At Hanifin Loyalty we like to talk about what it takes to build customer loyalty, but we also pride ourselves in being good listeners. We listen to clients and we listen to customers. Like the old saw said “God gave us one mouth and two ears for a reason”. Maybe they should be used in that proportion.

We’ve been listening to Millennials lately and we’ve shared a series of posts from our “Mystery Millennial” giving our followers insight into how Generation Y perceives the marketing efforts of big brands and local merchants.

Today’s story highlights why our Mystery Millennial loves Toys R Us.

Toy shopping with my little toddler is so much fun these days.

She sits in the cart eying the shelves with the kind of awe that such an exciting place inspires in children; innocently free from greed at her age. I love to indulge her wonder, and am amazed at what holds her attention, i.e. the cheapest trinket in the store. Much to my pleasure that’s a purchase that makes us both happy!

On a recent outing to Toys R Us I signed up for their rewards program. I had heard good things about recent updates to the program, and decided it would be beneficial to try and save some money. My experiences at the store surprised me, and the loyalty they established with me was not what I was expecting.

The main reasons I now shop at Toys R Us are less financially based and more thanks to the customer experience in-store. I have been reminded what old fashioned customer service looks like and how that often has far more weight with my purchase decision than just saving a few dollars.

The smiles, help, and conversations I have enjoyed from the employees at Toys R Us (even from the shy tech dude at the game counter) have renewed my love for shopping in-store rather than online. On one visit, I was inconvenienced when a security tag was left on a shirt by accident. It’s embarrassing when the alarms go off as you walk out the door and I appreciated the way store employees handled the situation and truly tried hard to make me a happy customer.

I will continue to shop at Toys R Us and Babies R Us. Maybe it was the money-saving rewards program which brought me into the store to begin with, but my loyalty to this store in particular was won by the sense of welcome and good cheer that I received from the people that work there.

In my opinion, a rewards program gains true loyalty when the fact that you just saved money is over-shadowed by the pleasure it was to shop!

Editor’s Note: There is wisdom to be gained by listening to our youth! Millennial marketers should lend an ear.

Loyalty Truth was treated with a big shout-out from Barry Kirk at Loyalty Expo in Orlando this week. Barry works with Maritz and has been quietly leading the way into the field of game theory and how “gamification” can be incorporated into customer strategies to increase engagement and build enduring brand loyalty.

I have great respect for Barry’s work and therefore was humbled by his recommendation of Loyalty Truth as a leading resource for marketers seeking independent and unbiased insight into this evolving space.  After three years at the keyboard the acknowledgment was appreciated, and caused me to revisit just who we serve with this blog as well as reaffirm the directions in which we are heading.

Our intention is that three groups will find value reading Loyalty Truth on a regular basis:

1. Brands interested in customer loyalty and lifecycle marketing
2. The supplier community which serves these brands
3. Financial interests seeking to decipher the entire landscape in support of investment decisions

You’ll notice that consumers, the focus of all our work, are not mentioned here. Though consumers would find some interesting program reviews and commentary here, we write in the marketer’s lexicon and I think it better to not mix the two. Check out this old post for more explanation on this point. Consumers are far from forgotten by our staff and in the very near term, we will introduce a destination site specifically designed for consumers seeking to make the most of their participation in today’s spectrum of loyalty programs.

Concerning future directions:

1. Consumer Behavior: We plan to continue on the course charted about 4 years ago when we shared our studies on Generation Y (the Millennials) and how we can create loyalty across this demographic segment. The difference is that we have expanded the conversation to recognize that the Millennials are part of a larger group, referred to as Consumer 2.0, estimated to be over 50% of the U.S. population at this time.
2. Everything Social: My Mom encouraged me to be social as a young person, but I never knew it would have these implications in business! Social Loyalty, Social CRM, Social Shopping, Social Location Marketing, Social “fill in the blank”. You get the idea. As the firehose of new ideas continues to spew forth, we are faced with one of the biggest challenges to separate wheat and chaff in recent memory. Keep reading here and we hope you find clarity and direction.
3. Global: As the brands, suppliers and investors we serve expand their interests and footprints to a global market, the business resources they seek are evolving. As a co-founder of the Customer Strategy Network (CSN), we have direct access into every developed loyalty market in the world and many that are emerging. Anyone can do desktop research, but few have the ability to speak directly to people living and breathing data-driven marketing in diverse markets. We’re not bragging, just feeling privileged to be part of this group that will continue to grow and expand. Among other things, CSN has a new website on the way which will underscore our collective direction.

