When you’re selling hammers, every prospect looks like a nail. You’ve heard the expression before. The loyalty version of this is that many suppliers think every solution has to be currency based because that’s what they are selling.

I can hear the groans now, but don’t worry. I’m an advocate of data-driven marketing strategies that are measurable and, whether you like points or not, having a currency as the center of your loyalty program gives you an easy way to keep score. There are lots of other benefits too, an important one being that consumers who belong to the programs tend to allow the brand a mistake or two as they have a vested interest in protecting the value of their accumulated points or miles.

That said, there are situations that not so much demand a non-points solution, but enable it to the extent that points are not in the consideration set as a solution. I’ve categorized these into three models with a few brands as examples for each one:

• Price Driven: Walmart and Costco
• Brand Personality: Apple, Red Bull, Zappos
• Social Interactive: Tasti D-Lite and Carrabbas

Zappos is the subject of the day and although I had heard all the stories of how founder Tony Hsieh personally answers tweets to help resolve customer service issues (remember the famous tale from Tara Hunt on the subject?), the Zappos story truly came alive for me when I heard Jenn Lim, the founder’s spouse, make an inspired presentation about Zappos and her new business, Delivering Happiness.

Delivering Happiness was named after the 2010 book written by Mr. Hsieh and took on a life of its own after Jenn Lim and a core group of customer fanatic “Zappites” decided they wanted to spread happiness across the nation and across corporate America.

The spring of this Happiness that seems to be a renewable resource at Zappos is their company culture. Zappos believes so much in promoting a specific culture that it takes time to solicit the opinions of its employees, partners and customers in assembling its “Culture Book”. I was able to obtain a copy (all you have to do is ask) of the 2010 Culture Book and was impressed to read the 200 plus pages of testimonies from Zappos loyalists as well as see their culture documented in living color through the pictures in the book.

The Zappos Culture is based on 10 Core Values. You can get your own copy of the book, so I’ll just share my favorites from the list of 10:

1. Deliver WOW through service
2. Be Adventurous, Creative, and Open-Minded
3. Build Open and Honest Relationships With Communications
4. Do More With Less
5. Be Humble

Creating a corporate culture is one thing, having the commitment to really live it out is quite another. Zappos has used its culture as the basis for a business that is set apart from competition and that has created customer loyalty without giving away points, miles, or other formal trappings of a loyalty program.

There’s something to be learned here, especially in the age of Social Loyalty. As another saying goes ….. if the shoe fits ……

Online retailers have a uniquely difficult challenge in building relationships and creating customer loyalty. Without a store-front to rely upon, most online retailers lead with product selection and price to attract first time buyers.

This leaves many to rely on ad words and keyword search as their only acquisition funnel. Generating repeat business, building trusted relationships, and retaining valuable customers? Those three goals can become esoteric concepts to the marketing department as they  continually focus resources on acquisition for fear of muffling the principal sales driver that works.

The first wave of internet business placed the hurdle for marketing very low. Building traffic and gathering eyeballs was all that mattered and it seemed that selling this portfolio of traffic was more the goal than creating a business model on fundamental business principles.

Web 2.0 is different. The online stores that are working operate like a traditional retailer in the sense that they have to provide product choice, quality, and good service as a minimum to succeed. The business models adopted are generally sound and the achilles heel for those single channel, pure online, retailers remains price. Price as in LOW price.

Hammer Nutrition is one pure online retailer that caught my eye. The company caters to a well defined passionate customer group, endurance athletes. But they are not allowed the privilege to compete in a vacuum as many of their supplement and fueling products (electrolyte drinks, energy bars, joint formulas) are sold by larger, heavily branded, and more widely marketed companies from GNC to Power Bar (owned by Nestle) and Clif Bar (distributed through major grocery chains, Costco, and specialty shops).

