One interesting note in the story was substantiated in the news last week.

In our post, we mentioned that ATM’s must be ready to accept EMV cards by 2017, about two years behind the deadline for liability shift at merchant point-of-sale. Even though securing merchant POS has advantages tied to fraud reduction, the major card associations are being cautious to accelerate the rollout of Chip and PIN at merchant point-of-sale so as not to push fraud to ATM’s.

During Card Forum this year, Stephanie Ericksen, Head of Authentication Product Integration, VISA INC. shared “the company is not pushing to accelerate the rollout of Chip and PIN at the point-of-sale as we suspect that remaining fraud volumes will run full speed ahead for unprepared ATM machines.

Last week, a gang of cyber criminals perpetrated a $45 Million fraud by hacking their way into prepaid card systems at several banks and extracting their take via ATM machines in 26 countries. The US portion of the scam took place courtesy of ATM’s mostly in the Northeast, giving too much publicity to the ensuing spending spree and clearly illustrating the risk that needs to be addressed via the EMV standard.

I’m not sure to what extent the current implementation plan can be accelerated, but it certainly seems that global criminals are going to make the most of the remaining time window. Electronic theft can’t be entirely washed away by Zero liability policies on cards as commonly offered by the associations. There is a residual emotional and mental impact from these events and repeated instances could send consumers into a fresh wave of negativity, something we don’t need in the US economy today.

Do you think it might be time to put our mobile wallet application development aside in favor of speeding up the protection of our current system of payments?

Yes, that phrase is a mouthful, but it’s useful, often necessary to define the loyalty marketing discipline by its most critical objectives and granular components for business people to engage in earnest conversation about how loyalty can work in their business. Leave the definition at “Loyalty” and much of the room mentally checks out, thinking they’ve heard it all before about points and miles programs. Talk about measurable financial results and most people lean forward in their chairs and start asking questions.

A few brands are pushing the limits of what loyalty can mean for their organization. Amazon’s announcement that it is offering “Coins”, a virtual currency that Kindle Fire owners can purchase and then use to buy apps and games for the device, got my attention yesterday. Like many other Amazon customers, I received an email from Amazon letting me know that “if” I was a Kindle Fire owner, I would receive 500 free Coins to get me started with the new virtual currency. Coins are valued at $.01 each and Amazon offers some at a discount, bringing the price down to 96 cents on the dollar.

You might wonder what Coins has to do with customer loyalty. In my book, Coins are an example of how a brand that has developed a wide base of passionate customers, actually fans, can float tactics that achieve specific product related results, not to mention increasing cash flow and a financial benefit from float associated with the cash collected for Coins sold but not yet redeemed.

Starbucks really broke the ice in this area when it trialed a limited edition prepaid card made entirely of steel with Gilt.com. 5,000 of the cards were made available at a price of $450 each. The lot of cards sold out nearly instantly with $400 of the purchase price allocated to a prepaid balance for future coffee purchases. My most ardent Starbucks buddies tell me that they can spend up to $60 per week at the chain, meaning that it will take about 7-8 weeks to burn off the balance for the highest value customers, about 2-3x that number for “average” users. For someone in my casual user range, it might take an entire year to burn up that balance.

Calculate a weighted average burn rate based on different user profiles any way you wish and the result is the same. Starbucks creates a huge stir among its most feverish fans and collects  around $2 Million in cash that it can sit on for an extended period of time. Roll this trial out to a larger audience and you can see the potential impact for Starbucks.

Both the Amazon Coin product and Starbucks Steel (my version of the name) card are illustrations of how brands with well executed customer loyalty strategies can extend their brand in any number of inventive ways. Both cases should make you more excited about the possibilities of customer loyalty and cause you to buy a bigger white board for campaign planning.

Apparently, whatever can be imagined by brands with a highly loyal customer bases can become reality. Instead of leaving loyalty in a box defined by points and miles, why not follow the lead of Amazon and Starbucks to leverage customer loyalty to meet goals not typically associated with loyalty programs.

