The Loyalty Research Report released by ACI Worldwide has received tremendous coverage, most of it making loyalty marketers feel like pulling up their hip waders and tugging down on their helmet. In the words of my old boss at North Carolina National Bank Hugh McColl, it’s time to “hunker down”.

The survey was conducted by Wakefield Research and interviewed 1,053 Americans ages 18 years and older in December 2010. Results were released in March 2011 and the loyalty haters ate up the talking points like free treats from Tasti D-Lite.

A Google search this week yielded SERPS that can be seen in the graphic to the right. From some reputable sources, here are the headlines that set the tone before reading any of the affiliated articles:

Progressive Grocer: “40% of Consumers Report Bad Loyalty Experience”

Desination CRM Blog: “UPDATE: ACI Study on Ineffective Customer Loyalty Programs”

Chain Store Age: “Study: 40% of consumers have negative loyalty program experience”

Retailing Today: “Loyalty programs missing the mark”

Not shy about piling on, Marlys Harris, The Consumer Reporter at Moneywatch.com wrote an article “Loyalty Programs: A Pain in the Neck?” in which her assessment of the ACI report was summed up with these comments:

• “Forget about frequent buyer points and simply lower prices”
• “You may as well (participate) because one way or another, you’re already paying for the loyalty program in higher prices”
• “If you’re concerned about privacy, then don’t join the programs because you don’t want anybody digging your records for buying booze or pornographic movies”

ACI themselves adopted an interesting approach to capture the interest of the marketplace. In the Moneywatch.com piece, Rob Seward, Senior Marketing Manager for ACI answered the question “Who is to blame?” saying “mostly retailers …. who are missing the mark when it comes to reaching out to consumers with information and offers that are relevant.” In the Chain Store Age article, Mr. Seward summed up the current state of the market by saying “The end result is that memberships are becoming meaningless.”

Destination CRM banged the gong this way “Like a disappointing date, many loyalty programs leave consumers feeling under appreciated; 85 percent of members report that they haven’t heard a single word from a loyalty program since the day they signed up”.  In other words, loyalty marketers have been reduced to being data hoarders. After all, anyone who collects data about me and does nothing positive with it is no more than a hoarder with stalker tendencies!

I decided to look at the survey results directly in order to balance all the negativity against some fact. In effect, I wanted to “read the tea leaves” to understand the substance of the report more clearly. What I found is that loyalty marketers are rightly judged for under-utilizing collected data and could do a much better job in communicating their value propositions with members.

The data points I found to support this statement includes:

• 63% don’t completely understand at least 1 of 4 programs to which they belong
• 62% said they had not heard from half or more of their retail loyalty programs since enrollment
• Reward program membership only influenced (just over 50%) where one shopped first

It is highly likely that the lack of understanding by consumers is the root cause for this finding:

• 62% rated discounts the most compelling reason to join a retail program

Just as cash back appeals to the lowest common denominator in the human psyche, discounts are similarly appealing in a retail environment.

That fact – the ACI survey was focused on RETAIL loyalty programs – adds further perspective. Most of the analysis I encountered through my search leaves readers with the impression that ALL loyalty programs are perceived in this manner. While there is room for improvement, don’t tell American Express, Marriott, Hilton, Best Buy, Nordstrom and others that they are poor communicators.

One other data point jumped out at me:

• 67% had positive experience with using a loyalty card at store or retailer

Somehow that one didn’t make it into any of the headlines. There is adequate blame to go around for lackluster, “me-too” loyalty programs, but the well-engineered ones are humming along.

There is a wave of innovation in the works which will change the face of Loyalty programs. There may be less cards, points and miles to identify the program as “Loyalty”, and the fundamental concepts and business case will be adjusted to help brands communicate in the digital channels where over half of the US population forms purchase decisions.

It’s all about “getting ahead of the transaction” and we are well on our way to achieving that goal. Stay tuned.

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

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

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

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

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

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

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

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

I’ve posted a new case study about Discover Card and it’s brand dominance in the cash-back credit card rewards field. It is available for download from the White Papers section of the Hanifin Loyalty LLC web site and I hope you will read, enjoy and send me feedback by entering comments to this post.  Please download here.

To whet your appetite, here’s an excerpt:

“Every industry that has been around for 25 plus years has its share of fiefdoms, dogma, and biases. Loyalty Marketing is no different. As a young man, I remember my grandfather instructing me that “Cash is King”. With our current economic meltdown well underway, we are again hearing from financial pundits everywhere that “Cash is King”.

It seems that only in Loyalty Marketing do we disagree.

The most fundamental best practices call for value propositions that are motivating for the customer, but maybe just a little tough to dissect. Prying open the gap between perceived value and actual reward cost is good for all parties involved, sponsor, customer, and solutions provider. For that reason, punch cards that reward “the 10th one free” and cash back discounts are treated as solutions that are only chosen when the strategy team has a loyalty planning version of writer’s block.

In the face of the criticism and cash-back snobbery, I increasingly admire Discover Card. In case you don’t keep track, Discover is the sixth largest card issuer in the US with over $49 Billion in receivable and is the largest revenue producer within the Discover corporate umbrella. In the January 30, 2009 Discover Financial Services Financial Community Briefing, Harit Talwar – EVP, Card Programs & Chief Marketing Officer – reinforced the importance of their cash-back strategy, stating “Clearly, rewards leadership is the core of Discover”.

When you think of cash-back for using your credit card, you think Discover. The company has carved out its niche and stuck to its knitting. The question that begs for an answer is: how long can they remain one of the leading US card issuers with this one-trick-pony approach?