Starbucks launched a mobile application to serve as the principal touchpoint for its My Starbucks Rewards program. In a discussion of the company’s 2012 Q1 results, Starbucks executives highlighted the impact of  the Starbucks Card and the mobile payment app , saying that it supports increased purchase frequency, and contributed to second quarter revenue growth, as U.S. customers loaded $500 Million on their cards in December, up more than 23% from the same period of the previous year.

Starbucks also reported that it gained 413,000 new members to the My Starbucks Rewards program in December, bringing total membership to more than 3.7 million. Growth in China is skyrocketing, with 250,000 already enrolled in My Starbucks Rewards. In North America, the card accounts for almost 25% of customer purchases.

Now CVS has gone mobile, announcing its app for iPhone and Android today. Though there are a host of things the app can do to benefit program members, the most important being (to me) that coupons can be loaded to the card and redeemed using the smartphone at the point of sale. Remembering your membership card or even your phone number associated with the account is no longer an issue.

Of course the app has a store locator and lets you check up on weekly specials as well as scan product QR codes in store. It also has a prescription function that makes it easy to access your prescription history and refill prescriptions on the go.

Soon, whether you are thinking about making your Saturday errands a little easier to knock off, or simply want to get the most from your rewards program,”don’t leave home without it” will take on a whole new meaning.

When I walked into Sports Authority last week and was asked to join “The League”, I had the feeling the sporting goods chain was striving to capture some of that same magic. The punchy program name gives the member a feeling that they are part of something, even if boils down to just a 5% discount able to be earned every 3 months.

I could dwell on the structure of the program and tell you that the program rules are largely unimaginative and the promises of value are vague beyond the 5% discount shown in their literature. The more important subject I want to treat is the motivation behind the launch, and how I read between the lines of program rules to interpret what they are created to communicate to customers.

For instance:

• The enrollment process was seamlessly built into the point-of-sale machinery and employees were well trained to facilitate enrollment without impacting check-out time. This tells me that Sports Authority is dedicated to building membership in the lowest cost channel available (smart) and is telling its customers they value their time (even smarter).
• The League is structured as a never ending interval workout, i.e. you run hard for a brief period of time, then rest for a moment before taking off again. Members earn 1 Point for every $1 spend on “qualifying purchases” (a Loyalty Asterisk) and must reach a minimum of 100 points in a calendar quarter (January 1 -March 31, etc.)  to be eligible for Reward Bucks. Here’s where the interval concept takes shape. Whatever you earn in the quarter generates a 5% equivalent reward (assuming you met the threshold) and then the account balance is set to zero with points below the threshold forfeited. This structure may exhaust consumers not able to keep the pace and The League had better build in some memory, doing special things for those who consistently shop even though they don’t reach a threshold.
• The program has an earning ceiling of $200. Apparently Sports Authority wants consistent customers who spend, just not spend too much. Yes, I realize that the ceiling denotes people spending $4,000 per quarter and that the rule is in place mostly to control fraud, but does it also discourage schools and local teams from sending all of their business to Sports Authority? I’ll give SA the benefit of the doubt that their data analysis showed this level of spending to represent true “outlier” behavior.
• Rewards are delivered in two ways, via sportsauthorityleague.com and by white mail. Web delivered rewards are available within 5 to 7 business days after the end of the designated interval (quarter), but those that come by mail take 3 to 5 weeks to arrive. With that contrast, why not take the bold step to make rewards available only online. There are reasons (see below).
• The list of things Rewards points cannot be redeemed for includes some of the typical items (gift cards, items intended for resale, etc.) but also includes online purchases. If you are going to make your website the most convenient redemption channel, why not let the rewards earned be used in that same web visit to make a purchase? There’s a group of 80 Million strong with growing influence called Generation Y that seems to have become fans of the internet

The motivation and timing of this program launch? I could imagine a few quotes overheard in marketing meetings at Sports Authority ranging from “we need to know more about our customers” to “it’s about time to launch a rewards program, everyone else has one”. The real reason just might be that “everyone” in Sports Authority lingo means Dick’s, and the competing chain just opened its first store in my area in a plaza directly across the street from Sports Authority. A week or two before The League came into being, storefronts were repainted and a new sign installed. Preparing for a more intense battle for sporting goods sale, Sports Authority probably launched its rewards program as an answer to Dick’s Scorecard program.

The good news for Loyalty Marketers is that despite criticism, most retailers still consider some form of rewards program as an effective tool to attract and retain customers. The better news is there is so much more that can be done by and on behalf of these same retailers and their customers. Sports Authority is a perfect venue to create a game based environment, maybe in partnership with local teams, and to incorporate social channels for communications.

