Bryan Pearson's Blog, page 48

April 17: Loyalty Links & Likes

Here are a few loyalty links that caught my eye this week.

1. Mastercard, Amex Quietly Feed Transaction Data to Advertisers — AdAge

Credit-card firms’ practice of selling transaction data to marketing companies raises privacy concerns.

2. The personal touch: Hotels customize rewards to match consumer tastes and trends —Leader-Post

The story shares how hotels are tailoring rewards to create memorable experiences for guests.

3. Do you have a spring or summer break hiding in a rewards program? Time to check the points balance — The Boston Globe

How families can capitalize on rewards points and use them to fund their vacations.

4. Swipely Expands Its Credit Card-Based Loyalty System — Tech Crunch

A startup that helps companies manage customer loyalty programs using credit card data has increased its offerings.

5. ‘Ship My Pants:’ Kmart’s Unexpected Viral Hit — Forbes

A video promoting Kmart’s rewards program has gone viral.

A Mint Worth of Information on Your Pillow

Most people hear the word “creepy” and think of haunted houses, but a recent story has me wondering if it isn’t hotel rooms.

The story, in Travel & Leisure magazine, details the vast amounts of personal data hotels are actively collecting on their guests. I am not referring specifically to high-spending VIPs who can afford the $1,000 penthouse suite. I mean everyday guests, even first-time visitors.

The extent hotel employees may go to learn more about incoming or repeat guests exceeds casual conversations at check-in. It includes Googling visitors before their arrival, pulling images if possible, and even going through someone’s trash. Some hotels invest in software that trolls the web and social media for details that may paint a more complete picture of the guest upon arrival.

“What has changed, in this brazen new world, is the sheer amount of data that hotels now collect on guests, and the often startlingly personal nature of that data,” the article states. “With the explosion of social networking, and our increasingly unguarded presence online, profiling guests has become a lot easier, and a hell of a lot more effective.”

The goal of all of this snooping is to better serve the patron, the hotel managers in the story explained. Indeed, they were quite transparent about the information they gather and how they collect it. They may be going to great lengths, but they are not being sneaky.

But are they being creepy? In my writings about data use I often refer to the “creepy line.” This is the slim divide that separates the responsible use of customer information to create better experiences from that considered invasive and just plain stalker-like.

The answer to the creepy question is in the execution, or how hotel employees respond to the information once it is collected. I think one manager put it best when he suggested that the art of it was “to act on that knowledge without calling undue attention to it.”

I agree. Consumers do understand their online activities are followed to a degree, but it can be jarring when those activities and shared preferences are addressed in an incongruent setting. It can shake a vacationing guest from her contented state to learn, for example, that the hotel knows the name of her dog.

Willingly sharing information with a brand, such as through a loyalty plan, is different than having one’s information drawn together from careful research. But we live in an increasingly indiscreet society, where people freely share intimate details in public domains such as Facebook.

Given this environment, is it wrong for hotel operators to use that information to better serve? What do you think?

April 10: Loyalty Links & Likes

Here are a few loyalty links that caught my eye this week.

1. Hotels, airline devalue loyalty programs, angering customers — FoxNews.com

This story highlights Delta’s decision to discontinue its policy allowing mile transfers when a SkyMiles member dies. It also features loyalty program scale-backs in the hotel industry.

2. Retailers offer loyal customer break on gas prices — ABC13

Walmart rolls back gas prices with Great Gas Rollback program benefiting those with Walmart credit, debit and gift cards.

3. The dog in customers — Lawn & Landscape

This story explores client loyalty metrics in the lawn and landscape industry.

4. Walgreens expands ‘get fit’ incentives tied to company’s loyalty program — Drug Store News

Walgreens boosts health incentives for its Balance Rewards program.

5. As Target launches, loyalty points fight heats up — Toronto Star

Target’s entrance into the Canadian market has many retailers relying on their loyalty programs to keep customers coming back.

Novel Approach to Goodreads Deal: Share Data Storyline

If Amazon’s motivation to acquire Goodreads could be summed up on a book jacket, it might be with these words: The data could overflow a library.

Few would disagree. Within a day of Amazon.com’s announcement that it would acquire Goodreads, a social platform for book lovers, the pundits were rushing to post their own reviews of the merger. Some describe it as a loss of independence for Goodreads, others as an opportunity for Amazon to engage readers with interactive reviews, rather than the static ones traditionally on its site.

