Carrabba’s Italian Grill stands apart from many of its chain restaurant competitors. Sure, the food is freshly prepared, the wood-burning grill adds ambiance to the setting, and the service is excellent, but I was thinking about their approach to building customer loyalty.

Looking at several national competitors in quick-serve (QSR) and white-table restaurant chains, I found that Starbucks, TGI Fridays, Dunkin’ Donuts, Tasti D-Lite all had rewards programs offering points for dollars spent in the location. Crate & Barrel as well as a host of national specialty retailers are partnered with Shopkick, offering Kick Rewards for purchase transactions as well as checking-in at the store and scanning selected product bar codes.

Carrabba’s has selected a different path, one that is principally communication driven, using direct mail, SMS and location based services to deliver offers, promotions and – just this week (see graphic) – money off coupons.

The Amici Club was launched in 2010 with enrollment available both on-line and in restaurants. I encountered the program as I suspect many people did – by filling out a 3×5 card placed on the dinner table. Talk about old school, but Carrabba’s says it has enrolled over 1 Million people to date.

Since my enrollment, Carrabba’s has been a cautious new friend, treating me with respect. I’ve received mostly emails and a few direct mail pieces offering something special related to a holiday or inviting me to a cause related fund-raising dinner. I’ve been paying attention to their mailings because they are not beating me to death, assuming that just because I signed up that I’m their newest “best friend”.

The parsing of the direct and email invitations I have received is a good example of how to manage a customer communication stream. Smartly coordinated communications can move people from enrollment to purchase to survey, leading to additional visits and a willingness to recommend the restaurant to others. In sum, Carrabba’s is effectively managing the customer loyalty lifecycle.

Carrabba’s has also encouraged check-ins with Foursquare and has used both the location based marketing channel and SMS to communicate offers when customers are ready to dine. That’s a great example of social loyalty at work – creating an exchange with a customer near the point of purchase, hopefully presenting an offer that will influence subsequent purchase behavior.

Now, Carrabba’s has taken the Amici Club a step further, sending a direct mail offer for $10 off specific appetizers or a complementary appetizer or dessert with purchase of an entrée.

Carrabba’s has been building its relationship with customers through the Amici Club thoughtfully and gradually, and is presenting a good example of how to engage with Consumer 2.0 using Social Loyalty tactics.

I’m going to continue to pay attention to Amici Club. Let me know what you think.

Technology Enables, but Imagination Wins

Tasti D-Lite not only rolled up its sleeves to take advantage of open API’s from Twitter, Foursquare & Facebook to integrate them with its point-of-sale system – it used its imagination to make an otherwise familiar loyalty program structure become the first and most widely executed example of “Social Loyalty” in the restaurant category.

Imagination Wins, but Flawless Execution Keeps Your Job!

All the hard work invested by Tasti D-Lite and its POS vendor, PC America, in integrating the SNAP Social Loyalty application would go for naught if the resulting customer experience didn’t work. Last night I took my family to visit a newly opened store in Boca Raton.

I did the unthinkable – I had forgotten my TastiTreat loyalty card and had no idea of my number or how to connect with Tasti Rewards – so I simply asked the cashier to help. She asked my last name and within seconds said, “oh, you’re Bill”. Nothing more needed to be done. We enjoyed our tasti treats and had some fun looking at the social posts resulting from the transaction.

No Loyalty Asterisk™ Here

Everything worked, the customer experience was put ahead of any policies or procedures, and the interaction between customer and the rewards program was nearly invisible.

This is a great example of how loyalty program execution should take place, and there are big lessons to be learned from the simple purchase of a tasti frozen dessert.

Note: In helping clients take the first steps towards new Social Loyalty models, Hanifin Loyalty is a SNAP agency partner. Affiliations aside, the desserts at Tasti D-Lite are great and SNAP works!

The Loyalty Research Report released by ACI Worldwide has received tremendous coverage, most of it making loyalty marketers feel like pulling up their hip waders and tugging down on their helmet. In the words of my old boss at North Carolina National Bank Hugh McColl, it’s time to “hunker down”.

The survey was conducted by Wakefield Research and interviewed 1,053 Americans ages 18 years and older in December 2010. Results were released in March 2011 and the loyalty haters ate up the talking points like free treats from Tasti D-Lite.

