Three men walk into a bar. Sorry, that’s the lead-in to an old Irish joke. In this case, three practitioners of Loyalty Marketing (people who actually create brand loyalty for a living) are on their way to a Florida Marlins game after the conclusion of Loyalty Expo 2009.

Having no idea of the conversation that would ensue, I commented that I did something surprising the weekend before, pay a $25 membership fee to join the Barnes & Noble Member Program. “I got half the annual fee back in one purchase” was my justification.  I also knew that with purchases pending to buy the kid’s summer reading books,  it wouldn’t be long before I recovered the entire fee. Add to that the convenient location of B&N to my house and it was an easy decision.

My friend riding shotgun retorted, “I’d never pay a fee because Borders lets you register for free and I can wait for those 40% off coupons they send by email”.

Not to be left out, our backseat companion added “I always buy my books from Amazon because they have the best prices, but I always wait until my order is big enough to get the free shipping“.

Suddenly we had a mini-focus group at work in a car full of Bibliophiles. Who knew that Loyalty Marketers were such avid readers? More importantly, I realized just how challenging it is to create a value proposition that attracts a wide enough audience to make inroads into competitive offers.  We had three examples right before us, each with an instructive lesson about consumer purchase behavior:

• The straightforward “pay now and recover as you shop” approach from B&N is sure to attract a self-selecting crowd, but does it shift share once the fee is earned back?
• Borders makes it easy for anyone to play, but numbs its membership with a repetitive cycle of discounts and sales that train customers to wait for the one they like best.
• Amazon builds on a low-price model with benefits like free shipping, but will share shift occur when these perks aren’t available?

Each of these strategies has its limitations and there is one common element missing from each program – Participation. My quick take on the Participatory Marketing value chain leads off with Awareness, creates Engagement, and leverages Word of Mouth and Viral effects to create Community and ultimately long term Loyalty.

I may not have these elements in just the right order and possibly abused some buzzwords, but its clear that each of the booksellers that were the talk of the evening needs to take a step beyond promotion and introduce mechanisms for customers to stay with them in between purchases and when the optimal deal is not front and center.

How do you buy books and from whom? Do any of these programs stand out for you, and why?

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.