VOL.

19 I S S U E
IN THIS ISSUE:

2011

Trends: The Insiders Look at Southwests Rapid Rewards Revamp Retail: How GameStop Powers Up Customer Passionand Loyalty Travel: Data and Relevance Keep Hilton Close to the Customer

THE ART AND SCIENCE OF BUILDING

CUSTOMER VALUE

W W W. C O L L O Q U Y. C O M

Trialogue
The Intersection of Social Media and Loyalty

The powerful reach of social media enables loyalty marketers to extend their mastery of dialogue with customers on a grand scale, achieving trialogue: proactive three-way conversation between customers and their friends and the companies they really care about. How can companies truly interject themselves into the customer-to-friend equation and harness social media? Listen in as COLLOQUY asks such questions and joins the conversationand be sure to tell your friends.

Release the Power of Total Customer Insight

enterprise loyalty in practice
COLLOQUYs Journal of Innovation in Loyalty
Brought to you by , the voice of loyalty marketing since 1990, Enterprise Loyalty in Practice is the semi-annual executive journal devoted to practical strategies and tactics for integrating focus on the customer throughout the enterprise. Learn from executives who are out there in the field, pioneering the best practices in applying customer insights throughout their entire organization and bringing Enterprise Loyalty to life. To subscribe to Enterprise Loyalty in Practice, visit www.COLLOQUY.com/EnterpriseLoyalty Subscription Price: $99 for 2 years

4445 Lake Forest Dr. Suite 200 Cincinnati OH 45242 info@colloquy.com 1.513.248.9184

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CONTENTS

24 / Retail Report: Power to the Program

How GameStop lives up to its motto of Power to the Players with its energizing PowerUp Rewards program, launched in September 2010 and already sporting 6 million memberswith more power, and more up, yet to come.

VOL. 19 I S S U E

2 0 1 1

12 / Trialogue
The Intersection of Social Media and Customer Loyalty

28 / Strategy Report: HHonored Guests

Hilton Senior Vice President of Global Customer Marketing Jeff Diskin describes how Hilton and HHonors MyWay are recalibrating the power of the loyalty program to stay close to the customer.

COLLOQUY means conversation or dialogue. As the voice of loyalty marketing since 1990, the COLLOQUY media enterprise is your reliable resource for innovative strategies that drive profitable customer behavior.

2 / Practitioners
Perspective: Keeping Score
Online gaming will be the shiniest new tool in the loyalty marketers kitif you play by house rules.

6 / Loyalty Landscape:
The powerful reach of social media enables loyalty marketers to extend their mastery of dialogue with customers on a grand scale, achieving trialogue: proactive three-way conversation between customers and their friends and the companies they really care about. How can companies truly interject themselves into the customer-to-friend equation and harness social media? Listen in as COLLOQUY asks such questions and joins the conversationand be sure to tell your friends.

The Final Words

Loyalty as interpreted by Dilbert, HAL 9000, and other fictional characters.

8-10 / Touch Points:

The Middle Glass
The glass half full in financial services, and the middle class filling up around the world.

22 / Travel Report: Rapid Change

The revamp of Rapid Rewards marks a radical change in Southwests venerable frequent-flyer program. Senior Director of Customer Loyalty and Partnerships Ryan Green describes the careful (and non-rapid) planning and design that preceded the revamp.
Innovative Loyalty Marketing: News and Opinion From COLLOQUY
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32 / End Notes:
What the World Needs Now
A love letter for loyalty marketers.

C O L L O Q U Y / Volume 19, Issue 1, 2011

THE PRACTITIONERS PERSPECTIVE

Keeping Score
A loyalty strategy for collecting considerably more than $200 for passing Go!
BY KELLY HLAVINKA WHEN I WAS A KID, we played the

their new M life Players Club benefits. While no betting is involved, MGM is counting on the gaming experience to keep members engaged with the brand (and with the fun of gaming itself)even when theyre nowhere near an MGM casino. Even the usually staid insurance industry has entered the gaming craze. State Farm launched a Facebook application called Car Town. More than 7.2 million active users earn points while they collect and customize virtual cars, build their dream garages, and encourage their friends to participate. Points can be redeemed for insurance discounts. So, gamification (the process of engaging customers through contest-based content) has gone mainstreamno surprise when you think about it. After all, Raph Koster, author of A Theory of Fun for Game Design, notes that game mechanics are rule-based systems/simulations that facilitate and encourage a user to explore and learn. Isnt that what loyalty marketings rule-based discipline has been doing for the last 30 years? Thinking about a few parallels, youll see why the marriage of gaming and loyalty is so natural: 1. Games appeal to our natural curiosity. Puzzles and riddles have long been used to tease us to reflect more deeply about a challenge or problem, so fun game elements are natural means to encourage customers to explore and learn about your product or service. Why

classic board game Monopoly with some creative house rules. For instance, we got double the normal $200 payout as a reward for landing directly on the GO space. At the time, I thought I was just playing a game. Little did I know that I was training for an important trend in my eventual profession as a loyalty marketer. The trend Im referring to is running loyalty programs with some new, creative house rulesby playing games. After all, it was inevitable. With the iPhone-fueled craze for apps and FarmVille all the rage on Facebook, it was just a matter of time before loyalty marketers integrated games into their efforts to engage their most-profitable customers.

Trivia contests and building virtual identities have been staples of entertainment-based brands seeking to further engage viewersthe Jeopardy! Premiere Club and NBCs Fan It are two that come to mind. But now, widespread adoption of games as a promotional layer for more traditional loyalty strategies has begun to flourish. A quick look at loyaltyindustry news in the previous quarter illustrates my point: IHG (InterContinental Hotels Group) launched Win It in a Minute,an online game for their Priority Club Rewards members, who compete against one another in the travelthemed trivia contest and earn points for their participation. MGM Resorts launched an iPhone slot game called Cleopatra as part of

I AM NOT GENERIC.
CREATE RELEVANT CUSTOMER EXPERIENCES
Your customers are not generic. They are individuals. Unique. Singular. They want experiences that are personal and relevant to them. At Epsilon, were introducing a powerful new approach driven by data and deeper insights to create more engaging relationships. Its called Customer Experience Marketing and its proven to:
Create Brand Differentiation Accelerate Considered Purchase Deliver Engagement and Loyalty Optimize Marketing Spend

Visit www.epsilon.com/experience to learn how Customer Experience Marketing works and how it can apply to your specic marketing challenges.

STRATEGY AND ANALYTICS / TARGETING / CREATIVE / TECHNOLOGY / DIGITAL

If you want to make an apple pie from scratch, you must first create the universe.
Carl Sagan
Luckily, Mr. Sagans universal observation doesnt apply to those charts made of pie, the charts that allow best-customer segmentation and targeted loyalty communications. You neednt start from pie-R-square one to create the most effective loyalty program for your organization, because COLLOQUY has already grown and harvested the ingredients. You just need to do the baking. Join us in learning the recipes for proven program execution by attending the COLLOQUY Loyalty Marketing Workshop and Certification, conducted with the Direct Marketing Association. Here youll discover what it takes to develop an effective loyalty strategy that recognizes, rewards and profits from your most valuable customers. In these certification sessions, COLLOQUY gives you the informa tional tools and the planning experience to help you initiate strategies crafting programs based on communication, value exchange and relevant use of customer data. They provide targeted instruction to improve ROI and leverage loyalty-marketing best practices. Our Loyalty Marketing Workshop and Certification offers a wealth of proven instruction in tailoring communications, building lift, reducing attrition, and improving profitabilitybacked by real-life examples from an array of industries. Youll be assigned to a team to work a case study under the guidance of our expert faculty, utilizing your new knowledge. Since 1999, more than 1,000 executives have attended and profited from this one-of-a-kind educational event. DMA/COLLOQUY Loyalty Marketing Workshop April 19 - 20, 2011, New York COLLOQUY Faculty: Kelly Hlavinka, Dennis Armbruster, Stephanie Cohen To register: www.dmaloyalty.org

How do you like those apples, Mr. Sagan?

Lively sessions. Great information. And apples-to-apples comparisons. Well see you there.

www.colloquy.com/twitter

www.colloquy.com/facebook

www.colloquy.com/linkedin

Timely. Opinionated. Essential.

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not apply those principles to how customers learn about what we offer? For example, Club Bing features a variety of games to encourage use of Microsofts Bing search engine. 2. Games blend short-term and long-term reward. Game manufacturers have made a science out of blending instant gratification (such as badges for interim game accomplishments) and unexpected rewards (such as earning a key to an interesting and rewarding side quest) with progress to achieve larger challenges (such as steadily advancingtier by tier, level by levelto the prestigious pinnacle of game status.) 3. Games allow us to keep score and to amass bragging rights. Whether were posting our high scores for all our friends to see, or boasting about the benefits that we Platinum members enjoy in a loyalty program, we all revel in those small moments of triumph. This often intangible perk is part of what keeps us engaged even when an experience fails to meet our expectations. The game-changer in the adoption of gaming tactics to loyalty programs results from the critical mass of scale. The popularity of entertaining iPhone apps and captivating Facebook games enables marketers to deploy game-based promotions on a scale that registers right on the bottom line. Tens of millions of

customers from all demographic segments are playing digital games. So, why not adapt some of loyalty marketings blend of art and science to engage customers in a fun and entertaining manner? Ultimately, of course, gamification is a marketing tactic. Just like sweepstakes, bonus promotions or points auctions, games can add intrigue and excitement to a sound foundation of traditional loyalty principles. The winners in gamification initiatives will be those companies that dont simply roll the dice and randomly deploy game techniques just because gaming is the latest craze. Such missteps will earn those initiatives the Second Prize in a Beauty Contest card. In fact, the best examples of gamification best practices will emanate from companies that use games to augment and elevate

their core brand principles, creatively reward accomplishment, and have fun doing it. Best-inclass companies, in other words, will employ gamification based on house rules that best serve their brands.
COLLOQUY Managing Partner and inveterate game-player Kelly Hlavinka should have realized that marketing would be her true calling when she insisted on being the banker in every Monopoly game shes ever played.

