In the midst of holiday preparations, you might have missed the Cards and Loyalty Payment Conference held in New York on December 2.  I was able to attend in my capacity as North American Contributing Editor of the Wise Marketer and filed this report with the WiseMarketer.

Source Media’s second annual ‘Cards and Payments’ loyalty conference was held in New York earlier this month, addressing the theme of ‘the intersection of cost management and rewards programme repositioning’, as detailed here by The Wise Marketer’s contributing editor, Bill Hanifin.

The proceedings began with Rob Rosenblatt of Chase Card Services, who presented an overview of Chases’ new flagship rewards programme, ‘Ultimate Rewards’, which is offered on Chase Freedom as well as the new Chase Sapphire and Chase Ink (small business) products. Launched earlier in 2009, Ultimate Rewards was built as a unified platform that would help drive customer engagement while improving operating efficiency and also strengthening the brand.

An expert panel debated cost-per-point reduction strategies, with experts from SunTrust Banks, Merrill Lynch, Wyndham Hotels and US Bank explaining a variety of techniques that can be used to lower cost-per-point while keeping programme members engaged with the brand. The panel concluded that forming strategic partnerships with providers, using redemption targeting campaigns, and fine tuning programme rules should all lead to positive results even in a tough economy.

Crista Dewire and John Kryczka of PriceWaterhouseCoopers offered an in-depth discussion of loyalty programme liability management, outlining the actuarial methods used to project redemption rates and help programme operators manage liability. They pointed out that, while no conclusions have yet been reached on the treatment of loyalty liability within Generally Accepted Accounting Principles (GAAP), another body – the International Financial Reporting Standards (IFRIC) – has issued guidelines for currency management that are quite restrictive and could potentially impact the future of the loyalty industry.

Indeed, loyalty operators in Singapore, New Zealand, and Australia have already felt the effects of the IFRIC standards as they must now account for points on a “fair value” basis rather than actual internal cost. In addition, the guidelines mean that companies must account separately for the award portion of each sales transaction. The end result of these guidelines is to defer revenue and increase point cost, squeezing margins for loyalty marketers. It was concluded that loyalty software suppliers will also feel the impact of these guidelines because they will need to track every point issued with a time/date stamp, and be able to process redeemed points on a FIFO (first-in-first-out) basis.

Geri Green of Barclaycard US shared a number of loyalty strategies that should not be forgotten in tough economic times, including the principles of transparency, consistency, value, messaging, and trust. Rick Ferguson of Colloquy and Andrew Pyper of Saks Fifth Avenue presented a case study showing how retailers can use store charge cards as points-earning accelerators for programme members.

US Bank senior vice president Bob Daly explained how the bank reacted to the merger of Delta and Northwest Airlines by launching ‘Flexperks’ – a travel rewards programme designed to retain its portfolio of cardholders from the Northwest Worldperks programme that was being closed down. Daly noted how the bank had included benefits specifically to help cardholders with unbundled air travel, such as offering an ‘allowance’ with a redeemed ticket to help pay for baggage and seat selection charges. He also mentioned that employee training in the call centre had been a subtle but important key to the success of the programme.

The event ended with a discussion of the proliferation of debit card rewards programmes. According to research from First Annapolis Consulting, 53% of the top 100 debit card issuers already have debit rewards programmes, although there is a contrast in penetration by bank size (90% of the top 20 issuers offer debit rewards, while only 35% of the remaining 80 issuers do so).

The structure of debit rewards is also evolving along a line that begins with generic rewards (e.g. points or cash-back) and heads toward cobranded rewards (e.g. with airlines) and relationship rewards. It seems clear that US debit card issuers are anticipating the continued growth of debit card transaction growth and sales volume, and are crafting increasingly sophisticated rewards programmes to help drive consumer engagement, card usage, and to gather deposits.

This article is copyright 2009 TheWiseMarketer.com

Loyalty 360 held its Loyalty, Reward and Incentive Expo 2009 at the Westin Diplomat in Hollywood, Florida between May 31 – June 2.  Over 500 attended the second edition of this conference and the report which follows was published at www.TheWiseMarketer.com on June 16, 2009 as filed by Bill Hanifin, North American Contributing Editor.