But one of the most spot-on items I read was in Salon.com, with the headline, “Amazon buys Goodreads: We’re all just data now.” Among the observations is that Amazon, by acquiring Goodreads, will inherit staggering amounts of consumer information.

“It is naïve to believe that Otis Chandler, the affable co-founder of Goodreads, didn’t realize very quickly the value of the beautiful data universe he created,” writer Rob Spillman states. He adds: “The acquisition, from a pure business point of view, is simply brilliant . . . Amazon is a step ahead of their competition.”

The column has a valid point. Goodreads counts 16 million active members, adding more than four books per second to their “want to read” lists over the last month and a half, according to a story in AdWeek. Amazon knows that whoever owns the data is poised to make the smartest product recommendations. This may be why Facebook, too, has been examining books as the next form of shareable content.

But Amazon, in the Goodreads deal, also inherited millions of wary Goodreads members. Some are considering canceling their accounts, and others have, due to worries about how Amazon will use their personal data.

Amazon will determine the next chapter in this relationship. The online retailer has proven to be an impressive operator, and it has demonstrated that it can be a master at effective data use, sending members relevant product recommendations based on previous searches.

If it were my merger, I’d get out in front of it — I’d reach out to every Goodreads member and share details, perhaps an FAQ, about what information I planned to collect, why, and how I intend to use it. I’d also consider giving members the chance to opt-in to the kinds of data they would like to share, as do other online entities including Facebook.

Amazon’s acquisition of Goodreads has yet to play out, but millions of consumers are watching closely. If it manages the data acquisition in an open, consumer-friendly way, it could lead to a pretty good story.

April 3: Loyalty Links & Likes

Here are a few loyalty links that caught my eye this week.

1. Ford jumped ahead of GM, Toyota in customer loyalty in 4th quarter — Los Angeles Times

Why customer loyalty is so important in the automobile industry and the brands leading the loyalty pack.

2. Calculating the Customer’s True Loyalty Score — 1to1 Media

The author writes about loyalty measurement methods and touches upon behavioral vs. emotional loyalty.

3. Pharmacy services boosting customer loyalty to Shoppers Drug Mart as Amazon heads into cosmetics turf — Financial Post

How one drug retailer is winning loyalty despite the competitive market.

4. Raley’s Unconventional Take on Shopper Loyalty — Supermarket News

Grocery chain adds social marketing component to loyalty program.

5. Uncle Maddio’s adds customer rewards program — Fast Casual

Pizza chain introduces new “Loyalty Love” program, rewarding customers with a free entrée after 10th meal.

When Data Comes in Cylinders, Privacy Should Have a Safety Belt

It is often said that life imitates art. But with the latest automotive technology now appearing in vehicles, it may be safe to say that life is imitating kitsch, or at least, KITT.

KITT was the name of the amped-up Firebird Trans-Am featured in the 1980s David Hasselhoff vehicle “Knight Rider.” The car – the Knight Industries Two Thousand, or KITT – was controlled by a computer with artificial intelligence. Wherever Hasselhoff’s character drove, KITT tracked his actions, kept him safe and provided occasional computer games.

Similarly, many of today’s new-model vehicles come with some form of intelligence technology, such as an onboard computer or tollbooth transponder, that gathers data about our driving activities. Soon, such tracking may be required: The U.S. government is preparing to mandate the installation of black-box accident recorders in vehicles to track the details before a crash. According to a story in USAToday, the devices are already built into 96 percent of new cars.

All of this technology may be reminiscent of KITT, but it is nothing to take lightly.

Privacy advocates are, understandably, on edge. They worry collected personal data will end up in the hands of unintended parties, including the government. Courts are already hashing out the admissibility of such information in lawsuits. And there is the ongoing question of whether the data will be sold to or collected by marketers.

These are good points, but I am not sure they will stop the progress of data collection in vehicles, particularly since these technologies are being implemented as a safety feature. To me, the primary task for automakers and the data collectors will be building responsible safeguards for that data, and communicating what information is being used and why.

The kind of data collected from under the hood (and behind the wheel) could help automotive manufacturers better advise their customers on fuel economy, vehicle wear and tear and perhaps on maintenance adjustments. And it could possibly help the community. What if the information indicates traffic congestion, so drivers could plan their travel more effectively? Or if it provided an analysis of traffic flow so municipalities could change the sequencing of stoplights to improve traffic efficiency?

