Amid the overwhelming flow of information in our digital world, there are a few keepers. Chris Brogan is one of them. I don’t know him personally, don’t have any affiliate relationship with him, and am not trying to get him to follow me on Twitter. I just like to read his stuff.

Chris wrote about his approach to New Year’s resolutions in this post, instead choosing 3 words that would help him to focus on what’s most important for the year ahead. I like the idea and am still trying to reduce my personal list of keywords to single digits. Meanwhile, I found it easier to create a 3 word list for Loyalty Marketing in 2012 and wanted to share it for your consumption and discussion.

Let me know what your 3 words would be for this year and why you chose them. I’ve started a discussion on our Customer Strategy Network Facebook page and in a few LinkedIn groups where you can participate. If you prefer, just leave comments here on Loyalty Truth.

Data

Loyalty marketers have been collecting customer data since the dawn of the business. To a great extent, that data has been under-utilized and this shortcoming threatens the trusted relationships we have with our customers. Consumer 2.0 is well aware that the portfolio of transaction and personal data that defines self is highly valuable to corporate America. Though we’ve been talking about increased leveraging of data as one of the biggest opportunities in Loyalty Marketing, 2012 might be the year that it happens.

Selecting Data as one of my 3 words for 2012 puts me in pretty strong company as I recently listened to Rupert Duchesne, Chairman of Aimia, speak about Data being the “New Oil”. And, just last week, I read that Foursquare was making public its intent to put its data to work as a tool for growing its business in 2012.

Mobile

The mobile handset has been predicted by many to become the central platform for social shopping and payments. The Google Wallet was announced last year and payment/loyalty plays including Square, Dwolla, and LevelUP seek to change consumer behavior and set a new mold for how we shop and pay.

Banks are pledging to make better use of mobile applications to bring banking products closer to the customer, in the process redefining how we view the retail banking customer experience. Groupon has responded to criticism that it is impotent beyond stimulating customer acquisition and trial and has introduced Groupon Rewards as well as partnering with Foursquare to find synergy in location based marketing and the daily deal.

The convergence of loyalty, payments, and the mobile handset will continue at a faster pace during 2012.

Social

We invested significant time gathering information and creating position papers on Social Loyalty, Social CRM, and Social Shopping during 2011. Clients as well as conference delegates wanted to absorb as much as they could on these topics and the buzz made us question if everything involving “loyalty” and “social” might dissolve away as just the latest marketing fad.

It’s not going to happen. In fact, 2012 will be the year when many brands put their PowerPoint presentations on the shelf and move to implement more social channels into their customer strategies. Consumer 2.0 is making purchase decisions differently than before and will be delighted by elegant ways to locate and evaluate local shopping offers via their mobile device. The social aspect comes in the form of interactions via social shopping networks like Zavee.com or by engagement with game-fueled loyalty programs where referral and recommendations lead visibly to purchase.

Three words that will define Loyalty Marketing in 2012: Data, Mobile and Social. I’m sure you can make an argument for others.

Let’s hear it.

Sometimes you work really hard for a small break. Other times serendipity shows its face and good things fall into your lap.

I’ve been lucky over the past month. First, I had the opportunity to interview Rob Markey, co-author with Fred Reichheld of The Ultimate Question 2.0, an update of the first version of the book which familiarized us with the Net Promoter Score. The book hit the market this month and you can find a good review of it on the Kobie Marketing blog, The Muse.

During October, Loyalty Truth will be featuring a three part blog series covering my interview with Mr. Markey. Stay tuned as I think you’ll find his comments interesting as well as see how Net Promoter Score has developed from a scoring metric to a practical management system that has been implemented with good results by many well-recognized brands.

The second piece of good fortune was my attendance at the ShopperTech Lead Marketing Conference. Al McClain and the good folks at RetailWire organized an afternoon of panels and I was able to participate in a discussion of loyalty marketing with BJ Emerson of Tasti D-Lite, Dan Frechtling of DS-IQ, and Bill Nasshan from Bi-Lo supermarkets. An executive summary of the conference can be found here.

To my surprise, one of the keynote sessions was given by Matthew McNerney and Tim Keiningham of IPSOS Loyalty. The two presented a new measure of customer loyalty, The Wallet Allocation Rule, which will be profiled in October in the Harvard Business Review.