If you are interested in the latest news on Loyalty and Relationship marketing, I strongly encourage you to Register here for a free subscription to the Wise Marketer

Among weekly updates and special reports, the WiseMarketer also offers the Loyalty Guide III, the most comprehensive resource covering the industry today.

New Channels Aid Loyal Customer Dialogue

The recent Loyalty Expo 2009 conference in Florida saw nearly 400 delegates (I was corrected by the organizer later that the number was over 500) gather to share ideas and innovations, with the overall informal theme being the discussion of new channels of communication that have recently become available to loyalty programme sponsors, and ways of fostering more meaningful dialogue with programme members, according to our US contributing editor Bill Hanifin.

Mobile phone applications and social media were hot topics and the conference sponsor, Loyalty360, put both into action itself during the event. Partnering with Vayulogic and Hanifin Loyalty, the organisers solicited feedback for conference sessions with SMS messaging and shared a live Twitter feed to foster networking and encourage real time discussion of presentations.

The three day event began with a series of workshops, most compelling of which was arguable “The Gamification of Loyalty“, presented by Barry Kirk and Tim Crank of Maritz Loyalty Marketing. The session demonstrated how game playing and competitive scenarios can be introduced in loyalty schemes to drive higher engagement, participation, and activity levels.

The general session keynote presentation featured Timothy Keiningham of IPSOS Loyalty, speaking about the realities and myths surrounding customer loyalty (largely based on Keiningham’s recently published book, Why Loyalty Matters).  Deborah Eastman of Satmetrix followed with an overview of the Net Promoter Score (NPS), and expanded on the basic concept to describe a methodology that could be applied as a planning mechanism for loyalty initiatives.

The conference then featured a range of subjects including sixteen panels on topics ranging from mobile marketing, B2B loyalty strategy, and global approaches to loyalty, grocery specific learnings, and how to translate the voice of the customer into higher programme engagement.

Among the highlights, Matt Howland of Loyalty Lab and Greg Dolan of Campbell’s Soup presented a compelling case for extending the relationship between CPGs and consumers beyond traditional channels, while Phil Rubin of rDialogue shared his thoughts on measuring loyalty programme performance.

Jonathan Silver of Affinity Solutions and Nick Medina of ExxonMobil provided insights into on how merchant funded rewards can be made more effective through strong retailer and bank relationships, while Bjorn Larsen of Edhance, Ragy Thomas of Aiti Solutions, and Atle Skalleberg of StudentUniverse joined forces for a lively discussion on how to engage with ‘millennials’.

The second day of the conference featured some 15 breakout sessions followed by roundtable discussions that Hanfin described as “the loyalty marketing version of speed dating“. Among the highlights, Mike Blyth of Groupe Aeroplan presented an insightful look at how UK grocer Sainsbury’s has connected loyalty programme data to SKU-level product information to drive more relevant promotions.

Another key presentation with implications for the future of loyalty was made by Don Hughes, CIO for Kobie Marketing.  Speaking from research recently completed by the company, Hughes talked about leveraging today’s mobile technologies to move products, reduce inventory, and increase communication.

Noting that there will be over 140 million smart phones in use by 2013 and that satisfaction ratings for smart phones are more than double that of conventional handsets, Hughes emphasized the importance of incorporating this medium into loyalty programme communications. Kobie’s study found that 94% of customers will complete a loyalty profile application through the mobile channel, compared to only 47% on the web.

This article is copyright 2009 TheWiseMarketer.com

The Word of Mouth Marketing Association held its “WOMM-U” event earlier this month in South Beach.  The conference report which follows was originally published at www.TheWiseMarketer.com on May 28, 2009 as filed by Bill Hanifin, North American Contributing Editor.

If you are interested in the latest news on Loyalty and Relationship marketing, I strongly encourage you to Register here for a free subscription to the Wise Marketer

Among weekly updates and special reports, the WiseMarketer also offers the Loyalty Guide III,  the most comprehensive resource covering the industry today.

Loyalty Moving from Marketing to Engagement

The Word of Mouth Marketing Association’s conference in Florida earlier this month provided some surprising insights, according to contributing editor Bill Hanifin of Hanifin Loyalty, who notes that the loyalty business is desperately re-engineering itself as programme sponsors look for innovations to freshen up their programmes.

