25, March 2011 • Usa today AN iNdepeNdeNt SUppLeMeNt froM MediApLANet to USA todAy consumer LoyaLty increasing digital; (background) fedex (background) digital; ed Pointed r offat, opportunities for m Photo:(front) dam customers Shaun Cunningham explains how a reward program provided a once in a lifetime experience 4StepS 2011 loyalty census daily rewards Memberships earn points for to maximizing your reward have exceeded everyday living program benefitS 2 billion in the U.S. and tasks photo: istockphoto.com photo: istockphoto.com 25, March 2011 • Usa today 2 AN iNdepeNdeNt SUppLeMeNt by MediApLANet to USA todAy chaLLenges Since their inception more than 100 years ago, loyalty programs have changed the way consumers interact with the companies from which they purchase products or services. We recommend Customer guarantee Learn why customer satisfaction doesn’t create loyalty. pAGe 12 the history and future “...when we open our ears, seek first to understand and listen to our of loyalty programs customers, we are able to position our ne of the earliest lines launched its Mileage Plus pro- programs has never been greater. solutions to solve efforts to win the gram; other airlines followed in the “Consumers Everything from the advent of social customer’s hearts, minds ensuing months and years. are looking media (Facebook “likes” and com- problems…” and wallets of Over the years, loyalty programs pany specific “tweets”), check-in a day of rewards p. 4 customers was have evolved well beyond airlines— for “surprise services (Gowalla and Foursquare), “Sally” shows how she uses reward the S&H Green expanding into all verticals of direct and delight” mobile proximity and targeted com- programs on a daily basis Stamp program, marketing in both the business to munications (Gold Mobile and Moca- Social media channels bring originating in 1896. To encourage business (B2B) and business to con- that creates pay) to transaction-based credit card extra earning potential p. 10 o A look at how companies are loyalty, consumers received tiny sumer (B2C) marketplaces. Today, even engagement insert and on-line statements (Clovr, utilizing Web 2.0 and other new stamps when they made purchases mass marketers have adopted the loy- BillShrink and Cardlytics) and deal communication mediums from participating merchants, glued alty concept. Why? Because brands in the channel of the day offers (Groupon and Living them onto pages of booklets (known industry-wide have recognized that in which they are Social) are continuing to change the as “alternative currency”) and there is proven value in cultivating a loyalty landscape. redeemed them for products when loyal customer. most likely to Consumers are looking for “sur- the accumulated stamps had attained partake—and prise and delight” that creates engage- a certain value. Just how popular was acquisition vs. retention ment in the channel in which they are consumer loyalty, 1st edition the program? S&H Green Stamps once According to a new survey from companies are most likely to partake—and compa- march 2011 issued three times as many stamps as the Chief Marketing Officer (CMO) nies are listening and engaging their listening and managing director: Jon Silverman the US Post Office, and by the 1960’s, Council, most marketers (61 percent) customers in that channel like never [email protected] S&H was the largest purchaser of believe that loyalty program partici- engaging their before. Companies are tailoring their editorial manager: Jackie Mcdermott [email protected] consumer products in the world. pants are the best and most profitable customers in that loyalty initiatives in ways that help Another well-known early loyalty customers, while 65 percent view cus- consumers get their desired reward responsible for this issue: publisher: Chad Goldman program was General Mills’ long- tomer loyalty program investments as channel like mix which, in turn, engages them in [email protected] standing Betty Crocker Points Pro- a very essential part of the marketing a deeper, long-term relationship with business developer: paul Herron never before.” [email protected] gram in which customers collected mix. We have also seen a shift away the brand. designer: Missy Kayko points which were redeemable for from mass acquisition to targeted Loyalty programs are no longer [email protected] Contributors: Mark Johnson, Kelly kitchenware from a catalog. As the retention. Companies know it is more solely focused on points. Loyalty is a Hlavinka, Max friend, bryan pearson, story goes, it all started with a tea- expensive to engage, attract and con- destination created through data-cen- patrick Sojka, ryan Green, emily K. Murphy, bob Gold, Mike Gorun, rob spoon tucked into boxes of Wheaties vert