The key to making any of these benefits resonate is complete transparency on the part of automakers. With every new feature, the manufacturer should provide the consumer with a direct communication explaining the “why” of the technology – that it improves safety, lengthens the life of the battery or alerts the driver to potential hazards. And it should provide a phone number or dedicated website where questions can be answered.

Once consumers see the value exchange in sharing their personal data, the creepy factor will diminish and they will open up to the idea of using their information more broadly.

KITT may have been an act of fiction, but the technology to operate a “living” vehicle is with us today. Consumers should be able to live with this idea, if automakers provide relevant outreach and recognition of the consumers’ role in the process. There’s nothing at all kitschy about that.

Retail Online Integration: What Retailers Can Learn About Customer Retention From the Latest Airline Mega Merger

Any retailer that’s been in business for five minutes knows that a loyal customer is far more valuable than a churner. Yet, an unfortunate fact of entrepreneurial life is that most businesses see half their customers change in five years, according to Fred Reichheld ’s “The Loyalty Effect.” Engaging a new customer is more expensive, costing a whopping seven times more than retaining an existing one.

When customers leave at such an alarming rate, companies lose value on an asset that’s expensive to acquire. The good news is this trend isn’t inevitable. Companies can increase retention rates by using marketing data to expand meaningful offers to best customers and by delivering relevant communications via customers’ preferred channels. By these same means, companies can raise their chances of holding onto customers even after a product or service mishap, a sign of true loyalty.

The recent merger between American Airlines and US Airways shapes up as a classic customer retention case study that transcends the aviation industry. Among other challenges, the airlines must manage merging their frequent flyer programs to satisfy 100 million members — the world’s largest customer loyalty program.

History shows that airlines suffer growing pains during mergers, so flight delays, untracked miles  and lost luggage may be inevitable, testing the patience of even the most loyal customers. Meanwhile, rival air carriers will be circling the territory, waiting to pick up any discontented travelers.

Savvy retailers have an opportunity to learn valuable customer retention lessons by observing the American and US Airways marriage. The airlines’ early decisions in the merger process will set the tone for how the customer experience will be post-merger. Those decisions have the potential to distinguish the merged company from its competitors.

In what would be a positive first step, American and US Airways should make frequent flyer miles go further. They should transform American’s AAdvantage and US Airway’s Dividend Miles to include additional forms of reward currency that expand redemption options for members.

The airlines already have the needed insights in the data collected through their loyalty programs to identify which services or products are most relevant to their best customers. By expanding the rewards selection, they could capitalize on these insights to enrich the customer experience while not putting added pressure on their route structure.

Some examples of how the points could be used include the following:

-airport parking;

-baggage delivery from the airport to the traveler’s final destination;

-food and drinks in the airport or on the flight;

-access to airline VIP lounges; and

-transportation from the airport.

In addition to expanding reward offerings, it’s critical for the airlines to preserve or enhance membership status. They should assign a team to bolster consumer confidence in their access to frequent flyer offerings. Synchronized messaging across the organization should serve to regularly assure passengers that their status in a new program will be maintained — and potentially enhanced if they were members of both programs and had been splitting their activity.

American and US Airways need to stay on their passengers’ radars. They shouldn’t leave loyalty members guessing, ever. They must provide timely, relevant information about frequent flyer program changes via communication channels preferred by individual flyers, including email, online, direct mail, mobile.

The combined airline should use the data gleaned from travel patterns to tell the Seattle-to-Toronto flyer specifically how program changes will affect her travel plans in good ways. It should create a dedicated website and hotline, and monitor social media and call-center activity to gain insights from customer comments.

Finally, American and US Airways should be ready to buckle up in case of rough patches. The two carriers should prepare themselves for potential issues involving lost bags, delayed or canceled flights, or untracked miles. While it’s essential to take care of all customers, the new airline should be especially fortified to manage the experiences of its best customers. They use the airline the most, and therefore are most likely to encounter any rough patches in the merger. The airlines must be ready with relevant makeup offers (e.g., bonus miles) and personalized notes apologizing for any inconveniences. With well-timed, relevant messages, the likelihood that brand advocates become “madvocates” can be quickly diminished.