You’ve got to focus to succeed in any task. The picture of the US Postal cycling team here reminds me of the focus needed to win in sport. We plan to hone our focus here at Loyalty Truth and bring you more value over time.

Let us know how we’re doing from time to time. Leave a comment, send me an email, or just give me a call.

Thanks.

Amazon announced it is selling more Kindle books than hardcovers, the US Postal Service is in jeopardy, and Continental Airlines will begin allowing travelers to scan themselves on board flights. As change marches on, what other familiar aspects of our lives will join the milk-man in a mythical global retirement home?

Keep an eye on traditional points-based loyalty programs, because they just might be next.

Points programs have been around for decades because, as my friend Jim Ryan told me, “they work”. Jim, the former CEO of Carlson Marketing, knows this business cold and although we both agree that points-based loyalty currencies are an effective medium to change & measure consumer behavior, the companies which foot the bill for these programs are increasingly opting for something different.

I did a market scan recently and found a few examples of how Loyalty Marketing is being redefined:

• Ford ran its “Fiesta Movement” campaign (to be profiled soon in Loyalty Truth) over a year ago, recruiting 100 agents to drive a Ford Fiesta and document their experiences through written and video blogs. The results? Ford created over 11 Million social networking impressions, created a 37% awareness of the new car across Generation Y (Millennials), and enjoyed one of the best new car introduction campaigns in years.

• Tropicana launched Juicy Rewards, a hybrid of the on-carton coupon model which typically requires consumers to enter codes online till their fingers bleed in order to win something of value akin to a paper clip. The difference here? Tropicana has aligned itself with a strong portfolio of merchants offering discounts that equate to 5X the value of the product purchase price.

• Clorox launched CloroxConnects, a social site that serves three key audiences, consumers, partners, and employees. Better described as an Engagement Platform, Clorox encourages participation from each group and awards badges and recognition rewards based on proprietary game mechanics.

Don’t miss the subtlety of these new loyalty program formats. Each program has well defined business objectives, predictive analytics and financial modeling are used to refine audience targeting, and a loyalty processing platform is needed as the backbone to run the program in most cases.

In other words, the fundamentals to engage, interact with and retain customers remain consistent. The key difference is that instead of keeping score by awarding points, companies are moving towards scoring as much by social behaviors as transactional.

For the past 30 years, Loyalty programs have been designed by Boomers for Boomers. The influence of a digitally connected generation is more apparent than ever, and consumer engagement will only happen if you re-tool marketing strategies to embrace the Millennials and others who want more transparency and immediacy in their brand relationships.

Are you equipped to make these changes?

I’m honored to have made strong alliances with respected people in my industry. Though I wouldn’t turn down sensible sponsorship, each of the icons on the right hand panel of the Loyalty Truth are there through mutual agreement, not due to an advertising deal.

Once in a while, one of my strategic partners gives me time on the soapbox. I wanted to share a piece here written about the impact of social media on loyalty and millennial marketing.

This was originally published in the Loyalty Guide, a great publication available from The Wise Marketer which I would encourage you to add to your library. A free 50-page Executive Summary, including chapter samples, table of contents, text searching, licensing and ordering details is available here.

How to earn loyalty from social media and Millennials

With data-driven marketing starting to resemble a mature industry, progress and change are clearly just around the corner, according to Bill Hanifin of Hanifin Loyalty. If you agree that the industry has its origins in the American Airlines AAdvantage programme in 1981, and in light of the first North American credit card rewards programme being launched around 1992, then the industry itself is something like 20 to 30 years old. In which case it’s time to stop leaning on the excuse that “we’re still learning” and assume the responsibilities of loyalty marketing adulthood.

For years, Bill has been asked the question, “Does loyalty really work?” and, with growing patience, he answers the question with a practised response: “Yes, it does work. The concept of measurable marketing programmes that link customer and transactional data is more attractive than ever”. I also explain that the magic of successful loyalty marketing programmes lies in attention to the details of execution, the diligent usage of collected data, and attention to financial measurement.

