and  retain  the  disloyal   might  be  to  your  company’s   disservice. 19
  21. 21. Ask  Siri,  the  genderless  iPhone  personal   assistant,  what  the  weather  is  and  it  can  tell   you.  If  you  ask  it  a  ques=on  like  “are  you   married?”  you’ll  get  an  almost  human   response  (it  coyly  dodges  the  ques=on).  But   ask  Siri  what  you’re  likely  to  buy  from  your   favorite  retailer  —  a  deduc=on  based  in  part   on  purchasing  history  and  other  behavior-­‐ based  metrics  —  and  Siri  will  falter. Siri  fails  for  the  same  reason  that  many   retailers  fail  when  it  comes  to  a[rac=ng,   retaining  and  engaging  customers.  For  all  the   talk  of  Big  Data  and  its  global  impact,  more   than  a  quarter  of  North  American  retailers  in   2012  —  27%  —  remain  unaware  of  Big  Data  or   are  aware  of  its  existence,  but  uncertain  of  its   retail  poten=al.  The  rest  report  par=al   awareness  and  knowledge. For  the  more  than  1  in  4  retailers  that  have  yet   to  embrace  the  poten=al  of  Big  Data,  here’s  a   refresher.  For  them,  the  engagement  riddle  is   that  retailers  have  always  been  data-­‐driven,   but  on  paper  and  in  siloed  formats.  It’s   surprising,  then,  that  so  many  have  failed  to   grasp  Big  Data’s  customer  engagement  and   loyalty  implica=ons.  Big  Data  concerns  the   accumula=on  and  analysis  of  —  as  well  as   ac=on  on  —  the  2.5  quin=llion  bytes  of  data   created  every  day,  much  of  it  freely  available   online  or  on  mobile.  In  fact,  90%  of  all  data   that  exists  today  was  created  in  the  last  two   years. Big  Data  and  the  customer  rela=onship   management  sopware  (CRM)  managing   today’s  omnichannel  environment  —  POS,   smartphones,  tablets,  kiosks,  digital  signage,   etc.  —  do  one  thing  well  and  another   increasingly  well: The  recording  of  consumer  habits:  That   includes  items  purchased,  purchase  loca=on,   purchase  frequency,  amount  spent  and,   some=mes,  purchaser  gender. “For all the talk of Big Data and its global impact, more than a quarter of North American retailers in 2012 — 27% — remain unaware of Big Data or are aware of its existence, but uncertain of its retail potential.” SOLVING THE RIDDLE OF BIG DATA By David Andreadakis 20
  22. 22. The  accumula<on  of  psychographic   metrics:  Retailers  can  be[er  predict   customer  feelings  in  real-­‐=me  and   use  that  informa=on  to  tailor   product  offerings  and  loyalty   rewards  that  address  their   immediate  emo=ons. Reverse  engineering  what’s  already   being  done,  this  new  approach  to   behavioral  Big  Data  analysis  helps   retailers  predict  customer  wants  —   possibly  even  before  those   customers  are  even  aware  of   wan=ng  something. Loyal  to  a  more  social  data-­‐driven   experience Retailers  are  gaining  this  more   subtle  but  vital  informa=on  through   gamified  loyalty  programs  and   social  media.  Take  Raley's  Family  of   Fine  Stores,  a  California-­‐based   grocery  chain.  The  brand  recently   enhanced  its  Something  Extra   loyalty  program  with  Try-­‐It,  an   online  loyalty  feature  only  available   to  Something  Extra  members.  Try-­‐It   members  are  invited  to  share  their   product  experiences  via  blogs,   social  networks,  site  tools  or  offline   communica=on.  Consumers’   omnichannel  interac=ons  are   scored  by  the  brand  based  on  their   number  of  “likes,”  comments  and   re-­‐tweets,  earning  higher  scores  the   greater  their  interac=on.  Higher   scores  also  mean  access  to  be[er   deals  and  campaigns  down  the   road. Another  example  comes  from   David’s  Bridal,  a  U.S.  wedding  gown   and  formal  wear  chain.  In  an  effort   to  a[ract  and  retain  customers  by   using  social  media  to  gather  even   more  real-­‐=me  customer   informa=on,  David's  launched  the   "My  Event"  sec=on  of  its  Web  site.   