Among the hottest topics concerning loyalty marketers are those of ‘engagement‘ and ‘word of mouth‘, with both having been quickly identified as effective paths to building more frequent and meaningful dialogues between sponsors and consumers.

Among the brands represented at the conference were big names such as Amway, Dell, Disney, Heinz, Kraft, Lenovo, McDonalds, NBC, PepsiCo, Proctor & Gamble, Texas Instruments, Unilever, and Walmart. The Web 2.0 names were also present, including Facebook, Google, MySpace, and Yelp.

Yelp’s Geoff Donaker kicked off the event with an overview of what he called a “platform for lifestyle blogging”. Over 21 million people had used the service to search for local businesses during the previous month, and the bulk of the consumer reviews posted broke down into 31% for restaurants and 23% for shopping. Donaker provided several examples of the power of the Yelp service, such as a carpet cleaning business in San Francisco which had invested in improving its customer service and generated such good reviews that the company was able to save US$100,000 per year in Yellow Pages adverts.

NBC also discussed its social media strategy, noting that community conversations, blog posts, and so-called “tweets” can not only build brand awareness and loyalty but also positively impact search engine results. Charles Edwards, CEO for Federated Media, also confirmed the importance of a strong search engine presence (particularly citing Google rankings): “It used to be that the homepage of your web site was your first digital impression, but now it’s the Google search result. Every marketer is a publisher now, and we don’t just compete with competitors but with any consumer that is also talking about us.”

Lenovo shared the story of how it tackled the challenge of making the most of its US$120 million Olympic sponsorship in 2008. The PC manufacturer chose to recruit 100 Olympic athletes, offering each a free technology solution and asking them to blog live from Beijing. Lenovo chose “long tail” athletes (i.e. those who weren’t in major sports, and who weren’t expected to draw general media attention). The campaign was a tremendous success and the athlete blogs quickly became the “insider’s view of the Olympics” during that highly competitive time.

Jeben Berg of YouTube also highlighted the power of video in marketing, noting that 15 minutes of video is uploaded every 60 seconds, all day every day. YouTube claims to be the largest site in the US (and the sixth-largest in the world), and boasts 81.6 million unique US-based visitors each month. Interestingly, the largest demographic in this massive set of visitors comes from the 35-49 age group.

WOMMA was able to get representatives of both MySpace and Facebook onto the same stage at the same time, and Heidi Browning (MySpace) and Chris Pan (Facebook) compared and contrasted the two social networks in detail. Browning exploded some myths about MySpace (particularly stressing that the site is not “just for teens”), and claiming that more than 70 million of its users are in the 18-34 age group in the US alone. Pan explained that successful Facebook marketing campaigns usually involve “building movements, not campaigns”, with a good recent example being the election campaign of Barack Obama.

Duncan Wardle of Disney discussed lessons learned using social media, and described a campaign that invited people to apply for their ‘dream Disney character job’. This word of mouth campaign quickly became viral and the responses were overwhelming. But Wardle was also practical, noting that “impressions don’t equal engagement” and suggesting that brands who don’t change from marketing to engaging risk soon becoming mere “nostalgia brands”.

The conclusion was that advertising and traditional ‘interruption marketing’ techniques are slowly but surely being replaced with collaboration, co-creation and dialogue with willing consumers.

This article is copyright 2009 TheWiseMarketer.com and is published here with permission.

The Word of Mouth Marketing Association held its “WOMM-U” event last week in South Beach, and was attended by an impressive array of consumer brands including Dell, Disney, Heinz, Kraft, Lenovo, NBC, McDonalds, Pepsico, Proctor & Gamble, Unilever, and Walmart. Add to these familiar names, several titans of Web 2.0 Facebook, Google, MySpace, Yelp and YouTube and you can imagine attendees got their money’s worth during the two day event.

I’ll have a full conference report submitted to The WiseMarketer very soon, but couldn’t wait to share a few highlights. WOMMA puts on a good show and to keep the conversation lively, they shared a live Twitter feed in the main conference salon.  Two days of Tweets are archived on their web page and, taken as a whole, they provide color commentary for the event.