The Wallet Allocation Rule correlates customer loyalty to share of wallet, and the executives from IPSOS report that “the correlation between a brand’s Wallet Allocation Rule score and its share of wallet was greater than .9 – a perfect correlation score being 1.0″. The score takes the relative ranking of competitors into consideration and is proposed as a new way to tie customer loyalty scores to wallet share and ultimately profitability.

Let’s give the marketplace time to absorb the IPSOS article in HBR (they are said to have the cover) and the new book by Messrs. Markey and Reichheld. The ensuing debate over how best to predict customer loyalty through these two scoring metrics will be one to watch.

Mark Cavendish is the fastest person in the world on two wheels. At the moment, the professional cyclist, riding for HTC Highroad, holds the lead in the sprinter’s competition in the Tour de France and is a favorite to hang on to the “green jersey” until the race wraps up next Sunday in Paris.

With all due respect to the accomplishments of Mr. Cavendish, there’s still a larger prize to be won, and the sprint competition is a subset of the overall picture in cycling’s greatest race. He’s a critical and fascinating part of the Tour de France story this year as are other similar “races within the race”, i.e. the King of the Mountains, Best Young Rider, Best Team, and some others.

In the business world, similar phenomena take place. The genre of data-driven marketing programs known as Loyalty Marketing were launched in earnest in 1981 and have been evolving steadily over the past 25 years. Throughout this time, there have been a number of subplots, some forgettable (online currencies like Flooz and Beenz) and some significant (1 to 1 Marketing, Word of Mouth Marketing, Deal of the Day).

The important thing to remember is that there’s a big race to be won, and the outcome is still in doubt. Winners are yet to be determined. Some of the “subplots” over past years have been precipitated by payment innovation (smart cards, contactless payment), regulatory/legislative issues (merchant funded rewards, whatever is to come post-Durbin), technology (Customer Relationship Management) or just plain visionary thinking (1 to 1 Marketing).

Today we are experiencing yet another phase of marketing development and, as in the past, the focus of brands, markets, and investment capital is on tactical options that can change how we communicate and deliver value to customers while macro themes are set aside. The current obsession with social loyalty, location based marketing, game based engagement programs, and deal of the day plans like Groupon are examples drawing the market’s attention.

You might be surprised to hear this sort of talk from Loyalty Truth. After all, we’ve invested ourselves to help brands “get ahead of the transaction” and successfully engage with Customer 2.0. To be clear, there is no inconsistency in our thinking, rather an unwavering commitment to help fulfill the greatest promises of data-driven customer strategy.

The three biggest unfulfilled promises of Loyalty Marketing from our viewpoint are the under-utilization of customer data collected, the failure to deliver personalization and relevancy through two-way dialogue between brand and customer, and the shortcoming of Loyalty Marketers to apply what they know works to meet objectives across a Customer Lifecycle.

At Loyalty Truth, we will continue to learn, test and advocate for how best to incorporate new technology and communication channels into customer-facing marketing programs. At the same time, we’ll keep our eyes on the big prize as we apply the benefits of these new tactics, technologies, and channels.

After all, if Cavendish could pull it off, he’d rather have both a Green and a Yellow jersey to wear at the end of the bike race.

The folks at RetailWire spark some great conversations – all of which are focused on retail marketing, but only some of which are loyalty marketing specific. I’ve been privileged to contribute to Retail Wire as a member of their Brain Trust, a name which still earns me some loving chiding around the family dinner table.

Last week the discussion was about “Napster moments”, those instances of change so profoundly momentous that industries are redefined and industry leaders are jettisoned with their place assumed by start-ups and other newcomers.

As RetailWire explained;

“These changes are happening all around us and in a multitude of industries. Newspapers, publishers and DVD rental chains, to name just a few, are being overwhelmed by changes that many saw coming a long time ago — changes that they could have been leading, rather than being annihilated by.”

From my recent study of the loyalty supplier marketplace and the growing inventory of loyalty software benchmarking accomplished with Mike Atkin and the Customer Strategy Network, I sense a Napster Moment coming for Loyalty Marketing.

