With March Madness about to launch into full swing, you might be dusting off your list of favorite sports bars. In South Florida, there are a lot to choose from, but there is only one that combines good vibes, good food and a decent rewards program – Duffy’s Sport Grill. If you aren’t familiar with the area, Duffy’s is operates a 20 store chain between Melbourne and Plantation on the Southeast Florida coast.  I believe the firm to be privately held and have noticed their expansion in my area through assumption of real estate from Roadhouse Grill as that chain exited locations.

The program is simple to understand, encourages repeat visits and sports an email based communications stream that provides just enough information without being intrusive. They’ve even got a decent Twitter account which seems to be following people back (the exception for many business twits) and posts about more than just their daily special.

The Club MVP program was comfortably explained by well trained staff. Enrollment consisted of completing a simple post card size form while I waited to wrap up our tab.  Name, email address, zip code and birthday were the required data to get started.I wonder if they use the zip code to manage communications – South Florida is a tourist market and maybe they tailor offers for locals and visitors.

The program awards 1 point for every dollar spent and automatically credits $10 to the member card once accumulating 100 points. Points never expire and the 10% back is nothing to sneeze at. Members can earn double points every Tuesday and those who visit 12 times in a 12 month period receive a $25 credit on their birthday.

The communications via email over the first 30 days were on target and well paced:

• After enrolling, I received a Welcome to the Club MVP program message highlighting special offers and links to get more information
• Day 4 – I received “Ways to Save Big at Duffy’s” which informed me of mid-afternoon specials at 40% off
• Day 8 – Since we were nearing the holiday season, I received an email inviting me to ” Book your company’s holiday party and keep the MVP points yourself!”
• Day 18 – Another special was highlighted having to do with Game Day Deals (food and drink specials)
• Day 30 – More Game Day Deals were touted prior to the weekend

Following this first salvo of email, they’ve been judiciously letting me know about seasonal events, gift card specials (buy $100 gift card and earn $20 bonus)  and other special offers 2-3 x per month. I can’t say that they have offered anything of a personalized nature but since they haven’t tried a survey, that stands to reason. I also haven’t noticed any email triggered by a visit or items ordered – something to consider for the future.

One competitor on the local scene is Flanigan’s, renowned to have the best ribs in town. For years the stores in our area have been offering paper based punch cards, which in my opinion are completely worthless. There is a temporary feeling of earning something when you receive the card from the wait staff, but inevitably the card is lost along with the value.

The Flanigan’s chain has fragmented ownership and just recently I saw the group that owns the Quarterdeck (near the beach and Port Everglades) going “Duffy’s style” with a plastic card that allows value to be accumulated.  Let’s see how that one works out.

The lesson learned is simple: just like cash back can be turned from a transparent reward that offers limited leverage into something more powerful with partner offers, a few tweaks to the traditional punch card used by many small – medium businesses can be made to create a loyalty program that matters.

Online retailers have a uniquely difficult challenge in building relationships and creating customer loyalty. Without a store-front to rely upon, most online retailers lead with product selection and price to attract first time buyers.

This leaves many to rely on ad words and keyword search as their only acquisition funnel. Generating repeat business, building trusted relationships, and retaining valuable customers? Those three goals can become esoteric concepts to the marketing department as they  continually focus resources on acquisition for fear of muffling the principal sales driver that works.

The first wave of internet business placed the hurdle for marketing very low. Building traffic and gathering eyeballs was all that mattered and it seemed that selling this portfolio of traffic was more the goal than creating a business model on fundamental business principles.

Web 2.0 is different. The online stores that are working operate like a traditional retailer in the sense that they have to provide product choice, quality, and good service as a minimum to succeed. The business models adopted are generally sound and the achilles heel for those single channel, pure online, retailers remains price. Price as in LOW price.

Hammer Nutrition is one pure online retailer that caught my eye. The company caters to a well defined passionate customer group, endurance athletes. But they are not allowed the privilege to compete in a vacuum as many of their supplement and fueling products (electrolyte drinks, energy bars, joint formulas) are sold by larger, heavily branded, and more widely marketed companies from GNC to Power Bar (owned by Nestle) and Clif Bar (distributed through major grocery chains, Costco, and specialty shops).