It’s worth a try.

Plink is a merchant funded rewards program launched in January 2012 which links national offline merchants with online consumers through a registered card model. Plink has grown rapidly, building both a large merchant network and strong consumer following.

The founders of Plink have roots in Adperio, an interactive agency working at the time for Netflix, Discover Card and other big brands. Adperio earned its success by referring massive numbers of people on FarmVille and other online gaming sites to open trial accounts at Netflix, in the process becoming the biggest source of new customers for the online media provider.

The kernel of the idea for Plink grew from this early online success. As Peter shared, “if it was possible to stimulate significant referral business between online players and e-commerce sites, why not extend the model to link online fanatics to offline brands?”

Plink began building its merchant network in the restaurant business with Taco Bell, Dunkin’ Donuts, Red Robin, and Outback Steakhouse. Today there are more than 50,000 locations across 15 – 20 national brands in the network nationwide. As they continue to grow, Plink will focus on national merchants and does not plan to extend into local retail markets. The program gets the most traction among consumers between 20 – 30 years of age and so far, growing the customer groups has not been a challenge.

If you ask Plink to describe what it has created, they might tell you they have perfected the art of moving large groups of consumers to brands carefully matched to their interests. Or they might say that they have taken the traditional affiliate model to an entirely new level. One thing they won’t say is that they want to be someone else’s loyalty program.

To draw some industry comparisons, the system is similar to Belly, Perka, or LevelUp as it maintains its own membership base. Plink focuses on driving share shift and other financial objectives for its clients, but stops short of substituting its structure for a client loyalty program.

Merchants are happy to contribute up to 10% in rewards funding based on Plink’s pay for performance model. Merchants are able to structure their rewards to meet their needs. White table cloth restaurants might offers 8%, while gas and grocery ring in at 1-2%. Multi-line department stores Macy’s and Nordstrom go as high as 10-12%. Of the amount contributed by the retailers, about 50-75% is allocated towards customer rewards, establishing a perceived payback for most Plink members between 5-10%.

Plink offers an advantage to its partners based on the data it collects, and can demonstrate a return on investment via share shift between brands in the same category. To protect this model, Plink is willing to grant exclusivity in some retail categories.

Early on, Plink rewards centered on Facebook credits. This catered to the core audience of online gamers, but this group wanted more, saying “I don’t always want FB credits”. As Plink has evolved, it has opened up the reward choices to gift cards issued by national merchants. Over 25 – 30 brands participate with the most popular choices including Walmart, Target, Amazon, Starbucks, and Apple.

Peter acknowledged that some loyalty programs built on a registered card model have experienced slow enrollment rates as customers evaluate the risk and reward of entering credit card information online. Plink has overcome this potential obstacle by making enrollment seamless and by focusing on groups of consumers considered to be digital natives.

Looking into the future, Vogel said that sorting out the legion of digital loyalty players will not be easy task. He predicted “there will be natural attrition in the offer space” and emphasized that he “would rather invest his energy growing the list of merchant locations accepting Plink.” He hopes to add 1-2 brands each month and reach 100,000 locations by end of 2013. Recently Old Navy, 1-800 Flowers.com, and travel brands AA and Holiday Inn have joined. The recent launch of the Plink mobile app is evidence of continuing development.

Plink is building a sustainable long term model, though Peter admits other groups might form similar networks based around member groups with distinct characteristics. The main value Plink emphasizes to its retail partners is that customers who are Plink members always pay full price and still get rewarded.

As opposed to other digital loyalty players which focus on daily deals, Plink is not teaching people to shop for deals and only buy when the product is 50% off. Vogel stated that “Plink does not devalue the products of its partners and prefers to help them elevate their brands through added value offers.”

Leslie has been in the payments industry for nearly 25 years and leads Citi Retail Services’ credit program activities across more than 20 retail and oil portfolios including Sears, The Home Depot, Macy’s and Shell. A division of Citigroup, Citi Retail Services provides consumer and commercial credit card products, services, and integrated retail solutions to national and regional retailers across the U.S. The business currently services more than 80 million credit accounts and has assets of nearly $40 billion.