Here’s what I mean:

1. With Consumer 2.0 defining customer engagement and loyalty strategies, how will suppliers fare whose model is based principally on “selling points” that can be later redeemed for merchandise, gift cards, and travel?
2. Which of the leading firms creating brick and mortar merchant networks will not only amass the numbers, but meet consumer demand to earn rewards, daily deals, and other promotional formats as they patronize their favorite local merchants?
3. With so much buzz about location based marketing, game based designs, and social posting, will it be industry “leaders” that capture the magic of Social Loyalty, or will the crown fall to a new wave of competitors?
4. As announcements of data breaches continue to grab headlines, will loyalty program enrollment be dealt a serious setback, or will leadership be taken to allay consumer fears and better articulate the high value of loyalty programs?
5. As increased customer engagement continues to be correlated to higher redemption rates, who will cope best with the new standards of loyalty accounting – seeking redemption instead of encouraging breakage?

The RetailWire discussion pointed out that Napster Moments “are particularly disastrous when companies or industries on the whole simply refuse to acknowledge that their business model or core product must change.” With great respect for colleagues, past employers, and competitors, I wouldn’t live up to the Loyalty Truth moniker if I didn’t speculate the coming of a Napster Moment for Loyalty Marketing.

Loyalty Marketing isn’t going away. Consumers continue to want goodies and recognition for their patronage. Brands need measurable and financially accountable marketing methods to drive results for their shareholders.

What is undeniably changing are the ways consumers are making purchase decisions, the way brands need to communicate with consumers to develop brand preference “ahead of the transaction”, and the means by which value is delivered to consumers in this evolving digital world.

By definition, a Napster Moment leaves in its aftermath winners and losers.

Be a winner.

I just saw a preview of the new Morgan Spurlock movie Pom Wonderful® Presents: The Greatest Movie Ever Sold. Spurlock is the raconteur behind the funny but frightening documentary Super Size Me, in which the protagonist ate nothing but McDonald’s food for a month—which caused him to become fat and physically ill.

This time out Spurlock demonstrates the ubiquity of branding messages in our lives, by literally selling out his new movie. In a series of filmed encounters, Spurlock urges brands to sponsor his movie for a price—and is able to entirely fund the film through product placement and sponsorships, including a cool $1 million dollars from pomegranate juice maker Pom for a spot in the title.

This got me thinking: maybe Bill Hanifin should sell out Loyalty Truth. With so many loyalty programs out there, the possibilities are limitless. Consider: Loyalty Truth sponsored by JetBlue TrueBlue or Verizon Business Link Rewards presents Loyalty Truth or how about Hilton Honors, Loyalty Truth & You.

After all, we’ve sold out our ball fields—from my beloved Mets’ Citifield to the Astro’s Minute Maid Park (formerly Enron Field) to the ridiculous sounding Pizza Hut Park, home of major league soccer’s FC Dallas. (Top overseas honors go to Germany’s pro soccer team FC Nürnberg and its Easy Credit Stadium.)

What’s more, we’re now advertising in virtually every space known to man. This includes the walls and stalls of bathrooms, corporate logo tattoos that turn people into walking advertisements, and the latest innovation in advertising space sales—entire homes turned into billboards.

With that backdrop, why shouldn’t Loyalty Truth sell out as well? I hereby declare myself Bill’s agent. Bidding starts at $100K. Any takers?

Editors Note: The answer is NO, we’re just having some fun here. But as @tomrapsas points out, product placement is trendy and even the makers of Bud Light are poking some fun at the idea in this video.

It was recently reported in the trade press that Pepsi had slipped to the #3 soft drink in sales, behind Coke and new #2 Diet Coke. But most interesting was the speculation behind the drop. In an Ad Age article titled “How Pepsi Blinked, Fell Behind Diet Coke”, it was hinted that Pepsi had put too many of its marketing eggs in the social media basket.

Some background: In 2010, the company launched the Pepsi Refresh Project. As I reported in a previous Loyalty Truth post: This Web-based initiative asks customers to submit ideas that they think will have a positive impact on the world, including everything from building community playgrounds to caring for wild cats. Consumers vote on ideas they think should be funded, and to date Pepsi has committed over $15 million to nearly 400 winning ideas.