I wanted to share my favorites which were selected for being insightful, forward-looking, or just humorous. Hope you enjoy them and please follow the folks who generated the original content to continue the conversation.

• It used to be that the homepage of your website was your first digital impression. Now it’s the Google search results. | @spikejones
• Federated Media: Amex has found Twitter best online vehicle for advertising their small biz website | @leslieforde
• Lenovo gave 100 Olympic athletes a free technology solution to blog live from Beijing…a social media plan with real teeth | @hyperdrivei
• “Trying to change an organization is like swimming in peanut butter.” – Chris Aarons |@CatchUpLady
• Facebook: focus on building movements, not campaigns | @tsiles
• 50% of US families have broadband – look for video explosion – this is likely how people will consume info – Duncan Wardle | @CentsibleSawyer
• Disney’s Ducan Wardle: Brands who don’t change from marketing to engaging will soon become nostalgia brands | @davekerpen
• 90% of moms watch online video in last 7 days vs only 1/3 of all moms are in the blogosphere. Integrated marketing w/ moms a must | @MomTalkRadio
• Duncan Wardle from Disney: It is NO LONGER about clicks and impressions. It’s about engagement , conversation and conversion. | @warrenss
• “Internet is not a library of information anymore it is a social area for people.” – Kathryn Collins.|@tanyachadha
• FTC Change “The communicator of the message must be transparent and honest.” Well that about says it all. | @jamietedford
• Wonders what a talk at WOMMA looks like. Based on my feed, it’s quiet with hundreds of people looking down, typing madly on mobile devices. | @justicar

The 21st Annual Card Forum took place last week in Marco Island, Florida. The conference synopsis which follows was originally published at www.TheWiseMarketer.com as filed by Bill Hanifin, North American Contributing Editor.

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The 21st Annual Card Forum and Expo has recently been held in Florida and, while the banking and card markets in the US might be reeling, the quality of presentations and attendees was superb.

Bill Hanifin, Managing Director of Hanifin Loyalty, reports that according to Bruce Kerr of Loyalty One USA and Laurence Booth of Amex Bank of Canada, the loyalty market in Canada is “holistically engaged”, with some nine in ten Canadian households actively engaged in a loyalty programme (the US figure is one in three). In order to break through the clutter, Amex has worked with Air Miles Canada to revamp and relaunch its Platinum Credit Card in 2008, breaking through the traditional co-brand model, with gratifying results.

According to Jim McCarthy, Head of North American Financial Institution Sales, Visa, payment cards are making inroads into cash and cheque payments which, in the US, have seen their share of annual Personal Consumption Expenditure fall from 61% to 47% over a few years. Consumers increasingly shop on value, are in control of their commercial relationships, and are tending toward more judicious use of credit cards.

According to McCarthy, the debit card will be the key product going forward for most issuers. He reaffirmed that rewards and loyalty programmes are here to stay and that providing value and control while encouraging responsible choices will contribute to overall card loyalty. McCarthy quoted a Wells Fargo study among university students which revealed that, as the result of a financial literacy campaign, late fees in the test group dropped 42%, overdraft charges were down 40%, and past due accounts declined 55%, while card volume spend increased by 22%. The results clearly indicate that banks offering solid financial guidance can separate themselves from the competition.

A panel of ‘Retail Loyalty Leaders’ including Best Buy, Macy’s and Saks Fifth Avenue, moderated by Colloquy’s Rick Ferguson, focused on the importance of loyal customers in a downturn, Aubyn Thomas of Macy’s said that loyal customers continued to shop during the downturn and fellow panelists agreed that it was their most loyal clients who saved the day when the economy worsened. As a result, none of the retailers were willing to reduce investment in their frequent shopping programmes. Instead, they recommended that better use of transactional and customer data would drive efficiency in communications and reduce programme operating costs. Saks has encouraged associates to work harder at building relationships with clients and to use the CRM tools already deployed.

At the best of times, there are challenges in predicting customer behaviour in any market, but the stakes are raised to do so accurately in a down market. According to Lightspeed Research’s Joel Stanton, to successfully understand and predict customer behaviour, a robust, holistic view of the customer is required and that simply focusing on one relationship or one product is not enough.