As Bill has turned his attention to recrafting loyalty programme designs to engage Generation Y, he has noticed that value propositions are changing and the communication channels used to convey promotional messages are also new, untested, and evolving before our very eyes. The key to successful ‘Millennial marketing’ lies increasingly with the effective incorporation of social media tools into our communications plans and, despite what you may read on Twitter, there are not nearly as many ’social media experts’ around the world as you might think.

Loyalty programme sponsors are launching communities, setting up Twitter accounts and Facebook fan pages, and some are even rewarding members with promotional currency for updates on social media sites. With more of this activity being evident in the market now, the new question that he is being asked regularly is, “Is this social media thing here to stay, or is it just a fad?”

That is a valid question on the surface, but his answer is another question: “Do you want to be able to communicate with the 80 million Millennial consumers in the US, a segment which is emerging as the most important economic force in the market, and equal in size to Baby Boomers?”

Of course, implied by his answer is the idea that we don’t have to like social media – and we don’t even have to necessarily understand it – but we do have to admit that social media and social networks are the preferred communication method of the Millennial consumer. While growing rapidly among the 18-29 age group, social media is also making inroads into older demographics as well.

In 2009, there were approximately 40 delegates at a loyalty conference who participated in a Twitter conversation during the conference. This represented about 10% of total attendees and the volume of Tweets during the event was less than significant. Interestingly, almost one year later, Bill made a quick evaluation of the Twitter accounts of those 40 delegates, and found that only a small handful were still actively participating and growing their network. This of course says less about Twitter itself than it does about how the core of the loyalty marketing industry is engaging with social media.

An increasing number of our clients and potential clients with whom we speak are active in social media and inquire about our depth of understanding of the tools. There is interest in incorporating social media into loyalty programme designs. Advertising agencies and specialty ‘new media’ marketing agencies are rapidly taking the high ground in this emerging area of member communication.

So, rather than waste time apologising for social media and wringing our hands over whether Twitter, Facebook, Mixx, StumbleUpon, or Propeller will survive, Bill is listening to clients and learning as much as he can to serve their growing needs.

Fred Reichheld told us long ago that we should listen to our customers to better meet their needs. We need to do the same with our own clients and exercise our own form of retention programme. Some 80 million Millennials may have different tastes from your own generation, but we need to meet them where they are and build transparent and open communication plans to build engagement and engender their loyalty.

This article is an extract from the 30 chapters of detailed coverage in ‘The Loyalty Guide 4′, which is The Wise Marketer’s latest 1,000+ page global guide to customer loyalty and engagement techniques, best practices, models, metrics, practical advice, market data and research. The report provides hundreds of detailed case studies, forecasts, trends, tables and visual materials to support new initiatives, presentations and proposals and represents a complete, portable reference library of customer loyalty, engagement and marketing strategy.

I’m honored to have made strong alliances with respected people in my industry. Though I wouldn’t turn down sensible sponsorship, each of the icons on the right hand panel of the Loyalty Truth are there through mutual agreement, not due to an advertising deal.

Once in a while, one of my strategic partners gives me time on the soapbox. I wanted to share a piece here written about the impact of social media on loyalty and millennial marketing.

This was originally published in the Loyalty Guide, a great publication available from The Wise Marketer which I would encourage you to add to your library. A free 50-page Executive Summary, including chapter samples, table of contents, text searching, licensing and ordering details is available here.

How to earn loyalty from social media and Millennials

With data-driven marketing starting to resemble a mature industry, progress and change are clearly just around the corner, according to Bill Hanifin of Hanifin Loyalty. If you agree that the industry has its origins in the American Airlines AAdvantage programme in 1981, and in light of the first North American credit card rewards programme being launched around 1992, then the industry itself is something like 20 to 30 years old. In which case it’s time to stop leaning on the excuse that “we’re still learning” and assume the responsibilities of loyalty marketing adulthood.

For years, Bill has been asked the question, “Does loyalty really work?” and, with growing patience, he answers the question with a practised response: “Yes, it does work. The concept of measurable marketing programmes that link customer and transactional data is more attractive than ever”. I also explain that the magic of successful loyalty marketing programmes lies in attention to the details of execution, the diligent usage of collected data, and attention to financial measurement.