Citi Retail Services approaches its business with a fresh perspective and provides a surprising set of services designed to bring extraordinary value to its clients. Apart from the expected credit related services, the business offers data insight services, conducts market research, maintains online panels of consumers to understand competitive wallet share and trends, and provides mystery shopping services, all with the goal of improving customer experience.

The overall goal of this approach is to position Citi Retail Services as a trusted advisor with clients rather than simply a vendor of card issuing services. Leslie described core mission of the business as a “commitment to create top-line growth for retailers and to make PLCC an instrument to improve sales.”

Leslie is optimistic about the future of PLCC, emphasizing that consumers don’t view their store charge cards as a credit product, but as a method to enable purchases. “The customer should think the private label card is the smartest way to pay in the store”, said Leslie, adding that “the fact that the product is the lowest cost payment method for retailers makes it highly valuable for all parties”.

To make PLCC truly relevant to the customer experience, Citi Retail Services enables “hot builds” and credit approvals in real time at the point of purchase. Leslie’s philosophy is that the issuer must be available to both the retailer and the customer in the moment of purchase decision.

Because people today have fewer cards in their wallet and are more savvy about using the private label card to shield their bankcard line from higher usage, Leslie was proud to share that the average FICO scores among PLCC cardholders are the same or better than in the branded card area.

Looking into the future, Leslie acknowledged the emergence of many disruptive marketing technologies offering mobile wallets and alternative payment systems. She noted the present system works well enough for most consumers and that establishing a broad acceptance network for the start-up competitors will be a challenge. Another challenge for the disruptors she mentioned was the focus on gathering data for themselves. Citi Retail Services, on the other hand, helps its clients leverage their own data, creating trust and value in the business relationship between issuer and retailer.

When asked about Merchant Customer Exchange (MCX), Leslie was quick to say the group provides a needed voice in the industry for retailers. At the same time, she reminded me of the core mission and commitment to create top-line growth for its clients. As I listened to her describe her passion to create stronger bonds with her clients, I realized that it might be this positive outlook that will help Citi Retail Services relieve the inherent conflicts with its retailers over interchange fees and create a new model for PLCC issuance.

At the recent Loyalty Expo conference, a panel of business leaders from Citi Retail Services, OfficeMax, The Home Depot, and Macy’s, gathered to discuss the convergence of payments and loyalty and how the partnership between big retail and those that issue credit and private label credit cards is becoming more important each day.

This two part article addresses this convergence, first through coverage of the panel discussion that took place at Loyalty Expo, followed by an interview with Leslie McNamara, Executive Vice President, Partner Management, Citi RetailServices, who spoke in greater detail about her perspectives on the business.

The panel discussion began with participants acknowledging the recent wave of credit card legislative reform, a recovering economy in which consumer appetite for credit is still evolving, and increasing momentum for the retail industry as it seeks to reduce its payment processing costs.

In the aftermath of implementation of the Credit Card Act of 2009 and the Durbin Amendment, private label cards had come under particular pressure. Many voices in the cards industry were predicting that a horizon loomed for PLCC, if not signifying the end of the product life, at least thinking that it would be marginalized as a marketing tool for retailers.

Brandon Hayes Director, Financial Services, The Home Depot tackled this question straight away saying that “cards can help fulfil the consumer dream and enable purchases that otherwise would not be made”. The opportunity to position the private label store charge card as part of the customer experience and as friend rather than foe to the customer was something each panellist had on their mind.

Highlighting the value of private label credit, Leslie McNamara, EVP Partner Management, Citi Retail Services pointed out that only through PLCC can the retailer develop a true 360 view of the customer, rich with more product level details than ever being catalogued from the purchase transaction stream. Arnold Lewis, Vice President of Customer Loyalty and Rewards, Macy’s agreed adding that while PLCC can serve to reduce cost and serve other infrastructure needs, they should first be positioned to drive business results.