This article is copyright 2009 TheWiseMarketer.com

The promise of social media to Loyalty Marketers should be clear. We’ve been advocates of establishing two-way dialogue with program members for the past 20 years, touting that only within the trusted environment of a loyalty program will customers share their preferences, aspirations, and concerns relating to your brand.

Don Peppers and Martha Rogers coined the term “1 to 1″ marketing in what seems an ice-age ago. While the concept was right, execution was too costly for most companies to absorb. It is one thing to craft promotions, offers, and communications by segments, but to drive personalization to the individual account level was not financially sustainable. After the first wave of failed CRM installations, the ambitions of “1 to 1″ marketing were softened to a more practical “Mass Customization”.

With CRM’s legacy of unfulfilled potential, one would think that Loyalty Marketers would be tearing apart the box labeled “Social Media” like a child on Christmas morning to see what’s inside.

I’m not sure it’s happening and here’s why:

Attending Card Forum & Expo in Marco Island last week, I heard a great keynote from Joshua Peirez, MasterCard Worldwide. His topic was innovation and he took an informal poll in the room of 200 bankers:

• Who’s on Twitter? – less than 5% raised their hand
• Who has a MySpace? – no one raised their hand
• Who has a Facebook page? – 25% said “yes”
• Who knows what a Kindle is? – 10% positive response

Given the median age in the room, I was almost relieved with the MySpace answer, but noticed the uncomfortable murmuring that waved through the room upon the mention of Twitter and Facebook. Mr. Peirez had made his point that “we” in the banking and card issuing industry need to understand, if not embrace, these new communications tools if we are to stay current in the market.

Listening to other sessions, my suspicions that all things social media were regarded as distractions to be enjoyed by the younger generation but not to be taken seriously by business, were reinforced.

There was a fascinating panel of “Retail Loyalty Leaders” facilitated by my friend and colleague, Rick Ferguson, Editorial Director Colloquy. Executives from Best Buy, Macy’s, and Saks shared how it was their most loyalty customers who continued to shop even after the economic downturn last fall, but made no mention of  social media until an attendee posed a question at the end of the session. Responses from the panelists were general and non-committal, indicating that social media was “interesting and deserved study” while not citing any ongoing programs.

Imagine you are standing on the crest of a ridge with the entirety of loyalty marketing knowledge under your arm. Across a deep ravine on the next ridge is Generation Y, all 80 Million of them. You can’t just walk over and engage them in what you have to say as there is a river running swiftly through the bottom of the ravine. You’ve got to build a bridge to reach the other side or you will miss the opportunity to engage this massive consumer audience.

Social Media could be the bridge. Read carefully, as I am not telling you that Social Media is THE answer or the ONLY answer. But, it is the best opportunity we have ever had to fulfill the promises of 1 to 1 Marketing.  The technology allows business to tailor messages to small groups if not individuals and the Millennial Generation is the first ever to be so forthcoming with personal insights and opinions.

There is evidence of experimentation in the space, with AirMiles Canada adding a community to its web site. It’s purpose is clear as the landing page advises  “Now there’s a place where you and other collectors can swap tips, experiences, and chat about anything and everything Air Miles”.

And there are a few active Loyalty Marketers with a presence on Twitter. If you open your own account and wonder who you should follow, you could start with @andrewkinnear,  @barrykirk,  @Phil_Rubin,  @Kobie_Marketing,  @LoyaltyLab,   @Loyalty 360 and don’t forget @billhanifin.

One of Hanifin Loyalty’s rules for engaging Generation Y is this:

• Don’t rationalize the need – you don’t have to like it or even fully understand it, you just have to do it.

Meeting the Millennials where they are sets the stage for engagement. How you present your brand from there is a topic for another day.

Follow me …….