As Bill has turned his attention to recrafting loyalty programme designs to engage Generation Y, he has noticed that value propositions are changing and the communication channels used to convey promotional messages are also new, untested, and evolving before our very eyes. The key to successful ‘Millennial marketing’ lies increasingly with the effective incorporation of social media tools into our communications plans and, despite what you may read on Twitter, there are not nearly as many ’social media experts’ around the world as you might think.

Loyalty programme sponsors are launching communities, setting up Twitter accounts and Facebook fan pages, and some are even rewarding members with promotional currency for updates on social media sites. With more of this activity being evident in the market now, the new question that he is being asked regularly is, “Is this social media thing here to stay, or is it just a fad?”

That is a valid question on the surface, but his answer is another question: “Do you want to be able to communicate with the 80 million Millennial consumers in the US, a segment which is emerging as the most important economic force in the market, and equal in size to Baby Boomers?”

Of course, implied by his answer is the idea that we don’t have to like social media – and we don’t even have to necessarily understand it – but we do have to admit that social media and social networks are the preferred communication method of the Millennial consumer. While growing rapidly among the 18-29 age group, social media is also making inroads into older demographics as well.

In 2009, there were approximately 40 delegates at a loyalty conference who participated in a Twitter conversation during the conference. This represented about 10% of total attendees and the volume of Tweets during the event was less than significant. Interestingly, almost one year later, Bill made a quick evaluation of the Twitter accounts of those 40 delegates, and found that only a small handful were still actively participating and growing their network. This of course says less about Twitter itself than it does about how the core of the loyalty marketing industry is engaging with social media.

An increasing number of our clients and potential clients with whom we speak are active in social media and inquire about our depth of understanding of the tools. There is interest in incorporating social media into loyalty programme designs. Advertising agencies and specialty ‘new media’ marketing agencies are rapidly taking the high ground in this emerging area of member communication.

So, rather than waste time apologising for social media and wringing our hands over whether Twitter, Facebook, Mixx, StumbleUpon, or Propeller will survive, Bill is listening to clients and learning as much as he can to serve their growing needs.

Fred Reichheld told us long ago that we should listen to our customers to better meet their needs. We need to do the same with our own clients and exercise our own form of retention programme. Some 80 million Millennials may have different tastes from your own generation, but we need to meet them where they are and build transparent and open communication plans to build engagement and engender their loyalty.

This article is an extract from the 30 chapters of detailed coverage in ‘The Loyalty Guide 4′, which is The Wise Marketer’s latest 1,000+ page global guide to customer loyalty and engagement techniques, best practices, models, metrics, practical advice, market data and research. The report provides hundreds of detailed case studies, forecasts, trends, tables and visual materials to support new initiatives, presentations and proposals and represents a complete, portable reference library of customer loyalty, engagement and marketing strategy.

I read some really great year end posts during the week leading up to New Year’s Day. Amidst the “Top 10/50/100″ lists, there were thoughtful, humorous, and motivational takes on how to evaluate 2009 and approach 2010 with energy and enthusiasm.

One or two that caused me to take my finger off the mouse and pause for a second read-through had to do with the pace at which we work.  The net-net message was that those people who work around the clock, never take their eye off the ball, and keep their energy switch constantly in the “On” position, will achieve the highest level of success in today’s always-connected world. One post went further, bragging about the pace they were keeping and implying that if the reader isn’t doing the same, you could count on falling, not only out of the race, but off the competitive map.

While there have always been overachievers and workaholics in our midst (and I admit to being in at least the first category), this year’s version of the “never take your foot off the pedal” message was heavily influenced by our steady adoption of social media. After two solid years (or 3?) of absorbing social media serum into our blood stream, we are a people possessed. Possessed by activity, by multi-tasking, by to-do lists, and by immediacy.

My take on how we interact with social media and other technologies – and how we advise our clients to interact with them – is that we have to remain constantly vigilant about who is in charge.

• Do we own the blackberry/iPhone, or does it own us?
• Does a ringing phone cause us to drop eye contact with a prospective customer to see who’s calling?
• Can we manage our social media presence as part of our work day, or does social media become our day?
• Are we creating another reason to procrastinate on tasks more closely correlated with revenue generation than SM so-far?

Don’t get excited, I’m not walking away from continuing to build social media communication strategies as part of my client’s customer strategies, but I am advising people to keep things in balance. If you’re not convinced, I have two resources to share with you, one older and more current.