The discussion turned to the opportunities for retailers to integrate payments and loyalty to achieve better business results with panellists speculating at the organizations to watch as innovators and loyalty enablers.

Citi has made conscious strides to expand their card based value propositions beyond points and discounts to emphasize the experiential aspect of the loyalty programs they connect with, while Home Depot mentioned its use of customer purchase data to predetermine which items are “next to buy” and push offers to people in their stores. The Home Depot is also a leader in accepting alternate forms of payment, and is testing offers triggered when PayPal is elected as the payment method.

The discussions were among the most valuable at the conference as multiple national retailers have banded together under the Merchant Customer Exchange (MCX) banner in hopes of identifying an alternate payment system to the four largest networks in operation today.

Signs of cooperation between issuers and retailers were in evidence and our interview with Leslie McNamara of Citi Retail Services shared as Part 2  tomorrow provides great examples of how one of the largest issuers of PLCC cards in the US is addressing new opportunities for cooperation with its retail customers.

Ok, I know that “payment card joke” is probably an oxymoron, if funny at all, but as I sat through an update of the status of EMV roll-out in the US at the recent Card Forum, I had to chuckle, even if under my breath.

You see, I was in the front row listening to a presentation given by Richard Sanders, former head of cards for Visa Europe and, at that time in the same position with Abbey Bank UK, when he brought the house down with his predictions about the timeline for EMV coming to America. Richard made his remarks in 2005.

The presentation was made during a CardTech SecurTech event in Las Vegas, and Richard was fresh from leading the launch of the first successful ”chip and PIN” program in the UK.. He knew his stuff and predicted to the audience that chip cards would be coming to America sooner than later. His logic was that as markets outside the US went to the more secure system of payment card management, fraudsters would be steadily eliminated from those markets and would eventually turn to the US as the only greenfield of fraud left in the world.

Most questions from delegates that followed expressed skepticism, saying that the current system powered by magnetic stripe was so dependable and that our fraud issues were so well managed that EMV may not ever land on US shores. Now EMV is well on its way to becoming a reality in the US, meaning that consumers will soon nonchalantly accept that all credit cards come with a micro-chip on board.

There is some confusion in the payments industry about the implementation timeline even today, but EMV (Chip and PIN) payment is most certainly on the way to the US. You might want to visit the Smart Card Alliance Group website to learn more about details of the plan.

At the moment, “up to 56% of US cardholders going abroad have difficulty using their cards” according to Carolyn Balfany, Group Head U.S. Product Delivery, MASTERCARD WORLDWIDE. As the EU has completed its migration to EMV, the region has seen an 80% reduction in credit card fraud while the US has witnessed a 47% increase. According to Troy Bernard, Director, Chip Payment Technology, DISCOVER FINANCIAL SERVICES, “fraud generally declines about 50% when the new system is fully in place”.

The April 2013 deadline for merchant acquiring organizations to be equipped to process EMV enabled cards in the US is just about in the rear view mirror. Plenty of progress has been made and the acquirers should be ready well ahead of the next important date in the process, October 2015. At that time, retailers or other parties in the payments chain that are not ready for EMV will become liable for any fraud that occurs in the course of purchases made.

ATM’s must be ready to accept EMV cards by 2017 and Stephanie Ericksen, Head of Authentication Product Integration, VISA INC. shared “the company is not pushing to accelerate the rollout of Chip and PIN at the point-of-sale” as it knows that any remaining fraud volumes will run full speed ahead for those unprepared ATM machines.

Once EMV is in place, early days will see about 60% of transaction volume be managed through the CHIP and PIN process, with about 40% of volume falling back to magnetic stripe card readers until all systems are converted.

The path to full implementation of EMV is deliberate, but it will happen.  At the rate fraudsters are ramping-up skimming schemes via ATM’s throughout the Americas, better protection of cards used by consumers will be most welcome. Consumers may not understand much about the card they will soon carry, but they will like the big idea that their card accounts will be safer on a daily basis.

