When you’re selling hammers, every prospect looks like a nail. You’ve heard the expression before. The loyalty version of this is that many suppliers think every solution has to be currency based because that’s what they are selling.

I can hear the groans now, but don’t worry. I’m an advocate of data-driven marketing strategies that are measurable and, whether you like points or not, having a currency as the center of your loyalty program gives you an easy way to keep score. There are lots of other benefits too, an important one being that consumers who belong to the programs tend to allow the brand a mistake or two as they have a vested interest in protecting the value of their accumulated points or miles.

That said, there are situations that not so much demand a non-points solution, but enable it to the extent that points are not in the consideration set as a solution. I’ve categorized these into three models with a few brands as examples for each one:

• Price Driven: Walmart and Costco
• Brand Personality: Apple, Red Bull, Zappos
• Social Interactive: Tasti D-Lite and Carrabbas

Zappos is the subject of the day and although I had heard all the stories of how founder Tony Hsieh personally answers tweets to help resolve customer service issues (remember the famous tale from Tara Hunt on the subject?), the Zappos story truly came alive for me when I heard Jenn Lim, the founder’s spouse, make an inspired presentation about Zappos and her new business, Delivering Happiness.

Delivering Happiness was named after the 2010 book written by Mr. Hsieh and took on a life of its own after Jenn Lim and a core group of customer fanatic “Zappites” decided they wanted to spread happiness across the nation and across corporate America.

The spring of this Happiness that seems to be a renewable resource at Zappos is their company culture. Zappos believes so much in promoting a specific culture that it takes time to solicit the opinions of its employees, partners and customers in assembling its “Culture Book”. I was able to obtain a copy (all you have to do is ask) of the 2010 Culture Book and was impressed to read the 200 plus pages of testimonies from Zappos loyalists as well as see their culture documented in living color through the pictures in the book.

The Zappos Culture is based on 10 Core Values. You can get your own copy of the book, so I’ll just share my favorites from the list of 10:

1. Deliver WOW through service
2. Be Adventurous, Creative, and Open-Minded
3. Build Open and Honest Relationships With Communications
4. Do More With Less
5. Be Humble

Creating a corporate culture is one thing, having the commitment to really live it out is quite another. Zappos has used its culture as the basis for a business that is set apart from competition and that has created customer loyalty without giving away points, miles, or other formal trappings of a loyalty program.

There’s something to be learned here, especially in the age of Social Loyalty. As another saying goes ….. if the shoe fits ……

Anytime we review a loyalty or rewards program for our readers, we use the available facts as assumptions in a model that estimates the effectiveness of the program.

Because all customers are not the same, we normally create a customer profile based on spending patterns and objectives and project the earning velocity for those segments. As a result we are able to offer insights into the program’s customer value proposition and then bake in evaluation of the communication methods used to engage the customer and the extent to which data is used to deliver relevant and targeted offers.

A final factor in this methodology is to assess whether the program creates a defensible competitive advantage to the sponsor. In layman’s terms, we run the acid test of differentiation – does the program have unique and proprietary features or is it another example of “me-too”?

Recently we ran across the rewards program at FreeConference.com. Thinking that services like this were “liked” by smaller businesses on a budget and seeking to avoid higher-priced subscription based alternatives, we constructed a customer profile that assumed a take rate of just the two premium level service packages.

The math showed that collecting airline miles through the FreeConference.com Rewards program would result in a round trip domestic airline ticket after a mere 12 years of usage. Another point of criticism was that requiring the customer to put in a credit card in the midst of the sign-up process would hurt enrollment rates. This requirement has historically hurt take-rates, therefore our assessment.

Our final comment concerned the use of airline miles as a currency. The granddaddy of all rewards currencies still appeals to consumers, but no barrier exists to prevent competitive response, and miles are expensive on a unit basis relative to other currency options.

Taken together, we gave the program poor marks. To my delight, FreeConference.com CEO Chad Clawson wrote in to tell us our assessment was incorrect. Mr. Clawson informed us that Freeconference.com has a premium toll-free conferencing offer in which customers spend tens of thousands of dollars per month, meaning the customer profile FreeConference is seeking to engage and retain has a spending profile that generates earning velocity to an acceptable level.

