The past few years we’ve seen somewhat of Cambrian explosion of products and services designed to help consumers burn their loyalty rewards.  Colloquy has studied the issue and found that around 1/3^rd of all earned loyalty awards go unredeemed.  Clearly there is a market for helping consumers get the most from their loyalty earnings.

Continuing our coverage of innovations in the areas of customer engagement and liability management, we interviewed Paul Hebert – Sr. VP Marketing and Skip Kitchen – Sr. VP Business Development, to learn more about LoyaltyShares LLC.

Launched in October after two years of work, the New York City based company, enables loyalty program participants to redeem their loyalty earnings for shares of stock in the sponsoring company.  If you’re a Delta frequent flyer with millions of miles – buy stock instead of stockings.  If you’re a member of AMEX rewards and just can’t stomach another trip – grab a few shares of AMEX.

Based on experience designing and operating a similar program for a regional hotel chain, LoyaltyShares LLC assembled the technical and financial resources needed to create an interface, currently called a Loyalty Equity Acquisition Program (LEAP^TM), connecting the loyalty program to a direct stock purchase plan. This allows members of the loyalty program to convert their earnings in the program – whether miles or points or whatever – into shares of company stock.  The redemption event can take place monthly and the conversion rate is set by the sponsor. Consumers pay a small annual fee with their points to have access to the LEAP^TM service and they can then execute a trade each month of the year for however many shares they wish to purchase.

What is interesting here is that not only do consumers win by getting a rather unique redemption option – the sponsor also gets a win by having what is a liability – their reserve for unredeemed points – converted into equity – stock in their company.   While any redemption would reduce the company’s liability, this option enhances its equity as well and would seem to be have a positive impact on a company balance sheet.

The partners in this effort also believe – and some research does back them up on it – that customers who own stock in a company are more loyal and likely to recommend the product or service.  It does make sense that investors/owners would want their stock to increase in value and therefore would talk it up with their social networks – both virtual and real.  Points don’t grow in value if they sit in an account waiting for redemption – but stock can increase in value.

Buyer beware though – stocks can also go down in value.  When consumers redeem for stock in a company they run the risk of losing some of the value they had accumulated in points or miles. We’ll recognize that risk but also say that it’s manageable compared to allowing points to go unredeemed and “break”.

In my conversations with Paul Hebert, I learned that LoyaltyShares has a patent pending on the application and have received great feedback from their early discussions with loyalty sponsors and industry insiders.  Though most sponsors may not be able to connect its program members with shareholders, the company believes an opportunity exists to capitalize on a defined group of shareholders who are also members of their loyalty program, opening up new avenues for customer engagement.

My Take

1. With liability for unredeemed points on the increase and consumers looking under every rock for a reward option that creates excitement and value, LoyaltyShares has potential.
2. Converting points to stock invokes math similar to cash back – one of the most traditionally desired redemption options – yet this option has the potential to increase a customer’s loyalty value over time.
3. On an emotional level, I have to believe that consumers who are stockholders will be more inclined to become brand advocates in order to protect their investment.

What do you think?

1. Will offering equity in a company change the way consumers define customer loyalty?
2. Do you think consumers will take the risk of redeeming for stock?  Could people see this as a way to recap loses in 401K’s with “free money”?
3. Will Social Giving and Ownership Loyalty become two pillars of the changing loyalty landscape in 2012?

Either way – in my mind the redemption space just got a little more interesting.

In a previous post, I mentioned several areas of innovation that will impact Loyalty Marketing in 2012. There is never room to offer a truly comprehensive list and not everything cited will necessarily become the equivalent of a marketer’s lottery ticket.

Realizing the abundance of new products and strategies introduced to market during the latter part of 2011, I plan to share a few more interesting things to watch over this first month of the new year.

As we all know, Groupon took the marketing world by storm last year, reinforcing an already dangerous instant gratification mindset among consumers. Reaction to the success of Groupon has been varied, with some marketers bemoaning the death of consumer loyalty as people seemed unable to focus on anything but 50% off a deal that needed to be purchased today.

Others soon pointed out the weakness in the Groupon model as it represented a consummate marketing “hammer”, i.e. a tool designed for one job and one job only. As a merchant or retailer, if you’re interested in acquiring new customers, Groupon seemed a great tool. Yes, you needed to protect yourself from the potential hazards of the Groupon model itself, but in our short term minded world, Groupon was seemingly too tempting for merchants to pass up.