A Google search this week yielded SERPS that can be seen in the graphic to the right. From some reputable sources, here are the headlines that set the tone before reading any of the affiliated articles:

Progressive Grocer: “40% of Consumers Report Bad Loyalty Experience”

Desination CRM Blog: “UPDATE: ACI Study on Ineffective Customer Loyalty Programs”

Chain Store Age: “Study: 40% of consumers have negative loyalty program experience”

Retailing Today: “Loyalty programs missing the mark”

Not shy about piling on, Marlys Harris, The Consumer Reporter at Moneywatch.com wrote an article “Loyalty Programs: A Pain in the Neck?” in which her assessment of the ACI report was summed up with these comments:

• “Forget about frequent buyer points and simply lower prices”
• “You may as well (participate) because one way or another, you’re already paying for the loyalty program in higher prices”
• “If you’re concerned about privacy, then don’t join the programs because you don’t want anybody digging your records for buying booze or pornographic movies”

ACI themselves adopted an interesting approach to capture the interest of the marketplace. In the Moneywatch.com piece, Rob Seward, Senior Marketing Manager for ACI answered the question “Who is to blame?” saying “mostly retailers …. who are missing the mark when it comes to reaching out to consumers with information and offers that are relevant.” In the Chain Store Age article, Mr. Seward summed up the current state of the market by saying “The end result is that memberships are becoming meaningless.”

Destination CRM banged the gong this way “Like a disappointing date, many loyalty programs leave consumers feeling under appreciated; 85 percent of members report that they haven’t heard a single word from a loyalty program since the day they signed up”.  In other words, loyalty marketers have been reduced to being data hoarders. After all, anyone who collects data about me and does nothing positive with it is no more than a hoarder with stalker tendencies!

I decided to look at the survey results directly in order to balance all the negativity against some fact. In effect, I wanted to “read the tea leaves” to understand the substance of the report more clearly. What I found is that loyalty marketers are rightly judged for under-utilizing collected data and could do a much better job in communicating their value propositions with members.

The data points I found to support this statement includes:

• 63% don’t completely understand at least 1 of 4 programs to which they belong
• 62% said they had not heard from half or more of their retail loyalty programs since enrollment
• Reward program membership only influenced (just over 50%) where one shopped first

It is highly likely that the lack of understanding by consumers is the root cause for this finding:

• 62% rated discounts the most compelling reason to join a retail program

Just as cash back appeals to the lowest common denominator in the human psyche, discounts are similarly appealing in a retail environment.

That fact – the ACI survey was focused on RETAIL loyalty programs – adds further perspective. Most of the analysis I encountered through my search leaves readers with the impression that ALL loyalty programs are perceived in this manner. While there is room for improvement, don’t tell American Express, Marriott, Hilton, Best Buy, Nordstrom and others that they are poor communicators.

One other data point jumped out at me:

• 67% had positive experience with using a loyalty card at store or retailer

Somehow that one didn’t make it into any of the headlines. There is adequate blame to go around for lackluster, “me-too” loyalty programs, but the well-engineered ones are humming along.

There is a wave of innovation in the works which will change the face of Loyalty programs. There may be less cards, points and miles to identify the program as “Loyalty”, and the fundamental concepts and business case will be adjusted to help brands communicate in the digital channels where over half of the US population forms purchase decisions.

It’s all about “getting ahead of the transaction” and we are well on our way to achieving that goal. Stay tuned.

Here in Orlando, enjoying the best Loyalty Expo to date, I can tell that change is in the wind. Today’s sessions covered future visions of how loyalty is evolving to drive results for brands across vertical industries. Loyalty 360’s chief, Mark Johnson provided a keynote documenting  changes in consumer behaviors that are compelling loyalty marketers to adopt new perspectives on program execution.

Barry Kirk, Maritz led a panel of practitioners from Gamestop, SAP and others who talked about the holes in current loyalty models and predicted that cross channel marketing and better use of data collected on loyalty program members will lead to breakthroughs in loyalty ROI.

Jonathan Silver, Affinity Solutions shared how Sony is using an innovative approach to retain viewership and support advertising revenues for Wheel of Fortune, America’s most watched game show.

Peter Oxley, RewardStream and Kiwi Collection shared insights into how referral and recommendation marketing leverages human behavior to create loyalty without a formal program construct.

Tomorrow, BJ Emerson, Tasti D Lite, will talk about the frozen desert chain’s use of passive check-in to accelerate the rewards earned by members of its Tasti Rewards program. More great content is sure to complete Day Two in Orlando.