Because these premium customers already have a credit card on file, enrollment in the reward as program is easy and the response rates have been “terrific” according to the company. Mr. Clawson pointed out that only paying premium customers are eligible to join the rewards program, and they have already provided a credit card number to establish their account. New premium customers enter a payment card as well therefore FreeConference is not asking for anything the customer is not already willing to give as part of the premium offering.

For as much as loyalty practitioners understand about loyalty programs, shared data from sponsors is hard to come by. The advantage for many of us working in the business is that we have an accumulated perspective based on the results of programs we have designed and helped to operate. There are surveys that help to round out our viewpoints, but attend an industry event and you’ll see that the slimmest part of every presentation covers program results.

It’s for that reason exactly that I was delighted to hear from Mr. Clawson and further pleased that he was willing to engage in a conversation to discuss his program in turn allowing us to “get it right” at Loyalty Truth. Mr. Clawson fairly asserted that “I can understand how, from the outside, the Loyalty Rewards program may not seem to make sense, but that is only because of a couple of factual errors.” From that point, we cleared up the factual assumptions leading to this post.

Loyalty Truth holds its ground on the use of airline miles as the chosen currency to support the program. The offer can be copied easily by a competitor, meaning the program could become table stakes at any moment. Also the airlines have a much publicized capacity issue which creates a perception among consumers that airline miles are difficult to redeem.

The bottom line is that the program is working for FreeConference.com. Corporate customers like to accumulate airline miles and we believe that several new initiatives will be introduced in the near term providing a relief valve to the capacity issue.

Our discussion with Mr. Clawson is one of the reasons we established Loyalty Truth and indicative of why we chose the name. I’m also delighted to have been named a member of the “Honest Blogger Club” in the process.

Something all of us who pound the keyboard and spin our opinions should remember that there is a perception about bloggers that many are crafted hastily with minimal research and little regard for the impact on third parties. To receive correction and “go dark” is the mark of an unreliable information source. To engage the conversation and make corrections earns entry into the Club.

I’m grateful for this interaction with FreeConference.com and hope to have more information to share about their program in the future. It would be great to know the size of the membership, the extent of revenues represented by members, and the delta between customers of similar profiles pre and post enrollment.

Most importantly, I’ve got a conference call to organize and know just where to go to continue to get the good quality service offered by FreeConference.com.

Every day I play on the seesaw.

It seems like I have one call with a person who expresses doubt about the efficacy of traditionally structured loyalty programs, and then turn around and inadvertently encounter a new program to add to my growing list that I have catalogued and reviewed.

Every seesaw has a balance point.

In this case, the criticism is usually based on impressions formed by poorly conceived programs, meaning I can take it with a grain of salt. On the other hand, the programs I am finding these days tend to lack imagination and justify the loyalty skeptics I meet.

Today I went to freeconference.com to organize a call and was greeted with an invitation to join their newly launched “Loyalty Rewards Program” (yes, they really called it that). The program is simple, earn one airline mile for every dollar spent on premium call services. Participating airlines include American, Delta, and United.

I’m always interested in customer earning velocity as a measure of loyalty program success. From a consumer point-of-view, if you can’t gather enough equity in short order to cash-in for a meaningful reward, the program will be perceived a waste of time.

Free Conference has two key premium services, unlimited recording and storage for $9/month and unlimited desktop sharing for $14.95/month. Imagine if a customer engages both services and spends $288/year. That equates to 288 frequent flyer miles. Let’s be generous and say a premium customer spends about $200/month or $2,400 per year. At that rate, it would take 12.5 years to earn a round trip domestic ticket given a “cost” of 30,000 miles.

Even though the program is free to join, the enrollment form requests credit card information right off the bat, increasing the likelihood of customer disconnect at that juncture.

I spoke with a potential client today who told me his company tried a similar approach to loyalty a few years back and that the slow earning rate turned out to be a club that customers would beat him with on a regular basis. After collecting for a period of time and realizing that the point total was not enough for a $5 gift card, many customers rebelled and the “loyalty” program became a negative from an overall marketing perspective.

There is a truism that I have believed in for some time in this business “loyalty programs are easy to launch, but more challenging to make successful”.  Just about anyone can arrive at a simple construct for a rewards program and to generalize, the more simple the offer, the worse it might end up for the customer.

The old automotive tagline “pay me now or pay me later” comes to mind. It’s worth an investment in program planning and a commitment to execution to make the programs work. Much too often, “do it yourself” only results in customers who go their own way.

