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.

In a society where people worship athletes and titans of business, rationalizing their transgressions by their success, it’s tough to criticize Groupon without looking foolish.

Groupon is just 2 years old, has around 50 Million subscribers, and an estimated market valuation of $15 Billion. Based on those numbers, criticizing Groupon is like saying Ben Roethlisberger “sucks” even after he’s won 2 Super Bowls (maybe a third next Sunday?).

Say what you want about Groupon, but it has gained a huge fan following, is an easy sell to most merchants, and has investors swooning to jump onboard before it’s “too late”. Nonetheless, Groupon is not without shortcomings and has clear room for improvement if it is to create a sustainable business model.

Groupon is powerful in helping local merchants acquire new customers. A Groupon can spike visits for a merchant like nothing else except perhaps leaving the doors unlocked after midnight. But “robbed” is sometimes how the merchant feels after Groupon-fever has run its course. More stories are surfacing from merchants who miscalculated with Groupon, customers who found the experience lacking due to capacity issues, and a class action suit has been filed in California which could “threaten its business model”.

Participating in a Groupon is still the merchant’s choice, and business owners should take time to understand the implications and responsibilities of the deal. Even so, Groupon lacks a feedback loop to help merchants evaluate campaigns, gain insight on margin cannibalization, and determine if Groupon users plan to return in the future while paying regular prices. It’s a long way from lifecycle marketing or a tool to create customer loyalty.

I have witnessed more than one case of a restaurant owner having to take an informal poll across Groupon users to figure some of this out. How many business owners have similar foresight, time, and energy to do the same is unknown, but those that don’t could miss the opportunity to see if Groupon will pay off for them holistically.

The fuel that fires the Groupon engine is merchants. Consumers will always be willing to grab a 50% off deal, but merchants have to be willing to play the game. Groupon needs to be mindful of how they mix national and online merchants into their offering as well as develop tools to help merchants evaluate campaigns if they are to keep the merchant community from becoming weary of the model.

For national and big box retailers who are ostensibly not Groupon partners, there has to be concern that Groupon is training consumers to look for “50% off” before pulling out their wallets. With thinning margins and high fixed costs in brick and mortar retail, fanning the deep discount mentality among consumers can be foreboding.

Groupon has been fantastic as a customer acquisition tool, but needs to evolve to retain merchant interest. Almost every criticism that could be leveled at Groupon is within its reach to resolve. It will be fascinating to observe whether Groupon feels the same way.

In a society where people worship athletes and titans of business, rationalizing their transgressions by their success, it’s tough to criticize Groupon without looking foolish.

Groupon is just 2 years old, has around 50 Million subscribers, and an estimated market valuation of $15 Billion. Based on those numbers, criticizing Groupon is like saying Ben Roethlisberger “sucks” even after he’s won 2 Super Bowls (maybe a third next Sunday?).

Say what you want about Groupon, but it has gained a huge fan following, is an easy sell to most merchants, and has investors swooning to jump onboard before it’s “too late”. Nonetheless, Groupon is not without shortcomings and has clear room for improvement if it is to create a sustainable business model.

Groupon is powerful in helping local merchants acquire new customers. A Groupon can spike visits for a merchant like nothing else except perhaps leaving the doors unlocked after midnight. But “robbed” is sometimes how the merchant feels after Groupon-fever has run its course. More stories are surfacing from merchants who miscalculated with Groupon, customers who found the experience lacking due to capacity issues, and a class action suit has been filed in California which could “threaten its business model”.

Participating in a Groupon is still the merchant’s choice, and business owners should take time to understand the implications and responsibilities of the deal. Even so, Groupon lacks a feedback loop to help merchants evaluate campaigns, gain insight on margin cannibalization, and determine if Groupon users plan to return in the future while paying regular prices. It’s a long way from lifecycle marketing or a tool to create customer loyalty.

I have witnessed more than one case of a restaurant owner having to take an informal poll across Groupon users to figure some of this out. How many business owners have similar foresight, time, and energy to do the same is unknown, but those that don’t could miss the opportunity to see if Groupon will pay off for them holistically.

The fuel that fires the Groupon engine is merchants. Consumers will always be willing to grab a 50% off deal, but merchants have to be willing to play the game. Groupon needs to be mindful of how they mix national and online merchants into their offering as well as develop tools to help merchants evaluate campaigns if they are to keep the merchant community from becoming weary of the model.

For national and big box retailers who are ostensibly not Groupon partners, there has to be concern that Groupon is training consumers to look for “50% off” before pulling out their wallets. With thinning margins and high fixed costs in brick and mortar retail, fanning the deep discount mentality among consumers can be foreboding.

Groupon has been fantastic as a customer acquisition tool, but needs to evolve to retain merchant interest. Almost every criticism that could be leveled at Groupon is within its reach to resolve. It will be fascinating to observe whether Groupon feels the same way.

Trendy business buzzwords aren’t any fun until you form an opinion and seek feedback to get to the substance of the issue.

Customer Engagement is one of those terms that is being mentioned more frequently than Kim Kardashian was during the Super Bowl. It’s the 2010 version of “what’s hot, what’s new, what’s next?”