It’s early in the first quarter, let’s see how the game plays out.

Phish ads cropped up on news websites as diverse as the New York Times, Slate, the Wall Street Journal, and several more of my usual haunts. Everywhere I turned, there was the same ad, exhorting me to purchase tickets for Phish’s summer tour. It was if my web browser had gotten a tattoo without telling me about it.

So here’s an advertisement, purportedly tailored to my interests as defined by my web browsing history, which Google had helpfully tracked for me. Pretty cool, right? I should be delighted that I don’t have to look at web ads that hold no interest for me. Google is encasing me inside a virtual cocoon, in which the only ads I’ll see are ones that reinforce my personality, my interests and my worldview.

There’s only one problem: The Phish ad was actually irrelevant to me because I had already purchased tickets for the summer tour. That’s what Phish fans do. I’d venture that most of the consumers Google had identified as likely targets for the ad were serious phans who had already spent their money. So for the band, the ad was money wasted preaching to the choir.

That’s the problem with spending money on targeted web advertising. All search engines know is what you’re interested in; they have no idea what you’ve done.

Now imagine an ad served to me based on my actual transaction history, rather than just my browsing habits. How much more relevant and valuable would such an ad be? “We know you just purchased tickets to Phish—did you know that My Morning Jacket is coming to your town this summer?”

It’s the ability to serve up an ad that delivers value by expanding my opportunities, rather than one that restricts opportunity based on an insufficient view of my behavior that separates loyalty marketing from targeted advertising.

Factor in my annoyance that at no point did I opt-in to this service, which provides useless ads that I didn’t ask for, and you’ve got a formula for an egregious waste of marketing dollars. There’s a subtle but important difference between being served ads on Google’s site, where I’m explicitly asking to use their service, and being served ads on a third party web site that are creepily stalking me based on data collected from my personal browsing history.

Don’t get me wrong: I respect Google’s right to make money for providing me access to their awesome search tools. I’d much rather be sold to advertisers than have to pay a monthly fee to search. But in this case, the Phish ad hits the bad-marketing trifecta: It violates my privacy, it delivers no value, and it reeks of faux relevance.

Google makes it clear from time to time that they can represent the most efficient channel for targeted marketing spending by brands, large and small. Sometimes it sounds as though they are planning to complete with my business: Building customer loyalty through the use of customer data, and helping their clients build strong relationships based on trust, value, and the transparent exchange of information.

Only in this case, the ad breaches my trust, offers no value and is based on data that provides them only a cursory view of me as an individual. Google should probably know better and has a gap to close if they are to fulfill market expectations as a preferred marketing channel.

Might I humbly suggest they look towards Amazon to see how the online retailer has improved its use of the collaborative filter? When introduced, it behaved similar to the Google ads of today, but over time has evolved to operate with more sophistication.

Phish is a rock band; you can forgive them for not getting it. But Google should.

Over the next few weeks, we will share announcements with you that may cause you to re-examine this independence. If you’ve noticed the re-launched Loyalty Truth blog site, you will see our sponsorship relationship with Aimia and, in this post, we highlight that Bill Hanifin (that would be me) has been named to a  newly formed Board of Advisors for Badgeville, the acknowledged leader in Gamification and behavior modification platforms.

We’ve been entertaining advertisement and sponsorship opportunities for some time and have deferred on a number of them based on the nature of the relationship or timing. Accepting the sponsorship of Aimia is all about good timing and thought leadership alignment. Aimia is the Canadian based global leader in loyalty management, having its roots in the Air Canada frequent flyer program that was spun off as part of the airline’s financial restructuring several years ago. Today, Aimia owns and operates Aeroplan, Canada’s premier coalition loyalty program and Nectar, the United Kingdom’s largest coalition loyalty program. In addition, Aimia has majority equity positions in Air Miles Middle East and Nectar Italia as well as a minority position in Club Premier, Mexico’s leading coalition loyalty program and Cardlytics, a US-based private company operating in merchant-funded transaction-driven marketing for electronic banking.

We’ll have more to say about our relationship with Aimia shortly, but for now, let’s just acknowledge that we are thrilled to have formed this business relationship.

The Badgeville Board of Advisors will provide a forum for thought leadership and creative application of Badgeville products to benefit existing and prospective users. Joining me on the board is a set of acknowledged industry leaders from a variety of marketing disciplines. Badgeville will be announcing the other members through separate releases. Being part of this group also provides an unequalled platform from which we can implement elements of Social Loyalty strategy that Hanifin Loyalty has been developing over the past 7 years.