Even though I come from the creative side of the business, I’m a big fan of customer data.

There’s no better way to build a relationship than using data to personalize communications according to a customer’s past buying habits. Amazon, of course, does a great job of this. So does iTunes. But is there such a thing as going too far in the personalization of communications? In essence, with all the concerns about data privacy, can you get too personal with your customers?

I think so and here’s why:

I am not a regular customer of the online ticket reseller site Stub Hub, but I have used their service once or twice in the past. Occasionally I go to the site to see just how outrageous the ticket prices are for the game or show I can’t get into. A case in point was a recent show by the rock band Social Distortion. After realizing the event was sold out in my area, I went to Stub Hub to check out the ticket prices. They were selling at a minimum of 4 times the face value of the ticket so I declined.

Sure enough, the next day in my inbox, I received a personalized e-mail from Stub Hub. It’s subject: “Social Distortion Tickets in a Flash!”

The body of the e-mail read:

“Hey Tom, We noticed Social Distortion tickets were on your radar. Great tickets are still available, but act fast. Head back to StubHub.com and use our interactive maps to find your perfect seats.”

Which would have been cool. Except I hadn’t signed up for Social Distortion ticket alerts—or any other kind of alerts for that matter. All I had done was a quick search for tickets and left the site. And a day later Stub Hub had come back to me with a personalized pitch. Did Stub Hub go too far in trying to engage me in a dialog?

My take: If they had sent me an e-mail merely pitching their service I would not have minded. But reporting back to me on my searching behavior seemed wrong. What else did their little cookie know?

It felt like I was being watched in a creepy “there’s a guy staring at me through my living room window” kind of way. Now don’t get me wrong, I’m not surprised me that Stub Hub knew about my search or that they had the capability to push the information back to me in an e-mail. But in the words of an old Hall & Oates song, some things are better left unsaid.

So the next time I need tickets for a sold-out show–I’ll be heading to TicketsNow.

Tom Rapsas is an independent Creative Director/Writer/Strategist. He can be reached at tomrapsas@gmail.com and via Twitter @tomrapsas.

www.ticketsnow.com

We recently published a new Case Study examining the competitive scenario between two leading retailers of cycling gear and supplies – Bike Nashbar and Performance Bike. There is a de-facto advantage to one of the players and a key channel that the other can leverage to fight back.

The ultimate question: What would you do if wearing the moccasins of either Chief Marketing Officer?

Loyalty Truth recruited a panel of experts to review this Case Study and offer insights into what it will take for Bike Nashbar to put forth a differentiated Customer Strategy and how it should revamp its email marketing strategy. Now that all 3 of our experts have weighed in, look for a compilation of responses in our Resource section soon.

Loyalty Truth is proud to share Stephanie Scuderi’s thoughts on this case study as our newest contributing author. Please read more about Stephanie, a veteran of the Loyalty Marketing industry, at the end of this article.

In the age old challenge of newcomer vs. established brand, the newcomer, or Bike Nashbar in this case, has the ’scrappy’ advantage.  Without the momentum of established brand experience, Bike Nashbar’s brand strategy is a clean slate – nothing terrible to overcome…and a point of established relativity – or Performance Bike in this case. Creative ideas quickly fall into acquisition, brand and customer strategies. At a high level, the following considerations could be explored.

Brand Strategy

• Give it a personality…if Bike Nashbar was a person, who would they be?
• Appeal to the segment – sponsor or be a founding partner of global amateur racing – designed for the wealthy who are looking to blend experience with exertion
• Enlist a spokesperson relevant to the target – Instead of Lance Armstrong, get Jack Dorsey (twitter founder) or someone equally contemporary, making a difference, using his head, thinking out of the box, and oh yea, biking off the steam.  Publish his race times or self-bests — how do you stack up?

THEN…within that framework…

• Take it offline:  make the relationship tangible – can be done with a physical mailing – cleverly designed or worded.
• Partner with biking merchants to create a Bike Nashbar network.  BN becomes the face of all mom and pop shops online…providing a few templates, BN essentially private labels their web site to shops who couldn’t otherwise afford the complexity afforded in a co-op structure.
• Host “the world’s largest recreational biking” party – all members invited to the local Bike Nashbar network partner – with streaming video, a la the You Tube Symphony – get everyone across the world together – have it be newsworthy enough that the press alone is value.