How does Hammer Nutrition compete? It stays true to the values of its founder, Brian Frank. Brian grew up in California in a progressively-minded household and caught the action sport bug early on, riding bikes, skateboards, swimming, and racing BMX and motocross bikes to the point where he won Montana State Motocross Championships in the late 90’s. Frustrated by the sparsity of quality, naturally formulated products to meet the needs of endurance athletes, he founded Hammer Nutrition during the 80’s.

His mantra from those days has survived the passage of time:  Deliver naturally formulated quality products and cement customers for life with product knowledge and trust.

A little guerrilla marketing was at the core of the Hammer strategy: provide “Race Bags” at events around the country as a cost effective way to meet the core audience for Hammer products at their moment of highest interest. If you’ve participated in any organized athletic event from a local 5K walk to an Ironman, one of the “bennies” received for your entry fee is the race day bag. The bag itself carries branding on the outside and is kind of like the athlete’s version of an Easter basket – lots of product samples and surprises inside. When I spoke with Brian a few months ago, he told me that the program now distributes over 750,000 bags across 2,200 events in North America. That’s some powerful grass roots marketing – Word of Mouth advertising at its best before the term was coined.

The impressive part of the marketing strategy at Hammer Nutrition is its constant flow of educational and product information materials, part of an overall communication stream designed to build engagement and increase customer retention. A first order will usually trigger sending of the “Little Red Book” (product descriptions and usage instructions) and a “Welcome to the Family” letter signed by Brian Frank or one of his guru partners Steve Born or Dr. William Misner.

Triggered by an array of qualifying metrics, new customers receive monthly product-focused brochures, quarterly Endurance News magazines with articles highlighting athletes of all types who have competed successfully using Hammer products, and reminder post cards with previous orders outlined to facilitate easy reorder. Invitation to join the Autoship program is packed with benefits and discounts and the Referral program has a dual benefit feature where both existing and new customer earn a discount.

An open call to any athlete to use Hammer products is made via the HammerBuck$ program which challenges customers to “Turn race day into Payday”. Over $36,000 in cash and credit was awarded to 36 winners during 2009. The program is simple, race in Hammer gear, place highly in your race, and win some cash or credits for future purchase. Talk about crowdsourcing, just think about motivating gobs of your best customers who fit your ideal profile to wear your logo on race day and give it their all to stand on the podium at the end of the day!

Granted that I may have lost some of you who hate to run, or for whom the idea of an open water swim, adventure race or ultra-marathon is greeted with a wry smile while muttering “they’re nuts!”

Look past the issue of endurance sports and you will see a sophisticated, if not home grown, communication stream that delivers on the company’s brand promise while driving business goals. There are lots of good lessons for any pure online retailer to take away from a visit to the Hammer Nutrition web site.

Will MyTeamUSA  (U-S-A! U-S-A!) attract loyal Olympics fans?

Does anyone remember the launch of the Discover Card? When introduced in 1985 as “the card that pays you back”, it really felt different from Visa and MasterCard. Forget the card’s super high interest rate—I was getting cash back on every purchase!

Times change and now the cash back bonus doesn’t feel quite so special, but an outfit called My Fan Rewards is putting a fresh spin on it. They’ve teamed with the U.S. Olympic Committee to launch a program called MyTeamUSA Rewards.

The program works like this: When you shop through MyTeamUSARewards.com, using any credit card, you not only earn cash back from the retailer—a like amount is given to support U.S. Olympic athletes. For example, shop at the Nike Store and you’ll earn 4% cash back, while 4% of your purchase is matched and handed over to the USA Olympic team.

The program is free and feels like a good way to tap into the emotions surrounding the country’s Olympics love fest. But the real test is coming: keeping fans interested in the MyTeamUSA program now that the Olympic torch at the Vancouver Winter games has been put out.