When Richard made his predictions in 2005, he probably did not expect that it would take up to 12 more years for EMV to become a reality in the US.  The fact that he made the prediction at all in 2005 is testimony to Richard’s visionary understanding of the payments business. If you are interested in today’s predictions about the cards business, throw away your crystal balls and just click here to contact Richard directly.

Editor’s note: This is not a paid endorsement, I simply remember this as one of my favorite stories from the early smart card days in the US. Richard is now Principal Solution Consultant with ACI Worldwide, where he continues to evangelize for winning card strategies.

Succinctly put, the current system of swiping a rectangular piece of plastic with a magnetic stripe on the back to complete a purchase works well enough to allow the associations to maintain their pricing structures. Over the past ten years, smart cards and contactless cards have all benefited from tremendous outside investment and each has fallen short of displacing the current system.

Now cloud based digital payment systems are gaining momentum to unseat the established oligopoly. There are several well documented competitors in the virtual wallet space, with Google wallet, ISIS (composed of key partners AT&T Mobility, T-Mobile USA and Verizon Wireless) and the Merchant Customer Exchange (MCX) deserving the most attention. Peer to peer payment systems as well as other schemes are popping up. Groups like Square, LevelUp and Dwolla, which merges a digital wallet with location based marketing and loyalty, are seeking entry into the inner circle of next generation payments systems. Wallaby, another cloud based wallet, also seeks to become the “one” card that consumers need to carry to optimize the way they use the cards in their wallet and maximize reward earnings.

The one thing each of the alternative payment groups has in common is the drive to create a high utility payment system that lowers processing costs for retailers while making life a bit easier for consumers. The difference between them all is the path they are taking to take to achieve this goal.

Recently I attended a workshop given by Robert Mau, Knowledge Expert McKinsey & Company and learned that 37% of consumers surveyed in the McKinsey Mobile Consumer Survey 2013 say they expect to have widespread ability to make mobile payment at retail stores within 3-5 years. About 60% of the respondents said they expected there to be just one principle mobile wallet system in that time frame, meaning the competitors I’ve mentioned are engaged in a zero sum game. Many will play, few (or just one) will survive.

In addition to merchants including Bed Bath & Beyond Inc., Dillard’s, Inc., Dunkin’ Brands, Gap Inc., Sheetz, Inc. and Wakefern Food Corp announcing their alliance with MCX last fall, RaceTrac made a similar announcement last week. The power behind MCX is growing and an announcement today shared that Gemalto has been selected to develop a cloud based mobile wallet using barcodes for reading at the POS. Based on current membership, the wallet is expected to be accepted at 75,000 locations across 35 participating retailers.

In a discussion that followed Mr. Mau’s workshop, it came clear that the eventual winner in the digital wallet competition will have a solution based on one of three backbones:

1. A network that allows retailers to accept payments based on traditional credit and debit cards but process them through a proprietary interface outside of the large associations
2. A payment clearing system based on the ACH Network that ties a payment card to consumer checking accounts, similar to the principal method used by PayPal.
3. A closed loop network built on connections made merchant to merchant and bank to bank.

There are pros and cons to each model, subject of a white paper you’ll see published soon on LoyaltyTruth.com and it is entirely possible that the associations themselves could step in and offer their own solution, in cooperation or “co-opetition” with each other.

Lowering payment processing costs is the easier of two objectives to be addressed. To become the winning solution for a new era of payments processing, a solution needs to be established that actually makes a difference to consumers. That solution must be clearly preferable to consumers at the point-of-sale, creating a gap between the innovation and the current magnetic strip card solution. Creating an elegent solution must also be accompanied by an acceptance network that is “universal” or as close as it can get to engage consumers.