Groupon has been moving to quiet its critics and recently introduced Groupon Rewards. On the surface, Groupon seeks to stimulate not just acquisition but repeat purchase and “loyal” customers, but as a writer at Colloquy smartly stated, “If I’m digesting this news right, this would be the equivalent of retail-store window signs announcing, “Everything 50% off in the store–spend over $100 and we’ll give you 80% off on your next purchase!”. The writer concluded by saying: “The concept seems to translate to simply an even bigger acquisition discount.”

In the midst of all the buzz over daily deals in late 2011, Affinity Solutions launched Spot ON Deals, a product positioned to “do daily deals right”.  In the company’s press release,  Jonathan Silver, President and CEO said; “Today’s daily deals programs more often than not attract bargain hunters; they don’t encourage repeat business, and they don’t allow merchants to meaningfully track results.”

To address these issues, Affinity says it will enable participating merchants to “target the right customer with the right offer at the right time, using data-driven insights to hone in on key segment and consumer spending trends”. Affinity also addresses daily deal measurement offering merchants the ability to track the effectiveness of their offers, “while deploying ‘follow-on’ offers to drive repeat purchases, loyalty and customer lifetime value.”

Today’s Take Away

There is and will continue to be heavy competition the daily deal space. The real prize is to move from a singular focus on daily deals and incorporate the tactic into a more comprehensive customer strategy that will benefit brands, their merchant partners, and consumers over the longer term.

It will be interesting to watch and see if the originators of the daily deal (Groupon, Living Social and others) will be able to bridge their product into the wider loyalty marketing space, or whether Affinity Solutions and other leaders from the loyalty marketing industry itself will be better suited to take the daily deal to the next level.

In the final part of our Three Part interview series with Rob Markey, Bain & Company, we share insights from Mr. Markey on how to better execute surveys, whether to introduce incentives to improve survey responses, and get his opinions on whether NPS or other metrics will eventually influence share prices on public exchanges.

Oh yes, we’ll also get to the bottom of whether there really is “just one question” to get a grip on customer loyalty.

Many firms have response rates to surveys in the single digit range. Some respond by offering incentives to drive up response to their NPS surveys. Mr. Markey stated that “at Bain, this is evidence that you are not earning your customer’s feedback”, adding that “offering incentives is almost always a sign that a flaw exists in the customer feedback process”.

Listening to the results that do come in and making change on the front lines will earn your way to 30-40% response rates over time. Rackspace, one of the examples cited in The Ultimate Question 2.0 gets above 60% response rates to its surveys. “Here’s why” stated Markey “Rackspace earned participation in its surveys because they are meaningful to the customer”.

According to Markey, being satisfied with a 5 – 15% response rate is dangerous. Business should seek the root cause for low response rates and test surveys across groups that are weighted to promoters, passives and detractors. “Detractors are less likely to respond to a survey than prompters” said Mr. Markey, and “bias needs to be rationalized through testing”.

When I asked Mr. Markey if measures of customer value predicted by NPS or other scores would one day influence share price and market capitalization, he said that “it was already happening.” Though he cited confidentiality, Markey stated that “an average category leader in NPS scores grows at least 2X competitive growth rates”, adding that “several nationally recognized investment firms pay attention to NPS as an indicator of companies they would invest in”.

I couldn’t let my time with Rob Markey end without asking one big question: Is there just one question that companies can use to predict and / or measure customer loyalty? Markey explained that “when done on an apples-to-apples basis, NPS correlates closely with other measures such as satisfaction, but that “if the goal is to find the best statistical predictor of individual customer behaviour, most likely a multi-variable index will be superior to any single metric index”.

For example, the investment firms cited earlier use NPS as a predictor of value, though it’s not the only metric considered. Having said that, Markey added that “in many instances, NPS will replace traditional customer satisfaction metrics, mostly for the practical superiority of the NPS system”.  “Not a single loyalty leader measured their way to success” said Markey, adding that “it’s hard to get employees fired up about some metric”.

For Markey and Reichheld, the metric is the starting point. It is the metric that provides the compass to navigate the path forward, but it is the system that is the path itself. The victory in where they have arrived with “The Ultimate Question 2.0” is that the system has been created and business now has a reliable option to predict customer loyalty and to help bring continuous improvement to the enterprise.

My interview with Rob Markey about the new book, The Ultimate Question 2.0 “How Net Promoter Companies Thrive in a Customer-Driven World”, continues today with a closer look at how the “score” has evolved into a “system”.