My take: a solid, targeted emotion-based communications program could do the trick. The key will be in getting program participants juiced not about the Olympics that just passed, but for the next Olympic games to come. (2012 in London, in case you were wondering.)

On a side note, My Fan Rewards is rumored to be expanding into the pro sports market next. It’s not a bad idea, as professional sports teams showing fans a little return love could help ease the grumbling about ever-increasing ticket prices.  (Of course, let’s hope the cash rebates will be a one-way affair, and go straight into the pocket of the consumer!)

Tom Rapsas is a 20 year direct and loyalty marketing veteran and heads up Creative Services at Hanifin Loyalty. He can be reached on Twitter @tomrapsas

My Dad taught me the value of money. Cash is King and all that.

A dollar is a dollar, that can’t be denied. And, those dollars are increasingly hard to come by with the demands of business pressing harder on most over the past two years.

With my mind on cash and flipping through the latest issue of Costco Connection at home the other day, I couldn’t miss the half page announcement that at Costco, February is REWARD TIME. For holders of the  True Earnings Card® from American Express and Costco, shoppers can earn 1% on all Costco purchases and up to 3% back on other purchases including travel, dining out, and gasoline purchased at the Costco store. Business cardholders enjoy a similar offer, topping out at 4% for gas purchases.

Rewards accumulate all year long and, just as folks are thinking of flowers in the spring, the annual disbursement of rewards checks is made each February. The certificates are able to be used for in-store purchases only and expire in about 6 months on August 31.

Costco, in their partnership with American Express, reinforces that a dollar is in fact a dollar. But does it have to be so?

The Costco cash back rewards model has weakness on two levels. First, with consumers interested ever more in redeeming early and often, are they willing to wait one entire year to enjoy their rewards? Actually, the real question is not if they are willing, but if they will consistently alter shopping behavior over this extended period of time. Second, the once a year model is less likely to encourage an extra shopping trip to Costco as it becomes a way to make a regular trip “cheaper” when the coupon is redeemed.

Can Costco do better? You only have to look at far as Target and Tescos to find an answer.

Tescos is the undisputed king of grocery loyalty and may be the undisputed heavyweight champ of leveraging the customer data it collects to drive value for customers and results for the business. Tescos Clubcard is based on cash back rewards, but manages to  turns a dollar (Pound Sterling) into two as it offers Tesco Clubcard holders double the value of their vouchers when applied to purchase of a range of popular items in-stores and online. They even have a nifty rewards calculator to help customers build excitement.

Even before the latest announcement, customers could spend their Clubcard vouchers at face value in-store and online or increase the value up to four times by selecting rewards offered by Tesco Clubcard partners including restaurants and entertainment venues.

Target announced they are testing new offer combinations with their private label and cobranded credit cards. Instead of the usual “10% off today’s purchase” incentive to take a store charge card, Target is testing everyday rebates between 3-5%  on all store purchases made with the card.  To me this means they are testing incentives to drive repeat purchase and retention rather than simply acquisition.

While it is not different in structure from the Costco program and there is no leverage on specific items purchased like Tescos offers its members, the test does create an incentive to increase visit frequency and the rebate is higher than the industry norm.

Focus group members may have spoken that “cash back is king” for years, but a closer look reveals that the pure model doesn’t breed stickiness to the brand.

Target is experimenting with changes and Tesco has already shared a partial answer key to the test faced by all retailers – how to keep customers coming back for more.

A small firestorm over the efficacy of Loyalty Marketing programs broke out over this past weekend thanks in large part to an article written by Joanne Kaufman for the Wall Street Journal.

Ms. Kaufman recounts a telling tale of how her own household purchase behavior adapted to take advantage of rewards programs from Duane Reade to Starbucks to the local pizzeria and shoe store, only to be thoroughly disillusioned by an in-store experience at Duane Reade.