The Refresh Project was backed by a big social media presence and its launch coincided with Pepsi’s move away from traditional advertising channels, including an ad boycott of the Super Bowl and other major marketing events. (By comparison, Coke is ubiquitous, sponsoring everything from the NCAA tourney to NASCAR to the hit TV show American Idol.)

In the Ad Age article, John Sicher, editor and publisher of Beverage Digest, expressed his concern about Pepsi’s marketing efforts saying, “In the cola wars, the Refresh Project by itself isn’t enough to market Pepsi’s cola brands.” Sicher believes that in addition to Refresh, the company needs “more product-oriented advertising and marketing. I think that the 2010 results are probably a wake-up call for Pepsi.”

In an Ad Age editorial, Rance Crain chimed in “there’s also the danger that consumers could conceivably tire of causes or decide that Pepsi, a marketer long known for its ability to amuse and entertain, is taking itself too seriously. After all, we’re talking about fizzy soda water here.”

Julie Rohem, the ex-marketing chief of Wal-Mart, also expressed her doubts about Refresh in a recent blog post:“the message had nearly nothing to do with the product or the sale of that product. It was altruistic and admirable but it did not engage people with the drink itself—only the endeavors that the campaign supported. Pepsi at the end of the day is a mass brand and that means appealing to the masses on the product first.”

So was the Pepsi Refresh Project a mistake? A qualified yes—if the company really thought it could abandon its more traditional advertising efforts for one that pitched good vibes instead of good taste. A message of corporate benevolence is all well and good, but it feels like the company forgot the primary goal of any marketing department: move the product.

That said, Pepsi should also be commended for doing something a lot of bottom line-focused companies have ignored in recent years—giving back to the community. Handing cash to initiatives like “supporting the rescue and care of injured and orphaned wildlife ” and “getting the lowest income students in our community into college” is truly a noble endeavor.

It’s enough to make this bleeding-heart chug a cold bottle of Pepsi or two. If only I drank cola.

Tom Rapsas is a regular contributor to Loyalty Truth. You can follow him on Twitter @tomrapsas

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.

When I first saw a QR code, I shrugged my shoulders and thought “one more piece of technology looking for a solution”.

I’m not cynical … I’ve just lived through years of expectation for smart cards and contactless cards only to see the technologists and vendors more excited about the product than consumers ever were.

Now I found myself staring at a black and white digital pattern slightly more intriguing than a bar code, and wondering what all the fuss was about. My disdain for QR codes has grown into mild fascination as I have experienced their use on a personal level and have witnessed how brands are using them to efficiently engage customers and grow their business.

Newspapers have made good use of the codes, allowing readers to instantly shift from print to online sources of content, in the process bringing a print story to life with a video or blog. Promotions and offers have been mixed in with content delivery to award readers for taking time to read the codes and explore an online version of the publication.

Retailers, especially local merchants fighting to win mind-share from the national brands, are using QR codes to effectively keep the store open “24/7″ by highlighting featured inventory or take viewers to online stores where they can shop at their leisure.

I’ve also seen the use of QR codes stretched beyond what consumers can digest. A local realtor comes to mind who substituted codes in a monthly print ad for the usual four color pictures of listed properties. The presentation was a bit too obscure and I noticed that the realtor reverted to pretty pictures the next month with one QR code in the corner directing readers to a web site.

Speaking of web sites, the most common use of QR codes I have seen in business so far is the inclusion of a code on a business card or online profile offering another way for visitors to link to a web site home page. Even though I created the code in this post with the same linkage, it’s an unimaginative use of the technology.

QR codes are much better used to send visitors to micro-sites, videos, or other dynamically changeable content that serve a specific business purpose. They could also be used in single-use format to enable reward redemption at point-of-sale.

With Nielsen projecting the penetration of smartphones in the US to exceed 50% by the end of 2011, more people will be able to easily access the information available. It might be merely an anecdotal commentary, but I’ll bet that the people who do have smartphones today represent an audience willing to take a digital shortcut to view useful content and get needed information from their phones without having to type clumsy URL’s into their browser.

Like most technology, the real fun starts when people apply their imagination to use applications in ways not anticipated by the inventors. QR codes have high potential for imaginative use and we expect to see more of them in both B2C and B2B settings.