The question is, should Customer Engagement be treated as a new marketing sub-set, on par with Loyalty and Word of Mouth Marketing, or is it a concept that’s been around for quite some time and just happens to be a point of pain in the Relationship Value Chain (RVP) for marketers today?

Relationship Value Chain? That’s the term that my good friend and former Colloquy colleague, Kelly Hlavinka, coined almost 10 years ago. The experience of many at the once proud Frequency Marketing was that customer value increased across a spectrum of customer interaction. Link the points of interaction and you had a value chain that loyalty marketers could use to influence communication plans and allocate marketing budget dollars to encourage specific behaviors.

The RVP is similar to the “acquisition – activation – usage – retention” lifecycle marketing that credit card issuers have been using for years, but takes objectives down to a more granular level.

One example of a flow that constitutes a RVP:

• Awareness
• Response to Invitation
• Program Enrollment
• First purchase
• Multiple purchases in response to offers
• Redemption for Reward
• Response to Survey
• Response to Future Bonus
• Multiple Redemptions

No one has a lock on defining the steps in the chain as they should be customized to the business situation under review. Going to back to Customer Engagement, just where does it live in the value chain used as an example here?

Let’s look at a few steps in the RVP and see where, if accused of being “Engaged”, there would be enough evidence to gain a conviction!

Program Enrollment – Doesn’t everyone enroll in programs without much care for future interactions? I enroll in just about every program where I know the odds are that I’ll be back (by choice or force) and the offer looks worthy enough to give it a whirl. The only caveat is that I won’t sign up if the data collection hurdle is too high at the outset.

First Purchase – You’ve got my attention, but what makes you think I’m “Engaged”? I may be a cherry-picking consumer or have just satisfied a one-time need for your product or service. Not enough evidence to convict me as engaged at this point in time.

First Redemption – I’ve stayed around long enough to make multiple purchases over time – how else would I have qualified to redeem? But did you catch me in a cycle of life that won’t soon be repeated, or can you count on me to do it again? Engagement? We’re getting closer, some say “yes”.

Survey Response – I’ve transacted, collected, redeemed, and now I am willing to actually have a conversation. You’ve got my attention, but I am skeptical of what you will do with the information and if I will hear from you again. Does this sound akin to dating? Conversation is certainly an accelerator to engagement, but does not constitute the end goal itself.

Multiple Redemptions – Once I’ve completed the purchase/collection/redemption cycle more than once, I think you can count me as “Engaged”. The focus shifts now to retaining my interest, expanding the conversation, and developing more business as a result.

My take on Customer Engagement is that it describes an end objective that marketers hope to achieve through smart execution of a well designed data-driven Customer Strategy. If you try to define engagement as one of the individual steps, take Enrollment as an example, then what you are truly talking about is more tactical ala “how to create awareness for a program and convert interest to enrollment”.

It’s a step along the way, not engagement itself.

The Loyalty Truth on Customer Engagement is that it has been around for quite a while. The reason the topic has been deserving of the spotlight lately is that customers are increasing difficult to engage, not to mention retain.

What’s your take?

After spending the last few weeks thinking through reasonable responses to my new favorite question for 2010 “Do you think Social Media is here to stay?“, I’ve recently been re-directed to my “old” favorite question that I have been answering for 12 years “Do loyalty programs work?“

Without disappearing completely down that gopher-hole, I’ll just say that there is enough discomfort in using the “L” word that industry insiders are redirecting the conversation to new labels. Is it any wonder why Customer Engagement has been the buzzword of the year?

Lifecycle marketing in the credit card business has always hinged on the “Activation, Usage Retention” triad. In retail, there is a similar flow with “Awareness, Visit, Purchase, Return“.

I believe that within these lifecycle flows, Customer Engagement has always existed. Activation can be broken down into Awareness & Engagement leading to Activation. You get the idea.

So why is Customer Engagement being given so much attention these days? Maybe because marketers have always found it one of the toughest steps to effectively manage in the relationship value chain. And, maybe it is because in 2010 the job is increasingly difficult as consumer attention spans are shrinking each day.

Not too long ago, I went to see the end-times movie “2012″ and the challenge of customer engagement was made crystal clear. As the final scene faded out, the entire theater full of patrons jumped to their feet and headed to the exits. As I sat comfortably watching the credits scroll by, I noticed that I was literally one of three people still in my seat. I had noticed this behavior before, but finally connected some dots.

You see, consumer attention spans have been shrinking for several years and the pace of shrinkage shows no sign of slowing down. The question is: how do marketers hope to create and maintain “customer engagement” when “customers” (us) can barely pay attention long enough to change the channel?

With tongue only slightly in-cheek, I believe the slide in customer attention span all started with USA Today. The snippet-based paper lowered the bar for people to gather their news, requiring them only to read a paragraph or two and then turn the page. After a while, reading a news story in the New York Times seemed like sitting down to crack War and Peace.