C O L L O Q U Y / Volume 19, Issue 1, 2011

L O YA LT Y L A N D S C A P E

Mouthbert
On page 12 of this issue, we tackle the connection between social networking and word-of-mouth to actual customer loyalty. But, as always, Scott Adams is a few words ahead of the marketing world in general . . .

Debit Kards
Well, the Kardashian prepaid debit card didnt last much longer than a couple of episodes of Keeping Up With the Kardashians, so we thought wed mention it in case you blinked. The card had no rewards component, though a wag might note the ultimate inability to use the card as the best reward of all, given the fee structure that led to its demise. Buying the card cost $59.95-99.95. An ATM balance query cost a buck. A buck and a half to make a customerservice call. And on and on. The Kard was kanned the same month it was introduced, and KOLLOKUY is K with that.

2010: A Special Oddysey

Overheard from a recent speech about installing tech solutions in support of a loyalty program: When the computer system finally came around, they labeled it HAL, and that stands for Help At Last.

So Why Did They Answer the Survey?

Gathering customer information (including via surveys), and then using that information wisely, is part of loyalty marketings genetic code. And apparently part of the human genetic code, too. A North Carolina State University study of propensity to respond to surveys concluded: There is a pretty strong genetic predisposition to not reply to surveys, as noted by Dr. Lori Foster Thompson, associate professor of psychology at NC State and lead author of a paper in the Journal of Organizational Behavior. The NC researchers surveyed more than 1,000 sets of twinsboth fraternal and identicalto determine whether the response of one twin predicted the response of the other. We found that the behavior of one identical twin was a good predictor for the other, Foster Thompson said, but that the same did not hold true for fraternal twins. COLLOQUY wonders if theres any genetic disposition to responding to surveys about surveys.

www.colloquy.com

Youve Just Been Upgraded to a REALLY COOL Window Seat!

COLLOQUY has generally ignored budget airline Ryanairs proposals for cost-saving measures (pay toilets inflight?), but then CEO Michael OLeary came up with something difficult to ignore: Eliminate co-pilots. Why does every plane have two pilots?, OLeary told Bloomberg BusinessWeek. Let the computer fly it, he suggestedor let a trained cabin crew member fly it. COLLOQUY has a better idea. Upgrade upper-tier frequent flyers to standby co-pilot as a soft benefit. They have plenty of flight experience, after all. And heres another cost-saving idea. Hire pilots with unicycle experience to save on wheels.

Intersection and Dichotomy

Word on the street, courtesy of our second COLLOQUY word-of-mouth (WOM) study, shows the powerand the potential pitfallsof what we term Champion customers. Champions are customers who demonstrate the intersection of Connection (the ability to recommend via WOM) and Advocacy (the willingness to recommend). See our cover story about social media beginning on page 12 for details. The good news is you dont need to look hard to find them, because 91% of WOM Champions are heavy participators in loyalty programs. Beware, though. Youll also find that Madvocates are lurking within your loyalty-program memberships. Madvocates are those who agreed with two survey questions: When I have a bad experience with a particular product or service, I advise my friends and family about it and Im far more likely to spread a bad experience than a good one. In the General Population, 26% fit the definition of Madvocate, and 79% of Madvocates belong to loyalty programs. Now, in the opposite of Let the buyer beware, we see in the statistics a need to Beware of the buyerin other words, make sure you treat customers right, because a dark-side dichotomy exists in nearly a third of WOM Champions. As expected in human nature, people can be both active promoters and fierce detractors, depending on their level of satisfaction and how well you treat them.
Source: 2011 COLLOQUY Word of Mouth Survey, U.S. General Population results Champions, n = 205

Courting Loyalty
COLLOQUY isnt exactly a sports publication, but as the 2010-2011 NBA season heads toward the playoffs with teams sporting new faces, we thought wed offer this somewhat skewed perspective: After earning 13,597 points in the Cavalier Club frequent-dunker program, LeBron James redeemed his points for an allexpenses-paid trip to Miami. One-way. This, despite the fact that among his many tattoos is the word Loyalty running at a 90-degree angle up the left front side of his torso. Clearly he was ribbing us.

C O L L O Q U Y / Volume 19, Issue 1, 2011

TOUCH POINTS

The Half-Empty Glass

How innovative thinking with a customer view can increase margins and program impactand fill that glass to the brim
BY STEPHANIE COHEN IF THERES ONE IMAGE that illuminates the attitude of todays banking industry toward approaching its fiercely competitive landscape, its the half-empty glass.

programs as costly burdens simply required to play in the space, rather than as a component of a robust and relevant long-term strategy. Rewards also tend to play most heavily as a tool for driving sales and acquisition, instead of being leveraged as an integral component of nurturing long-term relationships. Loyalty efforts are also usually placed in business silos, typically focusing on just one productsay, credit cardswith

and long-term profitability, with differentiated strategies that are much more difficult for competitors to copy. Some important ways banks can fill their loyalty glass to the brim: 1. Look at net margins, not pure costs. Traditionally, banks have used breakage to drive down costs. But the realities show that costcutting alone can go too far, as

Expanding the loyalty program can offer tremendous opportunity for growth, but even by just tweaking a banks current position in a few crucial ways, the banks loyalty efforts can go beyond commoditized rewards and be leveraged to achieve differentiation and drive positive behavior.
commoditized, cookie-cutter rewards that offer no sense of competitive differentiation. If customers can receive the same untargeted cashback or travel reward from any credit card, what would motivate them to stick with any particular provider over the long haul? Evolving loyalty strategies across products and with a broader view There is, however, another way to think about bank loyalty. A glasshalf-full approach focuses on innovative thinking that concentrates on increasing value and customer retention, moving toward a broader customer-focused view and leveraging a program across multiple products. Expanding the loyalty program can offer tremendous opportunity for growth, but even by just tweaking a banks current position in a few crucial ways, the banks loyalty efforts can go beyond commoditized rewards and be leveraged to achieve differentiation and drive positive behavior. Loyalty strategies can provide powerful tools for assisting with resource allocation, customer retention, liability management fewer customers find value in the program and, as a consequence, are less motivated to move toward profitable customer behavior. Instead, if you focus more on increasing margins by spreading rewards over multiple products, or you integrate benefits with more customized rewards, you can boost the impact of your loyalty program. 2.Provide benefits that add value. Is your rewards program a true differentiator for your customer? One size doesnt fit all when it comes to rewards. By going beyond commoditized rewards to differentiated soft benefits and targeted treatments that motivate best customers whether its access to private airport lounges, sports-related options or different treatment at call centersbank loyalty programs can increase retention and lift. 3.Use data to increase relevance of rewards and boost resource allocation. Other industries are well along the path toward using data to increase relevance. Just look at a

This Debbie Downer syndrome is understandable, given a wide array of profound changes that have affected bank profitability over the past couple of years. Customers remain stressed economically due to the recession, while government regulationsuch as new interchange fee legislationis increasing. With the mortgage and foreclosure mess still in full swing and consumers cutting up their credit cards left and right in favor of cash, theres no question that banks are struggling to negotiate the right road to success as they work to rebuild their reputations and relationships with customers during a seemingly never-ending recession. However, in response to these stressors, banks have mostly remained crouched in a protective posture to avoid perceived risk, including reducing customer lines of credit, closing customer accounts and restricting lending. That defensive stance has also affected bank loyalty efforts. Because banks are under pressure, cutting the cost of rewards is top of mind, as banks tend to treat loyalty

www.colloquy.com

casino company such as Harrahs, whose Total Rewards program hones in on their best customers and what they want and need. Its essential for banks to use data to understand, recognize and reward the customer across products, no matter how they interact. Its not just about bringing in new customers, but also about ensuring that the customers who stay and continue to do business are rewarded. 4. Integrate the rewards program into a robust lifecyclemanagement program. A banks lifecycle-management communications offer a powerful platform to inform customers about available benefits and how they might be interested in using them. By integrating loyalty messaging throughout the customer lifecyclewhen customers activate their cards or other bank products, and as they move along the Relationship Chaina company can focus more on driving impact. Drink a toast to a full glass of loyal The bottom line is that banks can use whatever loyalty program they have to drive portfolio value across the boardrather than considering rewards an add-on that must be cut out in lean times. By using data that banks already gather to improve customer engagement, financial services companies can score a huge win. The glass is more than half full when it comes to bank loyalty banks simply need a new attitude that uses the power of the right rewards to drive desired results among existing customers. Your bottom line will thank you for it.
Stephanie Cohen is a LoyaltyOne Consulting partner, and a COLLOQUY Contributing Editor.

Bottoms Up
Picture the loyalty-strategy glass in two dimensions to watch how applying a positive approach can quench customers thirst for differentiated, customer-specific treatment across your entire relationshipwhat we call Enterprise Loyalty. Along the horizontal dimension: Broadening the number of financial products that your loyalty program rewardseventually to cover the entire possible customer relationshipprevents leakage of customer participation from your half-empty glass. Along the vertical dimension: Pouring in a carefully measured mix of resources for best customersfrom hard benefits to recognition to lifecycle-specific benefitsbased on portfolio insights delivers satisfaction few competitors can match.

One Product

Two Products

Entire Relationship

Banks that evolve their strategies along both dimensions can achieve best-in-class status and move toward Enterprise Loyalty . . . topping off the bottom line.