We’ve dedicated significant resource to understanding how legacy customer loyalty models should evolve to meet the needs of today’s digital consumer. Building on our study of Generation Y (Millennials) in 2005, we’ve  broadened our work to encompass the population group known as “Consumer 2.0”. Estimated to represent approximately 50% of the US population or 150 Million persons, Consumer 2.0 is composed of those highly networked, mobile and “always-on” consumers who have taken brand conversations outside of traditional channels and are redefining how brands understand purchase behavior.

In the new era of Social Loyalty, brands need to get “ahead of the transaction” to be successful, and Gamification is the best engine to drive customer engagement, a predecessor of longer term brand loyalty. In our opinion, we believe Badgeville has the right technology, resources, and vision to change the shape of customer loyalty over the near term and make social loyalty a reality.

As a little background, Badgeville is known as The Behaviour Platform, and enables more than 150 of the world’s most innovative businesses to measure and influence user behaviour. The growing client list includes Deloitte, Samsung, EMC, CA, NBC, The Active Network, Appirio, Recyclebank, and many more. Founded in 2010 to revolutionize the analytics industry and bring modern engagement experiences to every web and mobile property, Badgeville draws on proven techniques from social gaming, traditional loyalty programs and social networking in its acclaimed suite of Behaviour Lifecycle Management solutions.

The team at Badgeville has extensive experience in game design, loyalty, enterprise software, and analytics, drawing on executives and team leaders from Zynga, Omniture, Playdom, American Express, Electronic Arts, Lithium, WebEx, Amazon, and Salesforce.com.

Over the summer, I’ll be participating with other members of the Advisory Board in a series of City Tour events in San Francisco, Seattle, Chicago, and New York. I’ll also be part of the Badgeville User Summit in San Francisco, scheduled for August 8-9, 2012.

Industry pundits as far away as Bahrain are speculating that 2012 will be the year that Loyalty Marketing makes great strides into the future. We agree, and through these relationships we will maintain our objectivity and continue to share the “truth” about Loyalty Marketing as you have come to expect. Badgeville, and you, wouldn’t have it any other way.

There was just one thing missing: the big idea.

The agency later found out they hadn’t won the business and frankly, I wasn’t surprised. Because had I stumbled upon the proposed site, I couldn’t have told you what the company stood for, what separated them from their competitors or why I should buy from them. It was another “me-too” site. And I don’t think this lack of originality was an isolated incident.

Over the past few years, it feels like the power of the idea is often trumped by the power of technology. Coolness wins over substance, and when that happens the opportunity to connect with consumers in a meaningful way is often missed. You may make a one-off sale, but the emotional connection that leads to return visits, repeat sales and brand loyalty is lost.

In the creative department we often say that the creative work is only as good as the strategy or brief behind it. (The exact phrase we use is “Sh-t in, sh-t out”.) And I believe a leading cause of the dearth of the big idea, is a faulty or non-existent strategy from the outset. The upfront thinking (aka heavy lifting) that’s required for meaningful work is often kicked down the road and then retro-fitted into whatever creative/technological solution that’s deemed the most cutting edge or fashionable.

In a recent blog post, Seth Godin touched on this less than consumer-friendly approach to marketing, specifically as it relates to strategy. Godin posited that the culprit was often the fact that there were too many strategies out there: “an email strategy and a social media strategy and a web strategy and a mobile strategy” and that they often ignored the “one and only one thing that matters, and it’s people”.

Godin goes on to point out the pitfalls that come with an incoherent strategy: All of these media are conduits, they are tools that human beings use to waste time or communicate or calculate or engage or learn. Behind each of the tools is a person. Do you have a story to tell that person? An engagement or a benefit to offer them? Figure out the people part and the technology gets a whole lot simpler.

When we put more value on the tools and tactics than the upfront thinking, what results are poor strategies that lead to weak ideas that fail to engage the consumer. While the finished product, for instance a new Web site, may look shiny and hip on the outside, it often has a pixel-thin appeal and lacks the emotional resonance that sparks people into developing a real relationship with your brand.

One company that’s getting it right: Anthropologie.

My wife is a big fan of this female-focused company’s clothing and accessories and a visit to their Web site helped show me why. The Anthropologie site successfully sells an alluring lifestyle that varies by season. Currently themed “The Island Life”, the site features a mix of beautiful “island” photography, video and copy that’s carried through on each of the site’s main sub-pages. It sets a great mood and romances the customer before trying to make a sale.

As far as the company’s use of personalization, upon entering the site it immediately called up the nearest store location (helpfully informing me it was currently closed for “remodeling from head to toe”, but pointing out another nearby location). And I know from e-mails my wife has received, they also do a fine job of personalizing e-mails, apparently by analyzing her past purchasing behavior. Kudos on a job well done!

