Cycling commentators like to quip that the individual time trial is a “race of truth”. In other words there’s no place to hide as the man and machine face off against the clock.

The winner of the most recent edition of the Tour de France was decided on the final day in such a race, as Cadel Evans scorched his rivals and took the overall Yellow Jersey with the second best time of the day. Australia’s first overall Tour de France victor was undeniably better on this day – the truth was told.

Building a brand is much like a “race of truth”. Consumers are either for you or against you. And, there are only so many brands that stand out in today’s market evoking emotional response and nearly blind loyalty from their customers.

Starbucks, Apple, Coca-Cola, Facebook are brands that generate passion. Visa, MasterCard and Google register tremendous awareness but don’t necessarily conjure up “passionate” responses. I worked for Visa in the past and can attest to the fact that many consumers don’t understand the brand. I still get questions from friends asking if I can help fix their credit card problems! That of course is a matter between the issuing bank and the cardholder, not the domain of Visa/MasterCard.

Some brands are strong regionally but invisible outside their core market. Grocers Wegmans and Publix come to mind as do coffee chains Dunkin Donuts and Tim Horton’s. Dunkin is apparently embarking on national expansion, so the name may become more familiar across the U.S. soon.

Borders had a brand that was high profile, but became fuzzy. Some say that the lack of focus led to eroding customer loyalty and ultimately, the chain’s demise. You can read one assessment of Border’s failure here. IMHO, I’m not sure Barnes & Noble is doing a much better job in creating a brand that consumers care about – they just happen to be the last chain standing in the book-selling category.

Luxury brands drive customer loyalty through aspirational messaging, exclusivity, and, if backed up with customer experience that reinforces the brand, are sustainable. Nieman Marcus, Coach, Cartier, Tiffany are all brands that speak for themselves.

Some brands equate ubiquity with success. I wore Nike shoes in my early cross country days but my love of the swoosh waned as I saw the logo plastered on everything from golf balls to swim suits. Under Armour adopted the same approach from the starting gate as their logos seems to show up everywhere.

Does brand saturation create confidence or invite a suspicion of quality?

The brands that trigger emotion and sustain it over time seem to be highly focused. NorthFace and Patagonia have created aspirational brands among the outdoor and adventure travel set. I’m just waiting to see which one introduces the Bear Grylls line first!

Ironman has built a brand that oozes passion, commitment, aspiration, desire. Please write me if you know of another organization that sells out nearly every event it operates one year in advance, registering 2,000 people at the exorbitant price of $625, all for the privilege of torturing themselves through a 140.6 mile race.

With the ever expanding presence of the Ironman brand, it runs the same risk as Nike and Under Armour. The ubiquity of brand impressions in the market dilutes the core message to “best” customers and opens the door for competitors. As Ironman attempts to consolidate its hold on the endurance sport market, new race series have sprung up, most notably the HITS series using 6 time winner Dave Scott as spokesperson.

The importance of brand understanding for Loyalty Marketers is that we have to maintain perspective on the power of our brands to engage customers before any incentives are introduced. Every market is competitive and we need to study the range of customer choice in the market and understand the limits of impact for our loyalty strategies.

Organizations should adopt a holistic approach towards building loyalty strategy. Brand understanding is critical to crafting the value proposition that will complement core branding messages and further solidify relationships with our customers.

Not only are the airlines missing a significant opportunity to engage their best customers based on data they already possess, they are eroding their value proposition by adding fees to multiple aspects of the in-flight experience as well as their frequent flyer programs.

In a WSJ “Middle Seat” column dated 2/3/09, I was reminded of the airline’s proclivity to invoke the Loyalty Asterisk™. Did you know that the standard “Contract of Carriage” used by United Airlines is the equivalent of 49 pages and that Delta’s “General Rules Tariff” is a bloated 58 pages?  These are the documents which govern fares, refunds, baggage handling, and virtually all other rules which travelers must live by. One can only imagine that the airline’s lawyers must view their customers as such an evil lot that they devised these heavy tomes to protect the business.

In reality, these documents do not include all the rules governing flight as employee manuals and directives go further to dictate how specific complaints and situations should be handled.

In effect, the airlines hold all the cards in resolving any customer dispute and, like any benevolent dictator, it is incumbent on the airlines to exercise delicate judgment in rules enforcement.

The airlines which hope to emerge from this current economic cycle with their image and brand in tact should carefully reevaluate their approach to nit-picking fees related to checked baggage and potato chips. They might also take caution while they deflate the value of their loyalty marketing (frequent flyer) programs.

Airline industry profitability will be found in more meaningful budgetary line items ranging from union contracts to equipment cost and fuel management. Most flyers would rather keep the relationship simple. If fares have to rise a bit, so be it. But let there be one charge for the flight, provide high quality service, and reward flyers for their patronage.

Anything less will compel flyers to think only of price, price, price and loyalty to the livery will be a thing of the past.

Deregulation of the US airline industry in 1978 was intended to create a competitive environment that would benefit the flying public and bring profitability to the airlines. With a number of bull and bear cycles under the belt, 2009 finds the airlines continuing to struggle for profits, and consumers once again being punished just for showing up at the gate.