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C O L L O Q U Y / Volume 19, Issue 1, 2011

TOUCH POINTS

The Middle (Global) Ground

Keys to capturing emerging middle class loyalty
BY STEPHANIE COYLES

population, but it is a tough economic equation to tackle: After all, the relative spend of the emerging middle class is quite small compared to that of a developed nations middle class. In addition, their spending patterns are fractioned among thousands upon thousands of momand-pop-type businesses, and they are strongly reliant on cash rather than on credit or other payments. These facts raise crucial questions: How can you market a loyalty program if this emerging middle class isnt accustomed to shopping in large retail environments? What if these consumers are new to noncash tender? What if they have never encountered rewards for shopping? Success may depend on what type of

of mom-and-pop businesses with inherent access to extremely per sonalized data: They know their customerswhere they live, who their children are, what they like to buy. Only with the kind of data and insight that can be gleaned from a welldeveloped loyalty program can larger, more cumbersome companies compete with such successfully entrenched personalization and targeting. 2. Emerging market loyalty programs will leapfrog over developed nations counterparts. The rewards mix and the communications vehicles within these new loyalty programs will skip over many of the stages that programs in developed nations went through. For example, when loyalty

CHATTER ABOUT EMERGING MARKETS is everywhere, as excitement mounts over the rising economic power of rapidly developing countries such as Brazil, India and China. One key ingredient serves as the biggest factor in the growth recipe of these rapidly developing nations: The emerging middle class. These newly prosperous spenders are drawing the attention of marketers around the world, who realize that millions upon millions of potential new consumers offer tantalizing opportunities.

The emerging middle class may be new to rewards, but they have the same expectation of being rewarded as customers in developed nations. And theyre hungry for communication and dialogue, far more so than their developed nation counterparts, who struggle with privacy issues.
loyalty-program model is put into place. Partnerships or coalitions may prove even more valuable in emerg ing markets than in developed nations, as large retailers struggle to establish their footing in these developing nations where companies are looking for growthwhile in mature markets they focus on market share. So why not work together for mutual benefit to reach these nascent markets? Companies working to capture the loyalty of the emerging middle class must consider these key points: 1. There is a desperate need for data and insight. With companies just starting to implement debit and credit options and consumers just being introduced to non-cash possibilities, the need for loyalty programs is particularly strong and the advantages of partnering to create those programs even greater. After all, large retailers are competing against thousands, even millions, programs first gained popularity, airlines frequent-flyer programs took the lead. Today, programs with such structures, in which consumers may have to wait years to earn a reward, wouldnt be favored, since todays consumer expects to earn more quickly. In addition, emerging markets arent likely to go through a big direct-mail phase, such as using bulky catalogs, to spread the word. Instead, they may immediately move to mobile and social media efforts to market their programs. 3. The ability to gain customerlevel insight will already be put in place. Marketers in emerging nations wont be wedded to standard operating procedures and tools as long-established companies in developed nations are. For example, a company can begin its efforts with a state-of-the-art POS system already in place. By deploying the latest in data gathering and analysis,
Continued on page 30

According to the McKinsey Quarterly, a clear argument exists that the future drive in global consumption will come from the ranks of this rising middle group, whose population spans over a dozen emerging nationsnot just the well-known BRIC countries (Brazil, Russia, India and China), but also Argentina, Mexico, Indonesia and Turkey. The middle class in these areas comprises almost 2 billion people spending nearly $6.9 trillion annually. McKinseys research suggests this number will rise over the next decade to $20 trillionan amount larger than the U.S.s entire $14 trillion 2009 GDP (according to the International Monetary Fund). The core challenge for marketers, however, is reaching that group. Retailers and brands may salivate at the thought of such a large, untapped

A more relevant offer

could have doubled your response rate.
See how leveraging shopper insights delivers a more protable outcome at precima.com/marketing

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C O L L O Q U Y / Volume 19, Issue 1, 2011

The powerful reach of social media enables loyalty marketers to extend their mastery of dialogue with customers on a grand scale, achieving trialogue: proactive three-way conversation between customers and their friends and the companies they care really about. How can companies truly interject themselves into the customer-to-friend equation and harness social media? Listen in as COLLOQUY asks such questions and joins the conversationand be sure to tell your friends.

www.colloquy.com

13

Trialogue
The Intersection of Social Media and Loyalty
By Sharon M. Goldman
For KLM Royal Dutch Airlines, creating relationships with consumers has always been challenging, as its wide-ranging international customer base represents numerous cultures speaking a variety of languages70% of passengers, in fact, originate outside of Holland. That has prompted the airline to be consistently creative in its marketing, and the airline has relied on the nimble nature of online marketing to take its customer dialogue to the next level. However, even this online-marketing-friendly company wasnt sure how consumers would react to its experimental dive into the social media swimming pool: Last fall, the airline piloted its KLM Surprise program, which presented select passengers checking in at Amsterdams Schiphol airport with a customized giftbased on information the passengers had shared on such social-networking sites as Twitter and Facebook. One customer traveling to New York had lamented that he would miss his favorite teams biggest soccer game of the year, so the airline surprised him with a Lonely Planet guide to New York, highlighting the best bars showing the soccer games. Another received a glass of champagne after he mentioned his upcoming birthday, and yet another received a voucher for iPad apps after mentioning that he was excited about using his new iPad on his KLM flight. KLM was shocked by the huge response to the Surprise campaign, a simple soft-benefit customer dialogue that swiftly blossomed into a runaway viral success, with consumers sharing videos and comments about the campaign with other consumers. It was a leap from dialogue to trialogue.

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C O L L O Q U Y / Volume 19, Issue 1, 2011

Skys Surprise
The KLM Surprise distributed unexpected rewards to some of the airlines passengers in response to their tweets. The effect of such a campaign is difficult to measure, admits KLMs Martijn van der Zeebut the viral effects through photos, videos and re-tweets have pointed toward loyalty success. It touches on something deeperthe feeling people have with the brand, he says. It creates something positive internally, within the company, as well.

gathering/analytics. COLLOQUYs prediction of social networks as a prime evolutionary trend in loyalty has come to pass manyfold. Loyalty marketers have worked overtime trying to leverage the social media/loyalty link. More companies than ever look to social media not just to acquire new customers and build brand awareness, but also to increase loyalty as a business objective. From 2009 to 2010 alone, social media budget growth tied to customer loyalty grew nearly 300%, according to a 2010 COLLOQUY/DMA industry benchmarking study, Deploying Social Media to Cultivate Customer Loyalty. Attempts to tame social medias wide-open frontier has led to a number of examples of forward-thinking marketers taking bold steps beyond marketing promotions and push technology into the social media universe to influence customer loyalty, and the learnings from these companies provide essential lessons for others. However, significant challenges remain, as companies struggle to keep up with quick-changing social tools, more-demanding consumers, and the difficulty of quantifying loyalty impact in a space that thrives on difficult-to-track sharing and word-of-mouth activities. The COLLOQUY and DMA joint study confirmed that active experimentation has been at the core of marketing through social mediabut it also stressed that the time has come to determine how these channels can drive profits, and how they can connect in a measurable way to increased customer loyalty. Id say most companies arent there yet [in terms of linking social media and loyalty], says Yuping LiuThompkins, Ph.D., Associate Professor of Marketing at Old Dominion University in Norfolk, Virginia. What I see most often are companies that treat social media just as another marketing channel. They post information about the company, and they indicate what they have on sale, but no real dialogue is happening between the company and the consumers. Frank Eliason, Senior Vice President of Social Media at Citi (who has been credited by some as a pioneer in using Twitter to offer fast, personalized customer care in his role in customer operations at Comcast), agrees that taking advantage of social medias unique features challenges companies accustomed to traditional marketing approaches. The number-one social media challenge that I see with a lot of companies is that they try to force a message out with a traditional marketing approach, he says. But social is about human dialogue, so how do you do that in a manner that still meets all internal as well as regulatory controls and is fast?because social is a place very much about speed.

We were surprised by the effect, but I can certainly say we are now addicted to the effect, says Martijn van der Zee, Vice President of E-Commerce for KLM. When you engage in a real, authentic way, it takes more effort from the company, but the viral effect is so much bigger than anything weve done in a highervolume or more organized way. It was a mere half-decade ago that loyalty marketers began to truly delve into how social networks and loyalty relate to one another. In early 2006, both BusinessWeek and COLLOQUY acknowledged the rising power of social networks and customer wordof-mouth. More specifically, COLLOQUYs TrendTalk white paper predicted that nurturing and leveraging virtual consumer networks would be a prime evolu tionary trend in loyalty over the next few years. Obviously, consumer use of social media has exploded since then, led by the seemingly boundless popularity of Facebook, followed by Twitter, YouTube, LinkedIn and blogs, as well as the more recent location-based success stories such as Foursquare and raise-your-handtogether models such as Groupon. In 2010, Americans spent nearly a quarter of their online time on social networking sites and blogs, an increase of almost 16% over 2009, according to Nielsena 43% change in the share of online time Americans devote to social media. And, thanks to the iPhone and other smartphones, the use of social networks through the mobile phone is increasing at a rapid clip as well. According to eMarketer, the number of mobile social network users will more than double between 2010 and 2015, from around 40 million users to close to 80 million. Taming social medias wide-open Wild West Social media from the very beginning offered many natural connections to loyalty marketers seeking to cultivate customer loyalty. With its emphasis on wordof-mouth, sharing, linking, friending and liking, social media provides powerful, ever-evolving tools to implement such core loyalty principles as relationshipbuilding, customer service, personalization and data

