6 C O L L O Q U Y / Volume 18, Issue 1, 2010 T O U C H P O I N T S Karmic Loyalty The positive road to loyalty nirvana IN ITS SIMPLEST DEFINITION, the concept 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 B Y D E N N I S A R M B R U S T E R 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 strategy. 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, Communicative. 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.
T O U C H P O I N T S Exercise Programs The loyalty marketer’s guide to program fiscal fitness B Y A L I N E O S T R O W S K I AGING GRACEFULLY IS EXPENSIVE. Many of us begin noticing fine lines and wrinkles requiring costly eye and night creams. And others of us face a few extra pounds as the years pass— I admit that I’m among those who do. I’m addicted to television shows like The Biggest Loser, even though these remarkable stories about significant weight loss aren’t relevant to my situation. I don’t need to lose 80 or 100 pounds—just the 15 pounds I managed to collect as a prize for turning 40. Besides, my budget doesn’t allow for a personal trainer. So what do I do to shed a little weight within my budget? Interestingly, I found some answers in best practices of my day job. Loyalty programs face a similar predicament, striving to maintain their image within an existing annual budget. Many programs, like some of my friends in the over-40 crowd, don’t need a dramatic overhaul, but instead only a few changes in habits or practices to maintain their appeal. Here are six touch-your-toes exercises you can employ to tone up your program—no eye cream involved: Create excitement with a new look. They say vertical stripes are slimming—apply a few to your program. The audio and visual component of marketing creative captures member attention and works to spur response. A simple way to reinvigorate program awareness is to update and frequently change the creative images and content within your marketing—this includes web, email, direct mail and signage. Work out as a team. Increase program relevance among member segments as your customers travel along program lifecycles. Gather primary or secondary research about existing segments to understand members’ attitudes regarding macro trends and the program itself. Although this information might reveal the need to revisit the overall value proposition, it can also influence marketing strategies and reward offerings in the short term to ensure that marketing layout and messages maximize member interests. Exercise undeveloped muscles. Redefine member experiences. Just because customers choose to remain in your loyalty program doesn’t mean that they’re getting everything they need from all your program touch points. In this world of fast technological evolution and adoption, knowing what your members expect when they interact with you is critical. For example, examine your website paths to see where members drop off. Seek opportunities to simplify the member website experience through design or content changes. In bricks-and-mortar locations, take a fresh look at how members interact with the program in-store and at point of sale to discover opportunities to improve signage and its placement. Don’t try to be a hard body. Introduce new soft benefits—rewards based on recognition and privilege, like special access to brand-related special events and tier-specific product previews. Although the value proposition is the primary driver of member participation, soft program perks are also key to maintaining customer affinity. Ensure that your program offers the right perks to the www.colloquy.com right members. If your program doesn’t yet feature soft perks, develop a plan to give higher-value members prioritized service and special opportunities to earn and redeem. Institute recognition benefits and extend small bonuses between redemption instances. If your program already features soft benefits, ensure that marketing efforts focus on member interests and preferences. Develop a workout support group. Employ new media outlets to leverage program advocates. For loyalty programs, all the recent applications made available through social networking provide new opportunities to identify and benefit Many programs, like some of my friends in the over-40 crowd, don’t need a dramatic overhaul, but instead only a few changes in habits or practices to maintain their appeal. from member advocates. Provide a stage for them. Social networking vendors and agencies can facilitate cost-effective solutions that extend beyond Facebook fan pages. Finding the right tool to display and promote member dialogue can both inspire and educate other members. Hire the most effective trainers. Learn from your members—they’re the ultimate taskmasters who will put you through your paces. Supplement surveys and data analysis by developing a formal member panel to guide program evolution. Just like people, programs mature and risk adding some love handles. And as in exercise and weight loss, there are no shortcuts—but also often no need to undergo major surgery. Instead, with a regular regimen that recognizes the need for constant attention and regular workouts, your program can shed just a few pounds and remain sleek and attractive. Aline Ostrowski is a LoyaltyOne consultant and the originator of the Ostrowskasize Weight Loss Program coming soon to an infomercial near you. 7