It seems that her son was shopping at the store and had his rewards card rejected with a less than satisfactory explanation from the cashier that Duane Reade was in a “blackout” period prior to launching a new and improved customer loyalty program. According to Ms. Kaufman, worse than the blackout message was the discovery that points previously earned in Duane Reade’s Dollar Rewards™ program would not be honored in the new program.

There are several lessons to be learned here and a few questions raised as well.

First, some background: On Jan. 15, Duane Reade announced it was launching FlexRewards™, a replacement program to Dollar Rewards™, the Company’s previous customer rewards program. The new program was to be in effect on Jan. 16. On Feb. 17, Walgreens announced that it was acquiring Duane Reade, the largest drug store chain in New York City.

The Questions:

1. What influenced the timing of Duane Reade’s launch of a new program when they were (presumably) deep into the final negotiations of the sale?
2. Regardless of the answer to #1, how could someone within Duane Reade, a company recently complimented for its customer facing marketing efforts, have been lulled into allowing the “your old points don’t count” feature to come into play? Have a look at the message on the graphic here “The old card works (just not in our store). I clicked everywhere I could on the program website and could not find an explanation for this disconcerting message.
3. Could Duane Reade have found a better way to communicate the program transition to its members? Why, oh why, does business place the burden of communications on cashiers at the point of sale? It’s an unfair burden on the position with highest turnover in the store and one that does not serve the corporation well.
4. Walgreens has a lightly advertised rewards program “Walgreens Rewards“. Will they do away with this program or will they launch something that allows consumers to earn and accumulate points at any Walgreens-owned property?

Some answers are easier to guess at than others.

The announcement by Walgreens regarding Duane Reade mentioned specifically that it would allow the chain to continue to operate under its own name. That said, launching an upgraded program might have seemed business as usual to Duane Reade marketers. Needless to say, there needs to be some damage control from Duane Reade as an operational faux pas of this nature intensifies consumer ire towards consumer rewards programs.

The most interesting question to speculate about has to do with the future of the Walgreens customer strategy.

The current program “Walgreens Rewards” offers rewards on specified products purchased using a Walgreens Card®. The value proposition does not seem clear or particularly strong and there are many product restrictions which limit earning power for members. One strong program feature is the ability to pass the Walgreens Card at the point-of-sale and instantly be credited for rewards.

As far the new Duane Reade program itself, it seems that the earning power from its predecessor has been reduced. The current offer is for customers to spend $250 to receive a $5 cash back offer. This equates to a 2% earn rate, less than the 5% offered by the previous plan according to the WSJ.

FlexRewards™ offers members lower prices on many items and rewards that can be spent on the spot at point-of-sale or can be saved up for larger rewards. Clumsy paper coupons which could be easily lost by consumers have been traded in for electronic points tracking online. Points issued never expire provided a purchase is made every 26 weeks, a generous definition of an “active” customer in the pharmacy space to be sure.

According to Joe Jackman, Acting Chief Marketing Officer, Duane Reade “customers had spoken and wanted more easily attainable rewards”, adding “half of customers in our old program didn’t even redeem their reward coupons because there were too many restrictions”.

It certainly seems that the strategy cooked up by Duane Reade is headed in the right direction and had increased customer engagement as a key objective. The company even introduced a new “Super Saver” tier to reward higher spending customers at a faster pace and with more flexible rewards.

Contrast the two programs at Walgreens and Duane Reade and you should not be surprised to see either the Duane Reade program extended (in structure if not by name) to include Walgreens stores or some new program from Walgreens that would at least improve upon the current offer. The more inclusive, the better as customers will respond well to a program that allows points accumulation at both Duane Reade and Walgreens stores.

Lessons:

1. Execution nearly trumps strategy these days.  My old boss, Pat LaPointe, coined the phrase “Technology enables, but imagination wins”. Based on what clients are telling me today, I have modified the mantra this way: “Technology enables, imagination wins, but flawless execution will save your job!”.

2. Expectations for Customer Communication are higher than ever. Consumers have access to more information than ever and expect clear, transparent messaging. Anything less sets you up for what Ms. Kaufman called “Loyalty Betrayal”.