www.colloquy.com

15

They Are the Champions

New COLLOQUY word-of-mouth research shows a steep rise in the use of social media among those who recommend
In 2009, COLLOQUY published a consumer research survey exploring the intersection of consumers who participate in loyalty programs and their word-of-mouth (WOM) activity (TalkTalk: The New Champion Customers). In 2011, we returned to the topic, looking even more deeply at the relationship between loyalty and advocacy and the role of customers we call WOM Champion Customers (those who are both Connectors who are able to and do recommend brands they like and Advocates willing to recommend the brand). With 91% of WOM Champions surveyed saying they belong to one or more loyalty programs, the strong, powerful connection between Connecting and Advocacy is crystal clear. We found that social media and word-of-mouth are closely inter twined when it comes to WOM Champions: Our survey results show that social media is significantly more useful and important to Champions than ever. In 2009, 27% of Champions said they used social media to recommend or discuss products or services. In 2011, 48% of Champions said they used social mediaa jump of 77%. WOM Champions in generalboth those who are members of a brand's reward program and those who aren'talso contribute more frequently to social media sites such as Facebook and Twitter than non-Champions. On a monthly average, member WOM Champions contribute to social media sites 18.4 times; non-member Champions, 15.9 times; member non-Champions, only 12.6 times. Not surprisingly, Facebook is the WOM Champions platform of choice for discussing or recommending brands: A whopping 85% of member Champions use Facebook, while 77% of member nonChampions do so. Twitter, too, is popular with member Champions 31% use Twitter, which is 63% higher than non-member Champions. With the idea of trialogue becoming more prominent in 2011, social media is clearly fueling amazing growth of Champions WOM behavior. Only a few years ago, a WOM Champion was limited to one-to-one or one-to-a-few conversations conducted face-toface, via telephone and email, or through other means. Champions continue to use such media, but today social networks allow far broader impactboth positively and negativelyas they share either satisfaction or displeasure with potentially thousands of others who can pass the word along. You know who your WOM Champion Customers are: Theyre likely found in the membership rolls of your loyalty program. They are your best customers, your brand advocatestake them seriously,

Source: COLLOQUY Word of Mouth Survey 2009 and 2011, U.S. General Population results Q: And overall, when recommending or discussing products or services, which communication method(s) do you use? Please select all that apply. 2011 Champion Members, n = 185; 2009 Champion Members, n = 374

because they can exalt your brand or tear it down through social media. Theyre conversing in spaces where you should be working on trialogue as well as dialogue. Want to increase your loyalty success through social media? Get the conversation started with your Championstoday. Sharon M. Goldman

A significant element of the challenge in effectively linking social media and loyalty is that building longterm loyalty isnt always top-of-mind when entering the social media space25% of companies surveyed in the COLLOQUY/DMA benchmarking study said they wanted to increase loyalty and engagement from existing customers, but 28% identified building brand awareness and 19% identified customer acquisition as their top goals. So, issues surrounding customer retention may not get the attention they deserve. Social media is really a space for engaging existing customers, and that

piece is what really leads to loyalty, whether youre striving to get feedback from them, to thank them for feedback, or to provide more of the benefits you can offer, says Citis Eliason. Another continuing problem is that, while social media budgets have grown, most companies dont yet understand how to use that investment, let alone how to measure and analyze the results from using it. According to the 2010 COLLOQUY/DMA survey, two-thirds of respondents were unable to express what the most

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important measure of social media success would be. The ad hoc efforts that have often resulted from such lack of understanding are fairly typical for early-stage development of any unfamiliar and promising frontier, but those results mean that most companies havent yet fully reaped the potential benefits of their investment. Put some skin in the social media gamea thick skin Whether companies succeed or fail in their initial efforts, there is no question that they must put skin in the social media game today. Once in the mix, though, companies must develop a thick skin, facing a fiercely competitive landscape filled with finicky, busy consumers with the power not only to instantly turn off and tune out marketing messages, but also to quickly and easily share information, both negative and positive, about a company with others. In fact, consumers can be choosy when expressing loyalty in social media: According to the 2010 Cone Consumer New Media Study, more than 80% of consumers say they follow only five or fewer brands online, whether

through Facebook, Twitter or an RSS feed. They really only have room in their minds for less than five brands, says Mike Hollywood, Cones Director of New Media. Its a pretty exclusive clubif you think about the number of marketing messages a consumer receives dailyto be welcomed into that inner circle of brands. It doesnt take much for a companys social media efforts to turn consumers off, though, which can quickly present significant dilemmas. According to Cone, almost 60% of its survey respondents say that they would no longer be fans of brands acting irresponsibly, either toward the respondents or toward others and the action was publicly visible. And 58% say that brands that over-communicate risk alienating consumers. Yet, a third of consumers said theyd stop following brands that didnt communicate often enough. Its definitely a delicate balancing act, says Hollywood. You need to figure out the cadence of communications and make sure youre always acting responsibly as far as your consumers are concerned. The biggest opportunities in this Great Frontier Loyalty marketers have discovered many links between social media and loyalty that offer potential opportunities for success. At COLLOQUY, weve identified two main forces that truly offer the chance for companies to move the needle on loyalty: 1. Social media as a catalyst for story-tellingand story-sharingthrough trialogue. Many marketing channels offer two-way dialoguephone, email, traditional loyalty programs and instant messaging all facilitate back -and-forth customer conversations. But Facebook, Twitter, YouTube and blogs offer tools that allow customers not only to communicate with companies directly but also to share ideas, reviews, feedback and stories with their friends and possibly their friends friends and beyondthe essence of the three-way customer relationships elemental to trialogue. To reach such engagement, companies have worked extensively to motivate consumers to join their Facebook pages or follow their tweets, enticing them with everything from discounts to donations. However, the problem is that Facebook likesno matter how many there aredont necessarily translate to true trialogue, or even to dialogue. Sites such as Facebook and Twitter are littered with top brands with millions of followers that do little or nothing to engage with their fans. Discovering the right way to effectively communicate is a challenge unique to each company, says Citis Eliason. He points out that in financial services, for example, privacy and security concerns are paramount. If a backand-forth is happening on Twitter, for instance, how can

The Trek to Trialogue: A Framework

Trialogue is a key component of COLLOQUY's definition of Enterprise Loyaltyviewing the enterprise as a high-performance system designed to build loyal relationships with all stakeholders. Trialogue takes the dialogue between customers and brands (powerful in itself) a step further by leveraging the customers' increasing ability to share opinions on a massive scale within the networks made possible by social media. The companies that can combine effective trialogue with organization-wide data-sharing and innovations are the ones that will achieve true Enterprise Loyalty.

Degree of Internal Integration

Marketing Function Only

Cross-Functional Coordination

Smashing Silos

Enterprise-Wide Integration

Identify, Track and Measure

Company-Customer Dialogue

Open Network Interaction

Trialogue

Extent of Customer Interaction

Engage Your Customers Throughout the Loyalty Lifecycle

The key to deeper customer engagement is delivering personalized, relevant, timely, and actionable communications at every stage of the customer lifecycle. By leveraging SoundBites Loyalty Rewards Program Solution, you can quickly and effectively communicate with your program members across a variety of devices and communications channels. The result? A substantial lift in redemption rates and incremental revenue, and improved customer relationships.

www.soundbite.com/loyalty

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Whats in It for Me in New Media?

The 2010 Cone Consumer New Media Study asked respondents want they look for when deciding whether to engage with brands via new media. Consumers responses:

Another brand, energy drink Red Bull, has created successful social media trialogue simply by understanding and honing in on the brands target audience. It offers interactive content related to activities that energy drink lovers likeparticularly adventure sports from freestyle skiing and motocross to skateboarding. Wall posts can receive hundreds of likes and comments, while the companys Facebook page adds to the three-way fun with interactive games offered up to its more than 14 million fans. Closed, sometimes exclusive, social communities offer further ways for companies to increase personaliza tion and encourage long-term loyalty within branded walls, particularly for those with loyalty programs. For instance, hotel chain IHG (InterContinental Hotels Group)s three private online communities drawn from their 52-million-strong Priority Club membership have been a key element in the chains social media efforts. These invitation-only communities each comprise about 300 rotating members, with more-active members invited to stay on longer than less-active ones. IHG explores and addresses strategic goals and questions with the members, creating a deep dialogue between members and executives, executives and members, and each other. We think of it as a three-way conversation, says Nick Ayres, Director of Social Marketing at IHG, of the trialogue potential. These private communities have given us an opportunity to test the waters and evaluate what our customers think about us across a wide range of activities, brands and topics we present to them. 2. New platforms for engagement and involvement harness fundamental loyalty factors. The social media universe is ever-changing, with new tools and platforms constantly evolving. But these new options are really harnessing fundamental factors of loyalty, albeit in new, entertaining waysthey quench customers desire for status, and play into peoples innate need to compete in fresh ways, for exampleboosting the potential for reinvigorated soft benefits. The rapid rise of Foursquare after its March 2009 launch showed off the powerful one-two punch of locationbased rewards combined with social sharing, which has now been replicated with other tools such as Facebook Places. Rewarding top customers with Mayor (the honor that Foursquare bestows on a locations mostfrequent visitor) bragging rights and special discounts, while providing companies with useful data and analytics about customers, has offered new and exciting options for loyalty marketers. Brands such as Tasti D-Lite, Gap and Starbucks have taken advantage of Foursquares

Chart response key: Incentives: Offer me incentives (e.g., free products or services, coupons, discounts) Customer service: Solve my problems/provide product or service information (e.g., customer service) Listening: Solicit my feedback on products and services Entertainment: Entertain me (e.g., provide access to premium content) Innovative interaction: Develop new ways for me to interact with their brands (e.g., widgets, mobile applications, online games, contests) Marketing: Market to me (e.g., banner ads, targeted ads)
Source: The 2010 Cone Consumer New Media Study presents the findings of an online survey conducted among a sample of 1,050 adults comprising 505 men and 545 women 18 years of age and older. The margin of error associated with a sample of this size is 3%.