How does Hammer Nutrition compete? It stays true to the values of its founder, Brian Frank. Brian grew up in California in a progressively-minded household and caught the action sport bug early on, riding bikes, skateboards, swimming, and racing BMX and motocross bikes to the point where he won Montana State Motocross Championships in the late 90’s. Frustrated by the sparsity of quality, naturally formulated products to meet the needs of endurance athletes, he founded Hammer Nutrition during the 80’s.

His mantra from those days has survived the passage of time:  Deliver naturally formulated quality products and cement customers for life with product knowledge and trust.

A little guerrilla marketing was at the core of the Hammer strategy: provide “Race Bags” at events around the country as a cost effective way to meet the core audience for Hammer products at their moment of highest interest. If you’ve participated in any organized athletic event from a local 5K walk to an Ironman, one of the “bennies” received for your entry fee is the race day bag. The bag itself carries branding on the outside and is kind of like the athlete’s version of an Easter basket – lots of product samples and surprises inside. When I spoke with Brian a few months ago, he told me that the program now distributes over 750,000 bags across 2,200 events in North America. That’s some powerful grass roots marketing – Word of Mouth advertising at its best before the term was coined.

The impressive part of the marketing strategy at Hammer Nutrition is its constant flow of educational and product information materials, part of an overall communication stream designed to build engagement and increase customer retention. A first order will usually trigger sending of the “Little Red Book” (product descriptions and usage instructions) and a “Welcome to the Family” letter signed by Brian Frank or one of his guru partners Steve Born or Dr. William Misner.

Triggered by an array of qualifying metrics, new customers receive monthly product-focused brochures, quarterly Endurance News magazines with articles highlighting athletes of all types who have competed successfully using Hammer products, and reminder post cards with previous orders outlined to facilitate easy reorder. Invitation to join the Autoship program is packed with benefits and discounts and the Referral program has a dual benefit feature where both existing and new customer earn a discount.

An open call to any athlete to use Hammer products is made via the HammerBuck$ program which challenges customers to “Turn race day into Payday”. Over $36,000 in cash and credit was awarded to 36 winners during 2009. The program is simple, race in Hammer gear, place highly in your race, and win some cash or credits for future purchase. Talk about crowdsourcing, just think about motivating gobs of your best customers who fit your ideal profile to wear your logo on race day and give it their all to stand on the podium at the end of the day!

Granted that I may have lost some of you who hate to run, or for whom the idea of an open water swim, adventure race or ultra-marathon is greeted with a wry smile while muttering “they’re nuts!”

Look past the issue of endurance sports and you will see a sophisticated, if not home grown, communication stream that delivers on the company’s brand promise while driving business goals. There are lots of good lessons for any pure online retailer to take away from a visit to the Hammer Nutrition web site.

We recently published a new Case Study examining the competitive scenario between two leading retailers of cycling gear and supplies – Bike Nashbar and Performance Bike. There is a de-facto advantage to one of the players and a key channel that the other can leverage to fight back.

The ultimate question: What would you do if wearing the moccasins of either Chief Marketing Officer?

Since I don’t have all the answers, I recruited a panel of experts to review this Case Study and offer insights into what it will take for Bike Nashbar to put forth a differentiated Customer Strategy and how it should revamp its email marketing strategy.

Tom Rapsas, a Contributing Author to this blog and an independent Creative Director, Writer and Strategist offers up some powerful suggestions here:

I’ve got just one question for the marketing folks at both Performance Bicycle and Bike Nashbar.

Where’s the passion?

As Bill points out in the Case Study, cycling now ranks as the second most popular recreational activity in the U.S. and is growing in popularity among the racing/triathlon set who are plunking down on average $3,500 per new bike. Yet, judging by the non-stop stream of promotional e-mails these retailers are sending out, they’ve decided to play a “lowest price wins” game.

This is further evidenced at their respective Web sites. During a visit to Bike Nashbar, I was greeted by a colossal 90-point headline that read “TAKE AN ADDITIONAL 20% OFF!” Not to be outdone, the primary image on the Performance Bicycle home page was “FREE SHIPPING.”