The book includes a number of case studies ranging from Charles Schwab to Apple Retail to The Progressive Group of Insurance Companies. One common element of execution employed by each firm was to include a short-cycle, closed-loop feedback mechanism that turns survey results into usable business intelligence that front-line managers and employees can use to better serve customers.

Mr. Markey emphasized the importance of collecting accurate NPS survey scores but also to determine the root cause of interactions that leads to people becoming “promoters” or “detractors”. Was a price too high? Could a better deal be found at a competitor or did the competitor allow more flexibilities in service agreement rules? Whatever the reason, it is essential to be able to deliver feedback from customers to the employees most directly responsible to deliver enhanced customer experience. Through the accumulated experience from working with multiple companies across varied industries, Markey and Reichheld were able to dig deeper and understand practical methods to create change.

Markey stated “Everyone in the enterprise managing a customer touch point needs to build greater understanding of where they stand with their customers, whether front-line personnel or executives… for real change to take effect, business people have to translate elements of feedback into usable and actionable items that customers can understand.”

The second critical element Markey noted was the ability to connect NPS improvements to robust economics at the enterprise level. Markey explained “managers must be able to demonstrate what it’s worth to improve NPS scores versus the competition, or the value of changing a detractor to a promoter”.  This is aspect of developing a learning environment through working with multiple enterprises that has helped to transform the score into a system.

Markey capped off this line of thinking by sharing three essential elements to successfully putting NPS to work in your business:

1. There must be a reliable way to evaluate and sort customers and employees as promoters, passives, or detractors. This evaluation must then lead to identifying customer behaviors that can be analytically tied to positive business outcomes
2. An organization must create a fast-cycle, closed-loop learning process to deliver survey as well as verbatim results to customer-serving personnel. The organization should engage in “deliberate practice” over time to demonstrate to customers that they are listening to their critiques and expression of preferences.  This could be the most distinguishing characteristic of the three elements as traditional customer satisfaction research is anonymous and misses the opportunity to establish two-way communication with customers
3. The commitment to earning the loyalty of customers must be a top priority of the organization and be supported from the top down. This commitment must be embodied in daily actions and NPS must have a high level visibility with employees. Firms putting their weight behind NPS initiatives in a sincere manner earned the best results.

When asked about finding the balance between focusing on the customer and enabling employees / associates to deliver critical feedback, Markey responded “low employee engagement is impossible to coexist with high customer NPS”. He continued “a company may create a temporary market advantage through innovation or pricing, but it is difficult to sustain high levels of scores without employee engagement”.  “It’s not just the right thing to do”, added Markey, “it’s necessary to rise above the competition”.

Interestingly, only about half of the firms encountered by Bain & Company over the past 5 years working with NPS take such a position. Reflecting on the recent economic downturn, Markey cited that “the companies which entered the global financial crisis with higher reserves of goodwill and higher NPS experienced lower dips than the general marketplace”.

In the final part of the series later this week, we’ll share some interesting tips from Markey on successful survey execution and find out if there really is “just one question” that can be used to determine customer loyalty levels within a business.

In a previous post I mentioned that I was the beneficiary of a serendipitous moment in which I was given the opportunity to interview Rob Markey, a partner in Bain & Company’s New York Office and head of the firm’s global Customer Strategy and Marketing practice.

The topic was a new book, The Ultimate Question 2.0 “How Net Promoter Companies Thrive in a Customer-Driven World”, which Markey co-authored with Fred Reichheld and published in September. The book was a revised and expanded edition of The Ultimate Question, the original book published in 2006 which introduced the world to the Net Promoter Score (NPS).

When I spoke with Mr. Markey, he was quick to shift my focus from “book review” to developing an understanding of how NPS had evolved from a scoring metric to a system which had developed through the collective experience of the thousands of companies working with NPS since 2006. With so much to talk about in a brief period of time, I have crafted a three part series of posts covering the interview, of which this is the first.

Having received a copy of Fred Reichheld’s book, The Loyalty Effect upon walking into the doors of Frequency Marketing in 1999, I was more than familiar with Reichheld’s ground breaking thought that “loyalty” had to be formed with top-down strategy that included not just customers, but also employees, shareholders, even suppliers.

This timeless path to creating sustainable competitive advantage has been followed by thought leaders in the loyalty marketing industry, though much of what we see in the market today known as loyalty or rewards programs have fallen short by focusing on customers, while giving a disappointing hand-wave to the interests of the other constituents.