Meanwhile, I received notice from Mike Atkin, a well regarded UK based loyalty consultant, that he was featured on New Zealand TV to share his views on the state of the industry in that country with comparisons drawn  to leading UK programs including Tescos. You can watch the video here.

In 2005, Mike Atkin and I founded the Customer Strategy Network as a global association of independent loyalty marketing practitioners. At that time, we were surprised that the 25 year old relationship and loyalty marketing industry did not have a professional organization where ideas and best practice could be exchanged in a non-competitive environment. That simple observation led to the establishment of this group, signifying a new model of cross-border collaboration among leading marketing experts.

CSN was founded on the pillars of solution independence and cross-border understanding, and its members deliver strategies for clients worldwide. CSN will have a new web site available shortly, so please watch this space for announcements.

It seems that Loyalty Marketing is truly entering a new phase of development. I’ve been encouraged by new ideas shared by delegates at Loyalty Expo and Mike’s appearance on NZ TV tells me that Loyalty never sleeps!

There are two forms of brilliance in business – one displayed by people who invent things we haven’t thought about before (Facebook, Twitter, Foursquare) and those that find a way to incorporate these new communications channels into mainstream business to generate revenue.

In many aspects of social media, we are waiting for the dots to be connected and for business to understand how to put the tools to use to enhance existing business models, engage customers, and make money. Location based marketing has been a head-scratcher from this perspective. Foursquare launched at SXSW only two years ago in March 2009 and now has an estimated 5.7 Million registered users. Many of these users are interested in doing more than becoming the “mayor” of a location, yet merchants have been slow to take advantage of the platform to deliver targeted and inexpensive marketing. Many people think that 2011 will be the year that Location Based marketing takes off and the predictions here are indicative of the potential.

The launch of SNAP (Social Network Appreciation Platform) today was covered by Mashable in an article here and has my full attention as it represents the second form of brilliance and is a legitimate tool to make any loyalty program “social”. In the spirit of full disclosure, Hanifin Loyalty has been named an agency partner of SNAP and will be advocating SNAP to the market.

In the SNAP press release, capabilities are explained and it is clear that the application can connect any existing loyalty program membership base to local merchants to enable “passive check-in” using Foursquare, Facebook Places, and Twitter. Leaderboards and Badges are supported as are more sophisticated bonusing elements.

“Social Loyalty” using passive social network check-in was pioneered by Tasti D-Lite and Loyalty Truth applauded its launch about this time last year. The work done between Tasti D-Lite and PC America has evolved to become SNAP and can enable social loyalty on a standalone basis for smaller merchants and even work within a gift card platform. You can get the idea even better via this clever video.

To my knowledge, TopGuest is the only other application in market that converts check-ins to rewards points, but they approach the subject from a different angle. TopGuest is a mobile application that enables consumers to check-in and earn extra points with designated rewards programs, principally in the hospitality segment. The fact that TopGuest quickly affiliated with brands such as Virgin America, Hilton, and Intercontinental speaks to the high level of interest by business in bringing a social element to their staid rewards programs.

SNAP is an open platform that can be used by any business – small or large – to enable social check-in, reward word of mouth marketing, and generate referrals and recommendations across a trusted network of friends. It can be integrated to loyalty processing software packages and with POS systems in merchant locations.

I’ve only recently realized that the conversation isn’t about Millennials or Generation Y anymore. It’s about “Consumer 2.0″, those consumers who have grown up with technology and live in an “always on” environment, preferring to communicate with friends and brands through digital channels.

The significance of this realization is that Consumer 2.0 probably numbers about 150 Million, or half of the US population. The figure includes all the Millennials (so you’re not forgotten) and accounts for those of us (Boomer, Gen X, and other groups) influenced by the Millennials we know and the increasing importance of digital marketing.

SNAP opens up many doors to allow brands to connect with their customers and adds a critical component to any loyalty program if it is to stay relevant with Consumer 2.0.

A day in the life with Foursquare has been changing, imperceptibly at times, but lately its reached the Malcolm Gladwell point, I mean the Tipping Point.

The difference I’m talking about has less to do with users and is all about merchants. That’s good news and also a partial answer to the one big question hovering over Foursquare: why merchants have been so slow to capitalize on the opportunity.