3. Staff training and incentives will trigger better program results. Turnover at the point-of-sale is difficult to control but an effort can be made to provide front line personnel with sales aids, inexpensive “take-me’s” and similar POS material to make the job easier for overburdened staff. Offering incentives for those that learn and deliver the message would help also.

Just a few months ago, on these very Loyalty Truth pages, I gave kudos to Caesars Atlantic City and its Total Rewards loyalty program.

During some trying times for the economy in general, and Atlantic City in particular, Caesars AC was making some smart moves to get its loyalty program members back to the casino.

Last week, Caesars AC got my attention again. But not in a good way. You see, they ran a rather bizarre full-page ad in the Sunday NYTimes magazine.

Let’s start with the image in the ad: a well-dressed 30-something guy has a pretty woman to his right. She has one hand on his shoulder and another wrapped tightly around his arm. It looks like they’re at a show. Okay so far, except our guy seems more interested in another woman to his left. He has his lips to her ear and her extended arm appears to be resting on his thigh.

Under the headline “The Life You Were Meant to Live“, the stilted copy reads:

Who is that in Section A, Row 1, Seat 5, having the time of your life? That’s Todd. Flanked by your fiery vixens. Paying no attention to your favorite band on stage. But give credit where it’s due. Todd is an escape artist. And when it’s time for a getaway, he get it’s right.

What!?!

Putting aside the confusing use of the possessive “your”, who are the fiery vixens with Todd? Am I supposed to pretend I’m Todd…on some kind of a three-way tryst? Is this what they mean by “he gets it right?” More importantly, did Caesars’ market research show the ménage a trois market to be a growing demographic?

Personally, I can only think of one word for the ad – Stupid.

Instead of creating a scenario that the largely upscale readership of the NYTimes magazine might be able to imagine themselves in, they’ve come up with a fictional character in a contrived situation that’s a non-starter for anyone not in the “swinger” category.

It of course begs the question, what were they thinking? The only thing I can come up with is that Caesars AC is trying to out Vegas-Vegas.

Sorry Caesars, as much as I like you and your loyalty program, you’re no Vegas. And there are better ways to spend your precious marketing dollars.

Tom Rapsas is a 20 year direct and loyalty marketing veteran and heads up Creative Services at Hanifin Loyalty.  He can be reached on Twitter @tomrapsas

Editors Note: Jim Kuschill is a patient man. Patient enough to have architected one of the world’s leading loyalty marketing software platforms while Chief Technology Officer of Frequency Marketing. DIRECTV got his goat and the following is worth a read, especially if you’re the person responsible for customer experience or customer service at your company.

I don’t know when the customer experience scales tipped, but indeed they have – DIRECTV can now claim to be just as lacking as your typical cable company.

My enlightenment started a few months ago…

As is the case with so many of us, my wife and I are pretty busy and we almost never remember pay per view (PPV). On this particular evening, I remembered PPV and even identified a movie that would be fun to watch. I queued it up and was looking forward to some comedy over the coming weekend, or maybe the weekend after.

In case you haven’t heard, the PPV model has changed and the (then) subtle notations on the ordering menu about the “new and improved” model were too subtle for me to comprehend. My movie recorded, my bill was debited, and my movie was erased.

I did some research and discovered this was certainly my fault. Flaming blog entries from a variety of people indicated that the change had taken place some time before. Never mind that there wasn’t anything with my billing statement explaining the change, nor an e-mail, nor a separate communication. It was as if DirecTV and the Studios didn’t want anybody to know about the change. How could it be that they wouldn’t want you to know that “pay per view” had become “pay per download?” Clearly the emphasis was now on “pay per” and viewing be damned.

I spent time wondering about “fair use” and what the Studios were thinking. How does a movie taking up space on somebody’s DVR lose them money? Do they expect thousands of recurring neighborhood parties for Battle of the Smithsonian? Maybe the movie gets tweeted around the world in 4 million little pieces? I just couldn’t figure it out.