The die was cast and a new standard was set for how consumers gather their news – short entertainment-driven sound bytes that could be absorbed while multi-tasking negated the requirement for thought or analysis. Now we have a “crawler” on everything from CNN to ESPN to summarize our news for us, and we are sharing our subjects of interest with friends through quick SMS messages and IM blasts. Even the outflow of natural disasters as recently occurred in Haiti are threatened by our short attention span.

Compress the communication further by limiting our messages to 140 characters on Twitter and it is clear that there is more emphasis on the announcement than the content inside. In the business world, we are increasingly asked to summarize key thoughts and initiatives into “one pagers”.  Weeks & months of work on strategic plans are being distilled into executive summaries that are shorter by the day. It almost seems as though even a brilliant business plan or strategy is doomed unless there is an effective elevator speech to go with it.

The trends we have seen in Loyalty Marketing include members who want to achieve award status quicker and redeem more often for smaller “attainable” rewards. Converting points for cash back certificates at the point of sale is high on the list for many program operators.

If you agree that attention spans are compressing daily and our own internal communications are being driven by 3 PowerPoint slides and a “one pager”, what tactics can we hope to successfully employ to engage our customers?

I think the answer is two-fold:

• First, we can go back to social media – as we might just have to meet people “where they are” rather than hoping to bring them into our web, our way.
• The second is to never forget that every house has a kitchen table or something akin to it. People still gather and enjoy each other’s company in informal settings. Putting a catalog or brochure on their kitchen table gives them something to talk about – YOU. Personalizing that catalog based on known behaviors makes it even more of a conversation piece, once opened.

Pairing these two unlikely partners – Social Media and Direct Mail – might just work. Give it a try.

After spending the last few weeks thinking through reasonable responses to my new favorite question for 2010 “Do you think Social Media is here to stay?“, I’ve recently been re-directed to my “old” favorite question that I have been answering for 12 years “Do loyalty programs work?“

Without disappearing completely down that gopher-hole, I’ll just say that there is enough discomfort in using the “L” word that industry insiders are redirecting the conversation to new labels. Is it any wonder why Customer Engagement has been the buzzword of the year?

Lifecycle marketing in the credit card business has always hinged on the “Activation, Usage Retention” triad. In retail, there is a similar flow with “Awareness, Visit, Purchase, Return“.

I believe that within these lifecycle flows, Customer Engagement has always existed. Activation can be broken down into Awareness & Engagement leading to Activation. You get the idea.

So why is Customer Engagement being given so much attention these days? Maybe because marketers have always found it one of the toughest steps to effectively manage in the relationship value chain. And, maybe it is because in 2010 the job is increasingly difficult as consumer attention spans are shrinking each day.

Not too long ago, I went to see the end-times movie “2012″ and the challenge of customer engagement was made crystal clear. As the final scene faded out, the entire theater full of patrons jumped to their feet and headed to the exits. As I sat comfortably watching the credits scroll by, I noticed that I was literally one of three people still in my seat. I had noticed this behavior before, but finally connected some dots.

You see, consumer attention spans have been shrinking for several years and the pace of shrinkage shows no sign of slowing down. The question is: how do marketers hope to create and maintain “customer engagement” when “customers” (us) can barely pay attention long enough to change the channel?

With tongue only slightly in-cheek, I believe the slide in customer attention span all started with USA Today. The snippet-based paper lowered the bar for people to gather their news, requiring them only to read a paragraph or two and then turn the page. After a while, reading a news story in the New York Times seemed like sitting down to crack War and Peace.

The die was cast and a new standard was set for how consumers gather their news – short entertainment-driven sound bytes that could be absorbed while multi-tasking negated the requirement for thought or analysis. Now we have a “crawler” on everything from CNN to ESPN to summarize our news for us, and we are sharing our subjects of interest with friends through quick SMS messages and IM blasts. Even the outflow of natural disasters as recently occurred in Haiti are threatened by our short attention span.

Compress the communication further by limiting our messages to 140 characters on Twitter and it is clear that there is more emphasis on the announcement than the content inside. In the business world, we are increasingly asked to summarize key thoughts and initiatives into “one pagers”.  Weeks & months of work on strategic plans are being distilled into executive summaries that are shorter by the day. It almost seems as though even a brilliant business plan or strategy is doomed unless there is an effective elevator speech to go with it.

The trends we have seen in Loyalty Marketing include members who want to achieve award status quicker and redeem more often for smaller “attainable” rewards. Converting points for cash back certificates at the point of sale is high on the list for many program operators.

If you agree that attention spans are compressing daily and our own internal communications are being driven by 3 PowerPoint slides and a “one pager”, what tactics can we hope to successfully employ to engage our customers?

I think the answer is two-fold:

• First, we can go back to social media – as we might just have to meet people “where they are” rather than hoping to bring them into our web, our way.
• The second is to never forget that every house has a kitchen table or something akin to it. People still gather and enjoy each other’s company in informal settings. Putting a catalog or brochure on their kitchen table gives them something to talk about – YOU. Personalizing that catalog based on known behaviors makes it even more of a conversation piece, once opened.

Pairing these two unlikely partners – Social Media and Direct Mail – might just work. Give it a try.