Although Foursquare outlines multiple forms of promotions on its page for business, only mayors got all the goodies until recently. Things are changing however. Over a recent 24 hour trek to New York, I encountered a Radio Shack $5 off purchase offer, a drink special from a midtown Thai restaurant – one that I wouldn’t have known existed in the bustling city, and of course the commonly found Starbucks “special nearby”.

Landing back in Fort Lauderdale, my check-in prompted a tip from a local attorney offering help if I got into trouble during my stay (maybe the Chamber of Commerce should shout out that we’re not all about crime down here).

Later, stopping into local eatery Sicilian Oven, I saw several nearby specials including free chips and salsa at Chili’s and a discount on tanning at Costa Del Sol.

Big brands Pepsi Co and Macy’s have been active with location based marketing trials as well as McDonalds, Starbucks, Bravo and MTV. In the restaurant space, Tasti-D-Lite has become the poster-child for integrating location based marketing with a loyalty program. Even local banks have gotten into the act, with North Shore in Wisconsin the most notable.

Now is the time for local merchants to embrace location based tools to promote themselves and compete head to head with their national-chain neighbors. I’ve written about how to build retail loyalty in 10 easy K’s, and that construct remains sound. Just add location based offers as a delivery channel and the plan results accelerate.

Foursquare, Gowalla and other location based applications offer a more immediate and visible channel to deliver offers and attract customers that otherwise would not have visited. Combine location based offers with a social shopping network like Zavee, and you have a winning combination.

The tools exist for local merchants to step up their marketing at low cost. Maybe the burden is on marketers (myself and others) to make available an understandable go-to-market plan that puts these tools to work for the smaller merchant.

I don’t like feeling guilty, so I’ve created just that. If you’re interested, let me know.

In the past week, business has taken me to Vancouver, BC and San Jose, Costa Rica with a pit stop in South Florida for a day or so at home. None of that was a big deal until my colleague Mike Atkin noted at dinner that we’ve been hitting these spots in conjunction with some pretty big events.

We arrived in Vancouver exactly one week before the start of the 2010 Winter Olympics, landed in South Florida the day before Super Bowl XLIV, and arrived in San Jose on election day as the country was electing the first female President in its history. I’m not sure how I can top that although I have noticed that I arrive back in SoFla just in time to make Valentine’s day special for my wife. Better pull that one off!

I’ve also been using Foursquare for a while and, like a lot of social media waves, I engaged knowing that it would cost me a little time without being sure of a return. I’ve been having some fun with it around my local haunts and have been thinking about how something like Foursquare could intersect with location based offers as part of a loyalty marketing program. My first eye-opener was the blending of Foursquare and Twitter into the Tasti D-Lite rewards program which I talked about in a recent post.

This last jaunt across the continent and back connected a few dots. Checking in to my hotel in Vancouver, I saw a pop-up on my iPhone that said “Special Nearby”. Clicking through, I read “Welcome to the Mill Marine Bistro & Bar. Mayor receives a free beer. Show your server to redeem.”

I wasn’t the Mayor and didn’t get a free beer, but Mike and I did visit the nearby pub to have a quick dinner. The point made was that promotions relevant to someone’s stay could be delivered via this little iPhone application. Better yet, these offers are made to people who have opted-in to receive the offer. in this case, the Mayor might game the offer to get lots of free beer and over time I hope the restaurant will become more creative in the offers made, possibly targeting guests at the hotel next door.

Landing in FLL a day or so later, I switched on the phone and “checked in” to Fort Lauderdale – Hollywood International Airport and received a tip from a local attorney, Leland Garvin. On the verge of the Super Bowl weekend in SoFla, what better message could an attorney send than (paraphrased) “Have fun while in town, but if anything happens from arrest to a speeding ticket, call Leland Garvin, attorney at law.” A phone number was included and if I was a “Who Dat” ready to tear it up for the Super weekend, I would have written it down and tucked it somewhere safe.

With lots of minds grinding on how to incorporate mobile marketing, location based promotions, and social media into loyalty program communication streams, these two “pops” from Foursquare got my attention and sparked some good ideas.

Consider the possibilities. What’s it make you think about?

In the past week, business has taken me to Vancouver, BC and San Jose, Costa Rica with a pit stop in South Florida for a day or so at home. None of that was a big deal until my colleague Mike Atkin noted at dinner that we’ve been hitting these spots in conjunction with some pretty big events.