customers versus understand, tric marketing communications that Urbanowicz, Heather passe, david patron, in 1931. General Mills then put paper reward and retain their current cus- lead to sustainable and measureable Maya Leibman coupons into packages of Gold Medal tomers. This switch from acquisition change in customer behavior. There distributed within: Flour and other General Mills brands. to retention benefits the consumers is also a realization that some con- USA todAy, March 2011 this section was created by Mediaplanet Ultimately, point values were printed as the loyalty programs now are more sumers desire and will only respond and did not involve USA todAy or its on the outside of boxes. focused on maximizing engagement to generous point-based or “hard” editorial departments. and keeping the customer “loyal.” (discounts, offers, incremental value) Mediaplanet’s business is to create new more than a coupon program In today’s very competitive mar- benefit-based programs. On the other customers for our advertisers by providing Clipping box tops and accumulating ket, loyalty is a business imperative. hand, some individuals want the readers with high-quality editorial content that motivates them to act. Betty Crocker points became a habit As loyalty becomes the most impor- “soft” program benefits (wine tast- in many households. As reported on tant word in the lexicon of CMOs, the ing, free shipping, complimentary gift Minnesota Public Radio, Mark Bergen, concept has changed. Loyalty has wrapping, complimentary upgrades). chair of the marketing department at evolved from a point-centric model to Your ability to let the brand know your the University of Minnesota’s Carlson a process by which marketers use all preference has never been greater. School of Management, says the Betty consumer touch points, data, insights Today’s stamps and spoons are by the numbers Crocker program was remarkable for and voice of the customer responses points, status, and interactive commu- two characteristics—its longevity (social media and survey insights) nication achieved through traditional CoLLoQuy Loyalty Census and the depth of emotion it inspired to increase the efficacy of their mar- and incremental “loyalty” program ■■ 2 billion: The number of among its devotees. It became more keting communications, loyalty offerings. This new breed of loyalty loyalty memberships in the U.S. initiatives has made access, interest than a coupon redemption program, programs and offers to their custom- exceeded 2 billion for first time. Bergen says, by working its way into ers. No matter what label we put on and reward levels more tailored—and ■■ 18.4: The average house- the fabric of family life. Betty Crocker it—loyalty, engagement, advocacy, engaging—to the individual. We have hold has signed up more than 18 officially retired her catalog in 2006. etc.—every brand needs to cultivate a seen Sears/K-Mart, Southwest Air- programs, compared with 14.1 Increased competition follow- base of devoted customers in order to lines, Delta, Talbots, Target, Carlson programs in 2009. ing the 1978 Airline Deregulation Act drive long-term, sustainable success. Hotels, Capital One, and TGIFriday’s ■■ 8.4: Despite the increase in encouraged airline marketers to cre- These brands want to reach out to the re-launch programs in recent years to overall membership, the average ate ways to reward repeat customers consumer in new ways that create increase their relevancy and engage- number of programs in which and drive brand loyalty. The first idea engagement. This generates oppor- ment, therefore making the rewards members are active is just 8.4. ■■ 46: at American Airlines, a special “loy- tunities for consumers to earn more more “empowering” to the consumer. Regardless the member- ship-to-activity ratio, those 8.4 alty fare”, was expanded to offer free from their programs than ever before. So the opportunity to find programs active memberships still repre- Because of new engagement tech- that are more suited to the benefits first class tickets, first class upgrades sent 46 percent of the total, up for companions, or discounted coach nologies, the ability of consumers mark Johnson that you, as an individual consumer, president & Ceo, Loyalty 360 from both 44 percent in 2009 and tickets. Within the week, United Air- to extract more value out of their are looking for are greater than ever. 39 percent in 2007. ■■ 50: Loyalty membership in the specialty retail sector rose a surprising 50 percent, indicating coLLoQuy loyalty study revealsu.s . reward statistics not only a bump in the number of loyalty programs available, but while the term symbiosis is Kelly Hlavinka, them, which inevitably leads to a lack stores (ie CVS, Rite-Aid, Walgreens).