A secondary theme of the conversations around digital wallets is to solve the compound equation of aggregation and disintermediation. Whether there can be “just one card” that consumers are able to carry that creates a better purchase experience in daily life remains to be seen. It remains one of the most interesting aspects of the discussion around the future of payments, and the loyalty programs that fuel card usage. 

Back then, our goal was to make every piece of loyalty communications as relevant as possible, striving for the holy grail of one-to-one marketing. But limited to direct mail and e-mail, our messaging wasn’t so much one-to-one as it was one-to-many. It was just too cost prohibitive to personalize every mailing, so we had to “bucket” customers into specific messaging streams.

Of course, with the advent of social media, achieving a true dialogue with customers through one-to-one communications has actually become doable. Via leading social sites like Facebook and Twitter, you now have the opportunity to truly engage with customers in real-time. In fact, most of your customers expect it.

Yet it recently struck me that most marketers play social media on defense. When it comes to engaging with customers in a true customer dialogue, they’re in a reactionary mode, not a proactive one. So the company-customer dialogue works like this:

A company has a person or team assigned to monitor the social space. They search for tweets or posts that call out the brand or product by name, and when they spot one, they spring into action. Most of the time it’s to address a problem or customer care issue that has surfaced. Sometimes it’s to say thanks for a compliment. But either way, it’s all about playing defense.

When it comes to offense, for most marketers the social media game plan is to blast out Facebook posts and tweets with promo hashtags, then wait for customers to respond. But there’s a vital piece missing. The one-to-one interaction or dialogue that recognizes me as a valued customer.

I believe there’s a huge missed opportunity here, and it’s the chance to proactively engage with best customers via social media—not because something is wrong, or because you have a new promotion or product to push—but because you want to engage them in a relevant dialogue to show these customers you really care about them.

For example, what if American Airlines reached out to me after a flight and asked me how things went? Or if my local Bonefish seafood restaurant let me know my favorite fresh seafood dish was now available? Or the Doubletree hotel let me know they were glad my family was visiting again and I could have a late check-out?

It would be possible—if these chains had made the effort to collect my personal social media information and had it on file. They could then use their massive databases to cross-reference my activities and personal preferences to proactively reach out to me via Facebook and Twitter.

I was recently reminded why this was so important by the godfather of permission marketing and dialogue himself, Seth Godin. In one of his recent blog posts he wrote:

Dialogue leads to connection, which leads to trust which leads to engagement.

Godin also points out that “in today’s over-saturated communications world” it can be exceedingly difficult to hold a dialogue, yet the attempt to engage with a customer is “demonstrably better than the alternative”. Because the alternative is still the mass-blasting of communications, even if the vehicles have changed from on-air media to social media.

So what’s holding you up? Are you using social media to hold a relevant dialogue and engage with your most valued customers? If not, why not?

Plink.com presented a case study with Dunkin Donuts, one of the leading coffee chains in the US. Plink was launched in early 2012 as a merchant funded loyalty program that links online and offline merchants with consumers through a registered card model. The Plink merchant network has grown quickly to include 15-20 national brands across more than 50,000 locations in the country. Interestingly, Plink CEO Peter Vogel shared that the company is not lobbying to become “someone’s loyalty program”, but is offering national brands a disruptive form of advertising in a risk free, performance based model that will shift market share their way.

For Dunkin Donuts, early results of working with Plink has generated 22% incremental sales for participating locations with 63% of transactions coming from new customers. Plink also reported a 24% market share increase for Dunkin Donuts, shifting share from the chain’s principal competitors in the process. 

After the presentation, I had the opportunity to interview Peter at length and will share highlights here next week.

A discussion of the convergence of Loyalty Marketing and the Payments business wrapped up the conference for LoyaltyTruth. The panel composed of Leslie McNamara, Citi Retail Services, Brandon Hayes, The Home Depot, Arnold Lewis, Macy’s, and Bernny Thacker, OfficeMax was moderated by Phil Rubin.

