Monday, January 24, 2011

What Do Customers Want From a Loyalty Program?

Thinking about a loyalty program to boost the bottom line? Whether it is a digital music promotion, offering free gifts with a purchase, or even a buy-10-get-1 frequent buyers card, many marketers question whether they should use a loyalty program for their business, and how effective it might be.

Back in 2009, the Chief Marketing Officer Council (CMOC) studied what customers wanted from their customer loyalty program, and what marketers were providing. What they learned was that companies are not fully connecting with their customers through their loyalty programs. Most companies receive high marks for their loyalty program offerings — perks, discounts, free gifts, deals, digital music downloads — but are not providing effective or useful communication to their program members.

According to the CMOC survey, customers are looking for "deeper engagement and personalized contact" in their loyalty program, "not mass blast communications and gimmicks." In other words, loyalty program marketers should focus on:

* Personalized Communication: According to the survey, customers expect their companies to understand them better (24 percent of marketers say their customers feel they do not get enough personalized attention). Whether it is direct mail or email, the technology exists to completely personalize communication with customers. The technology has gone beyond the basic "Dear _______" mail merge program, which means there should be no "Dear Valued Customer" emails or letters. Now loyalty program communications can change out body copy, offers, and even photos and graphics, providing a completely personal experience.
* Meaningful Rewards: The CMOC also found that customers want "more relevant and valued offers" from their loyalty program. However, the survey respondents were almost equally divided about what they should offer as member benefits: 39 percent offer discounts and savings, 34 percent offer free products and premiums, and 33 percent offer points.

This becomes a little more important when looking at the results for "typical customer complaints about loyalty programs." According to the CMOC, nearly 30 percent of respondents said that some of their customers saw little or no added value to becoming a member, 24 percent believe the rewards "lack substance." As a regular member of several loyalty programs, it is easy to see how small discounts or low-dollar value gifts for high-dollar purchases can be seen as lacking substance.

The very definition of the loyalty program is to get occasional customers and visitors to become regular customers and even brand loyalists. Given the fact that most marketers (61 percent) believe that members are their most profitable customers, it makes sense that they try to create more brand loyalists. However, the more desired result is to motivate the brand loyalists to become brand evangelists. The best way to do this is to include a reward-for-referral component to the company loyalty program.

Marketers spend over $2 billion each year to grow and run their loyalty programs. But according to the CMOC survey, only 13 percent of the respondents believe they have been "highly effective" in using their loyalty program to achieve any success. Another 25 percent say they have not been able to motivate their brand loyalists to become brand evangelists.

The long and short of it is, a loyalty program is an efficient way to turn visitors into regular customers, regular customers into brand loyalists. These loyalists can even become evangelists, given the right type of program and offer. To determine this, the savvy marketer will take time to examine her target market, the use (or non-use) of technology, and what sort of offers will keep the customers returning time after time. By finding out what their customers want, marketers can turn their brand loyalists into brand evangelists, who can bring in new customers, and grow their customer base, starting a whole new group of customers to move through the process.

SOURCE: http://www.cmocouncil.org/news/pr/2010/012510.asp

Monday, January 17, 2011

What Does New Verizon iPhone Mean For Digital Promotions?

Digital promotions experts will call February 11, 2011 the day their industry got a big boost, the day Verizon began offering the iPhone 4 to its customers. This means that not only will the Apple operating system (OS) see an increase in market share, but it means that a lot of people will be buying their first-ever smart phones, switching over from the old standard flip phones.

Some experts believe that Verizon may sell as many as 13 million new iPhones in 2011. (1) This will be a big relief to Apple, because many industry experts were expecting the Android OS to surpass them in market share in 2011.

Digital promotions professionals should be heartened by the news, because it shows that digital promotions strategies will not only have a new channel, but many, many new subscribers. Here are a few predictions for what the iPhone will mean for them in 2011.

1) Digital promotions marketers should focus on the new iPhone users. While many of the 13 million will be people switching from AT&T to the Verizon, many more will be brand new smartphone users who are switching from the standard flip phone. Digital promotions campaigns should be geared toward new users, showing them the best ways to use their new phones, and taking advantage of a new user's willingness to try new technology. For example, a campaign that includes free gift cards to the iTunes app store would appeal greatly to a lot of new iPhone users.

2) Digital promotions marketers who are creating apps need to continue to develop for both the iPhone and Android platforms. While the two operating systems are currently running neck-and-neck (according to ComScore, Google currently has 26% market share, while Apple has 25% (2)), app developers need to focus on both platforms in order to reach large portions of their audience. (Blackberry still owns 33.5% of the market share, although it has dropped 4% in two months.)