I sent an e-mail of complaint to DirecTV and requested a credit to my bill. No response. I sent another. Still nothing. The $4.99 wasn’t worth a call, which sadly I suspect was the plan in not responding to the e-mail, so I simply bit my tongue.

But, I really did want to watch that movie, so I tried to order it again. The DirecTV system, being smarter than I am, decided that because I had already viewed that movie that I couldn’t really want to view it again. Well, that’s not quite correct, it said something was “wrong” and I needed to call them. Sorry, it just wasn’t worth it.

I vowed to never again use PPV – we simply couldn’t watch a movie within 24 hours of recording.

I have to imagine many people did just the same and sales tanked quite a bit. I have to imagine that DirecTV noticed, and trying to get viewers back they held a promotion in December offering 4 movies for the price of 2. Frankly, this was enough to get my attention and break my vow – which is usually a bad idea. But I had an ace up my sleeve and since the prior problem I had developed a Rube Goldberg way of recording the movies, so maybe I could beat the system, maybe just a little.

With the hustle of the holidays we forgot about the offer until the morning of December 30th, so we had to move fast so as not to impinge too much on all the football we wanted to watch. I scheduled 2 of the movies for the night of the 30th and the other 2 for the night of the 31st (making certain the last finished recording before the clock ticked over to the 1st). I got up early on the 31st, scheduled a few football games to record, and started my “transcription” process. Did the same thing on the 1st (with the parade this time). Mission accomplished – didn’t miss much of any football game and had 4 movies to watch sometime later for under $10. Such a deal. Well, almost. Turns out I had a media problem with one movie so we got 3 for $10, still not so bad.

Well, I just got my bill. The 2 movies I downloaded on the 30th show up as being downloaded on the 31st. And sadly, the 2 movies I downloaded on the 31st show up as being downloaded on the 1st. So no credit.

I immediately call DirecTV and quickly get through to Customer Service. Mickey confirms that his screens show the movies correctly being ordered/delivered on the 30th and 31st. I ask what seems to be a logical question, “Why does my bill show the 31st and the 1st?” Mickey has no answer. My next question is about the missing credit. Mickey has an answer for this – “DirecTV will mail you a certificate that you need to return.” Huh? “I’m sorry, can you say that again?” Mickey repeats his explanation – they are going to mail a certificate and I need to return it “with my payment.” I mention that I’m on an automatic payment plan, “How will that work?” I ask. Mickey doesn’t know. “Does the certificate come with the bill or will it be in a separate envelope?” Mickey doesn’t know. “When am I getting the certificate?” Mickey is happy he has an answer to this one – “Usually 4 to 6 weeks.” “Usually?” I inquire. “Well, yes, usually 4 to 6 weeks” say’s Mickey.

I ask Mickey if he doesn’t think this is pretty “customer unfriendly.” No response. I ask if I can make a complaint about the process. Mickey offers to forward an e-mail to the complaint department, but his heart isn’t in it. “Mickey, I understand this is not of your doing, but somebody there should really be thinking about this more from the customer perspective.” No comment from Mickey. I wish him a nice weekend and hang up.

DirecTV will pay for people to answer the phones because the bills are wrong. DirecTV will pay for people to answer the phones to explain that a certificate will come in the mail, sometime in the future. DirecTV will pay for the certificate stock. DirecTV will pay people to print and mail the certificates. DirecTV will make their customers spend time and money to return the certificates. DirecTV will pay people to answer calls about where the certificates are. DirecTV will pay people to open the envelopes that the certificates are in and post them to accounts. And, inevitably, when certificates are lost or damaged in distribution, lost or damaged in return, or credited to the wrong account, DirecTV will again pay for people to resolve these problems.

DirecTV could have given their customers a warm fuzzy by giving a direct credit. They could have described the process up front (in readable type) and then people could have made an informed decision. Nope. Somebody at DirecTV created an equation that said the promotion wouldn’t cost them as much by doing it this way. Clearly the equation didn’t take into account the loss of customer lifetime value.

As I said, DirecTV is now officially a cable company.