There are voices in darkness supporting Mr. Reichheld’s original thesis. One industry group has emerged, the Enterprise Engagement Alliance, which is “dedicated to the concept that engagement is an enterprise-wide endeavour that begins with people and ends with profitability”. The organization’s principle mission is to support research and education to help brands “make the connection between engaging people in business and long-term financial performance”. Colloquy has a renewed focus on Enterprise Loyalty, and I have taken my stand by preferring to frame our work for clients as delivering Customer Strategy. In my opinion, every organization needs a well planned and executed Customer Strategy, while not all need a “Loyalty program”.

Markey started off by sharing that his initial interest in this topic came through reading Reichheld’s 1990 article “Zero defections: quality comes to services”. Markey’s curiosity to identify tools for making decisions on behalf of customers instead of just shareholders led him to Bain and Company and he has been working closely with Mr. Reichheld ever since.

Markey told me that this 20 year quest has led him to adopt a simplified notion of the ultimate objective – to transform the golden rule from something nice to say about customer relationship management, to something that can be implemented and drive tangible results to a business. Working with Reichheld, a system of thought was developed that, if implemented as intended, would lead to sustained market improvement and to making good decisions to earn customer loyalty.

When asked about the central point of the new book, Markey explained that the 2006 “one big question” book was meant to introduce the thesis, explain the metric construct, show how to measure, it and lay out the argument for adoption. In essence, it was a starting point.

When asked what he had learned in the years between 2006 and today, Markey pointed to the fact that Bain & Company has worked with dozens of companies around the world to implement NPS in their operations and have seen tremendous results returned, from lower churn rates, lower acquisition costs, and improved sales and profitability per customer.

In short, the “score” had become a “system” with a solid methodology to help firms guide implementation and enough market feedback to confidently predict results. Part Two of the three part series will cover how the systems works as well as share the three essential elements to successfully putting NPS to work in your business.

Editor’s Note: Frequency Marketing has since become LoyaltyOne, while The Loyalty Effect still sits on the shelf in my office, dog-eared as all good books should be.

If you have thick skin, you’ll do just fine as a banker. I know, I walked in the moccasins for about 10 years.

As economic cycles come and go, consumer confidence and trust in large financial institutions varies, but the range of difference bounces between “low and lower”. The American Banker Magazine (nicely relaunched recently and worth a read if you follow the industry) carried a short article reporting on the results of the 2011 American Banker/Reputation Institute survey.

The good news is that bank reputation scores improved between 2010 and 2011, with banks jumping up 2 spots and leaping ahead of telecommunications and energy firms. The bad news is that the improvement was from next to last in 2010 to 14th of 17 industries ranked in 2011.

Looking into the components of the reputation score, researchers noted that the impact of products and services on reputation scores diminished over the past year.  Not surprisingly “Performance” was the highest-weighted factor as consumers continued to worry about the outcomes of the recent recession.

Less noticed was a shift in importance for “Innovation”.  The researchers acknowledged that retail banking product and service offers in market were very much at parity and stated that “the days of being able to differentiate with free checking or a free toaster…that isn’t the path going forward.”

Here’s the best part – the article makes clear that the best way a bank can distinguish itself in the market is “by listening to customers, focusing on their needs and helping them understand how it makes business decisions.” If there was ever a research-driven foundation for further investigation of a relationship approach to bank marketing, this is it.  After a bit of a pause, total relationship banking programs seem to be taking off again. Colloquy reported on two new programs launched recently – one from ANZ Panin Bank in Indonesia and the other by Union First Market Bank in Virginia. The concept has truly gone global as I discovered Touch Points Rewards, a well formed program from Abu Dhabi Commercial Bank (UAE).

If possible, banks have to uncover the means to become more approachable, transparent, and caring if they want to improve their market reputation. The stakes are higher than survey results however, as there is a big opportunity for credit unions, savings and loans, and banks large and small to differentiate in the market through recognition and reward  of customers based on the overall relationship value. With pressure on individual products, debit and credit cards in particular, banks need to recruit the value of customer relationships if they are to mount a value proposition sufficient to change behavior and increase share of wallet with customers.

There’s no “one way” to structure a total relationship banking program, but there is one way that the programs will lead – to profitability.

According to USA Today, on Monday, pizza chain Papa Johns will announce plans to give a free large pizza to every American — if the Super Bowl goes into its first-ever overtime. The catch: You must sign up for its online loyalty program before game day (Feb. 6).

“We’d rather give away millions in free pizzas than spend millions on a spot,” says Andrew Varga, Papa John’s marketing chief.

