Loyalty Marketing has had its most notable successes in high frequency transaction environments. Think airlines, credit cards, gaming, hotels, and retail.

Where the sales cycles are extended or the opportunity for transactions less frequent, there have been fewer examples of success. Think insurance, subscription businesses like newspapers, cable, and wireless, and health care.

A revelation of Loyalty 201 is that data driven marketing will work in virtually any business model. Could it be that it was the self-limiting definitions of early Loyalty pioneers that created a self fulfilling prophecy that Loyalty only works in well defined settings and circumstances? To quote my Customer Strategy Network co-founder, Mike Atkin …. “Ballocks!”

To break free from these Loyalty cobwebs, the use of Customer Strategy as an umbrella term makes ever more sense to describe what this business is about. “Loyalty” whispers limitation, while “Customer Strategy” shouts innovation.

Today’s inspiring innovator is Safeway. The company has used incentives to reduce health care costs and its CEO, Steve Burd has become the leading visionary for health care reform from corporate America, having made nine or so trips to Capitol Hill just in 2009 to tell his story.  His rallying cry goes like this: “At Safeway we believe that well-designed health-care reform, utilizing market-based solutions, can ultimately reduce our nation’s health-care bill by 40%.”

The Safeway Healthy Measures program is voluntary and currently covers 74% of the insured nonunion work force. It gives employees a financial stake in the system and encourages healthy behaviors to achieve incentives.

As is common practice with many employers, Safeway requires employees to pay a portion of their own health care through premiums, co-pays and deductibles. Beyond that, the plan takes advantage of a provision in the 1996 Health Insurance Portability and Accountability Act (HIPAA), allowing it to differentiate premiums based on behaviors such as tobacco usage, healthy weight, blood pressure and cholesterol levels.

Ken Shachmut, Senior VP Strategic Initiatives, Health Initiatives, and Health Re-engineering at Safeway crafted Healthy Measures on the premise “that if people were given responsibility for their decisions, and there was transparency to the financial consequences to those decision, that they would choose to maximize both their health and their financial benefit.”

Safeway found motivation for its plan in the following health factoids which gave rise to the notion that encouraging behavior change could lead to healthier associates and big cost savings :

• 70% of all health-care costs are the direct result of behavior
• 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity)
• 80% of cardiovascular disease and diabetes is preventable
• 60% of cancers are preventable
• More than 90% of obesity is preventable

The program is working by several measures:

• 78% of participants rate the plan as “good, very good or excellent”
• 76% of those surveyed asked for more financial incentives to reward healthy behaviors

While business struggles with soaring health care costs and the nation debates adoption of a nationalized health plan, Mr. Burd projects that if the US had adopted its approach in 2005, “the direct health care bill would be $550 billion less than it is today, almost 4 times the $150 billion that most experts estimate to be the cost of covering today’s 47 million uninsured”.

And what is the key incentive proven to be effective to help influence the positive behavior changes by the insured population? Mr. Shachmut explains it this way “we all know that just telling people to do the right thing is not effective … cash truly has been king in our program in the form of differential premiums. Our average difference under Healthy Measures is about $800 per year – for the employee and spouse, so almost $1,600 for a family.”

A measure of soft benefits are included, using “mutually-reinforcing programs available to all employees and spouses – access to the Fitness Center, discounted gym memberships, care management programs, health and wellness programs, information seminars to employees, and other related items.”

The success of Healthy Measures should be highly encouraging to US businesses and the citizenry at large. There is a path to managing our health care needs as a nation on a better basis. The program also lends insight into how the core elements of Loyalty 201 can be applied in the health care industry, breaking away some of the old cobwebs.

I feel better already!

After more than 100 posts I can say that Loyalty Truth has achieved a degree of permanency.

Founded on my own conviction and commitment, it is a welcome relief to have help. I express my gratitude to guest contributors Tom Rapsas, Jim Kuschill, Brian Kryzanski, and Mike Capizzi. They have each written about aspects of Loyalty Marketing where they have particular expertise and collectively they represent a growing foundation of support for this blog.

With so much to write about in the evolving Loyalty Marketing industry, the opportunity is here to establish some themes to follow for the future. Keep your eye out for articles categorized as “Loyalty 201“, “Loyalty in Any Language“, and “Loyalty Futures“. In addition, we’ll continue to document instances of the “Loyalty Asterisk“, to address the gotchas and tripwires of Loyalty Marketing.

• Loyalty 201 will address how essential elements of the business are evolving to meet the needs of increasingly empowered and knowledgeable customer groups. Here you will read about new directions in rewards, communications, and marketing technology which drive higher ROI for loyalty program sponsors. I’m assuming that my readers understand the basics and are ready to move on to consume solid food!
• Loyalty in Any Language will share learning from international markets. The influence of culture, custom, and unique business environments on the execution of effective marketing strategy is undeniable. These posts will provide a vital resource for any company with cross border interests. I will not only share my own first hand experiences working outside of our borders, but will showcase loyalty leaders from key markets around the world.
• Loyalty Futures will take inventory of just about anything that can be found in the crystal ball of Customer-centric strategic marketing. Where innovation in building brand loyalty and changing customer behavior is observed, we’ll share it here. Lots of big companies are trying to connect the dots of social media, millennials, digital CRM, and profitability and Loyalty Truth will makes its contribution to the cause.

According to what I read in the blogosphere, my approach to Loyalty Truth is somewhat non-conforming.

• I am driven by substance, not frequency of posting. Though I manage to get a dozen or so posts up each month, I have yet to publish a “throw away” article and hope I never do. There is so much change underway in Loyalty marketing that my inventory of “posts-to-do” is outpacing my time to properly research and post. This approach should translate into high quality posts that are almost mini case studies by themselves. You can be the judge.
• Balancing quality and readability is the next challenge. Beyond a certain length, you won’t spend time to read what’s posted, so I am saving some bigger topics for white papers to be published on the Hanifin Loyalty website.
• Lastly, I have to admit that while writing is an enjoyable pursuit, I publish Loyalty Truth with a purpose. The perspective, opinion, and experience that is baked into each post is meant to offer a teasing glimmer of insight into the value that Hanifin Loyalty brings to its clients. We confidently offer the highest level of strategic advice as well as exacting project management and tactical execution services to make sure clients reach their profitability targets. Give us a chance to serve as your portal for top-tier decision making. You’ll find there is still quite a value to be found in the dollar these days.

I hope you will enjoy these new features and spread the word about Loyalty Truth.

Enjoy the journey….