Brides-­‐to-­‐be  use  the  site  to  organize   and  discuss  the  en=rety  of  their   wedding  experience  with  select   Facebook  friends.  The  goal  is  for   brides  to  help  generate   conversa=on  beyond  the  dress.   Party  planning,  shopping  lists,  tasks,   even  a  wedding-­‐related  newsfeed   are  all  encouraged.  Perhaps  the   most  interes=ng  feature  is  the   “mood  board”  where  members   describe  how  they  envision  their  big   day.  While  the  above  helps  the   bride  and  her  family  stay  organized,   the  big  win  for  David’s  comes  in  the   form  of  accumulated  psychographic   metrics  and  the  possibility  that   more  people  —  the  bride’s  social   network  -­‐-­‐  will  consider  David’s   when  it’s  their  turn  to  say  “I  do.” Conversa=onal-­‐based  data  crea=ng   a  more  accurate  customer   behavioral  picture  is  at  the   forefront  of  where  Big  Data  is   going.  Considering  the  speed  at   which  new  informa=on  is  generated   and  consumers’  increasing  desire   for  =mely  and  relevant  offers,  the   more  than  1  in  4  retailers  who  have   yet  to  embrace  Big  Data  are  running   out  of  =me.  This  “retail  riddle”   shouldn’t  be  hard  to  crack. If  retail  chains  both  large  and  small   — like  David’s  and  Raley’s  —  have   figured  it  out,  shouldn’t  your  brand   as  well?   21 AMP
  23. 23. Walk  into  a  Kroger  supermarket  and  you  might   be  surprised  by  what  you  see:  adver=sements   promo=ng  individualized  pricing  linked  to   loyalty  program  membership. It’s  a  business  intelligence  strategy  that’s  been   gaining  trac=on  for  several  months  since  the   grocery  chain’s  pilot  pricing  program  launch   last  summer  and  I  expect  its  popularity  (and   rising  acceptance  by  skep=cal  consumers)  will   con=nue.  According  to  a  recent  Loyalty  Report,   Kroger  Rewards  was  the  grocery  sector’s  most   popular  loyalty  program,  with  an  83%  overall   sa=sfac=on  ra=ng. Why  the  success?   Because  individualized  pricing  isn’t  just  about   strict  discounts  and  offers.  It’s  about  enhancing   the  customer  experience  and  elici=ng  life=me   customer  value.  Kroger  bases  its  individualized   pricing  on  past  purchases  and  what  customers   have  typically  spent.  The  result  is  a  sense  of   brand  loyalty  that  far  exceeds  what  you  could   achieve  with  something  as  simple  as  weekly   cutout  coupons  sent  in  the  mail  –  or  similarly   generic  offers  via  email  or  other  channels.   In  other  words,  Kroger  is  taking  loyalty  to  the   next  experience-­‐driven  level,  demonstra=ng  to   its  customers  through  clear  and  transparent   ac=ons  that  “this  company  has  taken  the  8me   and  effort  to  get  to  know  me.” Individualized  pricing,  however,  is  just  the   beginning.  A  growing  number  of  brands  across   different  ver=cals  (most  no=ceably  in  financial   services  and  retail)  are  upping  their  loyalty   game  by  trumpe=ng  the  value  of  individualized   experiences  over  just  discounts  and  deals.  This   is  known  as  transac8onal  loyalty.  While   remaining  a  bulwark  of  loyalty  program   engagement,  transac=onal  loyalty  is  open  a   simpler  consumer  behavior  modifica=on  model   that’s  costlier  to  implement.   “Individualized pricing isn’t just about strict discounts and offers. It’s about enhancing the customer experience and eliciting lifetime customer value.” PERSONALIZING YOUR CUSTOMER’S LOYALTY EXPERIENCE THROUGH BUSINESS INTELLIGENCEBy Michael Hemsey 22