The more time that goes by, the more I applaud the brilliance of Stephen Covey’s 7 Habits of Highly Successful People. Covey encourages people to prioritize the “critical” tasks of the day ahead of the “important”. In plain English, I am always going to complete and deliver a promised deliverable for a paying client before catching up on my Twitter email or posting to this blog.

The second resource is evidence of a growing body of evidence that multi-tasking is just not good for us as human beings.

• I saw the first commercial from a wireless company discouraging texting while driving over the holidays. Congratulations to Verizon on that ad which you can see here.
• The Harvard Business Review published an article during 2009 on “The Dangers of Distraction” and I have read other summaries of research that indicates we humans do our best work in linear, not multi-threading style.

With all the attention given by Marketers today to Customer Engagement, the issue of attention spans is critical to understand, dissect, and integrate into our communication plans. Our success in reaching and building loyalty with Generation Y (the Millennial Generation) is highly dependent on our commitment to addressing this key issue.

In my opinion, we need to build some space into our own lives if we are to successfully design and execute effective strategies for our clients. Building space into our lives means that we need to create some “margin” in the day. You know the one inch or so of white space around the typical page full of copy? Well, we need to put a version of that into our calendars, drop the to-do list to the ground, and reside peacefully there for enough time that it takes to refocus on the strategic, the critical, and the longer term view.

I’ve got lots more to share on how to drive Customer Engagement in an over-stimulated consumer environment.

Stay tuned.

I’ve gotten into a bad habit with my children. Whenever they ask me about overzealous promises from a product advertisement, I just tell them “It’s probably not true, it’s just marketing stuff“.

The bad part is that I am instilling a degree of cynicism in the little ones, but then again “buyer beware” has served us well for decades. To get their money’s worth, consumers need to be cautious, if not skeptical, of claims made and should complement personal research with word of mouth recommendations where possible.

My broad-brush description of marketers can be justified simply by witnessing the lack of loyalty transparency in favored market practices today. I really don’t want to read an email telling me that I can earn a 10% rebate on “all purchases made” only to click through and see that there is a monthly dollar cap on my savings. I also don’t enjoy seeing items priced “less mail-in rebate” while I end up paying a higher price at the register and later struggle with paperwork to realize the savings.

To its credit, Best Buy has partially broken from the mail-in rebate habit as it offered 5 Android smartphones at an introductory price with no strings attached.

In the B2B world, the use of whitepapers as the bait in email solicitation is becoming highly annoying and merits a huge Loyalty Asterisk™.  Just this week, I filled out a form to receive a “Whitepaper” from Socialtext covering critical requirements of enterprise social software. Thinking I was going to learn something, I realized as I was reading the document that it was not much more than a capabilities document for their own product reformatted as a whitepaper.

It is a simple and often used formula – take the key features and benefits of the product you are selling and create an outline that proclaims the same key points as “best practices”. The Loyalty Asterisk™ remains prevalent in advertising and promotional circles today and marketers need to accept that building campaigns with roots in gently misleading the public does not breed long term customer or brand loyalty.

In the words of Generation Y (Millennials) it’s “annoying”! Translated, it means “I’m not buying your stuff!”

If marketers are selling quality, performance, and reliability as part of their product or brand promise, then they need to deliver the message with a higher degree of transparency than is seen today. I consistently advise my clients to deliver offers with accurate pricing and all conditions proclaimed up front rather than play the bait and switch game.

The beauty of Web 2.0 and social media in particular is that consumers have the tools and communications channels available to be able to research products, compare opinions, and provide feedback to friends in an almost instantaneous manner. Brands that market with a heavy dose of the Loyalty Asterisk™ will be skewered on Twitter, Facebook, and in the blogosphere.

Rather than play the game and suffer the penalty, marketers would be wise to play it straight, exercise some Loyalty Transparency, and enjoy the complements and adulation of consumers as they award the brand for delivering just as promised. If you are running your business without social media tools to monitor brand mentions and conversations, you need to step up your game.

Adopting the right tools and building a commitment to marketing transparency will yield improved results. I am here to help you with both endeavors.

Black Cats, Black Magic, and Black Friday … sounds like a threesome to avoid.