Because Papa John’s is an NFL sponsor — advertising in games all season, he says, “We don’t feel the need to make the investment in the game.” The free pizza deal — which he estimates could cost Papa John’s 100,000 pizzas — will be promoted digitally, he says. The chain also will randomly give away pizzas on Super Bowl Sunday to folks who order online.

According to Papa John’s Facebook page, customers simply need to go to papajohns.com, open an account and register for Papa Points to “get in the game.”  If Superbowl XLV goes into overtime, Papa Johns will offer everyone who registers a free large pizza.  You can see the official rules HERE.

Loyalty marketing publication COLLOQUY wrote a cover story about restaurant loyalty programs in 1997 noting that most frequent-diner programs were still “missing some key ingredients.”  The COLLOQUY article noted:

The fact that customers by the hundreds of thousands are ready and eager to enroll in these programs underlines and confirms their appetite for the value-added, interactive relationships these programs promise either explicitly or implicitly. But most of these programs fail to deliver on their relationship promises.

The current frequent-diner template is simple and superficial. Customers join and earn points based on dollars spent in the restaurant. Mag-striped membership cards are swiped by cashiers to capture visit dates, times, locations and dollars spent. Points are redeemed for gift certificates which can be used for discounts and/or free items in the restaurant. Point earnings and totals are printed on the dining receipt and/or on quarterly account statements mailed to the member. A toll-free number permits members to inquire about their account balances or about program features and benefits. What’s wrong with this picture? Lots.

More than a decade later, loyalty in the fast-food segment still hasn’t reached its full potential although social and mobile media are making it simpler and easier for customers to participate.

Hardees and Carl’s Jr. fast-food chains recently launched their own loyalty mobile apps for iPhone and Android phones that reward customers for “checking in” at any of their 3,000 locations.  The Happy Star Rewards application, available through iTunes, allows users to reveal their locations in exchange for free food and prizes.

Patrick Sojka knows credit cards, travel rewards cards in Canada to be precise. As CEO & Founder of Rewards Canada, he’s been cataloging and ranking the myriad of offers in the Canadian market to help consumers find the best deals for their wallets and their loyalty points banks since 2001.

If you think Americans are reward-crazy, our Canadian friends are just a bit out in front.  You’ve probably read the oft-quoted finding from Colloquy that the average American household is a member of 14 loyalty programs, but active in only 6. RewardsCanada.ca, considered to be Canada’s premier frequent flyer and travel rewards resource, has chimed in to share that “more Canadians per capita participate in loyalty programs then any other country and a large portion of the loyalty market is comprised of travel rewards credit cards”.

No matter the numbers, it’s clear that consumers in both markets have almost too many choices, and are seeking clear and unbiased advice to make the right selection to meet their needs.

To help consumers fight their way through the noise, Rewards Canada just announced a new tool, the Travel Rewards Credit Card Flow Chart. “When used with our other credit card features, the flow chart guides the consumer to narrowing down the choice for a new travel rewards credit card” added Patrick.

The flow chart is the latest in a string of articles and charts aimed at helping Canadian consumers choose the right travel rewards credit card for them, including a newly released list of Canada’s Top Travel Rewards Cards for 2010. You can find the rest of the resources, updated on a daily basis, along with news, articles, program information and bonus offers for over 80 travel reward programs at the RewardsCanada.ca website.

I don’t take credit for much, but Total Relationship Banking (TRB) is a term that I created while working with the Colloquy consulting group around the turn of the Millennium. I recently had the chance to catch up with the “Patron” of TRB, Fabio Garcia and our talk spurred thoughts for where TRB might be headed in the future.

After working together to launch “Premia” several years back, I had a vision of how banks could finally take their card based rewards programs to another level and build enterprise-wide loyalty in the process. Excited about unleashing a new concept in retail bank marketing, we expected to see many banks follow suit.

Interestingly it took 2 years before Citi launched ThankYou! and another year or so for National city to launch its Points program. During the recent economic cycle, National City was acquired by PNC Bank and the PNC Points program remains in market today. An even longer respite occurred before Regions Bank introduced Relationship Rewards this summer.

With Regions’ new entry into the market, the question seems valid to ask again. Will TRB become the “next new thing” in retail bank marketing.

The answer: No – at least not by way of the model used by Regions Bank.