And so much for being a DirecTV advocate.

I need to do some consumer research. Do minor consumer revolts against good sense constitute a leading indicator of good times returning, or confirm that the economy is still struggling with frustration leading people to make irrational choices?

Whatever the answer, it seems a minor groundswell is taking place in the restaurant business with new chains opening that advocate consuming lots of calories in the form of “food to die for”.  A local eatery known as Heart Stoppers Sports Grill has attracted quite a following for its “Chili Chest Pain Fries“, “Heart Stopper 3 lb. Killer” burger and “Heart Dogs“. I guess waitress’ dressed as nurses with fishnets aren’t hurting business either.

Heart Stoppers attracted more than my attention as the Fort Lauderdale Sun Sentinel reported today that the Heart Attack Grill, an Arizona chain claiming to have ownership of  “Taste Worth Dying For” and all other things related to pumping out “fat food”  is asking Heart Stoppers to cease and desist the operation of its business model.

Heart Attack Grill touts its own brand of greasy aspirations including an array of “Bypass Burgers” and “Flatliner Fries”. If you visit their website, you’ll notice that the burgers are complemented by “No filter” Lucky Strike cigarettes and Jolt Cola. I have to wonder if both of those brands are comfortable with being thrown into the “bad health” food bin, but maybe I just think too much.

I scoured both web sites for any signs of rewards programs but didn’t see even a punch card or similar offers. One thing I did see is that the Heart Attack Grill promises that if you’re over 350 lbs., you eat for free. Apparently Heart Stoppers makes the same offer, one of many alleged copycat violations in the litigation between the two companies.

In direct marketing-speak, does this translate to an aspirational loyalty program tightly focused on a target market? Or, is crossing the threshold of 350 like being crowned a Platinum cardholder with your new tier offering soft benefits (perks) that others can’t have? I’ll leave it to you to sort out that debate. Meanwhile, I’m just worried that customers aspiring to reach the magic number that qualifies them for free food may not fare well thereafter!

I know we’re all “dying” to build customer loyalty and that many consumers are “dying” to earn enough points for that big freebie, but watching those that attain the highest tier in a program drop like flies isn’t my idea of achieving an acceptable return on investment.

Enough said, I’m going to pick up some Rolaids at CVS and earn a few more ExtraCare points! I think it’s safer.

Editor’s note: Opinions expressed by the author are influenced by his 40 mile bike ride earlier in the day and are not those of the target audience of these two restaurant chains!

A celebrity endorsement—for a loyalty program?

The pros and cons of using a celebrity spokesperson in advertising have been long established.

• The pros? A celebrity draws attention
• The cons? A celebrity draws attention—away from your product or service

What’s more, as we recently saw with golfing legend you-know-who, there’s the potential downside of aligning your company with a celebrity whose reputation takes a sudden nosedive. So when I learned that restaurant chain Outback Steakhouse had signed country music star Tim McGraw as a celebrity spokesperson, I was doubly surprised. You see, his job is not to pitch the brand, but to help launch their new loyalty effort My Outback Rewards.

As explained on the Outback Web site: “Fans of Tim McGraw and Outback Steakhouse will have the chance to win exclusive Tim McGraw memorabilia, downloads, tickets to the upcoming Southern Voice Tour and VIP access, great offers from Outback Steakhouse and even a chance to travel to Australia to see Tim McGraw perform live in the Land Down Under!”

Another thing that’s different about My Outback Rewards are the rules:

• The program has no loyalty cards, as it’s based totally online
• Once users register at the program Web site, they simply collect their Outback receipts–and then record numerical codes from the receipts on the rewards site
• A point is earned for each dollar spent, and points can be redeemed for prizes

The choice of McGraw as Outback’s loyalty program spokesman comes as less of a surprise when you learn the program was developed by event marketing agency Rally Marketing Group, whose specialty is experiential marketing.