Most people were engaged with their Smartphones while others scrolled away on their iPads. Others were less focused on reading material. For example, I couldn’t help but notice the couple next to me sorting out the selection of Airborne, baby aspirin, and sleeping pills they were sharing before take0ff.

The headline in my paper announced that married couples were now a minority, not only in Florida, but in the U.S. My first thought was to text my wife and congratulate her for making it through 24 years of marriage. Since the flight attendants might have confiscated my Android, I’ll do that later.

My second thought was about just how much our society is changing and, in turn, how difficult it is to “figure out” the consumer these days. Grouping people based on their past purchase history through a data segmentation exercise can produce a certain depth of insight. Research and focus groups can be heavily biased by sample sizes and group dynamics.

Listening in on the social graph probably leads to the most authentic insights about what consumers think, prefer, and actually do in practice. The question is, how do we listen and provide feedback to consumers without seeming like “big brother” or making their experience seem creepy?

And, how do we cope with and accommodate the increasingly “long tail” of customer segments discussed in this RetailWire discussion today?

The digitally connected consumer has done marketers a big favor in many ways. They have chosen to share details of the lives in granular fashion that could not have been anticipated before. They have also taken to communicating in channels that are the lowest of low cost.

Brands can afford to experiment, to test, and to learn in these channels without breaking the bank. But it’s not enough to “listen”, we have to connect the dots of the various interactions across the social graph – posts, check-ins, recommendations, reviews – and incorporate what we learn in a new form of value proposition that enhances customer experience and connects people emotionally with our brands.

If this sounds more like art than science, that just might be where we’re headed.

Last year, Loyalty Truth identified three key areas of unfulfilled promises in Loyalty Marketing, one of which was the leveraging of data collected through loyalty marketing programs. One of the tenets of loyalty marketing from its infancy was the ability to collect personal and preference data from members within the context of a trusted relationship. After 30 years operating programs, the brands sponsoring rewards programs have collected enough data to sink a battleship, but are using just enough to fill a row boat.

McKinsey agrees that we are entering a new era emphasizing business intelligence, saying Big Data is “the next frontier for innovation, competition, and productivity”. That said, why is the conversation about Big Data just now reaching a crescendo in the wider marketing industry?

And, how should we respond to findings of a report from Columbia Business School’s Center on Global Brand Leadership titled Marketing ROI in the Era of Big Data? The study found reasons why brands have failed to capitalize on big data and explained that marketers quickly adopt digital tools but stuggle to arrive at the much needed ROI calculations they were intended to predict.

An article in eMarketer highlighted figures from the study, in particular:

• More than half (51%) of US marketers said their biggest “Big Data” challenge was the lack of sharing of data among company departments
• Despite the large quantity of data that marketers may acquire, 42% of respondents said it was still too difficult to tie that data back to individual customers
• 45% said personalizing marketing communications—closely related to linking data to customers—was a major challenge

I’ve had plenty of first hand experience over the past few years working with customer data as part of customer strategy and program design. In the process I have my own specific reasons why Big Data is caught somewhere between well-head and the refinery.

My go-to group for data analytics and predictive modeling is the Boire Filler Group. Larry Filler, one of the two founding partners, convinced me early on in our relationship that there was no such thing as “just doing a customer segmentation”. The first step in an analytical process had to be an audit of data consistency and quality. Larry calls this a Data Discovery exercise and it has paid dividends in delivering quality work for brands seeking the right loyalty strategy.

In the process of “Data Discovery” we’ve found lots of dirty data, we’ve seen data collected through inconsistent methods and flawed by operational shortcomings, and have had big struggles to match transactions to unique customers across more than one database. The challenges are not insurmountable but require an investment of time and resource (equating to money) to arrive at a usable data set to support strategy recommendations.

All statistics aside, our experiences working directly with data provides the most compelling reason why Big Data is a challenge for business today. The resources to execute the work and the willingness to invest in the resources and tools to complete the work lags behind our ability to collect the data itself.

The parallels between Big Oil and Big Data are irresistible. Shell, BP, and ExxonMobil can own vast oil fields, but need the right level of refinery capacity to realize the raw material as a usable asset – gas for our cars. Big brands understand they own the resource, and the struggle today over Big Data is about creating the refining capacity to reach the end result.

Brands that want to solve the Big Data puzzle have an easy answer. Make the right investment in business intelligence and get the ball rolling. Assemble internal resources or outsource to a group such as Boire Filler. I wish I could complicate the answer, but in my experience, it’s just that simple.