If the Web-only Bike Nashbar wants to truly separate itself from its bigger, bulkier competitor, it needs to lead not with price but with passion. It needs to make an emotional connection with its customers, by showing that it knows and loves the sport of cycling as much as they do.

This approach starts with something lacking from both Web sites–attractive, compelling images that show the target market at play, whether it’s recreational cyclists, weekend warriors or competitive triathletes—or some combination of all three. Sure, I know you want to show me the goods, but you can make an emotional connection as well, by showing me the joy and excitement of cycling, the camaraderie, the beautiful places it can take me.

Then, start sending me e-mail communications tailored to my personal interests. Base it on my past purchases or browsing history, or better yet ask me to take a survey to find out if I’m a recreational or competitive cyclist, if I’m a street or trail rider and if I’m in the market for a new bike or specific accessories. Then, keep me posted on the latest products and trends that most interest me.

You’re not done yet, Bike Nashbar. Take the steps necessary to become the “go to” source for biking information and education.   How?

• Post Web-based cycling tutorials on your site and YouTube.
• Add employee reviews of products.
• Send out regular updates on bike races, trails and events in each customer’s geographic area.
• Start a Bike Nashbar blog manned by your company’s most avid cyclist (don’t have one? hire one!) and invite a dialogue with your customers.

By making an emotional connection with its customers and winning the passion game, Bike Nashbar has the opportunity to escape the no-win “our prices beat their prices” approach. As Bill once reminded me, there can be only one WalMart in any category–and Bike Nashbar, I don’t think this is the game you want to compete in.

Tom Rapsas is an independent Creative Director, Writer and Strategist. He can be reached at tomrapsas@gmail.com.

We recently published a new Case Study examining the competitive scenario between two leading retailers of cycling gear and supplies – Bike Nashbar and Performance Bike. There is a de-facto advantage to one of the players and a key channel that the other can leverage to fight back.

The ultimate question: What would you do if wearing the moccasins of either Chief Marketing Officer?

I recruited a panel of experts to review this Case Study and offer insights into what it will take for Bike Nashbar to put forth a differentiated Customer Strategy and how it should revamp its email marketing strategy.

Michael Della Penna, the Co-Founder & President Aiti Solutions, LLC offers up the first round of insights and critique here:

Five Email Marketing Fixes for Performance Bike & Bike Nasbar:

The experience Bill observed from both Performance Bike and Bike Nasbar is not uncommon.  As brands increasingly look to grow sales and reduce costs in a tough economy, many are turning to the power of email to do so.  Email’s proven ability to drive ROI seduces many of us to send more to sell more without thinking about the consequences.  As a result email marketing is losing its effectiveness.  In fact, the DMA projects email will generate $43.52 for every dollar spent in 2009.  Not bad, but this is down 10% from the $48.34 reported in the 2007 study.  The DMA also goes on to predict emails steady declines through 2013.  With cluttered inboxes and a continued batch and blast mentality, it is easy to see why.  So what should Performance Bike and Bike Nashbar do to grow the success of their e-communications program?  Re-examine their approach for one.

Email is about building an ongoing dialog and relationship with your prospects and customers.  To do so requires both companies to take a new look at their email marketing strategies and tactics.  Here’s how.