Loyalty Truth has been giving a lot of thought towards the shaping of loyalty and rewards programs to engage the interest of Millennials and the broader digital consumer group we are calling Consumer 2.0.

With many merchandise offerings lacking imagination as well as value, and airline miles tough to redeem given capacity restraints on available reward seating, cash back has earned renewed popularity as a quick-to-earn and easy to understand reward.

The problem is, rational can be boring. And easy to understand sometimes means too easy to label. With Groupon offering a 50% off “deal of the day”, a 1% deferred cash reward seems to be teetering on irrelevancy.

A 2010 paper written by an esteemed group of professors from Harvard University, University of Virginia, and University of British Columbia, pointed out that, in most cases, people enjoy experiences over things. While an item purchased can bring temporary pleasure, it is an experience that leaves a lasting impression.

Music is experiential and has been described as a “time machine” by some people. Most of us can attest to the impact of hearing a favorite song on the radio. The opening notes can transport us back in time and bring us vivid memories of first dates, world events, or just plain old good times.

If you don’t believe that music is important to human beings, is pervasive in our culture today and can be used to shape purchase behavior, then at least factor in these statistics:

• MP3 players — Just under half of American adults (47%) own an MP3 player such as an iPod — a nearly five-fold increase from the 11% who owned this type of device in early 2005  – Aaron Smith, Research Specialist, Pew Internet & American Life Project October 14, 2010

• 16 percent of Americans age 13 or older are using devices other than their home computers to download software applications (apps), music, video, and other entertainment content from the Web – NPD Group, May 2010

• 75 percent of iPhone and iPod Touch users are connecting to the Web to download entertainment content and apps – NPD Group, May 2010

Rewards and Music have been linked in an interesting way so far. Several digital content providers, including iTunes, have made forays into the loyalty industry. Reward administrators were asked to pre-purchase exclusively download codes to offer music as a reward, and the redemption process was often cumbersome as it required consumers to leave the brand sponsor’s web environment to collect their music.

To my knowledge, there hasn’t been a fully integrated platform to deliver music and other digital content as a reward until PointTunes™ was announced last year. The platform makes it possible for a loyalty program participant to redeem points or miles directly for music, eBooks, software and games with a patent pending transaction process named PointRobot™.

I had the opportunity to interview the founder of PointTunes™, Bill Cunningham, who shared that PointRobot™ can be used to create a customized digital rewards offering where program administrators have complete control over their digital rewards options.

He told me that PointTunes™ has its origins through his work as a Product Manager for one of the largest employee rewards companies in North America. “During that time I was never presented with a viable digital solution by our vendors” said Cunningham, and “myself and other rewards administrators were looking to add digital reward options to help control costs and find new clients.”

If you understand the shift taking place towards customer engagement, you understand how breakage, while a tempting element of a rewards financial model, can have negative impact on customer relationships. With pressure on reward costs, digital content is attractive to brands sponsoring loyalty programs.

Something had been missing from the previous method of including music as a reward in most loyalty programs and Mr. Cunningham “believes digital rewards is a perfect fit for the loyalty market both from an incentive (do this get that) and a loyalty (points, miles et al.) angle.”

Considering that Consumer 2.0 is perfectly at home with social networks and location based marketing (Gowalla, Foursquare, Facebook, Twitter et al.), using digital rewards that are as mobile as your customers makes sense. To meet the need, Cunningham said a mobile rewards platform is planned for launch in 2011, allowing consumers to redeem for music right from their mobile handset.

Loyalty is evolving to become more social and to meet the needs of the brands that sponsor the programs. PointTunes™ is a group to watch as the “Social Loyalty” continues to unfold during 2011.

Editor’s note:

The recently announced merger of Cartera Commerce and Vesdia has sparked lots of conversation in the loyalty marketing business and there is more speculation than consensus at this point in time.

Loyalty Truth shared early thoughts here and we are more than pleased to be able to share insight from Michael F. Hemsey President of Kobie Marketing in this post. Michael’s thoughts are the property of Kobie Marketing and he has been kind to allow Loyalty Truth an exclusive on this post.