The difference in what we know today versus 5 years ago? Not much.

Yes, the study by BCG, like many others over recent months, documents what we suspected we knew about you 5 years ago with quantitative measures. Apparently, the progress we Boomer-marketers have made understanding you has not been great, we’ve just been able to confirm what we suspected all along.

Surveying the range of interpretations of this study data by people in the know, we can say that Millennials now outnumber Boomers, and that they are “Engaged, Optimistic, and Charitable”. Possibly the most useful declaration among the current flood of articles is that “defining the Millennial Market is not as clear cut as you think”.

From my chair, I think it’s time to extend an olive branch to Generation Y. Instead of relentlessly attempting to analyze and categorize characteristics of your up and coming populous in order to sell more things to you, maybe we should round up a few chairs and have a frank conversation at the round-table. Considering that you’re soon going to be more important to brands than any other group on the planet, this seems to make a lot of sense to me.

When I get my chance, there are a few things I would ask:

• As digital natives, you’re always connected with your networks and have one of several devices close by to communicate with them. But which ones do you consider “private” and which do you allow to be peppered with ads, offers, deals and freebies?
• Let me go deeper. Since you don’t set up your voice mail and never turn your phone off, it seems the missed call log is the principal way you monitor who wants to reach you the “old fashioned way”. That said, I have a feeling that multiple missed calls from Nordstrom or Best Buy will not be embraced as “they love me”, but more like “they annoy me”. Do you agree?
• If reaching you by a voice call is not your preference, how about SMS? Even though you text each other until your fingers bleed, it seems there are few instances where you think of SMS as a commercial channel. Outside of just-in-time deal offers from your local frozen yogurt or smoothie shop, I’m not sure that invading your favorite means of talking with friends is a good idea. Agree?
• Twitter? Foursquare? From what I can tell, usage of these services is more popular in the older age ranges of your generation. So far Twitter and Foursquare have been used by AmEx, Walgreens and others to make you engage in lab-rat forms of behavior. Ring the bell once, you get the cheese. Your tendency to want it “fast and now” might make this work, but will you reject the perception of being manipulated?
• Maybe our entire conversation should just run through Facebook. After all, this is where you spend hours on end updating personal notes, reading reviews, and browsing retail catalogs.  But before I put all my chips on Facebook, I notice that lots of you still like to “showroom” in the mall to touch and feel products that you’ve researched online before you buy them. Agree?

What I’m really wondering about is how your proclivity for research pre-purchase and need for immediate gratification will impact our attempts to win your loyalty over the long term for any brand. It seems the need for immediacy, accuracy, value, service and a good price are a cocktail hard for most brands to swallow on a consistent basis.

You should know that we’re really trying to connect with you, and the smart ones among our Boomer-marketer group are sincerely attempting to deliver value communicated through the channel that suits you best. While you might think that points and miles are “lame”, we have other ways to make retail commerce fun and to recognize your value with the extras that make you feel special. Playing games is just a part of it, and our new take on Social Loyalty should convince you we’re on the right track.

Can we sit down and have that conversation? I promise not to treat you like a lab-rat.

This week, I found myself checking in at a familiar Wyndham property, one that I have frequented several times over the past six months due to several projects in the same region. I was sure I had enrolled in Wyndham ByRequest in the past, but could not find my membership information.

Later that day I started fresh and enrolled again. At the Wyndham website link, the process was easy. Having collected my “tombstone” information, I was presented with a form where I could designate my preferred room type and favorite destinations as well as note the beverage and snack that I would like to receive upon arrival. The welcome gift was to be triggered once I stayed 3 or more nights from sign up.

Before I left the hotel for a meeting, I stopped by reception and added my rewards number to my reservation. Because of the length of my stay, the reservations person informed me I qualified for a free room upgrade and continental breakfast on the executive floor the next morning. Needless to say, the immediate feedback was surprising and most welcome. Even as a relative newbie, I was beginning to feel like a valued guest.

I returned to my room after a meeting about three hours later and found a nice bottle of wine with crackers and cheese on the table with a welcome note from the hotel manager.

Talk about connecting the dots and delivering on promises, Wyndham had exceeded my expectations. The swiftness with which they recognized my qualification for benefits and the accuracy of delivery registered on my loyalty radar as exceptional in today’s market.

There was no waiting “until the next stay” or fiddling with details – Wyndham just delivered. The simplicity in execution translated into a certain elegance and, in the process, I was feeling like the hotel was intent on developing a relationship with me, not just reward me with “stuff”.

Flawless execution was the key to this stellar customer experience and cemented my intentions to stay with Wyndham on future trips. Trump Hotels and others in the category should take note!