Time will tell if the American and US Airways merger is a smooth flight or a bumpy ride for their loyal customers. One thing is certain, however: How the airlines manage their customer retention challenges will be closely watched, in and out of the aviation field.

The airline industry enjoys no special exemption from customer retention best practices. If companies aren’t completely dedicated to understanding and responding to customer needs and values, they shouldn’t expect customers to be with them going forward, whether it’s rolling down the runway or rolling down the retail aisle.

Bryan Pearson is president and CEO of LoyaltyOne, and author of “The Loyalty Leap.”

March 27: Loyalty Links & Likes

Here are a few loyalty links that caught my eye this week.

1. Getting On Board With Customer Experience — Forbes

The author speaks with Southwest Airlines’ Rapid Rewards program director and shares loyalty lessons learned.

2. IHG to offer free internet to all loyalty scheme members — Business Traveller

A recent survey revealed the importance of free internet access for hotel guests. The Intercontinental Hotels Group plans to offer that and more for rewards program members.

3. Earn Starbucks loyalty points beyond cafes — USA Today

The world’s largest coffee chain extends its loyalty card program to the grocery store aisle.

4. Marketers Could Benefit From a Small Data Strategy: Big Data is a damn mess — Adweek

The story explores what can happen when data collection surpasses its processing.

5. Exclusive: Pepsi Launches Pepsi Experience Points Rewards Program, Teams With SongBooth at SXSW — Billboard

Beverage company partners with mobile app in new pop culture-based rewards program.

Secreting Loyalty Out of Customer Satisfaction

Customer satisfaction is the Trojan horse of loyalty.

Companies must not mistake one for the other. If customer satisfaction is viewed as true loyalty, then the company tricks itself into believing all is well and right between it and its customers. The scary truth, however, is that many “satisfied” customers are simply tolerating a company’s services until they can find a competitor that offers a better price, service or location.

For every loyal customer who promotes a brand, there is another whose bags are packed, waiting for the next slightly better feature or benefit to come along — loyalty is hard earned and nurtured every day. It doesn’t just come stumbling through the gate.

As I state in my book, The Loyalty Leap, customer loyalty can really be broken down into two kinds: behavioral and emotional. Customer satisfaction falls under the former, but the latter is the most desired. Here’s a refresher about what distinguishes the two types:

Behavioral loyalty reflects purchasing behavior and is often motivated by rewards. Customers who maintain shopping frequency and purchasing patterns are deemed loyal based on average spending behaviors. The customers are content with the service, but if a better option comes along they’ll make the switch without a second thought to the company they’re leaving behind. Behavioral loyalty can be a strong indication of convenience, price advantage or lack of competition, but it can be fragile and fleeting.

Emotional loyalty, in contrast, exists within a sustained customer relationship; when the customer sticks with one brand even when a competitive alternative is available. It relies on the company’s capacity to recognize customers’ contributions directly. Research by the Gallup Organization shows that a customer who is more emotionally loyal to a business is more valuable than one whose loyalty is only behavioral, or due to satisfaction. In fact, emotionally satisfied customers increased their spending by 67 percent over a 12-month period compared with a mere 8 percent among those who were rationally satisfied.

Customer satisfaction should never be mistaken for customer loyalty. And, to that effect, behavioral loyalty should never be thought of as emotional. Customer satisfaction and behavioral loyalty are states of being that may appear good for business but actually conceal deeper issues, such as a desire for a more meaningful brand experience. Only when we achieve customer loyalty is the depth of that commitment revealed.

Don’t fall victim to the Trojan horse; recognize the difference.

March 20: Loyalty Links & Likes

Here are a few loyalty links that caught my eye this week.

1. Marriott Ties in With ’42′ to Promote Loyalty Program — The New York Times

Hotel company uses film’s release to promote loyalty program to African-Americans.

2. The Hidden Power of Privacy — COLLOQUY

How to leverage privacy policies as marketing tools to build loyalty.

3. Redtag launches customer loyalty program — Trade Arabia

Arabian-based retailer embraces first loyalty program to reward customers.

4. Raley’s Grocery Chain Adds Social to the Loyalty Recipe — Direct Marketing News

California grocer adds a new component to its Something Extra loyalty program.

5. MasterCard’s Three Key Factors For Loyalty’s Evolution — PYMNTS.com

The company’s Loyalty Solutions exec explains its steps to improving loyalty within payments.