We arrived in Vancouver exactly one week before the start of the 2010 Winter Olympics, landed in South Florida the day before Super Bowl XLIV, and arrived in San Jose on election day as the country was electing the first female President in its history. I’m not sure how I can top that although I have noticed that I arrive back in SoFla just in time to make Valentine’s day special for my wife. Better pull that one off!

I’ve also been using Foursquare for a while and, like a lot of social media waves, I engaged knowing that it would cost me a little time without being sure of a return. I’ve been having some fun with it around my local haunts and have been thinking about how something like Foursquare could intersect with location based offers as part of a loyalty marketing program. My first eye-opener was the blending of Foursquare and Twitter into the Tasti D-Lite rewards program which I talked about in a recent post.

This last jaunt across the continent and back connected a few dots. Checking in to my hotel in Vancouver, I saw a pop-up on my iPhone that said “Special Nearby”. Clicking through, I read “Welcome to the Mill Marine Bistro & Bar. Mayor receives a free beer. Show your server to redeem.”

I wasn’t the Mayor and didn’t get a free beer, but Mike and I did visit the nearby pub to have a quick dinner. The point made was that promotions relevant to someone’s stay could be delivered via this little iPhone application. Better yet, these offers are made to people who have opted-in to receive the offer. in this case, the Mayor might game the offer to get lots of free beer and over time I hope the restaurant will become more creative in the offers made, possibly targeting guests at the hotel next door.

Landing in FLL a day or so later, I switched on the phone and “checked in” to Fort Lauderdale – Hollywood International Airport and received a tip from a local attorney, Leland Garvin. On the verge of the Super Bowl weekend in SoFla, what better message could an attorney send than (paraphrased) “Have fun while in town, but if anything happens from arrest to a speeding ticket, call Leland Garvin, attorney at law.” A phone number was included and if I was a “Who Dat” ready to tear it up for the Super weekend, I would have written it down and tucked it somewhere safe.

With lots of minds grinding on how to incorporate mobile marketing, location based promotions, and social media into loyalty program communication streams, these two “pops” from Foursquare got my attention and sparked some good ideas.

Consider the possibilities. What’s it make you think about?

I’ve been in way too many meetings lately where I have been asked the question “Is Social Media just a fad that will soon blow away?”

Fortunately, I’m well schooled in responding to skeptics since, for the past dozen years, I’ve been answering the classic question in my core business, “Does this Loyalty stuff really work?”

I have a well-practiced response to the second question, but at times when asked about the staying power of social media, I feel like the kid who was just caught by his parents looking at a magazine not on his school reading list – as if I should feel guilty because I’m making a case for understanding how to incorporate social media into the traditional world of data-driven communication strategies.

Convictions aside, it is fortifying when we see offline businesses wading deeper into the social media pond. We’ve seen plenty of our favorite brands open a Twitter account and establish a public Facebook page. But really linking these venues with their mainline customer acquisition and retention efforts? Well, we are just beginning to see examples in the market.

A great one that I came across, courtesy of @ragythomas is the TastiRewards loyalty program, where customers can not only earn points for enjoying tasty ice cream treats, but can also earn extra rewards by connecting their accounts to  Twitter and Foursquare.

The program is really simple and has adopted what I consider a QSR chain best practice by offering a dual-function gift and loyalty card. In this case, the card can be used across participating locations first to facilitate purchase, but with the added value of registering at MyTasti.com to qualify for extra points through social media updates.

TastiRewards members earn 1 point for each pre-tax dollar spent on qualified Tasti D-Lite products. Members become eligible for rewards once 50 points are accumulated and are eligible to receive a free medium Tasti cup or cone.   Extra points can be earned for registering the card online and checking points balances.  Providing a date of birth qualifies you to receive a free medium Tasti cup or cone on the big day.

The success of the TastiRewards program won’t hinge on its linkage to Twitter and Foursquare but, like most programs, will be judged by consumers on its overall value proposition. Points don’t expire, but earning is only possible when the physical card is presented at time of purchase. And there are questions of just how Tasti D-Lite will protect itself against members who try to use the social media option to game the system. As far as value is concerned, the social media point-accelerator seems to boost the perceived value of the program to 8-10% back, above average among today’s loyalty programs.

Tasti D-Lite has taken the important step of doing something with social media instead of just talking about social media. If their treats are as tasty as their innovative TastiRewards, good things should be in store for the chain. I found a store nearby and plan to visit soon.