Reward and Recognize…

• Set a goal to get to know customers – and communicate with them with respect to the relationship they have with you…don’t send everyone the same emails…they’re not sending you the same amount of business – reflect knowledge and insight in messaging.
• Set up a program that motivates people to spend more with Bike Nashbar — and reward for bike-related activities – even if they aren’t a direct revenue stream.  Jack Smith completed his first race, give him bonus points to congratulate him and get him to race another…the more he races, and the more he knows you’re in his corner, the more he’s going to spend with you and tell you about his experiences.

Finally, the Acquisition Strategy…with ideas for brand direction and how to keep customers in the loop, how to attract those prospects?

• Start a “What was your first bicycle?” campaign to get people to go online, register, and indirectly get acquainted with Bike Nashbar.
• Take them back to the beginning…ask the question why they fell in love with biking…I’m not a biker, other than around the neighborhood with my son on his tricycle, but I still remember my first bike, it was yellow with a black racing stripe and training wheels.  Then, I graduated to a Huffy Sweet Pea (yellow and pea green – loved it).  Point being, by tapping into a basic memory, prospects who aren’t currently avid bikers may be lured into the brand introduction experience and fall into the fold of occasional customers — who can then be targeted for growth in spend.
• Conversion:  be a race portal
• Create a race log…have all “registered” bike races online, with registration forms
• Partner with bike racing organizations to automatically load all times for racers belonging to Bike Nashbar network
• Users can link with bikers of similar skill/time level to see how others like themselves are training to improve

Success lies in the blend of meeting basic needs with a new twist — elegant new ways to do and think about everyday things associated with the sport and hobby of biking.  By re-engineering its brand, Bike Nashbar has an opportunity to reset expectations and redefine the biker’s experience.

More about Stephanie Scuderi: Currently focused on business development and marketing for Centennial Bank, a $2.7 billion financial institution, Stephanie has deep roots in data-driven business development strategies that build engagement and drive customer loyalty.  Having worked with Brierley & Partners, Frequency Marketing, Inc. and Alliance Data’s Colloquy consulting group, Stephanie has developed customer strategies for a diverse group of companies including Verizon, classmates.com and JP Morgan Chase.

We recently published a new Case Study examining the competitive scenario between two leading retailers of cycling gear and supplies – Bike Nashbar and Performance Bike. There is a de-facto advantage to one of the players and a key channel that the other can leverage to fight back.

The ultimate question: What would you do if wearing the moccasins of either Chief Marketing Officer?

Since I don’t have all the answers, I recruited a panel of experts to review this Case Study and offer insights into what it will take for Bike Nashbar to put forth a differentiated Customer Strategy and how it should revamp its email marketing strategy.

Tom Rapsas, a Contributing Author to this blog and an independent Creative Director, Writer and Strategist offers up some powerful suggestions here:

I’ve got just one question for the marketing folks at both Performance Bicycle and Bike Nashbar.

Where’s the passion?

As Bill points out in the Case Study, cycling now ranks as the second most popular recreational activity in the U.S. and is growing in popularity among the racing/triathlon set who are plunking down on average $3,500 per new bike. Yet, judging by the non-stop stream of promotional e-mails these retailers are sending out, they’ve decided to play a “lowest price wins” game.

This is further evidenced at their respective Web sites. During a visit to Bike Nashbar, I was greeted by a colossal 90-point headline that read “TAKE AN ADDITIONAL 20% OFF!” Not to be outdone, the primary image on the Performance Bicycle home page was “FREE SHIPPING.”

If the Web-only Bike Nashbar wants to truly separate itself from its bigger, bulkier competitor, it needs to lead not with price but with passion. It needs to make an emotional connection with its customers, by showing that it knows and loves the sport of cycling as much as they do.

This approach starts with something lacking from both Web sites–attractive, compelling images that show the target market at play, whether it’s recreational cyclists, weekend warriors or competitive triathletes—or some combination of all three. Sure, I know you want to show me the goods, but you can make an emotional connection as well, by showing me the joy and excitement of cycling, the camaraderie, the beautiful places it can take me.