TRB has always been challenged by a short list of key obstacles:

1. Who Owns the Program?

Rewards in banking first took hold in cards and extending the currency to retail, mortgage and wealth management groups introduces potential conflict for program management. Only with Executive level support and a loyalty czar in place, do multiple product owners cooperate to the extent needed to achieve success.

2. How do we measure profitability?

The metrics used to track profitability in cards, retail banking, and loan areas are distinct. Appointing a standardized value for a loyalty currency and mandating its use across all product areas is not an easy task.

3. Who pays for the program?

The substantial cost of operations and allocation of financial liability is a sensitive topic. If I own consumer loans and only want to participate in my TRB program on a promotional level, do I accept cost allocation or do I just purchase points from the program owner as if I was a sponsor in a coalition program?

These organizational challenges are tough to solve, but the answers can be found. The place where attention deserves to be focused these days is on the customer.

I recently conducted a review of Regions Bank Relationship Rewards and, while it is clever and well thought out, the earning grid is too much for most consumers to understand. The temptation to over-engineer loyalty strategy is irresistible at times – I’ve been found guilty of it in the past.

The best strategies are those that can be implemented in a practical manner, are easily explained to customers, and pose the lowest level of friction for enrollment and participation. Establishing a bank-wide loyalty currency creates the foundation for an effective enterprise loyalty strategy, but its use should be apportioned carefully.

Credit and Debit Cards, Current and Savings accounts are high frequency products that are the glue for long term bank relationships. Loyalty currency can be applied in strong doses here. Every other bank product or service is tied to life-events and therefore loyalty currency should be used sparingly and on a promotional basis for best results.

The bigger question is how much customers care about bank rewards programs. I have not been able to confirm that consumers want to consolidate their banking relationship beyond a certain intangible threshold. The Boomer generation grew up hearing about the risks of “putting all your eggs in one basket” and the Millennial generation matured while living through the most frightening banking crisis in several decades.

As one wise banker recently shared with me, we don’t need to challenge the validity of TRB as much as we need to set realistic goals. Maybe we’re not after 80% + of an individual bank relationship, but simply want to establish a core group of products that defines a “primary bank” relationship. In other words, maybe 40% wallet share is 100% victory.

Enterprise loyalty is an achievable goal for retail banks. Striving to create bank brands that drive consumer loyalty, even passion, should be on banker’s lists of Key Performance Indicators for next year. Banks can still create a retail brand promise that is delivered holistically and complements reward with product innovation and outstanding service.

Now is the time to tackle the job, as consumers have never been more interested in transparency, safety and responsible financial management.

Relationship Banking is a term that has been around since the 80’s. In its first use, it described a holistic level of service that branch personnel could deliver to customers by having the entire bank relationship on their computer screen.

Gone were the days of reviewing daily overdraft reports and making subjective decisions about whose items to return or pay – now a branch manager could use hard data to make those decisions.

The concept was right, but retail bankers became distracted with more pressing matters until Banco Popular introduced its Premia program in 2002. I was fortunate to be part of the team supporting the launch, and coined the term Total Relationship Banking (TRB) at that time while working in the Colloquy consulting group (now Loyalty One).

TRB has at its core the use of a common rewards currency (points) awarded to customers to recognize their acquisition and use of any retail banking product including credit cards, debit cards, checking accounts, loans, and investment products.

TRB has become a commonly used industry acronym and once Citi launched its ThankYou! program in 2004, the buzz was that TRB would take retail banking by storm. Instead of a tidal wave, we saw just a ripple or two hitting shore as National City launched its Points program in 2006 followed by ….. nothing.

Nothing that is, until Regions Bank, the 22nd largest US Bank with $137 Billion in assets, launched Relationship Rewards during this past summer. Now we have banks ranking #3 (Citi), #12 (PNC), and #22 sporting a TRB model to increase customer loyalty and retention. As a footnote, PNC acquired National City during the past 2 years and morphed Nat City Points into their own branded currency. It says something about the value of the program that it was not shelved during the course of PNC’s takeover of National City.

One of the outcomes of the recent financial downturn has been increased focus in retail bank marketing on building relationships, encouraging financial literacy skills, and introducing or re-shaping loan and deposit products. The emphasis has been on transparency and value and consumers are responding.

Relationship Banking is a complex model to structure and manage and there is mixed research on whether consumers really want to put the majority of their eggs in one basket, regardless of how many points they can earn.

I’m going to take a closer look at the Regions Bank program this week and also summarize the opportunities and challenges with TRB over the next few posts.

If you’re not a banker, don’t worry, I have a juicy Foursquare post ready to go!