3) Digital promotions developers need to consider HTML5. This is the new html coding language that promises to replace Flash and Javascript. HTML5 is platform-agnostic, and web-based, which means anyone can use an HTML5 site, including Blackberrys and the Windows mobile operating system. Using HTML5 for digital promotions will save the cost of developing apps (which can be as much as $50,000 for a single app on one platform), but will allow the campaign to be accessed by anyone on any operating system, including laptops.

4) Traditional digital promotions properties, like wallpapers and free song downloads, will become even more popular. Rather than listen to songs on an MP3 player, smart phones have MP3 capabilities, where people can listen to music and watch videos on their mobile phones. Now, customers can redeem their free songs, movie downloads, and wallpapers directly from their mobile phones, using an app or a company's digital promotions page.

5) Digital promotions should be more locally-focused. Google recently announced they were focusing all their development attention on mobile usage for 2011. Google has already begun offering voice search with Google Maps and a turn-by-turn GPS navigation system (still in beta), and pulling local search results into Google Places from review sites like Yelp and UrbanSpoon. This means local retailers and restaurants should begin using digital promotions to increase traffic and sales to take advantage of the multitudes of new smart phone users.

The new iPhone-Verizon deal spells all kinds of new opportunities for digital marketers. With an expected 13 million new iPhone users in 2011, it is also safe to assume the Android platform will continue to grow as well. By focusing on brand new users, making digital properties available to all platforms, and focusing on local mobile marketing, digital marketers will see some amazing successes in 2011.


1) http://www.appleinsider.com/articles/11/01/10/verizon_may_spend_more_than_5_billion_subsidizing_iphone_sales_in_2011.html
2) http://comscore.com/Press_Events/Press_Releases/2011/1/comScore_Reports_November_2010_U.S._Mobile_Subscriber_Market_Share

Tuesday, January 4, 2011

Three Ways Promotional Risk Coverage Can Improve Your Promotion

Promotional risk coverage can save your bacon and improve your promotional campaign. It allows you to offer people a chance at winning big ticket items, but doesn't mean you have to have a big ticket budget.

Here are three ways promotional risk coverage can help marketers offer huge prizes without having to flee the country if they ever paid out.

1. Because Someone Will Eventually Win
While the odds of being struck by lightning are only slightly better than winning the lottery (or worse, depending on your outlook on life), the odds of winning a small contest at a local event are much, much better.

For example, an annual golf fundraiser includes a new car if someone hits a hole-in-one on the 9th hole. While it may seem like a good idea to save money by not actually paying for the car first, keep in mind that the United States Golf Register says that the odds of a hole-in-one are anywhere from 1 in 20,000 to 1 in 33,000: much lower than the risk of being hit by lightning.

So what happens if a golfer hits that 1-in-33,000 shot? While every marketer loves the attention that the contest brings, none of them want to think about what will happen if someone makes the shot, and they did not have the car covered.

Promotional risk coverage will cover the possibility of someone hitting the winning shot. In this case, the risk is placed with an insurance company, and the marketer pays a small fixed fee. If a contestant wins the prize, the promotional risk coverage kicks in, and the insurance company covers the difference.

Rather than risking the cost of the car in a contest, for a fraction of the prize value, the promotional risk policy gives peace of mind to the organizers and prize providers.

2. Because You Need to Make a Big Splash
In cases where a campaign needs a high-value prize, but there is no room in the budget, promotional risk coverage makes it possible.

For example, in some fast food contests, the restaurant will offer several million dollars in prizes, but they are counting on the fact that not every prize will be redeemed, and the total prize value will not be reached. However, there is a careful balance between gambling that not all the prize money will be claimed, and having enough in the budget to cover it.

If a marketer wants to offer $500,000 in possible prizes, but believes that only $300,000 will be collected, a promotional risk policy could cover the difference if contestants actually collect on all the prizes. This allows the marketer to make a bigger splash with the contest, entice more customers to play, and still cover all costs should the unexpected occur.

3. Because You May Get More People to Enter
A similar promotional risk strategy is necessary for coupon programs, rebate offers, and even free music downloads.

For example, a marketer wants to launch a free music download program, and has budgeted for 50,000 redemptions of the song. However, the campaign is a wild success, and there are nearly 90,000 redemptions of the music. This means the marketer must come up with the licensing fees for the additional 40,000 songs.

Of course, if she had purchased promotional risk coverage, for a set fee, she could cover any possible overages, without incurring any anger and wrath from customers for canceling the promotion unexpectedly, or risk losing her job because she did not plan accordingly. In this case, promotional risk coverage removes the risk of a larger-than-expected redemption rate, and helps keep costs under control.

These three promotional risk strategies can help marketers keep marketing costs under control, allow for small campaigns to become big ones without risk of staggering losses, and even cover an unexpected success. For more information and to implement this type of campaign, it is important to speak to a promotional risk coverage specialist.