Then, start sending me e-mail communications tailored to my personal interests. Base it on my past purchases or browsing history, or better yet ask me to take a survey to find out if I’m a recreational or competitive cyclist, if I’m a street or trail rider and if I’m in the market for a new bike or specific accessories. Then, keep me posted on the latest products and trends that most interest me.

You’re not done yet, Bike Nashbar. Take the steps necessary to become the “go to” source for biking information and education.   How?

• Post Web-based cycling tutorials on your site and YouTube.
• Add employee reviews of products.
• Send out regular updates on bike races, trails and events in each customer’s geographic area.
• Start a Bike Nashbar blog manned by your company’s most avid cyclist (don’t have one? hire one!) and invite a dialogue with your customers.

By making an emotional connection with its customers and winning the passion game, Bike Nashbar has the opportunity to escape the no-win “our prices beat their prices” approach. As Bill once reminded me, there can be only one WalMart in any category–and Bike Nashbar, I don’t think this is the game you want to compete in.

Tom Rapsas is an independent Creative Director, Writer and Strategist. He can be reached at tomrapsas@gmail.com.

We recently published a new Case Study examining the competitive scenario between two leading retailers of cycling gear and supplies – Bike Nashbar and Performance Bike. There is a de-facto advantage to one of the players and a key channel that the other can leverage to fight back.

The ultimate question: What would you do if wearing the moccasins of either Chief Marketing Officer?

I recruited a panel of experts to review this Case Study and offer insights into what it will take for Bike Nashbar to put forth a differentiated Customer Strategy and how it should revamp its email marketing strategy.

Michael Della Penna, the Co-Founder & President Aiti Solutions, LLC offers up the first round of insights and critique here:

Five Email Marketing Fixes for Performance Bike & Bike Nasbar:

The experience Bill observed from both Performance Bike and Bike Nasbar is not uncommon.  As brands increasingly look to grow sales and reduce costs in a tough economy, many are turning to the power of email to do so.  Email’s proven ability to drive ROI seduces many of us to send more to sell more without thinking about the consequences.  As a result email marketing is losing its effectiveness.  In fact, the DMA projects email will generate $43.52 for every dollar spent in 2009.  Not bad, but this is down 10% from the $48.34 reported in the 2007 study.  The DMA also goes on to predict emails steady declines through 2013.  With cluttered inboxes and a continued batch and blast mentality, it is easy to see why.  So what should Performance Bike and Bike Nashbar do to grow the success of their e-communications program?  Re-examine their approach for one.

Email is about building an ongoing dialog and relationship with your prospects and customers.  To do so requires both companies to take a new look at their email marketing strategies and tactics.  Here’s how.

1. Audit the customer experience: Step into your customers shoes.  If you were in their spot would you find the emails timely, relevant, valuable?  How do the communications compare to others you’ve seen and appreciate?  If you can’t be objective hire a third party to conduct that audit for you – you’ll be glad you did…remember the internet is social and the cost of not fixing a bad situation can be detrimental to your brand.
2. Think strategically:  If you have a successful website you’ve probably done some research on who visits, common paths and activities they take and perhaps even built some personas and “day in the life vignettes” to design a great experience.  Now its time to leverage all that great work to think about how you build a complementary communication program.  That program should speak to those various customers throughout the purchase process and customer lifecycle.  Email is about building relationship, not just selling – a successful lifecycle program should include acquisition, conversion, retention and winback communications that speak specifically to the customer’s needs, interests and mindset.
3. Nail the tactics:  Exception email is all about the details.  Be sure you work with someone who is going to help you maximize your programs success by providing strategic pointers, best in class practices, deliverability and creative expertise and new ideas.  Remember once you get in the inbox you need to stay in the inbox and get recipients to open and respond to your offers.  Make sure that partner is someone who has the experience and know how to help you scale your dynamic communications and stand out from the crowd.  It is also important for that partner to work with you to set some ambitious goals that can also be measured, so you constantly push the boundaries and ultimately establish your brand as the benchmark for all others to follow.
4. Expand the footprint & encourage participation:  Email is a wonderful communications and relationship platform.  Encourage users to participate with your brand and others.  Include forward-to-a-friend mechanisms and share to social features that allow users to write reviews, share feedback, and post email to their social networks.  Email users are typically your most loyal users so why not engage those users by getting them to participate with your brand.  With their help and participation you may just find that next great new product or promotional idea that further sets your brand apart.
5. Analyze and Optimize:  Email derives its great advantage from the power of immediacy.  Every email communications offers an opportunity to learn something.  Implement a robust testing strategy that helps you optimize every aspect of your communications including creative design templates and offers.  Use surveys to get inside the minds of your users and leverage data and customer actions including website activity to sense and respond to customer needs.

