Transformers - Colloquy

Transformers - Colloquy


C O L L O Q U Y / Volume 18, Issue 1, 2010


Karmic Loyalty

The positive road to loyalty nirvana


of karma intertwines cause and effect.

The word itself means “action”: Your

actions affect others, of course, but

they also affect you. It’s basic stuff:

Put out good vibes, you get good vibes

back. Put out bad vibes . . . you get

the idea.

I slipped into this moment of Zen

contemplation while reading about

InterContinental Hotels Group

(IHG) wooing Hilton HHonors

members with a “Luckiest Losers”

competition. This action, I feared,

would have karmic implications

not only on the specific programs

involved but also on the loyalty

industry as a whole.

The back story: In January 2010,

Hilton raised the number of

HHonors points required for a free

stay, which Hilton executives said

brought them in line with their

competition’s offerings. Responding

to what many consumers saw as a

devaluation of HHonors points,

IHG’s promotion “gave back” more

than 400 million Priority Club

Rewards points to members who had

“lost” the most HHonors points.

Yes, it’s a competitive initiative, and

vigorous competition is expected in

any business. Yes, it’s an original

initiative, and we at COLLOQUY

certainly encourage marketers to

avoid copycat tactics. But the tone of

this promotion takes competition

to an entirely new level within the


loyalty industry. It amounts to a

negative war of words–as well as

creates an environment of points

commoditization that we believe

bodes poorly for loyalty programs.

Loyalty, after all, is something

of a karmic marketing endeavor,

building brand engagement and

two-way relationships by creating

a positive message and experience.

Positive action in differentiating

your product or service with a unique

loyalty value proposition reinforces

your relationship with customers.

Negative action, such as sniping at

the competition, might attract both

attention and customers in the short

term, but the long-term vibe will

return skeptical consumers looking

for the best deal instead of cement ing

a rewarding relationship.

Think of loyalty programs as an

accelerator along the long road to

brand enlightenment—the beautiful

wrapping that surrounds a wellthought-out

approach to sound

products, sound pricing, and a sound

service model. Positive messaging

illuminates; while negative messag -

ing casts shadows by threatening

to turn loyalty programs into a

commodity or, worse yet, a weapon.

Invoking the karmic return of

such negativity is not a sustainable


So, loyalty Zen masters, what strate -

gies should you be contemplating?

Looking at the frequent-guest

program landscape as we are, let’s

consider three approaches currently

in market:

Seek and destroy: In my opinion,

that’s what IHG unleashed when it

jumped all over Hilton’s re-jiggered

HHonors offerings. This kind of

negative approach won’t likely work

in the long term for any company

that wants to underscore how their

loyalty strategy stands out in order

to curry good feelings from

program members.

Match to get in the mix: Best

Western recently unveiled its “Status

Match, No Catch” program, in which

the chain promises to match the elite

status of any other hotel loyalty

program. The initiative quietly woos

the competition’s customers without

the accompanying “nyah-nyah” tone

of discourse. It offers customers

the feeling of a company stepping in

to save the day, but without “tearing

down the enemy.”

Va-va-voom value proposition:

Marriott’s elite rollover offer exudes

loyalty karma. Marriott’s action

put forth their own unique vibe,

offering something that no one

else was providing–the prospect of

rolling over to the next year any

elite-qualifying nights in excess of

the elite status minimum. Sure,

Negative messaging casts shadows by threatening to turn

loyalty programs into a commodity or, worse yet, a weapon.

another company could come

along and match it (to get in the

mix) but since Marriott’s move in

June 2009, no one has.

My suggestions to marketers, then?

Adopt a karmic mantra composed of

but three words: Assertive, Innovative,


Assertive: Own the space. Be the first

and be bold to leapfrog the competi -

tion. Don’t be tempted to define

what you are by what others aren’t.

Innovative: Don’t borrow or hijack

the competition’s space. Make sure

your effort is truly innovative–not

simply a copy.

Communicative: Don’t be silent

about standing out. Demonstrate

clearly how your offering is special,

that your value proposition is an

internal boon and not an external

loss, and the karmic return will be

members who feel recognized and

rewarded for investing their loyalty

in you.

Dennis Armbruster is Managing Partner of

LoyaltyOne Consulting.

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