  24. 24. Contrast  that  with  experience-­‐driven  loyalty:  a   consumer  engagement  model  built  on   psychographic  triggers  and  status  that  strives  to   make  an  emo=onal  connec=on  with  loyalty   program  members,  building  a  sense  of   reciprocity  along  the  way.  Brands  would  be  wise   to  adopt  the  tenets  of  experience-­‐driven  loyalty,   and  here’s  why: • Brands  that  fail  to  engage  their   increasingly  experience-­‐driven  (and  tech   savvy)  customers  risk  loyalty  program   membership  fall-­‐off  or  non-­‐engagement • Aggressive  rival  brand  compe==on   undermines  exis=ng  loyalty  outreach.   Thus,  if  your  brand  isn’t  exploring  new   ways  to  drive  innova=ve  customer   experiences,  you  can  be  certain  a   compe=tor  is. • Data  suggests  the  loyalty  landscape  is  at   a  cri=cal  crossroads  and  stellar  programs   are  essen=al  in  order  to  prevent  loyalty   program  backlash. The  last  bullet  point  deserves  further  emphasis   as  the  latest  Colloquy  data  shows  something  of  a   mixed  bag  for  loyalty  program  popularity.  While   overall  loyalty  program  membership  has  risen   27%  from  2010,  only  44%  of  survey  respondents   were  actually  engaged  in  any  one  of  their   approximately  21.9  memberships  per   household.  That’s  a  decrease  of  4.3%.  And  while   it  may  not  sound  like  a  lot,  a  2.2%  annual  slide   amounts  to  approximately  10%  drops  every  five   years.   The  point:  a  disengaged  loyalty  program  subset   is  as  toxic  to  the  program’s  overall  health  as  is   outright  non-­‐membership.   Chase-­‐ing  Rewards  and  Zapping  Up  Loyalty:   Two  (Addi<onal)  Brands  Promo<ng  A+  Loyalty Beyond  innova=ve  grocery  chains,  Colloquy’s   study  found  that  Chase  and  its  Chase  Ul=mate   Rewards  loyalty  program  led  the  financial   services  industry  with  an  84%  approval  ra=ng   while  Kohl’s  and  Kohl’s  Rewards  snagged  the  top   spot  in  retail  at  73%  approval. A  quick  visit  to  Chase’s  website  illustrates   exactly  why  they  remain  a  financial  services   category  winner.  Two  of  the  Chase  Ul=mate   Rewards  subcategories,  “Experiences”  and   “Travel,”  make  up  40%  of  the  en=rety  of  the   Chase’s  rewards  framework.  In  terms  of   experiences,  Chase  members  can  enjoy  a   selec=on  of  perks  including  VIP  access  to   concerts,  wine  tas=ngs,  movie  premieres  and   spor=ng  events. Best  of  all  is  that  these  experience-­‐driven   rewards  are  based  on  consumer  preferences   gleaned  from  the  business  intelligence  gathered   from  today’s  omnichannel  –  and  omni-­‐ empowered  –  loyalty  member.  That  means   customer  outreach  across  all  channels.  But   omnichannel  loyalty  isn’t  just  about  channel   preference.  It’s  also  about  ensuring  that  at  each   step  throughout  the  purchasing  con=nuum,   consumers  feel  engaged  with  a  brand  and  that   rewards  have  been  tailored  specifically  to  their   wants  and  needs.   While  Kohl’s  was  the  focus  of  the  study  I   men=oned  earlier,  I  also  want  to  men=on   Zappos.com,  the  online  shoe  and  apparel   retailer.  Aper  a  recent  purchase  of  hiking  shoes,   I  no=ced  the  emails  I  was  receiving  from  the   etailer  changed.  Rather  than  generic  offerings   that  could  easily  end  up  in  my  junk  mail  or  being   deleted,  Zappos  looked  at  my  purchasing  history   and  adjusted  its  offers  accordingly.   Instead  of  sending  more  shoe  offers,  Zappos   deduced  that  the  kind  of  hiking  shoes  I   purchased  is  indica=ve  of  inland  outdoor   ac=vi=es  and  not  a  lazy  day  at  the  beach.  As   such,  I’ve  received  offers  for  camping  gear  and   other  outdoor-­‐related  products.  What’s   interes=ng  is  that  none  of  Zappos’  engagement   required  loyalty  program  membership  as  such   tac=cs  have  become  central  to  the  company’s   DNA  and  brand  promise. Internally,  Zappos  calls  its  customer  engagement   its  “WOW”  philosophy.  I  can’t  speak  for  Zappos’   other  customers  but  this  customer  is  definitely   wowed.   Taking  the  Pulse  of  the  Customer  Experience As  consumers  interact  with  their  smartphones   and  tablets  –  browsing  the  Web,  sharing  recent   purchase  informa=on  or  brand  likes  or  dislikes   on  social  media,  swiping  and  tapping  on  apps  –   they  create  a  digital  informa=on  trail  that   reveals  individual  preferences. 23