But untold millions will be lining up the day after Thanksgiving in the wee hours of the morning with steely-eyed focus and adrenaline pumping – all with the almighty bargain in mind.

Maybe it’s a gender thing, but while you might find me up at 5am to go fishing, you’ll never find me caffeined-up and ready to shop at that time of day. Maybe Black Friday is defined less by gender and more by the American way. We’re competitive and like to win. And, after a year of economic suffering like we’ve had in this country, you can’t blame consumers for wanting to taste even a small victory.

But as any coach worth his salt will tell you, winning comes at a price. Unfortunately, the price of playing the Black Friday game reached an all time high in 2008 when a Walmart worker was trampled to death by a mob of shoppers at a store in Long Island. The repercussions have been strong and retailers are taking steps to calm the crowds and bring order to stores as the holiday season kicks off this coming Friday.

Walmart settled the lawsuits that followed with a nearly $2 Million payout to victims of the incident. Concern is so high that even the National Retail Federation (NRF) has released crowd management guidelines for its members hoping to prevent future disasters.

Consumers seeking ways to get ahead of the game have options. They can check out Top 10 Black Friday websites to find bargains in advance, or they can just sit at home after turkey dinner on Thursday and watch “what not to do” videos on YouTube ranging from Stampedes at Walmart to Scuffles at Target.

Outside of the fun that some people associate with the crazed energy of Black Friday, I have to wonder if retailers knew what they doing when they originally promoted the concept. Competing on price only leads to a “death spiral” of diminishing profit margins. And since there is usually only one acknowledged price leader in a discounting category (ahem, Walmart) the rest of the retailing pack might be much better off taking a higher road to open consumer wallets in their favor.

There have been some really good articles written about the violence of last year’s Black Friday, and academics such as  University of Delaware professor Sharron Lennon are now studying the human behaviors that lead to such incidents. There is also a groundswell of voices encouraging consumers to “Spend time together, not money”.

All of this makes me smile when people ask if Loyalty Marketing programs work. Yep, there are some lame versions of the concept out there, and even the good ones could make use of their data to be more relevant to their customers. But as a business owner, it should be attractive to preserve margins, improve the shopping experience, and justify repeat business at your store without having to fake a “going out of business sale” once a month.  Data-driven Customer Strategies do just that.

I’ll bet there are some forward thinking people at the NRF and among larger retailers that could change the paradigm. Maybe the time has come to return a bit of elegance and class into daily shopping experiences, not to mention air travel. And, retailers had better consider the impact of promoting mass shopping frenzy on Millennial (Generation Y) consumers shopping online at home from their PC’s.

Could it be time for Black Friday to “Go Dark”?

Black Cats, Black Magic, and Black Friday … sounds like a threesome to avoid.

But untold millions will be lining up the day after Thanksgiving in the wee hours of the morning with steely-eyed focus and adrenaline pumping – all with the almighty bargain in mind.

Maybe it’s a gender thing, but while you might find me up at 5am to go fishing, you’ll never find me caffeined-up and ready to shop at that time of day. Maybe Black Friday is defined less by gender and more by the American way. We’re competitive and like to win. And, after a year of economic suffering like we’ve had in this country, you can’t blame consumers for wanting to taste even a small victory.

But as any coach worth his salt will tell you, winning comes at a price. Unfortunately, the price of playing the Black Friday game reached an all time high in 2008 when a Walmart worker was trampled to death by a mob of shoppers at a store in Long Island. The repercussions have been strong and retailers are taking steps to calm the crowds and bring order to stores as the holiday season kicks off this coming Friday.

Walmart settled the lawsuits that followed with a nearly $2 Million payout to victims of the incident. Concern is so high that even the National Retail Federation (NRF) has released crowd management guidelines for its members hoping to prevent future disasters.

Consumers seeking ways to get ahead of the game have options. They can check out Top 10 Black Friday websites to find bargains in advance, or they can just sit at home after turkey dinner on Thursday and watch “what not to do” videos on YouTube ranging from Stampedes at Walmart to Scuffles at Target.

Outside of the fun that some people associate with the crazed energy of Black Friday, I have to wonder if retailers knew what they doing when they originally promoted the concept. Competing on price only leads to a “death spiral” of diminishing profit margins. And since there is usually only one acknowledged price leader in a discounting category (ahem, Walmart) the rest of the retailing pack might be much better off taking a higher road to open consumer wallets in their favor.