the conversation continue off the public page? At Citi, one planned solution will be a click-to-call and click-to-chat feature that steers users away from the social network after engagement. This way, youll still be talking to the same person you were Twittering with, but youll continue that conversation in a secure environment, he says. Over the past few years, some companies have discovered creative ways to encourage and stimulate true trialogue. One such company is online retailer Zappos, which has famously used the power of CEO Tony Hsieh as the face of its Twitter feed. Not only do Zappos customers directly respond to Hsiehs tweets, but they also re-tweet them to friends, virally spreading the Zappos mantra and championing the company to other potential customers. Many experts also point to Starbucks MyStarbucksIdea program as an early, continually-successful effort to create that three-way conversation on a wide scale. Cus tomers submit ideas on the MyStarbucksIdea website for new products or campaigns, and ideas get thumbed up or down by other consumers, and, ultimately, by Starbucks itself. Some have quibbled with its successa relatively small number of the customer ideas have truly been put into practicebut most agree it was an early game-changer when it comes to developing trialogue.

www.colloquy.com

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ability to socialize loyalty, while a recent Pepsi/Vons partnership has taken Foursquares opportunities to the next levelenabling users to link their Vons loyalty accounts to Foursquare. Were trying to take the loyalty card as it exists today and make it smarter and more engaging, says Tristan Walker, Head of Business Development at Foursquare. Loyalty offers are just the cherry on the icing on a very large loyalty cake, and one thing that we try to focus on is the retention piece as opposed to the acquisition because its a lot more valuable. Retailer Sports Authority recently used Foursquare to great effect: During Black Friday 2010, the company gave away $500 gift cards to 20 randomly selected Foursquare users who checked in at one of the brand's 400-plus stores. Participants were required to publish the checkin on Twitter to have a chance to win. The effort was a powerful, fun engagement tool that greatly increased online engagement metrics and instore foot traffic attributed to Foursquare users, says Clay Cowan, Vice President of E-Commerce and Digital Marketing at Sports Authority. It added an element of game mechanics that really resonated with people. But it also added a data-gathering dimension that helped the company gain insight into customers: Its a powerful way to test different offers and directly measure the customer response through various metrics. And, as further evidence of how fast-paced the social media space is, 2010 was also the year of another localized success story: Groupon. A daily-deal website tied to local communities, Groupons concept began in late 2008, but took off last year as consumers sparked to the notion of getting a particular deal only if a certain number sign up for ittaking to social media sites to encourage friends to get on the bandwagon. Recently, Groupon began to test loyalty offers, offering marketers yet another social-media opportunity to salivate over. Personalization and soft benefits that offer an emotional connection are also being added to loyalty marketer toolboxes using social media platformsas shown by KLM Surprise.We have the increasing belief that small and deliberate and genuine investment is much better, says KLMs Martijn van der Zee. And a new type of soft benefitenhanced customer servicecan result from successful trialogue. For example, Best Buys Twelpforce has emerged as a strong leader in the customer-service space. Begun by a small team of internal Best Buy employees, Twelpforce has grown into a 2,200+-strong force of Best Buy Blue Shirts, Geek Squad Agents and corporate employees who

volunteer their time to research and answer questions tweeted by Twitter followers. Were demonstrating our effort to solve something for the customer and that we have their best interests in mind, says John Bernier, Best Buys Social Media Steward, who runs Twelpforce. But by proving themselves every day on Twitter, the Twelpforce team also contributes to positive word-of-mouth and advocacy for the retailer, leading to trialogue. As Bernier says, We work so that people will recommend us in the future or turn to someone at their dinner table and say, You should really trust Best Buy.

Twelp Times Twelp

Best Buys Twelpforce delivers customer answers via Twitter. And its not necessarily softball questions like, Whats the difference between plasma and LCD?its hard ones that require some research and to dig deep into our knowledge bank, says Best Buys John Bernier. Thats where we demonstrate what we can bring to the table. . . . It shows there are real human beings behind the Twitter account.

TWELP FORCE

The next social media-loyalty frontiers Social media spending may be up, as loyalty marketers recognize its current and potential value. However, measuring and evaluating the effect of social media on loyalty, as well as integrating social media with the rest of a companys loyalty efforts, remain among the biggest hurdles to truly linking loyalty and social media. As noted before, when asked what core metrics had been put in place to measure the effectiveness of their social media strategies, most respondents to the COLLOQUY/DMA benchmarking study were unsure. Of the remaining third that did respond, 20% indicated that increased customer involvement and engagement with their brand was the number-one metric, yet few employed any kind of listening toolssuch as new software technologies like Radian6 or Google Analytics to get a sense of customer-involvement trends. Effective metrics gauging social media spending and incremental profitable revenue growth were hard to come by. Up to this point, says Prof. Liu-Thompkins, it seems that companies will report satisfaction with their social media initiatives, yet most dont know whether their satisfaction is justified. People say they are happy with their social media ventures, but if you ask them if they actually measure, a majority of them dont. They dont really know whats actually happening. I think

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thats going to be one of the most challenging things for the next couple of years as we see how companies are going to move toward that direction. That said, Prof. Liu-Thompkins adds that measurement efforts, while still in their early stages, are the wave of the future because companies are simply demanding specifics regarding social media ROI. Of course, there are technology challenges in terms of integrating social media measurement into a traditional CRM system to better manage customer relationships, says Liu-Thompkins. But we are moving in that direction and its definitely a step forward toward active participation in measurement rather than just observation. A lot of companies are getting tough around that because social media is moving out of the experimental realm and because of competition for resources across different channels.

product or service they asked about from Best Buy in the following 6-12 months. To me, it reinforces the trust factor, he says. Another challenge in integrating lies in maintaining consistency of look and tone. Prof. Liu-Thompkins says that Starbucks is a great example of integration. Theyve tried a lot of different things and their image is consistent across social media channels, including Facebook, Twitter and Foursquare, as well as their website and other channels. Trekking toward trialogue Social media clearly offers transformational loyaltymarketing opportunities, but all of its unique benefits have hardly been tapped. And, as with any loyalty effort, gaining consumer trust, and providing a good value propositionand a superior product or serviceare essential. Loyalty game-changers in this space clearly must succeed in both understanding and creatively using social media, as well as in offering top loyalty leadership across their entire enterprise. Its those companies that bring disciplined decisionmaking, strong buy-in from the top, constant efforts at measurement and proof, and willingness to experiment that will win in linking social media and loyalty and move to the next stage of success in the social media space. Companies such as Best Buy, Starbucks, Coca-Cola, Zappos and Ford are regularly cited as among the handful of innovators that bring at least some, if not all, of the above factors into play. Hotel chain IHG is another example of a company that is truly holistic about its social media strategy. At COLLOQUYs 2010 Loyalty Summit in Phoenix, IHGs Nick Ayres cited essentials of social media successincluding the importance of being brave in the space; knowing where customers are talking in social media; focusing on gaining the insights necessary to achieve growth; and integrating social media communities with other tools within the organization. The bottom line, Ayres points out, is that social media offers the opportunity to see customers as more than just numbers. Through trialogue, social tools help bring customers to lifewhich helps loyalty marketers learn the right ways to reach their goal of building long-term relationships. It adds a lens of real life to your customers, he says. It allows you to really get a good sense of whats important to them, and to use that as input into what you do and the decisions you make day in and day out.
Sharon M. Goldman is a COLLOQUY Contributing Editor.

You Are the Mayor of Page 20 of This Issue of COLLOQUY

Its important to understand that social media and loyalty dont have to remain in silos, says Foursquares Tristan Walker. If you can get 20% of your consumers to spend more per month or get 20% to visit your venue two times more per month by leveraging tools and tailoring unique experiences, and you can prove that stuff out, thats value.

At Citibank, Frank Eliason says that the companys focus on measurement throughout the organization was an important factor in his accepting his new position. In my discussions with Michelle Peluso, our CMO, she made clear her perspective on social media as well as the types of measurements she wanted to concentrate onspecifically the Net Promoter Score (a classic measurement of customers willing to recommend a product or service). Because social media helps amplify trends regarding recommendation likelihood, it plays a strong role in the Net Promoter Score, Eliason says. We also use standard metrics such as how many people saw or engaged with a particular message, but my number-one concentration in everything we do is about the Net Promoter Score. Best Buys Twelpforce offers measurement opportunities, says Bernier: We do a biannual survey of Twelpforce followers, asking whether they received the service they expected, whether they were satisfied, whether theyd recommend Best Buy, and of course where they ulti mately bought a product from. Though sample sizes are low, Bernier says the company has been able to determine that up to 85% of people who interacted with Twelpforce either bought or planned to buy the

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C O L L O Q U Y / Volume 19, Issue 1, 2011

TRAVEL REPORT

COLLOQUY: The Rapid Rewards con version from credits based on flights taken to points based on dollars spent and other changes seems more of a revolution than an evolution. What led to the revolution?
GREEN: Quite simply, we had outgrown

Rapid Change
A COLLOQUY Q&A

The introduction of the all-new Rapid Rewards marks a radical change in Southwest Airlines venerable frequent-flyer programin place for nearly a quarter of a century. To learn more about why and how the revamped Rapid Rewards was implemented, COLLOQUY sat down to talk to Ryan Green, Southwests Senior Director of Customer Loyalty and Partnerships.

the old program. Southwest created Rapid Rewards in 1987, awarding members a free flight after earning a credit for each of 16 flights, and it has remained virtually the same program with no major enhancements until our recent announcement. We had to evolve the program to fit the airline that we are today. In 1987, we were a regional short-haul airline, and virtually all of our flights were onehour flights, so a one-size-fits-all approach made sense back then. Today, we are the largest airline in terms of domestic passengers carried in the United States. We fly coastto-coast, and it didnt make sense to customers or to us that someone who flies from Los Angeles to Washington D.C. receives the same currency as someone who flies from Los Angeles to San Francisco. We had to develop a program that not only better matches our route network but also solves the customers problems and frustrations that we hear most often about frequent-flyer programs in generalfinding a reward seat. Therefore, we implemented a program that doesnt have any blackout dates or any seat restrictions; every one of our discount seats is available for redemption.
: How long has the new Rapid Rewards been in the making?
A: We started the process in 2007.

the next evolution of Rapid Rewards. To understand how we wanted to proceed, we talked to customers by way of dozens of focus groups and conducted quantitative research, working to understand their frustrations with frequent-flyer programs overall, and what they liked and what frustrated them about our current program. We spoke with Rapid Rewards members, with our nonmember customers, and with customers of our competitors. In the quantitative research, we presented concepts of different types of programs and different possible loyalty program features. We measured the customers acceptance or satisfaction with each of those components, which then informed how we wanted to ultimately build the program. As a result of this program, we expect to win more customersmore business customers and more long-haul customers, which has been an objective of ours overall for several years. We also measure satisfaction with the program and with the changes, and the amount of revenue that the program drives for Southwest.
: Was it difficult to sell such complete change to upper management?
A: Obviously a change like this involved a lot of individuals across the company cross-functionally. The frequent-flyer program touches virtually all aspects of our business, from our customer-contact employees, to our customer-service agents at the airport, to our revenue management and finance and marketing employees.