The airlines pioneered the loyalty marketing business, linking customer data, profitability measures, and the reservation system to change the way all consumer facing companies viewed their customer policies. Since American’s AAdvantage program launched in 1981, the airlines have awarded zillions of miles to loyal frequent flyers and have collected untold terabytes of customer data.

It is astounding to see that the data collected remains largely under-utilized. My latest mailing from American congratulated me on my status with them and included some offers marked “specially for you”. I was disappointed to see that the offers had no connection to my preferences and looked like this:

• Offer to purchase additional frequent flyer miles
• Bose QuietComfort 2 headphones offer
• Directv – switch and receive 10,000 miles
• A credit card offer (actually two different ones)
• A sweepstakes offer in connection with MyCokeRewards.com

Not only are the airlines missing a significant opportunity to engage their best customers based on data they already possess, they are eroding their value proposition by adding fees to multiple aspects of the in-flight experience as well as their frequent flyer programs.

A struggling industry should leverage the lowest cost assets they own and use this low-hanging fruit to generate profitability as well as engender brand loyalty. Why not take steps to use the valuable data they have gathered over time.

The favorite subject for most humans to talk about is “me”. Flyers are waiting to spill the beans on their preferences and all the airlines have to do is ask.

I have long maintained that two moments of truth define whether consumers will engage with a loyalty program, the exception being that some loyalty geeks like myself will sign up for anything just to see how it works!

The two-step process goes like this:

1. What’s in it for me? A quick read of the “take me”, direct mail or email invitation triggers the “loyalty calculator” that resides deep within the human brain. Nearly instantly, we register brand compatibility or lack thereof, and calculate the potential reward and recognition of the offer. The outcome dictates our willingness to invest additional time to enroll and engage.
2. What do I get? The value proposition having passed the initial test, consumer attention turns to rewards. We ask ourselves, “So, if I earn what I expect from this program, what can I get in exchange?” Easy understanding of reward options and their accessibility confirms our continued interest in the program offer.

Assuming these two tests are successfully passed, the ball is in the hands of the program sponsor, who is now in a position to win.

A similar mental process can be mapped to how consumers think about any advertising offer. I observed a digital bank sign the other day which rotated several messages beyond just time, date, and temperature. My attention was drawn to the invitation “Want a friendly hometown bank? Visit Us”.

Intrigued by the message and the implied high-touch service from this community bank, I was making the right hand turn into the parking lot only to see the follow up display. “Restrictions Apply….. Details Inside.”

Even allowing for substantial benefit of the doubt, I was put off by this bank’s take on full disclosure. Every Sales 101 course instructs that you keep the prospect’s eyes on the benefits before directing them to the fine print.

In an earlier post, I described the Loyalty Asterisk™ that plagues many marketers today. In this case, the bank might have just as well printed a large Loyalty Asterisk™ on this sign, symbolic of the shifting sands upon which this message was constructed.

If this pairing of digital messages were part of an invitation to a loyalty program, I would have read the value proposition and then passed the rest to the shredder once deflated by the second message. In this case, I just moved the shifter to reverse and headed home!

Bill Hanifin

Loyalty Marketers are regularly challenged to differentiate their value propositions and are continually vexed in attempts to build community among like-minded users of their product or service. In the midst of chasing increasing levels of sophistication to reach targeted consumer groups, I have to pause and celebrate simplicity.

The Greater Fort Lauderdale Road Runners Club has organized a promotion to build participation in local races each spring. In the process of meeting that modest objective, they have been successful in building community among runners of all ages and boosting the fortunes of local merchants who support the running community and local races.

The “Three for the Road” series links three separate races together over the course of each March. Since this is the shoulder season for local athletes – marathon season being over and triathlon season not yet started – races between 5k and 5 miles are perfect to keep everyone on their training plans and to have some fun.

Registration for the series is $20. Put that small bet on the table and complete three races of 5K, 4 miles and 5 miles over four weeks and you earn gift certificates from Running Wild, (local running store), Chuck’s Steak House (restaurant), and Starbucks (you’ve heard of them) totaling $50. The certificates come with few restrictions and, if my math serves me well, represents a 250% ROI to participants. That’s pretty good…….and pretty simple.

You still have to pay the registration fees for each of the 3 races, but you would have done that anyway if you were planning to run. If you must, factor in three registration fees of $20 each and you have a total investment of $80 with a net cost of $20 if you reach the payoff. For people who like their sport, it doesn’t get any better than that.

I’m marking my calendar to interview the race director who came up with the idea. He must have been an ex-loyalty marketer because there is a blend of reward and recognition in the offer. Each person who completes the series earns a specially designed medal to commemorate their achievement.

Something tangible and something to show off …

… A perfect blend of loyalty program cornerstones

The only bad news that I can imagine is that you’ll have to wait until next year to take advantage of the promotion. The first race took place last week.

While you’re waiting for next year, why don’t you celebrate simplicity and create a simple yet effective promotion for your business that all of your customers will understand.

It works!

Bill Hanifin