With all the recent press and advertisements announcing the merger of Cartera Commerce and Vesdia, I feel I’d be remiss if I didn’t join the discussion and provide some additional perspectives on this news. For reasons which you’ll likely surmise, I’m calling these musings “a grain of salt.”

First, as I have varying degrees of relationships and respect for many of the folks toiling within this newly formed organization, I say Congratulations! This merger has no doubt enriched many of the senior- and executive- and regular rank & file vice presidents we see listed on their merged “Leadership” page. (I think I counted 19 of them, this new company must be huge!)

This merger has, no doubt, provided some much needed breathing room from the Venture Capitalists and other Investors who insist on creating some version of a profitable company out of these two, formerly competitive entities.

[ Pop Quiz - Name that Film: "I love the smell of napalm in the morning." ]

I’m a curious cat, hungry for knowledge, so I studied the advertisements and press releases touting the exciting news of the merger of Vesdia and Cartera. And I studied the posts and industry blogs and their opinions regarding the pros and cons of this merger. I’ve searched all the promising words from all the sources I could find in a quest for one, particular, viewpoint.

Alas, I have not yet been successful. Where, oh where, are the clients of these two companies touting the benefits of the merger? I’ve searched and I can’t yet find any who have taken the time to share their thoughts on behalf of Cartera or Vesdia. Perhaps it’s too soon? Perhaps they weren’t consulted?

Regardless, when it comes to change management and announcements of this magnitude, I think the client viewpoint is not only important, it’s frankly the only viewpoint worth reading. Can the clients explain the benefits of these new teammates having to battle it out for resource – and platform – supremacy? Can they explain the benefits of one, unified platform? Will they have to convert and is there a cost to conversion? Are there proven benefits to that cost? What happened to their account teams? To their ability to get things done? Better? Worse?

Neither here, nor there?

So, yes, those questions come to mind, and without the voice of the customer, some other questions come to mind. If these companies were thriving, would they have merged? If it’s true they’ve been on the block for years, how focused have their management teams been on their client’s needs? Have they delivered on their promises? Mergers are sometimes inevitable – more so when the more traditional business model of Revenues, management of salaries and expenses against those Revenues, and an insistence on glorious EBITDA and Profits isn’t exactly working out.

[ This just in: The former CIO of Vesdia (now listed as a VP of Technology) has announced on his LinkedIn page that he's looking for a new opportunity, in 4 to 5 months. What does that mean for those clients on his platform? Hmmmmm. ]

Yes, mergers can be a good thing because running a business can be far more difficult when Payroll is funded by venture capital, versus profits from a strong business model. So one conclusion is: they needed to merge, to show accretive value to their investors. And by extension, their clients will experience employee turnover, a bit of technical chaos, competing resources, and maybe even loss of throughput because the larger entity is no longer efficient.

In the interest of full disclosure, Kobie provides its own merchant funded platform, and has partnered with Mall Networks, (and I suppose we now partner with Vesdia by extension), and we have partnered with Free Cause, and others, because we make it our mission at Kobie to constantly scour the marketplace for innovation for our clients. And while we believe in the merchant funded model, we’ve always believed it’s only a (relatively) small piece of the customer loyalty and rewards pie. And rarely is it a differentiating piece of the customer experience.

For our techie friends out there, do you remember when font software was sold separately in the ’80s and early ’90s, until Windows and Apple integrated them into the operating system level? Perhaps, this merger represents part of the definitive statement that ‘merchant funded rewards’ are more of a feature to be absorbed into larger offerings that have similar, or superior, data aggregation and reporting functionalities. When the history books are written on this business model, maybe it will be more accurately perceived as an “outer ring of Saturn” rather than an independent, viable offering.

There is always a way through the woods, and smart management teams figure it out. And so I muse on the continued need for responsiveness, a focus on the customer experience, delivered innovation, and reporting to show profitability and incrementality. Whatever the status of the players and the platform, I offer encouragement that this newly formed organization will do what they say they’re going to do. And I’m hopeful, in the interest of competition – and the fond relationships I have with many of their team – they will find common ground and create momentum for their clients.

But it is a very competitive marketplace, and patience isn’t always in great supply when the changes we enact don’t further the cause of the customer.