In the loyalty business we’ve long talked about the value of experiential rewards. But I wondered about putting the Tim McGraw experience on the same level as the Outback dining experience. So it was with great interest that I visited the My Outback Rewards site on the program’s January 25th launch date. Just how would they incorporate McGraw into their communications? Would he be strumming an Outback inspired tune? Be shown chomping on a ribeye or a Bloomin’ Onion®?

Well, I can say they’ve done a nice job of integrating Tim McGraw into the My Outback Rewards Web site. The site is clean and easy to navigate, they do a good job of explaining step-by-step how the program works, and they have successfully linked Tim with the Outback brand by identifying several dishes that are “Tim’s choices”.

Still, I can’t help but wonder why Outback chose to put all its loyalty program eggs in the Tim McGraw basket. An e-mail welcoming me into the program came written and signed by Tim McGraw himself. A view of the reward list shows more Tim McGraw-related rewards than Outback options. And with the program so closely linked to McGraw, I’m left wondering if they have a fall back plan should the unthinkable happen. I personally think Tim McGraw seems like a stand-up guy. Who doesn’t love his wife Faith Hill? And I really think they’ve done a beautiful job with the My Outback Rewards site.

But in some ways the whole thing sure feels closer to a Tim McGraw loyalty program than one for Outback.

Tom Rapsas is a 20 year direct and loyalty marketing veteran and heads up Creative Services at Hanifin Loyalty. He can be reached on Twitter @tomrapsas

Editor’s Note: We trust that Rally Marketing Group has determined through research that ardent Outback Steakhouse customers are country music fans with a special love for Tim McGraw.  I dined at an Outback 1 week ago and saw no sign of MyOutback Rewards. Even with star power, a multi-channel approach to loyalty is mandatory for success. Let’s see how this unfolds and hope, for the sake of  Outback Steakhouse, that Tim continues to hit only the high notes!

I’ve been in way too many meetings lately where I have been asked the question “Is Social Media just a fad that will soon blow away?”

Fortunately, I’m well schooled in responding to skeptics since, for the past dozen years, I’ve been answering the classic question in my core business, “Does this Loyalty stuff really work?”

I have a well-practiced response to the second question, but at times when asked about the staying power of social media, I feel like the kid who was just caught by his parents looking at a magazine not on his school reading list – as if I should feel guilty because I’m making a case for understanding how to incorporate social media into the traditional world of data-driven communication strategies.

Convictions aside, it is fortifying when we see offline businesses wading deeper into the social media pond. We’ve seen plenty of our favorite brands open a Twitter account and establish a public Facebook page. But really linking these venues with their mainline customer acquisition and retention efforts? Well, we are just beginning to see examples in the market.

A great one that I came across, courtesy of @ragythomas is the TastiRewards loyalty program, where customers can not only earn points for enjoying tasty ice cream treats, but can also earn extra rewards by connecting their accounts to  Twitter and Foursquare.

The program is really simple and has adopted what I consider a QSR chain best practice by offering a dual-function gift and loyalty card. In this case, the card can be used across participating locations first to facilitate purchase, but with the added value of registering at MyTasti.com to qualify for extra points through social media updates.

TastiRewards members earn 1 point for each pre-tax dollar spent on qualified Tasti D-Lite products. Members become eligible for rewards once 50 points are accumulated and are eligible to receive a free medium Tasti cup or cone.   Extra points can be earned for registering the card online and checking points balances.  Providing a date of birth qualifies you to receive a free medium Tasti cup or cone on the big day.

The success of the TastiRewards program won’t hinge on its linkage to Twitter and Foursquare but, like most programs, will be judged by consumers on its overall value proposition. Points don’t expire, but earning is only possible when the physical card is presented at time of purchase. And there are questions of just how Tasti D-Lite will protect itself against members who try to use the social media option to game the system. As far as value is concerned, the social media point-accelerator seems to boost the perceived value of the program to 8-10% back, above average among today’s loyalty programs.

Tasti D-Lite has taken the important step of doing something with social media instead of just talking about social media. If their treats are as tasty as their innovative TastiRewards, good things should be in store for the chain. I found a store nearby and plan to visit soon.