  25. 25. Just  as  physicians  gauge  pa=ents’  health  through  blood   tests  and  blood  pressure  measurement–  loyalty  program   managers,  whether  in  retail,  financial  services,  or  any   other  consumer-­‐facing  ver=cal,  need  to  take  their   customers’  pulse  –  albeit  while  respec=ng  consumer   privacy  while  seeking  opt-­‐in  engagement.  This  means   implemen=ng  solu=ons  that  collect  and  analyze  valuable   informa=on  so  it  can  be  turned  into  ac=onable  business   intelligence  that  dictates  how  each  customer  is   approached  and  engaged  with  offers  and  experiences   that  are  relevant,  =mely  and  add  value. For  loyalty  marketers,  the  tools  to  create  individually-­‐ tailored  customer  experiences  that  seamlessly  cut  across   all  channels  and  draw  customers’  a[en=on  and  repeat   business  are  easily  accessible. With  so  many  loyalty  programs  compe=ng  for   consumers’  a[en=on  and  the  posi=ve  long-­‐term   consumer  percep=ons  of  loyalty  program  effec=veness   at  risk,  brands  need  to  offer  something  more  than  the   stereotypical  points-­‐for-­‐rewards  model.  When  they  turn   customer  insights  into  genuine,  consistent  and   customized  experiences  that  drive  op=mum   engagement,  brands  stand  a  much  be[er  chance  of   crea=ng  a  strong  base  of  sa=sfied  customers  and  brand   advocates  who  keep  coming  back  again  and  again  –   maybe  even  for  life.     “For loyalty marketers, the tools to create individually-tailored customer experiences that seamlessly cut across all channels and draw customers’ attention and repeat business are easily accessible.” - Michael Hemsey 24
  26. 26. Big  Data,  social  media  and  the  con=nued   expansion  of  mobile  market  satura=on  were  all   topics  of  wide  discussion  and  analysis   throughout  the  loyalty  industry  during  2012.   And  it  looks  as  though  these  trends  will   con=nue  to  grow  and  amplify,  establishing   themselves  as  essen=al  components  of  today’s   customer  rewards  experience.   Some  of  the  ships  we  expect  to  see  more  of: o As  brands  adop=on  of  social   media  as  a  customer   engagement  tool,  the  original   focus  was  on  quan=ty  –  how   many  Facebook  “likes”  or   Twi[er  followers  can  we   amass?  Now,  brands  with   loyalty  programs  are  shiping   the  spotlight  to  the  quality  of   customer  rela=onships  on  social   media  and  turning  those   rela=onships  into  revenue. o Driving  loyalty  through  data  will   con=nue  to  become  more   sophis=cated  as  brands  –  for   example:  restaurants  that  store   informa=on  on  where  regular   patrons  like  to  sit,  what  are   their  favorite  appe=zers  and   when  their  birthdays  are–  use   tech  channels  to  assemble  data   snapshots  of  individual   customers’  preferences. o Focus  will  con=nue  to  ship  from   brands  trying  to  win  customer   loyalty  through  tradi=onal   points-­‐for-­‐rewards  models  and   toward  winning  stronger   “emo=onal  loyalty”  –  and  that   comes  from  providing   customers  with  a  great   experience  and  making  them   feel  truly  valued. o Loyalty  marke=ng  is  never   sta=c;  it  must  con=nually   change  shape  to  fit  the  latest   channels  of  communica=on   that  customers  favor.  As  they   enter  the  second  half  of  2013,   rewards  program  managers  will   con=nue  to  seek  more   sophis=cated  ways  of   leveraging  the  engagement   poten=al  of  Big  Data,  social   media  and  mobile  to  build  ever-­‐ stronger  rela=onships  with  their   best  customers. As  we  look  ahead  to  the  remainder  of  2013,   Kobie  is  excited  to  be  part  of  the  discussions   that  are  taking  place  about  how  companies  with   customer  rewards  programs  are  accoun=ng  for   these  trends  when  designing  programs  for   maximum  value.     ARE LAST YEAR’S BIGGEST TRENDS IN THE LOYALTY INDUSTRY CHANGING, OR ARE THEY GROWING? By Bram Hechtkopf 25 GET READY FOR AMP™ Alchemy Marketing Platform, coming soon to a loyalty program near you.  

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