Ultimately email offers a great opportunity to build a relationship and drive sales.  To be successful, you need to break out of the push promotional mentality and embrace email as a participatory medium where the recipient is an equal partner in the dialog.

Michael Della Penna is co-founder and president of SuiteDialog (www.suitedialog), a participatory marketing company that helps leading brands build interactive marketing program that engage users in an ongoing dialog.  Michael also writes a monthly column for eM+C that highlights the strategies and tactics behind exceptional email communications.  Michael’s column can be found at www.emarketingandcommerce.com.

Can a little magic help Borders?

I’m a card-carrying member of Borders Rewards, the program run by book, music and movie seller Borders, who recently announced their rewards program had grown 23 percent over the past year and now totaled 32 million members.

I first discovered Borders via their bricks-and-mortar stores in the early 90’s and still love their open store layout and laid-back vibe. I generally find their salespeople to be well-informed and helpful. I’ve been to their Web site many times and opted in to their e-mail list years ago.

Yet I may be one of Borders’ worst customers.

You see, not long after Amazon.com launched in 1995, I became a regular there. As fans of Amazon know, they have the world’s best selection. Nine times out of 10, they have the lowest prices. And there’s plenty of customer commentary to peruse should I be on the fence about a specific book, CD or other product.

So it’s tough for either the Borders stores or Borders.com to measure up to market leader Amazon. Sure, I still visit my local Borders every now and then—but only after they send me promotional e-mails with a coupon good for 40% off any purchase. (As I said, I’m not a good customer.)

Still, even with Amazon’s superiority in so many areas, Borders now possesses a potential game changer – if they can figure out what to do with it.

It’s called the “Magic Shelf” and it was launched by Borders just about a year ago, with little fanfare. This nifty feature enables registered customers like me to turn the Borders’ home page into my own virtual bookshelf. Through an attractive wooden shelf interface, I can quickly scan music, book and movie recommendations in several categories.

Importantly, it shows me selections based on my preferences, per an online survey I filled out, so the titles on my virtual shelf are personalized just for me. It’s a different approach than Amazon whose less attractive home page shows me items based on my past purchases, not my preferences.

So will the Magic Shelf make me more likely to shop at Borders or Borders.com?

Well, not yet. Old habits die hard and Borders needs to find a way to compel me to become a regular customer by better leveraging the benefits of the Magic Shelf. For starters, it would help if Borders both told and reminded customers about this very cool feature.

It also means Borders will have to move away from their current e-mail marketing strategy, where it’s all about the discounts and latest money-saving offer. As Bill pointed out in a previous post, fully 75% of the e-mails Borders sends out are offer or price-based.

The solution seems simple: start sending personal, relevant e-mails, using information culled from each customer’s Magic Shelf selections. By filling e-mails with content that has real value—like info on new products I might be interested in—Borders stands a better chance of building a real (and profitable) relationship with me, because it will be based on my love of music, movies and books, and not my love of saving money.

With the proper use of the data gained from the Magic Shelf, it feels like there may be a small opening for Borders. Will they follow through on it? Or will they continue to beat their heads against the wall by trying to out-discount Amazon? Time will tell. But surely a personalized communications approach is a better way to go than continuing a price war against the mighty Amazon.

Tom Rapsas is an independent Creative Director, Writer and Strategist. He can be reached at tomrapsas@gmail.com.

Can a little magic help Borders?

I’m a card-carrying member of Borders Rewards, the program run by book, music and movie seller Borders, who recently announced their rewards program had grown 23 percent over the past year and now totaled 32 million members.

I first discovered Borders via their bricks-and-mortar stores in the early 90’s and still love their open store layout and laid-back vibe. I generally find their salespeople to be well-informed and helpful. I’ve been to their Web site many times and opted in to their e-mail list years ago.

Yet I may be one of Borders’ worst customers.

You see, not long after Amazon.com launched in 1995, I became a regular there. As fans of Amazon know, they have the world’s best selection. Nine times out of 10, they have the lowest prices. And there’s plenty of customer commentary to peruse should I be on the fence about a specific book, CD or other product.