It was a part of the overall company strategy that we needed to continue to evolve the airline and the infrastructure and the programs that support the airline and who we are. We took a look at the program we had and we realized there were some deficiencies and that it was time to begin exploring

In the cross-functional effort over the course of the last four years, weve had many meetings with senior management, reviewing where we felt we needed to make changes what customers were saying the changes needed to be and how we could make those changes in a way that made financial sense for the company. Once we laid out that case,

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Flight Simulator: The Customer Cockpit

we earned support of senior management, and then it became a matter of executing against the new program.
: Did these meetings facilitate employee messaging to explain the changes and get them on board?
A: Obviously this move required a large internal change-management initiative, involving a number of phases. One phase was laying the foundation for why we would even change a successful program, in the form of a dedicated internal cam paign this past fall that laid the case for change. The next phase outlined the specifics of what was changing, and that phase led up to the announce ment of the new program. Between announcement and launch, we trained employees on the changes impact on how theyll do their jobs, using the different systems and tools that are part of the new technology rollout.

The new Rapid Rewards changes from per-flight earning (16 flights earn one free flight) to a per-dollar-spent points model. Existing credits will be grandfathered and can still be used by converting newly earned points into enough credits to complete the 16 needed for a flight. Points are used like cashshorter routes use fewer points as opposed to devoting a set amount of miles to flights of various distances. All this is outlined at www.newrapidrewards.com, a site that features explanatory videos and interactive tools. One such feature is the Points Simulator. Customers can select a start city, and by dragging a slider to set point levels, see via a visual route map where those points can take themestimations only, of course. Members can import their account balances to learn whats available to them. Other elements of the tool allow flyers to calculate earn potential on specific flights, or by patronizing Southwest partners automatically updating the interactive route map.

: How did you map out announcing this change to your loyal customers?
A: Quite a bit of planning went into

how we were going to roll out the messaging among current members. It was important to first talk to our most-engaged, most-active membersthey received a proactive email. We then phased our communication out among the rest of the membership. In those messages, we highlighted the key elements that we are changing and directed those members to newrapidrewards.com to learn about the new program. We invested considerable time and energy in developing newrapidrewards.com, as a website tool that helps customers understand what the new program will mean to them and enable them to experience the new program in a personal way. Finally, we deployed a : Will the new structure allow you cadence of communication to alert and prepare customers for the transi - to gather data to further tailor value tion to alleviate and eliminate as many to customers? surprises along the way as possible. A: We have re-platformed the loyalty engine that runs the program on the : It seems that some customers back end, and the new platform allows are a bit shocked by this conversion. us to be very personal and relevant to A: Overall the feedback from cus members in our communications, tomers has been what we expected. based on their travel patterns, based There are those who are really excited on their desires, based on what moti-

about the new program; there are those who are taking a wait-and-see approach; and then there are those who were taken by surprise by the change, and they have questions. We hope and we believe that over time, as customers understand the program and how it will work for them, everybody will come on board and be happy with the changes. For instance, we use the corporate blog to engage in two-way conversation with cus tomersit gives them an additional way to communicate with us and give feedback. There, we try to just lay out in a conversational way the changes weve made and why we made them, and to present a behind-the-scenes aspect to give customers more insight than they typically get just from a marketing piece.

vates them and what gets them excited. The new technology allows us to conduct different promotions than weve been able to do before. For example, we can now conduct promotions offering tier qualifying points, which allows us to accelerate members into A-List or A-List Preferred status or get them closer to Companion Pass status.
: What advice do you have for other marketers contemplating loyaltyprogram upgrades and revamps?
A: My first advice: Dont underestimate the amount of work and effort that will go into it. Next, be very clear about your objectives, and stick to them. Its easy to get off course if youre not very clear about the customer problems youre trying to solve and what youre trying to achieve for your company. Being steadfast will make the process as smooth as possible.

Im very glad that this new program is another chapter in the Southwest Airlines story of being there for our customers and delivering what they expect from an airline. Thats always an exciting part of this job.

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R E TA I L R E P O R T

called PowerUp Rewards Pro. Were also getting quite a bit of positive qualitative feedback from customers and our field teams, another key metric for evaluating our programs success. PowerUp Rewards in some senses employs the same game design principles as the games we sell. Player actions lead to a succession of rewards, perks, and bragging rights. Players track their progress, and work toward victory. Its not a competition per se, but it combines the passion of achievement with fun. End game Achieving this level of success, of course, is never as easy as it looks. GameStop has grown from a regional specialty player to the number-one national brand in our space. Like all companies, we have faced a number of challengesand the new rewards program was a key element in our strategy for overcoming them. Among our goals: Increase our share of wallet by increasing purchase frequency and by shifting purchase behavior to higher-margin products. In a nutshell, our goal was simple: If we could shift just one title per year away from our competition in just one of our consumer segments, we would add a big number to the top line. We also wanted to increase frequency of trade-ins. Were fortunate to have a robust used-game model, in which we take games in trade for cash or for store credit that then can be spent on new games. We call it the Circle of Life. Collect data on our customers and then use it effectively. Like many retailers, we hadnt done enough to get to know our customers and offer relevant communications. Though our customers love coming to our stores, we lacked the systems to gather meaningful information about those customerswho they are and what games they like to play so we could talk to them specifically

Power to the Program

How GameStop's recently launched PowerUp Rewards powered up to 6 million members in just a few months
BY JENN McMILLEN AND MIKE HOGAN

YOUVE SEEN THE MEDIA REPORTS of the

excitement generated when a sequel to a hot video game is released. Lines of avid players waiting for the newest Medal of Honor, the latest Halo, the introduction of Fallout New Vegas some dressed in costumes inspired by the games themselves. At GameStop, were accustomed to this kind of behavior, but we were shocked by one fan lineup we encountered when we opened up one of our stores in September of last year. The avid fans werent there for the latest roleplaying game, the hottest first-person shooter or a long-awaited real-time strategy game.

Theyd come for our brand new loyalty program. The size of the lines of customers waiting to be the first to sign up for our September launch of PowerUp Rewards (without any advance advertising) was astounding, and the continuing response has significantly exceeded our expectationsand our expectations were fairly aggressive. By the beginning of 2011, after the launch had rolled out to all our stores by mid-October, we exceeded six million members, many of whom have chosen a more benefitspacked $14.99 annual membership

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about those elements in-store and through other channels. Increase customer focus. We simply werent as customer-centric as we needed to be, which was particularly frustrating because our audience is very, very vocal. They want to be asked their opinion. In our space, if you dont engage your customersand engage them through a channel you maintainthey will post on other sites and blogs, and you may not like what you hear. Power to the players GameStops points-based PowerUp Rewards encompasses all transactions and interactions with GameStop. It provides enhanced and customized experiences and communications for every member regardless of their point balance. Like any good loyalty program, it provides a mix of soft and hard benefits (including gift cards, codes to unlock exclusive in-game accessories, and member-only events), multiple ways to earn points (for example, earning 10 points for new games and hardware, and 20 points for pre-owned items), and a compelling rewards catalog that changes every week (from GameStop merchandise to restaurant and movie rewards to member-only specials). As we noted, the program features two levelsfree and paid. In the free level, you can earn points on purchases, trades, engagement, and other activities. In the paid tier, you get all of the benefits of the free tier as well as a 10% price discount on pre-owned merchandise, 10% bonus if you trade, a physical or digital Game Informer magazine subscription, and a buy-2- get-1 coupon for pre-owned itemsa value upwards of $50. You also get a 10% points acceleration bonus, allowing members to earn points a lot faster, as well as automatic double entries into our monthly Epic Reward Giveaways. Our marketing hook is short and simplesomething every store associate can communicate to customers

Powering Up the In-Store Experience

GameStop increases in-store interactivity at kiosk stations and at point of sale
Approximately half of GameStops locations are equipped with in-store kiosksanother element intended for point of differentiation. Customers in general can access game information through the kiosk, and PowerUp Rewards members can access their dashboards. Mike Hogan notes that store associates often use the kiosks to increase personal interaction rather than decrease it, leading customers to the station, and making relevant recommendations. The associates can supplement their recommendation with such tools at the kiosk as access to game trailers. Additional customer information is available at the POS, where associates can call up customers purchase histories for insights into customer preferences, and for conversation starters.