The hazards of business travel aside, it’s good to see and be seen.  You can find Bill Hanifin at one of several events in the next few weeks. If you are attending either Card Forum or the Loyalty Expo, I hope you will say hello. Here’s where I can be found in the near future:

April 20 – 22, 2009
21st Annual Card Forum and Expo
Marco Island Marriott Beach Resort
Marco Island, FL

May 14th 2:30pm ET
Creating Loyalty Among Generation Y
Webinar sponsored by OnSite Conferences

May 31 – June 2, 2009
2009 Loyalty, Incentive and Reward Expo
Westin Diplomat
Hollywood, Florida

The Direct Marketing Association, known as The DMA, is the leading trade association of “business and nonprofit organizations using and supporting multichannel direct marketing tools and techniques”. Even in the digital age, Direct Marketing (DM) remains a huge business. As you can read from their site, expenditures by U.S. companies totalled $173.2 Billion during 2007, equivalent to 10.2% of total U.S. GDP.  To say that the DMA is a powerful organization is an understatement, but is the DMA introducing policies that could create long term damage to its brand?

Among the year-round slate of conferences, seminars, and educational events, the crown jewel of the DMA is their Annual Conference & Exhibition, known this year as DMA09. I have facilitated DMA sponsored seminars in the U.S. and Brazil and have attended the Annual Conference on many occasions, presenting on a few. It has always been competitive to be accepted as a speaker at a DMA event and the influencers of selection can be reduced to Brand (the power of your company’s brand in the market), Client (the interest the market has in a campaign run by your client), or Money (to what extent you sponsor or exhibit at the event). In 2009, it seems that Money has become a more influential filter for speaker selection as the DMA instituted speaker proposal fees ranging from $59 for council members to $199 for non-members.

The new policy sparked controversy. Robert Rosenthal kicked off heated conversations in Facebook and LinkedIn groups where he wrote:

“The Direct Marketing Association is circulating its call for DMA09 presenters. This year there’s a new twist…the DMA will charge a processing fee for proposal submissions in 2009 to cover the administrative costs associated with managing the RFP process….have they gone too far with this policy? The implications are serious as long term damage to their organization is not out of the question.”

The posts which followed were passionate and largely in opposition to the new policy. This excerpt sums up the opposing argument succinctly:

“Speaking at DMA events is a marketing and networking opportunity. It has brought me can’t-put-a-price-on-it credibility….I’d also like to think that the benefits flow both ways. Surely by traveling and speaking at our own expense, and by sharing what would otherwise remain proprietary information, we render a valuable service to the DMA and its members. Must we now pay, not only to be of service, but to think up and suggest ways to do so?”

Ultimately, the DMA’s Bill Carls, Senior Digital Marketing Associate, posted a response directly from the Office of DMA’s President.

“….We believe most people understand the inherent value of taking a leadership position in the direct marketing community by sharing thought leadership at the global event for integrated marketing. For them, the investment of a small processing fee upfront should not be a real deterrent, even in these increasingly challenging times.”

Weighing the stream of comments from both social networks, it is clear to me that the DMA elected a policy that is contrary to the interests of its members. Except for a few outliers, the majority of entrepreneurial and business-owning DMA members vigorously objected to the new fees.

Capitalism has an interesting personality – the market unceasingly evolves to fill gaps as historical models decay and no longer provide value. Through its new policy, the DMA may be unwittingly contributing to the disintermediation of the conference business.

There are alternatives to incurring big fees and travel expenses to attend a conference when the highest element of value is often distilled to networking. As we all know, networking has gone viral – just witness the conversations on this subject in Facebook and LinkedIn. The DMA is not alone as SourceMedia, IIR, and others are adopting their own “pay to speak” business models.

I was taught at an early age that as soon as you think you are invaluable, you are at your most vulnerable. Conference organizers in the traditional model should take note.  There are several avenues through which disintermediation could take place and I will cover a few in the very near future.

I am a proponent of keeping one step ahead of the market. The loyalty marketing business has put out an APB for innovation, wherever it may be found. For those of you who are in the Metro NY area, you should make an effort to attend the Reinventing Loyalty Conference on December 1, 2008 at the Roosevelt Hotel in New York City!

This new one-day event, sponsored by ATM&Debit News and Cards&Payment will feature presentations from industry experts offering practical insights on how to identify, retain and grow the customers that drive franchise health and profitability.

Register for Reinventing Loyalty, and if you register with the promo code “50OFF”, you will receive a  $50 discount. This promo code must be entered to receive the discount online.  Or, call Glen Van Dusen at 212-803-6072. The offer is valid for new registrants only and will not be available onsite.

I’ll be attending and I hope to see you there……Bill Hanifin