1. Audit the customer experience: Step into your customers shoes.  If you were in their spot would you find the emails timely, relevant, valuable?  How do the communications compare to others you’ve seen and appreciate?  If you can’t be objective hire a third party to conduct that audit for you – you’ll be glad you did…remember the internet is social and the cost of not fixing a bad situation can be detrimental to your brand.
2. Think strategically:  If you have a successful website you’ve probably done some research on who visits, common paths and activities they take and perhaps even built some personas and “day in the life vignettes” to design a great experience.  Now its time to leverage all that great work to think about how you build a complementary communication program.  That program should speak to those various customers throughout the purchase process and customer lifecycle.  Email is about building relationship, not just selling – a successful lifecycle program should include acquisition, conversion, retention and winback communications that speak specifically to the customer’s needs, interests and mindset.
3. Nail the tactics:  Exception email is all about the details.  Be sure you work with someone who is going to help you maximize your programs success by providing strategic pointers, best in class practices, deliverability and creative expertise and new ideas.  Remember once you get in the inbox you need to stay in the inbox and get recipients to open and respond to your offers.  Make sure that partner is someone who has the experience and know how to help you scale your dynamic communications and stand out from the crowd.  It is also important for that partner to work with you to set some ambitious goals that can also be measured, so you constantly push the boundaries and ultimately establish your brand as the benchmark for all others to follow.
4. Expand the footprint & encourage participation:  Email is a wonderful communications and relationship platform.  Encourage users to participate with your brand and others.  Include forward-to-a-friend mechanisms and share to social features that allow users to write reviews, share feedback, and post email to their social networks.  Email users are typically your most loyal users so why not engage those users by getting them to participate with your brand.  With their help and participation you may just find that next great new product or promotional idea that further sets your brand apart.
5. Analyze and Optimize:  Email derives its great advantage from the power of immediacy.  Every email communications offers an opportunity to learn something.  Implement a robust testing strategy that helps you optimize every aspect of your communications including creative design templates and offers.  Use surveys to get inside the minds of your users and leverage data and customer actions including website activity to sense and respond to customer needs.

Ultimately email offers a great opportunity to build a relationship and drive sales.  To be successful, you need to break out of the push promotional mentality and embrace email as a participatory medium where the recipient is an equal partner in the dialog.

Michael Della Penna is co-founder and president of SuiteDialog (www.suitedialog), a participatory marketing company that helps leading brands build interactive marketing program that engage users in an ongoing dialog.  Michael also writes a monthly column for eM+C that highlights the strategies and tactics behind exceptional email communications.  Michael’s column can be found at www.emarketingandcommerce.com.

Retailers face an increasingly difficult challenge to be successful.  Not only do they have to outwit competitors with clever merchandising, creative store layout, and careful inventory management – they also have to understand how to best communicate their promotional offers to customers.

The last challenge can be perplexing as not all retailers use the same merchandising channels. For example, competitors in the same category can be single channel in brick and mortar, catalog, or online, or be operating with a mix of all three. Generally speaking, there isn’t a successful catalog retailer operating today without a website, and most brick and mortar retailers have gone online. Some have added a catalog and, to keep things interesting, others avoid the expense of printed catalogs and supplement their online marketing efforts with mass media advertising campaigns.

I’ve published a new Case Study on my web site that examines the competitive scenario between two leading retailers of cycling gear and supplies – Bike Nashbar and Performance Bike. There is a de-facto advantage to one of the players and a key channel that the other can leverage to fight back. The conclusions raise as many questions as it offers answers.

The ultimate question: What would you do if wearing the moccasins of either Chief Marketing Officer?

Since I don’t have all the answers, I’ve asked a panel of experts to review this Case Study and offer insights into what it will take for Bike Nashbar to put forth a differentiated Customer Strategy and how it should revamp its email marketing strategy. Chiming in will be:

• Michael Della Penna, Co-founder and President of SuiteDialog, a participatory marketing company that helps leading brands build interactive marketing programs that engage users in an ongoing dialog.
• Ragy Thomas, Co-founder and CEO of Aiti Solutions. Ragy is the former president of Epsilon Interactive, a division of Alliance Data Systems that was created by combining market leaders, Bigfoot Interactive and DoubleClick’s email solutions group. You can read his blog at The PMN blog.
• Tom Rapsas, an independent Creative Director, Writer and Creative Strategist who has worked for some of the biggest and most respected direct and loyalty marketing firms in the U.S.  Tom is a Contributing Author to Loyalty Truth and has written numerous trade articles on issues related to loyalty and direct marketing.

In the next week, we will post comments from our panel on this Case Study in a new post on Loyalty Truth.  We invite your comments on the case and are interested to know your reaction to the recommendations of our contributing panelists.

Download the Case Study here and join in the conversation.