PowerUp Rewards is a GameStop trademark

quickly and effectively: Score points. Get cool stuff. And the stuff really is cool. The program offers advance notice of sales and members-only events, such as private holiday shopping hours, tournaments, midnight openings, and so on. With every in-store transaction, you receive an entry into our monthly Epic Reward Giveaways, which are, as our customers would say, very awesome. For example, we offered a VIP experience at Comic-Con International conven tion, a huge pop culture event held every year in San Diego. The Epic

Reward winner received a full-access pass that allowed him to cut all the lines and get all the autographs he wanted. He got so much swag that we had to ship it to him in a big box afterward. Weve had winners go to a NASCAR race and take a practicerun ride with Joey Logano, the driver GameStop sponsors. And one reward was a trip to Rome to visit the sites referenced in the game Assassins Creed. The idea is to give customers a chance at things they could never in a million years get enough points to achieve, and a lucky member lands

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One element of the customer profile is the Game Library, which is divided into three sections: I Have, I Had, and I Want. Weve found that players love to show off how many games they have, and knowing what they love to show off, we can tell them about other games that they would also enjoy.
such a prize every month. Any good program always features some type of emotional appeal that you just cant quantify by calculating how many points it takes to get a $5 coupon. The dream value of the Epic Reward Giveaways inspires an amazing number of emails to usand of course this element will continue to be an important part of our external communication for the program. Going in circles The program has also succeeded in helping us immensely as far as learning more about our customers. Our home page on PowerUpRewards.com serves as the member dashboard a complete profile that members maintain to, in essence, completely run and customize their experience with the program. One element of the profile is the Game Library, which is divided into three sections: I Have, I Had, and I Want. Members post a list of all the games they own, whether or not theyve bought them at GameStop, and we reward them with up to 500 points for activating their PowerUp membership online, completing their profile and estab lishing their Game Library. Weve found that players love to show off how many games they have and knowing what they love to show off, we can tell them about other games that they would also enjoy. who have listed the game as an I Want. Think of I Want as a wish list that you could publish to your grandmother, your friends or whoever might buy you games as gifts. When members share their I Want lists, it also links directly to GameStop.com, where members also earn points for purchases there. The next circle employs an algo rithmic model that makes recom mendations for games similar to those in the customers profiles. Anybody who bought Grand Theft Auto, for example, would be a natural candidate for Red Dead Redemption. We employ other ways of tailoring the experience, as well. For example, we deliver birthday bonuses based on player value and what we see about player behavior. Power to the program Some of our learnings from the launch of PowerUp Rewards may give your total loyalty game a boost in leveling up. Might we suggest:

in-store spikesthe lines we talked about at the beginning of this article. Offering member pre-sales events on off-hours, or offering bonus points for early trade-in of previous games helps us smooth out the sales cycle. Make it personal. Employee engagement is critical to PowerUp Rewards. Employees helped test the program, and are free to join the program and even are eligible to win Epic Rewards. This deep knowledge of the program is combined with POS and kiosk access to members purchase history, so the employees can make recommendations for further purchases, and even offer tips for playing the games their customers currently own. Track the passion. GameStop has deployed a quarterly tracker measuring program awareness, level of understanding of program benefits, customer perception of key benefits, and engagement levels in addition to the transaction lift that PowerUp Rewards is clearly delivering. Were learning which communication channels and what frequency of communication our customers prefer. Were doing the research. Thats the key to success: Spend the time. Narrow the focus. Ask customers what they want. Make customers feel more than special. This point is probably the most important, and weve kept it front and center. Make your program unique to your customers, and tap into their passions. We want customers to shout, My gamer geek dreams are going to come true!
For GameStop, Jenn McMillen is the Director of Customer Loyalty and CRM, and Mike Hogan is Senior Vice President and Chief Marketing Officer. They also share the title of CGD (Chief Geek Dreamer).

Work strategically with your partners. When one of our publishers launches a title, we discuss the publishers business objectives and the consumer segments that are likely most profitable for that pub lisher. Our goal to ourselves and our goal for the publishers is for any given title launch, we can find the 5-10% of consumers who are going to purchase 60-70% of that game, with relevant communications and With this information, we now mar - incentives. ket new games in a series of concentric circles. In the absolute bulls-eye, Tailor your program to other we can target anybody who bought business challenges. For example, a prior version of the game and those when new hot games release, we see

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S T R AT E G Y R E P O R T

HHonored Guests
How Hilton is recalibrating the power of the loyalty program to stay close to the customer
BY JEFF DISKIN IN TODAYS MARKETPLACE, where customers have so many different ways of communicating and accessing information, where theyre inundated with marketing messages from the world at large, our approach at Hilton Worldwide has been to recalibrate what it means to be part of a loyalty program. Our success has come through our efforts to stay as close as possible to customers, and our philosophy rests on a simple formula: If youre delivering value to your customers, they will deliver value to you. Todays challenging market has focused the consumer on not leaving any bits of value uncovered. That value can be in their earning potential, in the rates they pay, or the speed of service and interactions efficiency is certainly something that customers value.

when our guests raise their hands, sign up with us, and share information. Through a variety of communications streams, our guests can let us know if theyre interested in, for example, family programs, geographical destinations, meeting planning, adventure destinations, and so on. We can then establish proactive outbound communications catering to those interests and provide incentives and rewards for the customers patronage. Tracking guest responses and activity makes us smarter and more relevant in our ongoing communications with them. The iterative research and analysis includes postmortems on promotional activities, to learn who saw the promotion, where they saw it, and how they responded allowing us to continually refine our approach. In other words, Hilton operates in a continual test-andlearn environment. To build your 360 view of the customer, consider these strategies: Ask directly about preferences. Through the Hilton HHonors MyWay program, we put our guests in control of that information. Guests can update profiles to indicate destinations about which they would like to receive information regarding things to do, special promotions, or hotel openingsfrom international locations from Europe to Australia, and U.S. regions from the MidAtlantic to the Northwest. And they

can tell us what types of vacation/ leisure activities they enjoy, from beaches to dining to skiing to theatre/shows. We ask their room preferencesbed size, floor preference, proximity to the elevator, for instanceand then take it a step further, to determine which of those room preferences takes top priority. That kind of information-gathering may eventually evolve into such capabilities as personalizing inroom entertainment, so that when a guest checks into a room and turns on the TV, it will display their personal list of favorite TV channelsno matter where they stay in our system. Such information is supplemented by more general research. In our everyday operations, we engage in guest-satisfaction surveys and collect feedback from our HHonors members and most-frequent guests. And we routinely host some of our best customers for cocktails or dinners so that we can just sit down and talk to them. Supplement direct answers with inferred answers. Some of the data we collect enables action based not only on direct input from the customer, but also on inferences about the sorts of things we might want to make available to them. So we may, for example, infer that someone may be receptive to spa visits, which would enable us to offer incentives to visit some of our spas or to share information with them about the best time to go if theyre looking for a great deal on that type of vacation. Consolidate information into the 360 view. Just a few short years ago, Hilton Worldwide was two different companies operating independently under the Hilton name. Of course, we didnt have the same tools in place at both companies, and when we came together, we didnt have the kind of aggregate customer information that we would have liked. Since then, we have invested in those tools, so that we now have a single-source

This flow and communication of value to and from the customer depends on information, so we strive to be as data-driven as possible. Our focus on developing a robust data-driven approach has brought extraordinary success to the HHonors program. In what has been a very challenging year for the hospitality industry overall, we have enjoyed the highest levels of engagement, enrollment and promotion response that weve had in more than 20 years of operating the program. Customer engagement at Hilton is based on an iterative cycle that begins

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customer database, tracking more customers, and with a greater history of information on each customer. As well, the customer histories contain more consistent information, resulting from concentrating on aligning and refining our metrics and research. Extend the 360 view in concentric circles. Once youve established that sort of repository of information, deliver the 360 view to all who can use it. Hilton concentrates on building highways, if you will, between customer information and insight and the various customer touch points. One touch point, for instance, is the web. When customers sign on to our website, we know who they are and their past history with us. We can show them their past stays, help them make a quick reservation at the same hotel, and show them destinations they have visited or have searched for.

HHoning the Message

The Hilton HHonors relaunch of its global brand identity seeks to change how the world thinks about loyalty programs. Our goal is to shift the conversation from points to possibilities; from being just about rewards to really honoring our customers; from being just about functionality to the human, more emotional and experiential side of travel. The new message: Hilton HHonors, a World of Experiences Worth Sharing.

of hotels. The group of people who develop, build and own hotels under the various Hilton banners is obviously a much smaller audience for us to reach, but theyre a key part of our engagement strategy. We work closely with owners to share Such message touch points must the results of our customer research extend to personal interactions. For through the individual hotel organiinstance, when customers arrive in zations. For example, fifteen-hundred the hotel or call to make a reservation, owners joined us recently for an associates have access to the 360 ownership conference in which we view, which allows them to message shared results of our customer-based guests appropriately. The associates research and how the research affects might alert guests if, say, theyre the evolution of our products. That one stay away from achieving the information gets layered back in next level in the HHonors loyalty weekly communications delivered program, or thanking them for from our brands. surpassing that level, or telling them that their room has been We also invite select customers to upgraded based on their status. participate in ownership meetings or You must focus intently on the to talk to a gathering of general manend-to-end experience, insuring, agers, which is another important way as in our case, that it means of connecting our traveling customers something to be an HHonors member to our owners. We continually share at every single touch-point in our new information with the owners network. and help to reinforce what we are trying to deliver, from a pro Information-sharing of course grammatic perspectiveinformation extends to the macro level, as well. grounded in strong research about Our business success is not only what our customers like and want. measured by how effectively we drive Much of what weve developed in people to stay in our hotels, but is also the last few years has allowed us to predicated on growing our number deliver more value both for the

travelers who are staying in our hotels and for the people who own and build them. And we are happy to be sitting right in the middle of that. Get social. Were of course very active in the social media space. In addition to simply being active on Facebook and Twitter, we monitor comments about our individual brands and individual hotels. Owners and managers at the hotel level have anytime access to an online dashboard report recapping the specific buzz and other communications in social media, allowing them to proactively reach out to those customers, sometimes even during a guests stay with us. Use the information judiciously, and wisely. We have so much more knowledge, tools, power and con nection than weve ever had before, and its a great time to be in our particular part of the business. At the same time, the immediacy and wide reach of todays technology requires companies to be accountable and authentic and to really stand for something, which we think is an overwhelmingly positive devel opment. My personal sense and belief is that all the advances in

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technology and social media are just additional ways for people to communicate with each other and have dialogue. Its critical to realize that the great amount of actionable data thats collected must be used sensibly, judiciously, and to consumer benefit. For example, we employ a guestreviews process in which customers provide feedback directly to the hotel shortly after their stay. This enables us to quickly resolve problems that guests did not share with us while they were on property, which regains guest trust and confidence in us and better ensures that they will come back to us on their next trip.