So it’s tough for either the Borders stores or Borders.com to measure up to market leader Amazon. Sure, I still visit my local Borders every now and then—but only after they send me promotional e-mails with a coupon good for 40% off any purchase. (As I said, I’m not a good customer.)

Still, even with Amazon’s superiority in so many areas, Borders now possesses a potential game changer – if they can figure out what to do with it.

It’s called the “Magic Shelf” and it was launched by Borders just about a year ago, with little fanfare. This nifty feature enables registered customers like me to turn the Borders’ home page into my own virtual bookshelf. Through an attractive wooden shelf interface, I can quickly scan music, book and movie recommendations in several categories.

Importantly, it shows me selections based on my preferences, per an online survey I filled out, so the titles on my virtual shelf are personalized just for me. It’s a different approach than Amazon whose less attractive home page shows me items based on my past purchases, not my preferences.

So will the Magic Shelf make me more likely to shop at Borders or Borders.com?

Well, not yet. Old habits die hard and Borders needs to find a way to compel me to become a regular customer by better leveraging the benefits of the Magic Shelf. For starters, it would help if Borders both told and reminded customers about this very cool feature.

It also means Borders will have to move away from their current e-mail marketing strategy, where it’s all about the discounts and latest money-saving offer. As Bill pointed out in a previous post, fully 75% of the e-mails Borders sends out are offer or price-based.

The solution seems simple: start sending personal, relevant e-mails, using information culled from each customer’s Magic Shelf selections. By filling e-mails with content that has real value—like info on new products I might be interested in—Borders stands a better chance of building a real (and profitable) relationship with me, because it will be based on my love of music, movies and books, and not my love of saving money.

With the proper use of the data gained from the Magic Shelf, it feels like there may be a small opening for Borders. Will they follow through on it? Or will they continue to beat their heads against the wall by trying to out-discount Amazon? Time will tell. But surely a personalized communications approach is a better way to go than continuing a price war against the mighty Amazon.

Tom Rapsas is an independent Creative Director, Writer and Strategist. He can be reached at tomrapsas@gmail.com.

Retailers face an increasingly difficult challenge to be successful.  Not only do they have to outwit competitors with clever merchandising, creative store layout, and careful inventory management – they also have to understand how to best communicate their promotional offers to customers.

The last challenge can be perplexing as not all retailers use the same merchandising channels. For example, competitors in the same category can be single channel in brick and mortar, catalog, or online, or be operating with a mix of all three. Generally speaking, there isn’t a successful catalog retailer operating today without a website, and most brick and mortar retailers have gone online. Some have added a catalog and, to keep things interesting, others avoid the expense of printed catalogs and supplement their online marketing efforts with mass media advertising campaigns.

I’ve published a new Case Study on my web site that examines the competitive scenario between two leading retailers of cycling gear and supplies – Bike Nashbar and Performance Bike. There is a de-facto advantage to one of the players and a key channel that the other can leverage to fight back. The conclusions raise as many questions as it offers answers.

The ultimate question: What would you do if wearing the moccasins of either Chief Marketing Officer?

Since I don’t have all the answers, I’ve asked a panel of experts to review this Case Study and offer insights into what it will take for Bike Nashbar to put forth a differentiated Customer Strategy and how it should revamp its email marketing strategy. Chiming in will be:

• Michael Della Penna, Co-founder and President of SuiteDialog, a participatory marketing company that helps leading brands build interactive marketing programs that engage users in an ongoing dialog.
• Ragy Thomas, Co-founder and CEO of Aiti Solutions. Ragy is the former president of Epsilon Interactive, a division of Alliance Data Systems that was created by combining market leaders, Bigfoot Interactive and DoubleClick’s email solutions group. You can read his blog at The PMN blog.
• Tom Rapsas, an independent Creative Director, Writer and Creative Strategist who has worked for some of the biggest and most respected direct and loyalty marketing firms in the U.S.  Tom is a Contributing Author to Loyalty Truth and has written numerous trade articles on issues related to loyalty and direct marketing.

In the next week, we will post comments from our panel on this Case Study in a new post on Loyalty Truth.  We invite your comments on the case and are interested to know your reaction to the recommendations of our contributing panelists.

Download the Case Study here and join in the conversation.