Panelists agreed that private label credit is far from dead, and that even after two rounds of credit card and interchange legislation in the US, the payment vehicle is once again becoming integral to the customer experience. Brandon from Home Depot expressed that cards “can help fulfill consumers dreams” and facilitate purchases which otherwise might not be made. The PLCC product is more available to consumers with approvals able to be made in the process of check out. The result is that customers associate the payment card with their favorite brand and tend to view it as a payment facilitator rather than simply an alternate source of credit.

While the friction between retailers and card issuers was acknowledged, Leslie from Citi made a clear case that her organization’s success is tied to serving the retailer and helping to drive incremental sales and profits. As proof of this statement, Leslie expressed support for her retail partners such as Home Depot who choose to accept PayPal at the retail point-of-sale. By operating in this transparent model, Citi is establishing itself as a partner with its retailers rather than just a card issuer.

Loyalty Expo provides a venue for marketers from many disciplines to exchange ideas and advance the sophistication of the business. Based on what transpired at this most recent event, there is progress and change ahead in 2013 which serve to accelerate the transformation of loyalty marketing for the future.

In North America, Loyalty360.org is the de-facto industry association for loyalty marketing. This was the 6^th edition of the Expo and the size of the delegate audience and diversity of brands in attendance were testimony to the continued interest in loyalty marketing as well as success of this organization.

Mark Johnson, Loyalty360 CEO, provided his own keynote for the event. Asking the question that never seems to go away with a simple consensus, Mark queried the audience on how they each define “Loyalty”. He continued by sharing a series of personal experiences with some of his most frequented airline, hotel and retail brands, making the case that the true value of a loyalty program is in the data collected. While the world spins in discussions about Big Data, Mark pleaded for brands to take advantage of “little data” to inform daily interactions, recognize valuable customers, and enable customized treatment of these customers based on their history, value, and potential to the brand.

Phil Rubin, owner of the agency rDialogue and Maggie Lang, Kimpton Hotels, followed with a case study of how the boutique hotel chain has used little data to improve its customer service and increase customer satisfaction.  The San Francisco chain is an acknowledged pioneer in bringing the boutique hotel concept to the US and now operates 58 hotels in 24 cities. Its loyalty program is named InTouch and focuses on gathering profile information for its members in order to serve up personalized experiences while on property.

In Kimpton’s and other presentations which shared examples of brands crafting customer interactions based on collected data and positioning this customization as a benefit of a loyalty program, several delegates asked for clarification between data-informed customer experience and stellar customer service. For instance, when reservation personnel at the hotel made an in-the-moment decision to provide a cocktail for a weary traveler on the house, delegates wanted to know if the surprise and delight tactic was “loyalty” or “customer service”. The answer seems to “both” and highlights another important aspect of loyalty program execution today. Front line employees hold the key to successfully communicating program benefits and making these benefits come alive for members. For Kimpton and others, training employees to understand the importance of the InTouch program and allowing them the freedom to execute within discretionary limits was the crucial link between the loyalty program and the customer experience.

The discussion of customer experience continued with Orbitz, Choice Hotels, MasterCard, American Eagle Outfitters, SunTrust Bank, Badgeville and several others. As you might imagine, it was the presentations which shared data concerning program outcomes that drew the highest attention among delegates.

Mister Car Wash is the largest chain of its type in the US, with over 100 locations in 14 markets. They operate two loyalty programs, Mister Value Program and Unlimited Car Wash club. The “MVP” program is free to join and provides a 10% discount on full service car wash and other services, while the Car Wash Club provides unlimited car washes for a monthly fee with no contract. Individual store managers were voicing concern that these programs were margin-eaters, and wisely the chain decided to respond to their doubts with hard program data.

The power of both programs was made clear when Mister Car Wash shared that members who registered an email address with the chain visited 4.67 times more than those who did not register an email and delivered an average revenue $75.42 higher than their non-registered counterparts. Those numbers translate into huge incremental revenue figures and helped sway opinion among store managers. 

Part 2 of this conference report will follow tomorrow and will focus on the future of private label credit cards.