The Middle (Global) Ground

Continued from page 10

marketers can run with customerlevel insight gathered from their loyalty programs at the start. And during their programs initial growth period, companies can build their platforms knowing that they will be able to fully compete in the marketplace in just a few years.

The voice of loyalty marketing since 1990

Managing Partner: Kelly Hlavinka Partner: Jim Sullivan Senior Editor: Phaedra Hise Managing Editor: Bill Brohaugh Online Editor: Josh Milner Market Alert Editor: Joan Deno Research Coordinator: Wardah Malik Contributing Editors: Dennis Armbruster,

4. Consumers have pent-up expectations about how they want to be treated through rewards. The emerging middle class may be new to rewards, but they have the same expectation of being rewarded as customers in developed nations. They want the status symbols that come Hilton Worldwide has experienced along with a program, such as a loyalty card. Theyre also hungry for commudouble-digit growth in our share of occupancy and number of room nication and dialogue, far more so nights from HHonors members. And than their developed nation counterenrollment in this 25-year-old pro - parts, who struggle with privacy gram is up more than 15% over last issues. Consumers frustration with year. The registration and activation the existing loyalty programs in their countries relates to the programs rate of our promotional programs has virtually doubled. This indicates slow earn velocity. By the programs both a marketplace in which con - nature, they never seem to reward and may feature a redemption rate as sumers are hungry for value and the extent to which our process for low as 10%. A coalition program delivering promotions, programs, could solve that problem by presenting options that appeal to everyone, relevance, dialogue and value has not just premium customers. improved. Its exciting to think that weve probably taken the possibilities of loyalty marketing only about 25-30% as far as they can go. But even at that level, we feel were pretty far ahead of where many other competitors are, in terms of having that close access to and relationship with the customer. The fight for the hearts and minds of travelers and customers is going to be as strong as ever in the coming year, and engaging in that fight with relevance and differentiation will be to the ultimate benefit of the travelers themselves. Were excited about whats to come.
Jeff Diskin is Senior Vice President Global Customer Marketing, Hilton Worldwide.

John Bartold, Colleen Becker, Stephanie Cohen, Guy Dilger, Sharon M. Goldman, Bruce Kerr, Aline Ostrowski, Dan Ribolzi, Richard Schenker, Fred Thompson, Sol Zia Marketing Assistant: Nicole Lorenz
COLLOQUY Editorial Board:

Tom Collinger, Chairman, Integrated Marketing Communications Dept., Associate Dean, Medill School at Northwestern University Stephanie LoyaltyOneCoyles, Chief Strategy Officer, Dan Finkelman, SVP, Chief Marketing Officer, Retail Services Alliance Data Garret Ippolito, Vice President Global Accounts, MasterCard Worldwide Key Kyle Murray, the Retailing andDirector ofProf.School of Associate of Marketing, University of Alberta Bryan Pearson, President, LoyaltyOne Randy Petersen, Chairman and President, InsideFlyer Magazine Aubyn Thomas, Head of Marketing, Analytics andCRM, Database Loyalty, Luxottica Retail Mark Vandenbosch, Prof. of Marketing, Richard Ivey School of Business, University of Western Ontario 4445 Lake Forest Drive, Suite 200 Cincinnati, Ohio 45242 Telephone/Fax: +1.513.248.9184 Email: info@colloquy.com www.colloquy.com
COLLOQUY a global provider of loyalty strategy and programs, customer analytics and relationship marketing services. Its roster includes: the AIR MILES Reward Program, North Americas premier coalition loyalty program; Direct Antidote, a direct-marketing agency specializing in datadriven campaigns to inspire customer loyalty; Precima, a consulting and analytical services firm that uses shopper insights to boost retail performance; LoyaltyOne Consulting, a global loyalty advisor to Fortune 1000 companies; and Dotz, Brazils largest coalition loyalty program with more than 3 million users and 50 sponsors. Toronto-based LoyaltyOne is an Alliance Data company. For more than 30 years, Alliance Data has helped its clients build more profitable, more loyal relationships with their customers. For more information, visit www.loyalty.com.

Implementing loyalty programs that work in developing markets will be no small feat, because the funda mental constructthe design and the executionmust be just right. But for the marketers that get it right whether through a coalition, a partnership or a solo modelthe payoff will be huge. Consumers in the emerging middle class are ready for a program that meets their rewards expectations and treats them like equals. In return, marketers around the globe will have the opportunity to capture the loyalty of a market that, for the foreseeable future, appears unstoppable.
COLLOQUY Contributing Editor Stephanie Coyles is Senior Vice-President and Chief Strategy Officer of LoyaltyOne.

COLLOQUY is a trademark of Alliance Data Systems Corporation used under license by LoyaltyOne, Inc., an Alliance Data company. Issue 2011, LoyaltyOne, Inc. All rights reserved. Permission to reprint may be granted upon specific request.

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Timely. Opinionated. Essential.

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END NOTES

on my wayexcept I didnt leave just then. I asked the store manager why they were treating me so well. She laughed and explained that, while they cant replace every broken device tossed at them, they have discretion to take actions to satisfy customers. Very likely, they knew I was a loyal, high-value iNut. I also own an iPod, an iPad, a Mac mini, and a Macbook Pro notebook. Thats it. I thinkthe Apple tech at the genius bar can confirm that, because the fullness of my account information told him all he needed to know to simply replace rather than repair the device. Apple is practicing what we at COLLOQUY call Enterprise Loyalty, using cus tomer data to integrate marketing, merchandising and pricing decisions across channels to deliver a superior experience. Because they love me.

What can loyalty programs, which are pure services performed in conjunction with your best customers, learn from the love lessons Apple employs? Insights: Best customers want you to make the first move, caring enough to take the time and the care to know who they are and what they do and dont like, and to respond appropriately and considerately. Use that treasure trove of loyalty data to inform all actions to support your beloved customers and let them know you care. Involvement: No one feels loved in a one-way relationship. If your only conversation with customers is telling them what you want them to do for you, a painful break-up surely looms. Its a partnership so shut up, open up, and bring

What the World Needs Now

An advisory love letter to marketers
BY JIM SULLIVAN WHEN I DROPPED MY IPHONE recently,

with a cracked screen the only damage, I went online and scheduled a consultation at the genius bar at a local Apple Store for later that day. Now, its a confident retailer that calls its front-line customer-service agents geniuses, and wants them to interact with customers face-to-face so everyone can see if they are or arent. Geniuses, that is. More than simply a confident retailer, however, its a retailer that loves its customers. Love? you ask, In business? Its just not a proper business topic. Too warm and fuzzy for most corporate types. Its too bad businesspeople are so uncomfortable talking about the L word, because otherwise we might be able to see that many barriers to customer loyalty stem from a lack of it. I encountered no such barriers in the Apple Store, where Id expected to hand over my iPhone to a lengthy and expensive repair despite the fact that it still worked fine. The tech nician behind the genius bar studied the out-of-warranty device, glanced at my account info on his hi-def flat-screen, smiled at me and said, Mr. Sullivan, lets just replace this one and get you on your way. No charge. As simple as that. Almost as quickly, he transferred data from the cracked iPhone to the new one and sent me

If your only conversation with customers is telling them what you want them to do for you, a painful break-up surely looms. Its a partnershipso shut up, open up, and bring your best customers in to share how they want to be treated.
When I speak of love in a business context, I mean cheerful service to others. One fascinating aspect of the service brand experience is that it rests on intangible and often emotional factors. Cues, clues, and their influence on our senses often determine the final consumer perception of quality as much or more than the tangible aspects of the delivered service. Also interesting is that the provider and the consumer of services must work together for the service to be delivered. The relationship, and the way it makes the customer feel, are of central importance to the overall experience. Talk about warm and fuzzy. For brands in the service economy, customer loyalty and future profitable revenue growth demand that we pay attention to customer motivations that are more elusive, yet perhaps more powerful, than mere satisfaction of feature-function-value for basic goods. your best customers in to share how they want to be treated. Let them in on your plans and dreams. Maybe theyd be more loyal if they felt a degree of ownership of your new ideas and innovations. Speaking of which Innovation: Woody Allen famously said in the movie Annie Hall, A relationship, I think, is like a shark. You know? It has to constantly move forward or it dies. And I think what we got on our hands is a dead shark. Keep propelling your program forward. New ideas keep interest alive and prevent your loyal customers from looking for more excitement elsewhere. Thats what the business world needs now, as underscored by my recent lovefest at the Apple Store. Loyal before, and an advocate after.
COLLOQUY Partner Jim Sullivan loves his job. It loves him back.

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We know customers from head to toe.

At LoyaltyOne, we know that the key to building businesses is understanding how to protably change customer behavior. We lead enterprise loyalty with unmatched capabilities in loyalty strategy & programs, customer analytics and relationship marketing. Plus, our multi-industry experience means we can develop solutions that are specic to your business needs. Whether you sell footwear, groceries or something else entirely, LoyaltyOne delivers results. Discover what LoyaltyOne can do for your business. loyalty.com

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