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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
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
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
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
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
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
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
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
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
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
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
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
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
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
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.
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
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
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
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
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
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
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
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
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
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
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.  
Kobie Marketing Quarterly Review: Retail Edition, June 2013
Kobie Marketing Quarterly Review: Retail Edition, June 2013

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Kobie Marketing Quarterly Review: Retail Edition, June 2013

  • 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.