There have been some really good articles written about the violence of last year’s Black Friday, and academics such as  University of Delaware professor Sharron Lennon are now studying the human behaviors that lead to such incidents. There is also a groundswell of voices encouraging consumers to “Spend time together, not money”.

All of this makes me smile when people ask if Loyalty Marketing programs work. Yep, there are some lame versions of the concept out there, and even the good ones could make use of their data to be more relevant to their customers. But as a business owner, it should be attractive to preserve margins, improve the shopping experience, and justify repeat business at your store without having to fake a “going out of business sale” once a month.  Data-driven Customer Strategies do just that.

I’ll bet there are some forward thinking people at the NRF and among larger retailers that could change the paradigm. Maybe the time has come to return a bit of elegance and class into daily shopping experiences, not to mention air travel. And, retailers had better consider the impact of promoting mass shopping frenzy on Millennial (Generation Y) consumers shopping online at home from their PC’s.

Could it be time for Black Friday to “Go Dark”?

Two forces are at work in the financial services industry today that place bank marketers at an interesting crossroads.

The first is a new wave of regulatory pressure specifically targeted at credit cards. The Credit CARD Act of 2009 will have wide ranging impact on the payments industry in the US.  Passing of the legislation was in reaction to increasing criticism and lobbying by consumer groups and was driven to passage as the US economy cratered over the past 18 months. The impact on credit card usage will be better understood with the passage of time, but there are immediate effects which mostly benefit consumers.

The second force at work is a growing need, indeed a demand, by consumers to improve their finanical literacy quotient. Members of Generation Y surveyed have cited a lack of understanding of financial products and an eagerness to get help to establish a higher comfort level with financial basics. Some bank marketers are putting programs in place to meet this need and may be creating the foundation for stronger consumer banking relationships for years to come.

The question remains: Will the industry jump on board to promote financial literacy or will it treat the subject as a passing fad?

That the need exists is undeniable. Just witness the results of the National Financial Literacy Challenge. Conducted among 46,000 high school students in 2008, the average score was a failing 52 of 100, indicating the level of work to be done. Congress recognizes the need as well, and is considering setting up a Consumer Financial Products Commission to evaluate products sold to consumers by the financial services industry and provide relevant protections.

Financial literacy could be defined as having the skills to be able to understand and perform basic tasks such as balancing a checkbook, creating and living within a budget, paying bills on time, avoiding late fees, and saving for the future and/or major purchases.

Becoming advocates of increasing financial literacy seems like a no-brainer as banks could build trust through transparency and a show of sincere interest in the welfare of their customers.

The reality that represents a speed bump in the progress is this: US Banks generate a massive amount of NSF and other deposit account related fees on an annual basis according to the FDIC.

The connection between transparency, financial literacy and Loyalty Marketing is this:  I am aware of some marketers who propose to craft Debit Card Rewards programs where the business case is driven by increasing overdraft fees and have listened to more than one debate about the wisdom of rewarding points for NSF fees. The answer to that question can be found by asking what type of consumer behavior we are encouraging. If it’s not good for the consumer, we should take it off the board.

Fifth Third Bank and SunTrust are examples of a wave of banks taking the high road. SunTrust has launched it’s new campaign “Live Solid, Bank Solid” and is training its own staff in financial basics, hoping that the skills learned will be shared with the customers they serve.

Fifth Third has launched a new marketing campaign “Don’t be That Guy” and has created a series of humorous but instructive videos to illustrate “what not to do” in common financial situations.

Targeted to students, the bank has seen a 27% increase in new accounts opened by students in the first 6 months of 2009 over same period of 2008 according to Larry Magnesen, Fifth Third’s CMO.

Whether the current interest in promoting financial literacy survives the economic recovery is dependant on two main factors: Will consumers relax as the economy improves and go back to their old ways of debt-fueled free spending? And, will banks be able to resist the temptation of short term profits to promote financial literacy and build more trusting relationships for the longer term?

If US consumer reaction to the ebb and flow of fuel prices is any indicator, we may be witnessing a recession induced fad. Helping consumers to stay in better financial shape, however, should make them lower risks for credit card and other consumer debt and create a higher appetite for financial services products. That longer term promise might be something attractive for banks to consider.